GOP to Jobless: Drop Dead
 

That's the catchy title of a column by WAPO business writer, Steven Pearlstein. The column contains plenty of myth busting about the effect of raising the marginal tax rates for those making more than $250,000.

Wouldn't it be interesting to see an honest congressman come out and say that we can't raise taxes on the top incomes because our masters will not permit it.

Regards,

D-Ray

I was glad to see Pearlstein's column, he is not the first one to dispute that $250,000 small business bullshit, but the GOP keeps trotting it out at every turn - Dr. Goebbels would be proud.

"The macro view, from the forecasting firm Macroeconomic Advisers of St. Louis, is that not extending tax cuts for high-income households would reduce gross domestic product growth by - drumroll here - two-tenths of one percent in each of the next two years. And the difference in the unemployment rate? A whopping one tenth of one percent!"



Where is the Democrat who will stand up every time they say such nonsense and yell "Liar! You are lying! The words you are saying to the American People right now are LIES!" No, don't shout it DURRING a televised speech like they do, shout it in your sound bites to the media.

Just feeding my need to be devils advocate here:

Let's just tax anyone making over $250K at 100%. Let's just quit messing around and do it right once and for all. Those rich bastards probably just screwed someone else and took their money and called it "making a profit", so lets just fix 'em and tax 'em at 100%.

"...let high-end tax rates return to where they were during the Clinton years and use the $65 billion in additional income over the next two years for tax breaks for businesses that increase investments or hire new employees. After that, the extra revenue would go toward deficit reduction."

Well, hell, Health Care Reform takes virtually all of top earners’ ordinary income tax to 44.6 percent, starting in 2013 with the increase in the Medicare tax. Going back now to the Clinton-era rates of 40.8 and 43.7 percent in the top brackets would essentially give Obama his wish a couple years early.

And does anyone really believe that the BEST path to deficit reduction is raising taxes? We're already in a recession, so lets take money out of the economy where it might actually be put to use, just so we can make government flush?

It's gonna take both taxes and cuts. Your numbers sound fishy to me. What is the 44.6% composed of? Most of the numbers I've seen shows that actual rate collected from the top incomes in the 20's.

Regards,

D-Ray

Well, I know you're playing devil's advocate, but no one said anything like that. I've defended, for instance, Reagan dropping the top tax rate from 70 to 50%. At that time, 50% top bracket was considered an historic move down. I'm not buying this 46% rate you speak of, but what if that were the case? It's still lower than the rate Reagan initially dropped it to.

It's not an all or nothing deal. It's kind of silly to say that anything above 30% might as well be 100%.

If this 46% number is legit, I'd like to see some documentation. I might could think that was high. Not sure. But I don't believe it unless I see it. I haven't heard anything close to that.

Take care,

Ed

Limbaugh says the rich don't pay taxes anyways.

He sure does a lot of bitching about paying taxes for someone who doesn't pay them anyways..................

Dave

To begin with it is "anyone with a taxable income of $250,000" which is a hell of a lot different that earning $250,000. The broad assumption that all those rich folk spend their money creating jobs is laughable. Oh well, maybe they do create jobs, in Nice or Cannes, or anywhere along the Riviera.

Poor people sure don't create jobs.

You have found such a man? :)

Pete

Yes they do. A lot of people have become rich providing substandard housing and jalopies to poor people. They will use underlings to deal with the riff raff whose money they take. Poor people still buy groceries. In many cases, the poor will pay higher prices for goods or services, because they can't afford to buy them in bulk. Because there are plenty of poor people, those who target those markets have plenty of customers. I don't think Sam Walton got rich by catering to the yuppies. Wal-Mart has created thousands of crappy jobs (to replace the jobs lost in local stores that were run out of business by Wally Martindales.)

Regards,

D-Ray

Tell it, D!

Dave

At one point in time Bill Gates was a poor college student. He created a few jobs. How about the first Apple computers. Bill Hewlett and Tony Packard started in a garage. Wealthy people are too busy wallowing in their money to create jobs. Even Warren Buffett does not create jobs, he just buys up companies.

