Who Pays for Big Government?

[lustylad]

Originally Posted by UnderConstruction

Clinton is your answer to the first one, with the Taxpayer Relief Act of 1997. Long-term capital gains went from 28 to 20 percent. I actually agree, taxing long-term capital gains at a lower rate makes more sense. Short-term, I don't agree. It's income and should taxed as such. As for why I agree on long-term, it's not adjusted for inflation, so you pay taxes on the return as well as inflation. It's also a tax on future consumption, which has been shown to decrease long-term growth. It's also double-taxing if you tax at the same rate as income. It also depends on if you're talking about long or short-term capital gains. Long-term (usually held for over a year) is much lower and depending on tax bracket, is 0. Obama actually extended Bush's lowered rate that was set to expire. The answer to your second question is Obama, but it's only true for short-term capital gains. Long-term went from 15 to 20 percent.

Ok, you surprised me undercunt. You actually got more right than wrong this time. The inflation and double taxation arguments are correct (although double taxation applies more to dividends than capital gains). Another key argument you omitted is that capital gains are a product of taking risks, and the tax code treats losses and gains asymmetrically. There are other arguments for taxing capital gains less but I will leave them for Cap'n Midnight.

The correct answer to the second question isn't Obama. (Read the question again.) It's Ronald Reagan. The last time ordinary income and capital gains were taxed at the same rate (both set at 28%) was after Reagan signed the Tax Reform Act of 1986. He accomplished this feat by pushing for "revenue-neutral" tax reform whereby higher taxes on capital gains were fully offset by lower taxes on ordinary income. Damn, who woulda thunk a Republican could do such a thing?

Obama is incapable of duplicating Reagan's accomplishment because he won't allow any tax reform to be revenue-neutral. Revenue-neutral means the government takes in roughly the same amount of taxes before and after. Obama wants to use tax reform as an excuse for a huge new revenue grab by the feds. That ain't gonna happen.

Please take the time to educate your lapdog shammytard on all this.

.

[warriorforlife]

Originally Posted by shanm

You say 90% of your income is earned income. What about those CEO's (Mark Zuckerburg, Larry Elison and a million others) who make a $1 in "earned income" for a year. Do you think they are rationing out that 1 dollar to cover their Ferrari insurance? No. They are making bank of off capital gains and dividend income while gaming our tax system. It is a FACT that Romney paid a 14% tax rate during the year prior to his presidential campaign run. So did Warren Buffet. Do you think that is fair? while the rest of the country men (like you) pay almost 40% of their income, people with BILLIONS pay only about 15% of what they actually made? Thank George "idiot" Bush for his capital gains tax rates right? This is exactly why we have such a huge disparity in income equality currently.

This is also exactly what's wrong with the republican party. Their entire agenda is based on the philosophy of the very few (the rich and wealthy) and they push that agenda on the majority of republicans who don't even know what's good for them. They'll appease to them by throwing a bone like religious sanctity or some other bullshit and then fuck them seven ways from Sunday when it comes to anything of actual safety and importance.

This guy hit the nail on the head. I work as a tax accountant. There are so many ways to avoid paying "your fair share" that the rich usually never pay what's allocated to them. Our system is riddled with loopholes that you could drive semis through. Its just that most people don't know about them.

All while the wealthy can hire people like me to 'game' the system for them. The poor are left fighting each other to pay the majority of our tax burden.

[UnderConstruction]

Originally Posted by warriorforlife

This guy hit the nail on the head. I work as a tax accountant. There are so many ways to avoid paying "your fair share" that the rich usually never pay what's allocated to them. Our system is riddled with loopholes that you could drive semis through. Its just that most people don't know about them.

All while the wealthy can hire people like me to 'game' the system for them. The poor are left fighting each other to pay the majority of our tax burden.

Not to say you don't know your business, but a small percentage pay a very large percentage of the income tax in this country. It isn't the very poor. You say it isn't the rich, so I'm assuming the middle class is taking it up the ass.

[IIFFOFRDB]

Originally Posted by warriorforlife

This guy hit the nail on the head. I work as a tax accountant. There are so many ways to avoid paying "your fair share" that the rich usually never pay what's allocated to them. Our system is riddled with loopholes that you could drive semis through. Its just that most people don't know about them.

All while the wealthy can hire people like me to 'game' the system for them. The poor are left fighting each other to pay the majority of our tax burden.

This is all the Republicans fault, taxfrauderforlife?

[shanm]

Originally Posted by warriorforlife

This guy hit the nail on the head.

I try.

I just wish it was LustyIdiots head so that we never have to hear from him again!

[Texas Contrarian]

Originally Posted by UnderConstruction

It's better now than it was. In the 50s the top tax bracket was well north of 75%.

