Obama may have had his tank moment

Skipjack · Post by **Skipjack** » Tue Jul 24, 2012 11:51 pm

http://en.wikipedia.org/wiki/Income_tax ... ted_states

Nowhere do I see an increase for the top tax rate after Reagan. All I see is a decrease.

Cant see it here either:
http://taxfoundation.org/article/summar ... tax-data-0

Everywhere I see a more or less steady decrese since the 80ies and quite a huge decrease starting in the mid sixties. Oddly enough taxes for the top earners were among the highest during the 50ies, a time when the US economy boomed...

Capital gains, a main source of income for the top earners, is also taxed much lower than it was in the 70ies.

gregw · Post by **gregw** » Wed Jul 25, 2012 12:06 am

Teahive wrote:
gregw wrote:
Skipjack wrote: Well, I dont interpret it that way. Also, Obama extended the Bush tax cuts for the wealthy and they are still paying A LOT less taxes than they did before Reagan. So I cant really see any class warfare going on.
Actually not true, the rich payed a higher % of all taxes after Reagan, and they have been steadily paying more and more of the total since then. See table 6 in this link: http://taxfoundation.org/article/summar ... tax-data-0
Comparing table 6 to table 5 for the top 1% and top 5% percentiles, that seems to be somewhat in line with the growth of income share. An imbalance that in itself will continue to drag down the economy until it's reversed one way or another.

At the peak, 2007, the top 1% earned 22% of all income and payed 40% of all taxes. So they are paying more than a fair share. Unless you believe in a zero sum game, someone getting rich does not mean someone else is getting poor.

gregw · Post by **gregw** » Wed Jul 25, 2012 12:14 am

Skipjack wrote:http://en.wikipedia.org/wiki/Income_tax ... ted_states

Nowhere do I see an increase for the top tax rate after Reagan. All I see is a decrease.

Cant see it here either:
http://taxfoundation.org/article/summar ... tax-data-0

Everywhere I see a more or less steady decrese since the 80ies and quite a huge decrease starting in the mid sixties. Oddly enough taxes for the top earners were among the highest during the 50ies, a time when the US economy boomed...

Capital gains, a main source of income for the top earners, is also taxed much lower than it was in the 70ies.

The rates went down and revenue increased because the economy grew and that growth created more wealthy people. The wealthy pay a larger share of the overall tax burden than ever before. The US has the most progressive tax system of all the G20 countries. When they lowered the capital gains rate, revenue to the government increased becasue of the growth it created.

Skipjack · Post by **Skipjack** » Wed Jul 25, 2012 12:16 am

The US has the most progressive tax system of all the G20 countries.

Wha?
Where do you get that from?

gregw · Post by **gregw** » Wed Jul 25, 2012 12:29 am

Skipjack wrote:
The US has the most progressive tax system of all the G20 countries.
Wha?
Where do you get that from?

Excuse me, OECD countries.
http://taxfoundation.org/blog/no-countr ... ds-much-us

Skipjack · Post by **Skipjack** » Wed Jul 25, 2012 1:04 am

I find this highly strange... In Austria employees dont pay any income taxes at all up to 12,000 Euro (~14,500 USD) income a year. In the US, people start paying taxes right away. The highest tax bracket in Austria is also higher than in the US. So I am slightly confused how this is supposed to work.

gregw · Post by **gregw** » Wed Jul 25, 2012 1:28 am

Skipjack wrote:I find this highly strange... In Austria employees dont pay any income taxes at all up to 12,000 Euro (~14,500 USD) income a year. In the US, people start paying taxes right away. The highest tax bracket in Austria is also higher than in the US. So I am slightly confused how this is supposed to work.

Rates and brackets are meaningless, the actual taxes payed never match the rates, they never have. Today almost 46% of all Americans pay no federal income taxes. (with incomes higher than $40k.)

http://www.taxpolicycenter.org/publicat ... ID=1001547

Skipjack · Post by **Skipjack** » Wed Jul 25, 2012 1:41 am

Well, I will see how much I will actually end up paying. I will have about 25k deducted from my salary but allegedly I can get some back by the end of the year. Will be interesting to see how much that is.
From the looks of it, it would have to be most of it?