Current Highest Federal income tax rate = 35%
FICA Tax = 6.2%
Medicare Tax = 1.45%
Total tax on income - 42.65

Under PPACA, the Medicare tax will increase to 2.35% for income earned over $200K. Total income tax = 43.35%

That's the story for taxes on income. Individuals who have a combination of W-2 income and investment income (or just investment income) will pay an additional Medicare tax of 3.8% under changes enacted by PPACA. This could push their total tax rate up towards the 44.6% level.

Ahh. It's unfortunate that I don't fall into the top tax bracket, so I can’t speak from personal experience- but it's my belief that people who fall into the scenario you describe above don't actually *pay* anywhere near 42.65% of their income in taxes. If fact, I suspect it is much, much less than that.

In 2007, Warren Buffett rather famously derided the tax system that allows him, the third richest man in the world, to pay less in taxes than his secretary.

http://www.timesonline.co.uk/tol/mon...cle1996735.ece

I believe the truth of the matter is, that for all the talk of "taxing the rich", our current system allows them many, many loopholes to prevent them from paying anything close to the rates often bantered about by the conservative pundits. Buffet claims he paid less than 18% while making no effort to pay less than his share.

I think the sad truth is, the convoluted tax system is set up the way it is on purpose. It allows the wealthy folks, a.k.a. the lawmakers, to point at a number and say "look, that's almost half my income that goes to taxes!" while at the same time providing them myriad ways to avoid paying taxes that are not available to you and me. I'd love to see a much simplified tax system for that reason, and the "fair tax" you posted about yesterday is sounding better and better to me. I love the idea of national Sales Tax. I tend to save money and not spend a lot. My taxes would drop like a rock. I've also long been in favor of an increased gas tax to build motivation for using less gas - increasingly a security issue. Everything about the "fair tax" seems to reward good behavior and punish poor decisions. That makes sense to me.

hook line and sinker

honest Whell this is just shocking

Actually the only path to deficit reduction is a combination of spending cuts and tax increases. We tried the big tax cut thingie about exactly 10 years ago. How'd that work out?

I do *not* think higher taxes are the *best* way to address the deficit. They are part of the solution to the deficit problem, but, no, on the whole we'll have to cut spending to address the deficit. That's why programs like the health care bill that actually reduce the defict are so important.

I *do* however, feel that higher taxes are the best, and maybe *only* way to attack the debt. Paying back what we owe can only be done with actual capital. It has to come from somewehre. We're not paying enough now to pay for what we already spend. We'll have to make some "extra payments", as it were, to get out from under the debt.

They create jobs by buying things? Sure, but that is a far far cry from building a company with 100s or 1000s or 10,000s of jobs. Sam did that.

Pete

My post wasn't referring to marginal tax rates. I was referring to income tax rates.

So, we should raise taxes in the middle of an economic recession / depression? Even Krugman admits that when FDR did it, it lengthened the depression.

Its shocking that you believe its a good idea to tax our way out of this mess.:p

I didn't say that. However, I tire a bit of the tax cut panacea offered up by the GOP.

I stand by my statement- I don't think you can find anyone actually paying 42% in taxes.

I found this article on what Americans actually pay:

http://economix.blogs.nytimes.com/20...-pay-in-taxes/

"The main findings: The overall effective federal tax rate (the ratio of federal taxes to household income) was 20.7 percent in 2006, with the highest quintile of American households paying 25.8 percent of their income in federal taxes."

This is no where near 42% or even 35%. Those figures are, at best, misleading.

We're addressing two separate subjects: marginal or effective rates (you) versus taxes on W-2 earnings (me). You suggest my numbers are misleading by posting something unrelated. Interesting debate strategy...

The fact is that, disregarding the numerous ways there are to avoid paying taxes at the taxable rate, the actual tax rate to which you refer is would not be paid by the earners in the $250k-$500K range, which reaches up into the 99th percentile. Actually, because the president's proposal expands the 28% bracket, those whose incomes are a bit above $250k will actually pay less in taxes.

If you weren't referring to marginal tax rates, your post is even more misleading than it originally appeared. Basically, it just ain't true. Even the millionaires don't actually pay that rate on their overall tax bill. That's like saying a chocolate milk shake is nothing but chocolate. It has chocolate in it, and it tastes like chocolate, but chocolate is only a small fraction of the total ingredients.

Regards,

D-Ray

Changing the definition midstream. Interesting debate tactic.:cool:

Regards,

D-Ray

Without customers?