Yes, indeed! In fact, the top-bracket rate was 91% for an extended period back in those days. However, it was completely farcical -- virtually no one paid an effective tax rate more than a fraction of the statutory rate. The reason is that before the 1986 tax reform, it was ridiculously easy for affluent taxpayers to shelter large portions of their income, and in many cases virtually all of it, by utilizing such means as accelerated depreciation on highly leveraged assets.

That's why the AMT (alternative minimum tax) legislation was passed about 45 years ago. Policymakers wanted to at least raise some tax revenue from very high-income earners, even if no one suffered under the delusion that affluent individuals would be likely to pay, for instance, an effective rate higher than that typical of the present time.

Originally Posted by shanm

You say 90% of your income is earned income. What about those CEO's (Mark Zuckerburg, Larry Elison and a million others) who make a $1 in "earned income" for a year. Do you think they are rationing out that 1 dollar to cover their Ferrari insurance? No. They are making bank of off capital gains and dividend income while gaming our tax system. It is a FACT that Romney paid a 14% tax rate during the year prior to his presidential campaign run. So did Warren Buffet. Do you think that is fair? while the rest of the country men (like you) pay almost 40% of their income, people with BILLIONS pay only about 15% of what they actually made?

Thank George "idiot" Bush for his capital gains tax rates right? This is exactly why we have such a huge disparity in income equality currently.

The capital gains tax cuts of both the Bush and Clinton eras actually contributed very little to the increasing income disparity of the last few decades, which is primarily due to megatrends that began decades ago involving free-trade globalism and rapid advances in technology. And, if you wish to continue looking for other significant contributors to income and wealth inequality, a good place to begin your search would be the halls of the Marriner Eccles building in Washington, D.C.

I don't recall whether Romney released much in the way of detailed information concerning his returns, but do remember that it was widely reported that he paid an approximately 14% effective rate. As a private equity manager, it's likely that most (or even virtually all) of his income is carried interest, which is taxed at the capital gains rate, which was 15% at the time. (That rate was, of course, increased to 23.8% two years ago.)

Warren Buffett avails himself of an even sweeter deal. He has been able to shelter much of the dividend income on which he otherwise would have had to pay tax -- while accumulating his vast wealth -- by utilizing a maneuver referred to as a holding company dividend corporate tax exclusion.

Full explanation @ http://www.eccie.net/showpost.php?p=...&postcount=156

So, as you can easily see, if Buffett really wanted to pay something closer to what he seems to consider his "fair share," all he would have to do is own a much larger portion of his aggregate stock holdings outside Berkshire Hathaway. This is why I think it's so humorous to see him go around prattling all the time about how rich people like him ought to pay more.

Originally Posted by warriorforlife

This guy hit the nail on the head. I work as a tax accountant. There are so many ways to avoid paying "your fair share" that the rich usually never pay what's allocated to them. Our system is riddled with loopholes that you could drive semis through. Its just that most people don't know about them.

All while the wealthy can hire people like me to 'game' the system for them. The poor are left fighting each other to pay the majority of our tax burden.

Huh??

In what way, pray tell, do you think the poor pay anything remotely resembling the "majority" of the nation's tax burden? Please check out the graph and associated commentary by economist Casey Mulligan that I linked in the opening post.

Lower income groups in the U.S. pay a far lower percentage of the total tax burden than in virtually every other wealthy nation. Although income tax rates for the non-affluent are generally lower than in other nations, that's largely because we do not have a VAT, or consumption tax. The VAT rate in many European countries is in the 20-25% range. A consumption tax is, of course, highly regressive, sacking a far higher percentage of the incomes of low- to middle-income taxpayers than those of higher income households.

The capital gains tax is always a favorite tool of demagoguery for progressives, but the rhetoric connected with attempts to push it to historically high levels is all about base-pleasing politics; not sound economics.

That should come as a surprise to no one who participates in this forum, and who presumably follows the policy debate.

[shanm]

Originally Posted by CaptainMidnight

Yes, indeed! In fact, the top-bracket rate was 91% for an extended period back in those days. However, it was completely farcical -- virtually no one paid an effective tax rate more than a fraction of the statutory rate. The reason is that before the 1986 tax reform, it was ridiculously easy for affluent taxpayers to shelter large portions of their income, and in many cases virtually all of it, by utilizing such means as accelerated depreciation on highly leveraged assets.

That's why the AMT (alternative minimum tax) legislation was passed about 45 years ago. Policymakers wanted to at least raise some tax revenue from very high-income earners, even if no one suffered under the delusion that affluent individuals would be likely to pay, for instance, an effective rate higher than that typical of the present time.



The capital gains tax cuts of both the Bush and Clinton eras actually contribute very little to the increasing income disparity of the last few decades. It's primarily due to trends that began decades ago involving free-trade globalism. And, if you wish to continue looking for significant contributors to income and wealth inequality, a good place to begin your search would be the halls of the Marriner Eccles building in Washington, D.C.