Jccarlton · Post by **Jccarlton** » Wed Jul 25, 2012 1:58 am

Teahive wrote:
gregw wrote:
Skipjack wrote: Well, I dont interpret it that way. Also, Obama extended the Bush tax cuts for the wealthy and they are still paying A LOT less taxes than they did before Reagan. So I cant really see any class warfare going on.
Actually not true, the rich payed a higher % of all taxes after Reagan, and they have been steadily paying more and more of the total since then. See table 6 in this link: http://taxfoundation.org/article/summar ... tax-data-0
Comparing table 6 to table 5 for the top 1% and top 5% percentiles, that seems to be somewhat in line with the growth of income share. An imbalance that in itself will continue to drag down the economy until it's reversed one way or another.

Growth in the top 1% and 5% is a good thing. It means that the productive are being rewarded and that the economy is growing. Are you willing to sacrifice economic growth on the altar of economic equality?

Jccarlton · Post by **Jccarlton** » Wed Jul 25, 2012 2:19 am

The problem is that looking at income tax charts aren't going to tell the story. You're looking at the wrong things. The hidden little fact is that the real wealthy don't really care about income per se. That's for the nouveau riche like Steve Jobs. Jobs made a lot of money creating wealth. But the true wealthy don't do that. In fact increasing wealth is bad for them because that means there would be lots more people competing for the things they take for granted. The truly wealthy have assets already and don't need to make great sums of money. So they don't need to appear on the radar.
What the truly wealthy want is power. Power to prevent the rest of us from "making it." That's what the kennedys' want. As well as the Rockefellers, Maurice Strong and the rest of the Davos crowd.

Jccarlton · Post by **Jccarlton** » Wed Jul 25, 2012 2:59 am

I think we are going to see a lot more of this:
http://www.youtube.com/watch?v=ae9SjPEsRf0

Skipjack · Post by **Skipjack** » Wed Jul 25, 2012 11:45 am

The really rich have all the money in a family trust anyway. That way they live in riches without having to pay much income tax at all.

gregw · Post by **gregw** » Wed Jul 25, 2012 11:53 am

Skipjack wrote:The really rich have all the money in a family trust anyway. That way they live in riches without having to pay much income tax at all.

I'm sure this is true, but who cares? There are just not many people like this and they have no effect on the middle or lower class. The money they have has already been taxed as income and now being taxed at the lower capital gains rate. If you feel that you just have to punish those evil rich people, you can raise the CG rate, they will still be rich, they will still have no effect on the middle and lower class and it will also reduce revenues to the government. No one wins.

choff · Post by **choff** » Wed Jul 25, 2012 3:53 pm

One thing I was reading about charitable trusts, but don't know if it applies anymore, they keep a controlling percentage of company stock in the trust, immune from hostile corporate takeover attempts. The other was that charitable trusts and foundations are often used for politcal purposes, even espionage activities.

Teahive · Post by **Teahive** » Wed Jul 25, 2012 11:08 pm

gregw wrote:
Teahive wrote:
gregw wrote:Actually not true, the rich payed a higher % of all taxes after Reagan, and they have been steadily paying more and more of the total since then. See table 6 in this link: http://taxfoundation.org/article/summar ... tax-data-0
Comparing table 6 to table 5 for the top 1% and top 5% percentiles, that seems to be somewhat in line with the growth of income share. An imbalance that in itself will continue to drag down the economy until it's reversed one way or another.
At the peak, 2007, the top 1% earned 22% of all income and payed 40% of all taxes. So they are paying more than a fair share.

A fair share is a vague concept. What I'm pointing out is that the fact the rich are paying more of the total is simply linked to the fact that they are also earning more of the total.

Unless you believe in a zero sum game, someone getting rich does not mean someone else is getting poor.

True. The issue I'm referring to, though, is continued concentration of wealth with those who have little desire to spend. Jobs are sustained by customers. If you have no one willing and able to spend, you have no customers, and no jobs.

Jccarlton wrote:Growth in the top 1% and 5% is a good thing. It means that the productive are being rewarded and that the economy is growing.

In this case growth in the top percentiles (growth in their share of total income) simply means they get a bigger fraction of the cake.
It doesn't imply that the cake is growing.
It doesn't imply that correllation between productivity and earnings is increasing.

The highly productive are generally being rewarded by being high earners. Suppose for a moment a direct correllation between productivity and income (which certainly isn't always the case), then growth in the income share of the top percentiles simply means that their productivity is developing better than that of the lower percentiles.

Is that a good thing? I don't know. Compared to what?

For example, if the alternative scenarios are a) 5% percent productivity increase for the top 5% and no change for the rest, or b) 2% increase across the board, then I'd say the latter is far better.

Are you willing to sacrifice economic growth on the altar of economic equality?

No, but that's a false dichotomy.