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White House Proposes "Wealthy Tax"
President Obama is proposing a new tax rate for people making over $1m a year. The new rate is part of a larger plan which seeks to bring in $1.5 trillion in new tax revenue and is sure to meet opposition in congress. From the article: "The core of the president's plan totals just more than $2 trillion in deficit reduction over 10 years. It combines the new taxes with $580 billion in cuts to mandatory benefit programs, including $248 billion from Medicare." GOP Rep. Paul Ryan of Wisconsin said, "Class warfare may make for really good politics but it makes for rotten economics."
So all they did was give even larger incentive for rich people to start playing games with taxes. Remember that tax planning isn't illegal, nor is forming offshore companies. It's unlikely to change as well, because foreign companies are needed too. As long as you keep the money in the offshore company accounts and not your personal ones, you don't need to pay taxes from them. The people making over one million dollars a year have all the means to do this - normal working people don't.
You know what, maybe start looking if the huge companies pay taxes? For example Google does a insane amount ($60 BILLION) of tax dodging.
Once the wealth accumulates to the top only, how will the economy survive without spending by the middle and lower classes? Won't a lot of business just shutdown because people don't have money to spend?
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Yes, that's true. However, I wonder why this comment is usually directed at the working classes, when they are the ones upon whom the warfare is being waged. The rich have been conducting class warfare in the US since the Reagan administration, and they are now beginning to reap what they have sown.
I now make more than twice what my father earned at the height of his career in the early 80's, but I have less actual purchasing power. Rotten economics indeed.
Insisting on "correct" English is like saying that there is only one, definitive recipe for chili.
Might it not be better just to cut say military spending in half? Nobody is going to invade the US, without coming home to a glass parking lot anyway, and all that money is just thrown down a hole. Yes military spending is to an extent recycled back into the economy, but surely we can come up with something more constructive to spend it on if one must spend that money?
For the past thirty years we have held up the image of the put upon rich person who would love to invest in the US but can't because of our terrible tax burden. So the tax code has been modified to take the burden off the most wealthy [our top tax rate used to be 50% now it is 35%]. We did this in hopes that the wealthy would let the rest of the economy have more. This has not happened. In fact, the money has become more concentrated at the top while wages have stagnated at the bottom and in the middle. Instead of investing in industry, the Giant Pool of Money at the Top has bought US debt [we don't owe our soul to the Chinese, we owe it to the wealthy] and, because T-bills have had lousy returns for a decade, the money also went to fuel speculative bubbles [including the global housing bubble].
In this situation, where the top earners [about 5% of the population] have over 85% of the wealth, to whine about horrible confiscatory tax and wave the class warfare banner is beyond absurd. In order to have class war you need to have class, is the GOP saying that we still have class in the democratic United States?
"The conduct of neither [party], if strictly examined, will be irreproachable." -Elizabeth Bennet
The tax rate is 33% on "income." But rich people don't work for a living and make an income. That would be vulgar.
Instead rich people invest their money and get a return on investment. That tax rate is only about 7% once all the deductions are taken into account.
Warren buffet claims that he pays less in taxes than his executive secretary does.
...for a long time now. IIRC, the 250K top tax bracket dates back to almost the beginning of the income tax system, when 250K was legitimately rich, and the earner of 250K would likely be a millionaire due to cash reserves from earning that kind of money for years.
Nowadays, 250K is still a very, very good income, but inflation has curtailed its spending power significantly. New brackets every so often that account for inflation, or else a periodic adjustment of all brackets for inflation would probably be good for the country.
As far as those who want to argue that "job creators" in the form the of the wealthy wouldn't create jobs if their personal income were taxed higher, the simple solution would be to offer tax breaks for the demonstrable creation of jobs. This mainly would affect small companies where only a handful of people actually own the companies in question, as they could say, "I didn't take $XX salary because instead I reinvested $XX in the company for salaries for workers" with the ability to produce those figures from the payroll books...
Do not look into laser with remaining eye.
The main reason that Warren Buffer, hedge fund managers, and many of the rest of the ultra-wealthy pay so little in income taxes is that most of their "income" is in the form of long-term capital gains: the appreciation of and sale of investments. On that money, they don't pay the maximum income tax rate of 35%, but rather the maximum long-term capital gains tax rate of 15%. (The situation is different for short-term cap gains, which are generally taxed at the ordinary income tax rate.) This is also the case for many CEOs who have compensation packages in the tens of millions of dollars: much of that value is in the form of stock and stock options, not outright salary.