I don't recall whether Romney released much in the way of detailed information concerning his returns, but do recall that it was widely reported that he paid an approximately 14% effective rate. As a private equity manager, it's likely that most (or even virtually all) of his income is carried interest, which at the time was taxed at the capital gains rate of 15%. (The cap gains tax rate was, of course, increased to 23.8% two years ago.)

Warren Buffett avails himself of an even sweeter deal. He has been able to shelter much of the dividend income on which he otherwise would have had to pay tax -- while accumulating his vast wealth -- by utilizing a maneuver referred to as a holding company dividend corporate tax exclusion.

Full explanation @ http://www.eccie.net/showpost.php?p=...&postcount=156

So, as you can easily see, if Buffett really wanted to pay something closer to what he seems to consider his "fair share," all he would have to do is own a much larger portion of his aggregate stock holdings outside Berkshire Hathaway. This is why I think it's so humorous to see him go around prattling all the time about how rich people like him ought to pay more.



Huh??

In what way, pray tell, do you think the poor pay anything remotely resembling the "majority" of the nation's tax burden? Please check out the graph and associated commentary by economist Casey Mulligan that I linked in the opening post.

Lower income groups in the U.S. pay a far lower percentage of the total tax burden than in virtually every other wealthy nation. Although income tax rates for the non-affluent are generally lower than in other nations, that's largely because we do not have a VAT, or consumption tax. The VAT rate in many European countries is in the 20-25% range. A consumption tax is, of course, highly regressive, sacking a far higher percentage of the incomes of low- to middle-income taxpayers than those of higher income households.

The capital gains tax is always a favorite tool of demagoguery for progressives, but the rhetoric connected with attempts to push it to historically high levels is all about base-pleasing politics; not sound economics.

That should come as a surprise to no one who participates in this forum, and who presumably follows the policy debate.

I'm curious. I understand what you said about the consumption and VAT, they are always regressive and always have to be, unless you can charge rich people a different amount for the same thing. If you go to europe, everything seems so ridiculously expensive in countries like France and Spain, due to the combined effect of the Euro standard and consumption taxes. In the U.S, we do have a sales tax though, which is arguably the same thing, but it's much lower.

You say that there is indeed a problem of the rich not paying their fair share. I am well aware that the rich pay most of the tax burden for this country. BUT I don't think that is very hard to do if, for example, the top 1% own more than a third of the wealth of the entire country? It seemed like you were arguing in favor of the rich not getting higher taxes. My dad is a multi-millionaire, and just like Buffet he argues that he should be paying higher taxes; he regularly pays around the 20-25% mark. I can definitely see that we don't need more money and the money that we don't pay in taxes doesn't always "trickle down" through the economy. That is one of the essentials of the wealth inequality in the country, and a huge flaw in the current capitalist system. The rich keep on amassing wealth instead of spending it to the benefit of the economy. Capitalism only works in the U.S at a macro level, meaning people who are already rich can use our system to gain even higher levels of wealth while the majority of the poor people are doomed to work a 9-5 job for their entire lives, and that is if they're lucky. The rags to riches American dream just isn't possible anymore. It's all the effect of our broken capitalist system and tax + corporate laws that overwhelmingly favor the rich.
Raising taxes is a start. The government might not be as efficient as the private sector, but at least the money is going somewhere other than the pockets of the rich, don't you think? Spending helps our economy, that is pretty much set in stone as far as economics goes. The spending-savings gap gets bigger the richer you get. That same $1000 that would be added to the bank account of Warren Buffet could go to a middle class person who would use that to buy products/services that fuels further creation of those products/services and in turn creates more jobs and more growth in the economy. That sounds like "sound economics" to me.

[DSK]

Originally Posted by CuteOldGuy

Gee. How much does GE pay in taxes? Under Obama? They both favor the rich. You know why? The rich OWN them! The corporations OWN THEM! The banks OWN them! BOTH parties! Gawd you people are gullible.

The income tax is evil and barbaric. It is a tool of control, not revenue. That's why it is a major component of the Communist Manifesto. The income tax should be abolished. When the government tells you how much of what you earn you are allowed to keep, you are not free!

Yes, it does function as control and also makes it easier for the government to give away money to get elected. However, it just needs reformed, not abolished.
I propose getting rid of personal deductions for any 501c3 charitable organization, and eliminating the tax loopholes companies like GE abuse.
Also, make capital gains get taxed at ordinary income rates.

[Texas Contrarian]

Originally Posted by DSK

...Also, make capital gains get taxed at ordinary income rates.

Unless you are a supporter of a Steve Forbes-style flat tax with a rate near 20%, I assume you mean that you would like to see capital gains taxes raised all the way up to 39.6%.

So, just a few simple questions, please, if I may.

