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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."
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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Who cares how 'large' the incentive is? There will always be incentive for people to cheat to keep their money. It's our patriotic duty to make sure they pay their fair share for this country. This is a step in that direction.
It is class warfare to increase tax rates in the highest income brackets to a level that is about half that of the 1950s http://en.wikipedia.org/wiki/Income_tax_in_the_United_States#1913_-_2010. The current tax rate for the highest income brackets is 33%. In the 1950s and 1950s the highest tax rate was 91%. One can also argue that the proposed increased tax rate won't even restore the high tax rate to the same extent, since the historical tax rates were for income of at least $250,000, whereas this will apply to income of at least a million dollars but this would be slightly misleading since adjusting for inflation $250,000 in 1960 dollars is around a 2 million now. But even given that, the general point should be clear: This is far less than the historic tax rate during a time period that is often considered to be one of the most stable and prosperous.
The other problem with labels like class warfare is how much they miss the point of what actual class warfare is. If one wants to see actual class warfare look at the French Revolution where aristocrats and clergy got executed and this eventually spread to wealthy merchants. Or look at the Russian Revolution and the following years where people were punished and exiled for simply being farmers who owned their own land and equipment. That's class warfare. Voting to increase tax rates to levels well below historical levels is just regular economic policy. One can discuss whether such taxes are a good or bad thing, but it is pretty clear that such discussion isn't going to go very far when people like Ryan are using this sort of ridiculously inflammatory rhetoric.
Then how about we tell the multinationals where to get off and push heavy incentives to actual local businesses, who make up more of the economy than the huge companies and can't hold regions hostage when they throw a tantrum about not getting treated special?
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So instead of giving them "reason" to seek tax loopholes, you suggest giving up that tax revenue without a fight? How is that going to result in a revenue increase?
Some rich people (and wannabes) always bring up the "they (yeah right) will leave and go to tax havens. I say good riddance. If they like it better in those countries, what's stopping them? Or do they just want to stay here and twist our arms, because they actually like it here, you know, with the jobs and the infrastructure, and just don't want to pay as much taxes?
Remember how awful the economy was when Clinton was president? Eight horrible years of peace and prosperity, thank God that's long gone.
Going back as far as 1950, higher top marginal rates are (weakly) correlated with improved economic growth, not reduced economic growth ( http://golem.ph.utexas.edu/~distler/blog/archives/002279.html ).
Wealth accumulating at the top does ruin the economy. The only thing that makes this economy thrive is spending. One person having a billion dollars in the bank isn't going to make Target's quarterly numbers, no matter how much real-estate or stock said rich person invests in. Unless that money finds its way to the lower and middle class to be spent again, our economy will continue to stagnate. So yes, rich people continuing to accumulate a larger share of the wealth in this country every year are the problem. Fixing corporate tax loopholes will not increase demand for goods from the middle and lower classes.
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.
Keeping the money that you earned and worked for is cheat
BWAHAHAHAHAHAH. LOL.
The vast majority of this income in this range is "Unearned Income." People aren't earning nor working for multi-million dollar annual incomes, they are enjoying the benefits of others work by collecting dividens and stock profits.
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
No, using public services to make money, then hiding your earnings so that you don't have to pay for those public services is CHEATING. EVERYONE in this country benefits from tax-funded services. But the rich seem to think that because they make millions, they don't have to contribute.
Let's put it this way: I am one car on the road, and I have to pay taxes for road upkeep. Mr. Millionaire has a fleet of 1000 semi trucks to deliver his product, but he doesn't have to pay for road upkeep? Does that seem fair to you?
...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.
What's going to be entertaining (in the sense that the sad circus of American politics is entertaining) about this whole thing is to watch the about-face the conservatives will make about how much money it takes to be rich. Recently, various state governments have been going after unions, and you see conservative commentators on the various shows talking about how teachers make enough money, how $30-40k a year is plenty when you consider union benefits, blah blah. Now these same exact people are going to go on the same exact shows and, with a straight face, say how those poor folks making a million a year are just struggling to get by and really need a break in this kind of economy while completely ignoring the fact they've spent a better part of a year telling us a teacher's salary is downright lavish. How does a conservative's head not explode from the cognitive dissonance? Do they actually simultaneously believe these polar opposite stances they take, or are they (like all politicians) simply bought and paid for by their masters and puppet whatever talking points they are fed?