In that light, creating a new, higher income tax bracket is unlikely to have quite the intended impact that many would like to see: having the ultra-wealthy pay at least as great a percentage of their annual income as taxes as their secretaries, minions, and housekeepers. Much as I prefer a simplified tax code, it seems to me that we may want to instead add this provision: If more than 50% of your adjusted gross income comes from long-term capital gains, then count it as ordinary income, because that's what it is to them.
Yes, some will find ways around that (and goodness knows the ultra-wealthy have tax planners aplenty), but it seems more equitable than what we have currently. Please don't trouble us with the strawman argument of "If the ultra-wealthy have their investments taxed so heavily, then they won't invest." What else are they going to do with all their extra money? Save it at ~0% interest?
That is the other side of the argument - if you raise taxes on high incomes sufficiently, you encourage re-investement and deferral of the income.
Whatchathink, /.ers?
deleting the extra space after periods so i can stay relevant, yeah.
Yeah, as someone who grew up in a work-class family that managed to climb to the upper middle class/lower upper class (or whatever you want to call it) I'm going to quote my dad (who started his own company which ended up becoming fairly successful): "Sure we worked hard but we were lucky too". That pretty much sums up his views on his own success, he worked hard but he was lucky to be in the right place at the right time with the right idea...
On a personal level I've actually had some issues this experience of upward mobility, I grew up in a working class neighborhood, just about all my old friends are the children of people who worked blue collar jobs, I knew I had to work hard to make anything of myself and despised the idle rich (and according to my dad I did so with good reason) yet these days my dad frequently has to deal with these people and yes, a lot of them truly see themselves as "self-made" even though they really had it easier than my dad (and required less luck since they were born into wealth).
GOP Rep. Paul Ryan of Wisconsin said, "Class warfare may make for really good politics but it makes for rotten economics."
Class warfare, in the strict sense of guns and bombs, is -- like all civil war -- bad for the economy. Labor resources spending time shooting at each other, and getting shot, is potential productivity lost. Similarly, spending time on arguments that have no basis in reality is a waste of resources. There is evidence, however, that reducing the Gini (a measure of income disparity -- higher Gini means higher disparity) in the United States would increase the GDP growth rate. Here is one example set of data:
http://beach.traxel.com/img/gdp-gini-4.png
America's Gini has been rising steadily since the early 1970's (it started before Reagan, because the tax brackets didn't keep up with the rapid inflation resulting from the oil embargo). Our Gini is now high enough to make our PPP (GDP per capita) an outlier. Most nations with our level of income disparity are third world nations. Only Hong Kong and SIngapore -- hybrid economies which mix successful free market economies with the stark poverty resulting from communism -- are in the first world ballpark and have Ginis as high as ours.
One possible reason is this: In any economic system there is an optimal market price to pay for any resource. If that economic system overpays for some resource or class of resources, it will operate less efficiently. There may be systemic biases in place which cause us to pay more for the labor (and/or capital lending) of our wealthy than their labor (and/or capital lending) is worth. Of course the chart above is insufficient to show the causal relationship, but it would explain why our PPP (GDP per capita) growth rate has fallen during the same period that our Gini has been increasing (I have more charts that show the temporal relationship, but they are not yet ready for publication).
If, in fact, the increasing Gini is a cause of falling PPP, then increasing the taxation on upper income brackets would increase the GDP growth rate. If that is the case, and assuming one believes (as I do) that the ideal free market is GDP maximizing, there is only one possible explanation: some degree of progressive taxation actually increases the accuracy of our approximation of the free market, by offsetting a systemic bias.
Disagree? Good, I'd love to see your empirical evidence. Show me the data.
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First off, yes you can live on Min wage. I've done it.
Second, no one is forcing students to take out huge loans for college. I made it through college without borrowing anything. (Stupidly running up credit card bills is another matter however.)
Third you need to define the "American Dream" before you can claim how it isn't available for millions of Americans.
Fourth, if you're going to claim that trickle down economics is class warfare, you should back it up with something. Anything.
And that's just my response to your first sad, sad paragraph.
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.
Eating Ramen 3 times a day in a bad part of the neighborhood with no car, etc. etc. is not really "living."
If you ran up CC debt, you *didn't* make it through college without borrowing.
Everyone knows what the American Dream is and that it's unobtainable by the majority (at all, or without major financial consequences), stop being a moron.