Are you aware of the fact that there was a period of a few years during the last half-century when politicians pushed the capital gains tax rate to approximately 40%?

Do you know what effect that policy had on tax revenue to the Treasury? (In particular, do you think it raised revenue in the fashion envisioned by its supporters?)

Are you aware of its inhibitory effects on capital formation and on the free flow of capital to its highest and best uses? Do you know that such inhibitory effects can adversely affect the whole economy, not just the fortunes of "rich people?"

Can you name the president whose Treasury officials began to have concerns about the damaging effects of large capital gains tax increases, and who signed legislation lowering the cap gains tax rate to 28%?

(Hint: He isn't a former president whose name springs to mind when one mentions "tax cuts for the rich.")

[DSK]

Originally Posted by CaptainMidnight

Unless you are a supporter of a Steve Forbes-style flat tax with a rate near 20%, I assume you mean that you would like to see capital gains taxes raised all the way up to 39.6%.

So, just a few simple questions, please, if I may.

Are you aware of the fact that there was a period of a few years during the last half-century when politicians pushed the capital gains tax rate to approximately 40%?

Do you know what effect that policy had on tax revenue to the Treasury? (In particular, do you think it raised revenue in the fashion envisioned by its supporters?)

Are you aware of its inhibitory effects on capital formation and on the free flow of capital to its highest and best uses? Do you know that such inhibitory effects can adversely affect the whole economy, not just the fortunes of "rich people?"

Can you name the president whose Treasury officials began to have concerns about the damaging effects of large capital gains tax increases, and who signed legislation lowering the cap gains tax rate to 28%?

(Hint: He isn't a former president whose name springs to mind when one mentions "tax cuts for the rich.")

I would compromise with a top tax rate for ordinary income at around 30%, and capital gains at the same rate.
I think your arguments are sound about capital formation and such but that the rich manipulate the system to conform to the rules and drastically lower their tax. I don't blame them too much since it is legal, but the system should not allow it.

Clinton?

[Texas Contrarian]

Originally Posted by DSK

I would compromise with a top tax rate for ordinary income at around 30%, and capital gains at the same rate.

That, in essence, was the structure of a deal reached by the Reagan administration and a Democrat-controlled congress in 1986, and the rate settled upon (for both ordinary income and capital gains) was 28%. But, not surprisingly, it didn't take long for politicians to begin pushing up the rate on ordinary income and loading the tax code with massive quantities of brand new junk.

I think your arguments are sound about capital formation and such but that the rich manipulate the system to conform to the rules and drastically lower their tax. I don't blame them too much since it is legal, but the system should not allow it.

People on both sides of the ideological divide agree that the system clearly needs to be reformed. But since our major parties don't care about much other than winning political battles, I wouldn't wait with bated breath for anything other than silly, crude demagoguery.

Clinton?

Carter, in 1978.

Clinton signed legislation in 1997 that further lowered the rate from 28% to 20%.

.

[CuteOldGuy]

I've gained some respect for Captain Midnight, so I will refrain from my usual support of the FairTax. However, I will reiterate that an income tax is antithetical to freedom. It's impossible to reform. It will always be the playground of the rich to screw the middle and lower class. If we want a solid economy with real jobs and real growth, one of the first steps we have to take is to eliminate the income tax.

[DSK]

Originally Posted by CuteOldGuy

I've gained some respect for Captain Midnight, so I will refrain from my usual support of the FairTax. However, I will reiterate that an income tax is antithetical to freedom. It's impossible to reform. It will always be the playground of the rich to screw the middle and lower class. If we want a solid economy with real jobs and real growth, one of the first steps we have to take is to eliminate the income tax.

How in the heck do you think the government could survive without the income tax?

[CuteOldGuy]

Originally Posted by DSK

How in the heck do you think the government could survive without the income tax?

They'd manage. They could either replace it with a simple, non-invasive tax, or just not replace it and quit spending so goddamn much.

[UnderConstruction]

Originally Posted by CuteOldGuy

They'd manage. They could either replace it with a simple, non-invasive tax, or just not replace it and quit spending so goddamn much.

While I agree in spirit, income tax makes up roughly 46 percent of federal revenue, so that's quite a big hole to fill. Your last option is the only real one that would work and not damage the economy in the process. Quit spending so goddamn much money on bullshit. The military is one place we could cut back but do you think the republicans are going to do that? We waste billions on programs for planes and weapons that never come to fruition, so basically the money is pissed away.

2011 Breakdown of federal budget, by percentage

20 percent, military
21 percent, Medicare, Medicaid
20 percent, Social Security
13 percent, Safety Net Programs
6 percent, Interest on Debt

That's 80 percent and we haven't even touched Education, Benefits for Federal retirees and veterans, Transportation infrastructure, Science and Medical research, etc.

We've got to get smarter about where money goes.