For those of you who are going to dispute my point, here are some preemptive replies. First, I know that folks on the left do this shit all the time too. I remember Kerry's "flip flopping" helping cost him the 2004 election. But pointing to the other side and saying "See, they do the same reprehensible thing we do" does not actually make it okay. It's still downright disingenuous. My point is simple: How much money does it take to be rich? Because the conservatives in America have two different definitions that depend not on the amount income, but essentially on class. The fact that these same conservatives are the first to scream "Class Warfare!" at this kind of proposal is deliciously ironic and the whole thing would be fucking hilarious if the stakes weren't so high.
Reality check: to solve the long-term debt crisis, two things need to happen. Taxes need to go up, and spending needs to go down. Either side that says you can do one but not the other is living in some magical fairy-tale land where facts are superseded by what they wish were true.
"To confine our attention to terrestrial matters would be to limit the human spirit." -Stephen Hawking
If by "work hard" you mean go to a business school where they will give you a adress book of other self content bastards who will exclusively hire you instead of someone competent and teach you how to maximize short term profit until you can use your golden parachute (only to be hired the next month by another rogue corporation's board), then that's what you deserve. This is about 50% of the rich, "hard working people". Add to that the 45% of lucky sperms, and you have 95% of the rich out there.
Working hard is by far no guarantee to get wealthy.
Being rich is by far no proof to have worked hard.
The important thing is to spare small businesses from the tax increase. A lot of small businesses are either simple proprietorships/partnerships or LLCs, for which the profits are taxed as an addition to personal income. Proprietors and partners will pay these taxes from the cash on hand of the business, meaning that the business has fewer resources to expand and hire more employees.
So go ahead and tax the $20M CEOs and such, but try to avoid placing the additional burden on small businesses.
First, there isn't enough money in million+ income hands to balance the budget.
That's no reason why they shouldn't contribute to balancing it.
This smells like more class warfare shit,
Yeah, and the middle class is losing the war. We should start fighting back.
and now they'll tax the remaining producers into moving their assets out of the country. Maybe it'll get him re-elected, right? We'll worry about the economy in the 2nd term.
Nice disingenuous straw man there, Mr. Koch. This isn't about corporate taxes, this is about personal income tax. Why should Warren Buffett pay half the rate his secretary does? Buffet vs his secretary IS class warfare.
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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?
Note that this is still an income tax -- not a wealth tax. Those who are already wealthy can and will always game this such that they report little income, thereby preserving their wealth. If necessary, they'll just keep their money offshore.
If he had any sense, he'd offer an amnesty to the wealthy. Allow them to repatriate their funds from overseas at a reduced tax rate so that money comes back to the US. The money the treasury makes on that smaller percentage would still be more than the zero they get from it today.
But, earning money is not a side affect of society, it is the primary purpose of society to provide order and mechanisms for economic growth
No, it isn't. The primary purpose of society is to continue the existance of the society. Economic growth is a result of our current growth rates and stability of social interactions. Consolidation of wealth however leads to threats to the continuation of society as we know it. The challenge though, is that many of those with wealth believe they would benefit more from a new society in which more wealth was consolidated. So they can use their wealth to influence people who aren't in their wealth class to believe that there isn't a threat to social stability.
It is a masterful art, but it will not lead to a better America.
That isn't to say that we need to get all commie and make everyone equal. A progressive tax program is hardly full on commie though.
And to counter your political jab: We all know what happens when Republicans propose tax cuts and spending cuts. Taxes decrease on the rich and the poor die in wars. :P
-Rick
"Most people in the U.S. wouldn't know they live in a tyrannical state if it walked up and grabbed their junk." - MyFirs
Number of households in the United States filing tax returns: 140,494,127
Number of households in the United States filing tax returns with incomes of $1,000,000 or more: 236,883
Percentage of households in the United States filing tax returns with incomes of $1,000,000 or more: 0.19959471529%
Percentage of households in the United States filling tax returns with incomes of less than $1,000,000: 99.80040528471%
Number of people in the US living at or below the poverty line in 2001: 34,570,000
Number of people in the US living at or below the poverty line in 2010: 46,200,000
Percentage of US population living at or below the poverty line in 2001: 12.1%
Percentage of US population living at or below the poverty line in 2010: 15.1%
Of those living at or below the poverty line in 2010, the percentage that are 18 years old or younger: 35.5%
Of those living at or below the poverty line in 2010, the number that are 18 years old or younger: 16,401,000
Total number of people living in the United States, as of September 19, 2011: 312,204,000
Maximum number of people living in the United States who would be affected by President Obama’s proposal to impose a minimum tax rate on those earning more than $1 million a year : 450,000
Highest possible percentage of people living in the United States who would be affected by President Obama's proposal to impose a minimum tax rate on those earning more than $1 million a year: 0.144136526118%
Number of people in the United States who would not be affected by this tax increase: 311,754,000
Lowest possible percentage of people living in the United States who would not be affected by President Obama's proposal to impose a minimum tax rate on those earning more than $1 million a year: 99.855863473882%
All stats derived by me from Census.gov using 2010 and 2011 census data, and from IRS.gov data using 2009 data, the most recent year for which reporting, especially Adjusted Gross Income (AGI) information, was available.
The first person to invoke Census.gov or IRS.gov conspiracy theories will receive my 1st Annual Stannous Fedora Trophy. Please reply with your mailing address, so I'll know where to send this very special award.
Goddamn Republicans beating the same fucking drum they've been beating for 10 years "Lower taxes and remove regulations so corporations can compete!" Ignoring the fact that that's what got us into this mess to begin with.
And Goddamn Democrats incapable of showing anything resembling leadership. Hook up that vagisil IV drip because they're just a bunch of vaginas.
Vote them out. Vote them all out. And keep doing it until we find some representatives who are more interested in solving the nation's problems than playing political games with American lives as the pieces.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
No, using public services to make money, then hiding your earnings so that you don't have to pay for those public services is CHEATING.
Then why does the US tax every dollar you make overseas, even if you are overseas for the entire year? If I live in Thailand the entire year and earn my salary over there, I still have to pay US taxes on it - even though I didn't use any US public services. It's not about paying for what you use - it's about paying for what Government wants.
Let's put it this way: I am one car on the road, and I have to pay taxes for road upkeep. Mr. Millionaire has a fleet of 1000 semi trucks to deliver his product, but he doesn't have to pay for road upkeep? Does that seem fair to you?
Mr. Millionaire's company probably pays those taxes on those 1000 trucks. Unless you're suggesting he personally owns them? Do those trucks pay fuel taxes, excise taxes, and State registration taxes? How are they not paying for road upkeep - they pay fuel costs...
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
This bill is dead on arrival that the House, which is Republican controlled. Too many there have signed Grover Norquist's pledge to NEVER raise any taxes of any kind.
I'm sorry to say this, but the radicals are now in control. Just like the Taliban, they have an extreme ideology and will not compromise or make "common sense" decisions because they carry a radical philosophy.
As such, there is no longer any 'bargaining" going on. The bill will be flat out struck down or filibustered into oblivion. I'm not sure if you've noticed, but our Congress has passed almost no legislation of any kind since taking office 18 months ago. All they've done is argue.
This is the Congress that campaigned on a platform of "jobs", came in and immediately wasted two days reading the Constitution, then tried to repeal Obamacare and abortion rights, and since then, hasn't done anything except destroy the nation's credit rating.
Good luck getting this through.
If telephones are outlawed, then only outlaws will have telephones.
I think that most of Buffet's income is in capital gains which are taxed (inexplicably) at a much lower rate than income. This is such an absurd concept. If a baker sells a loaf of bread, he's taxed on his profits at the income tax rate, but if a trader sells some financial instrument, he's taxed on the proceeds at a much lower rate. The baker (arguably) has contributed more to the economy but is discriminated against, tax wise.
God is imaginary