People have to have the money to buy the merchandise or the business goes down the tubes, regardless of how wealthy the business owner may be. This notion that only one narrow sector of society, "the wealthy", create jobs is absurd. It's like saying all you need to make plants grow is rain, without regard for soil or climate conditions.

If the tide fails to lift all boats the system is broken. If wages fall too far behind, prices need to drop in order to maintain demand. Unfortunately, we have been acheiving this through outsourcing which leads to higher unemployment and/or lower wages. Yes, you can increase productivity to some extent, but even this has it's limits.

Just my opinion, but it takes perfect sense to me.

Dave

If you're buying food, you're going to buy it somewhere. Sam convinced them to buy it at his place, and built the structure so that they would continue to do so happily.

He worked a lot harder than many, he had a better business sense than many, and made a ton of money while, whether they're 'good' or not, he made tens of thousands of jobs.

A bit more than buying a loaf of bread.

Pete

The forest for the trees, Pete.
They had to have the money to spend, or Sam would still be peddling his wares in a singular store in Arkansas. (If he weren't dead, that is.) It's not just the one loaf of bread---it's millions of loaves, peanut butter, and "Snuggies" and lampshades and beer and toilet paper.....being sold to millions of people who have the money to buy it. Did Sam just suddenly happen upon thirty billion dollars and hire a bunch of people? Or did he build his wealth over time selling his goods to the poor and working class?

Did Henry Ford make his fortune selling cars to billionaires? No, he sold them to a large, financially empowered middle and working class. No money in the workers pockets = no demand, no demand = no revenue.

It's not all that complicated.

Dave

Ford's a great example. HE made something that people wanted, not his customers, and he (kinda) invented a new way to do it too. And changed the world to boot.

If poor folks drive the economy, Obama's doing a great job! :p

Pete

Okay, I'm trying here. Correct me if I'm wrong, but "marginal" tax rates refer to the higest level of tax you pay. We have a graduated taxation system and the marginal tax rate applies to the highest level of taxes you pay. It is a number, as I understand it, that is much higer than your average tax rate. Your average tax rate, again, as I understand it, refers to the percentage of tax you pay on all your income- that is, at all the rates that apply to you up to and including the portion of your income on which you pay the marginal rate.

So, no, I have no idea what you mean when you simply say "taxes on W-2 earnings". That doesn't say anything. Do you mean averge tax rate? If so, you're making your case worse as I'm reasonably certain that your 44% fiugre is speaking to a marginal rate. No way anyone is paying 44% on ALL their W-2 earnings.

Try this:

http://www.dinkytown.net/java/TaxMargin.html

If you are single, no dependents and make $1M a year (pretty sure that's none of us) you *still* only pay 32.4% average tax rate on W-2 income, putting nothing in an IRA, nothing in a 401k and with NO DEDUCTIONS AT ALL. I can't figure out a way to make more of a "worst case scenario" as I'm almost sure that would be virtually no one in the United States.

So, yes, please tell me where I'm doing anything but giving you the most favorable counter to your argument. If you are talking about average tax rates your figures are even MORE misleading than I made them out to be.

Okay, yeah, I'm pretty sure I got that right:

http://taxes.about.com/od/preparingy...ax-rates_2.htm

The U.S. Economy was 75% consumer driven. The top 1% beggared the consumer and wages did not keep up with inflation. So what really happened is that all those smart-ass businessmen shot themselve in the foot.:rolleyes:

Let's try this, because I think I now understand what you mean. A hypothetical example. You believe there is an American, let's call him Rube, who has a sallary of $275,000 a year. If I follow you, you believe that Rube had deducted from his check, or pays at tax time a total of 275,000 * 42.65%. Right? You think Rube pays the government $117,287 a year?

Using the IRS Calculator for our friend Rube "Your anticipated income tax is $72,781" again assuming NO deductions, single, no contributions to tax deferred... etc. Again, NO ONE does that. Zero people. But even with that, 72,781/275,000= 26.4%.

Is there some Tea Party propoganda that leads you to believe this? If so, I can see why they're so angy. They think people are paying insane amounts of tax, almost higher than anyone in the world!

Damn you, Eddie, with all your fact-based arguments!:D
You shouldn't let truth get in the way of indulging in a good fantasy.

Man, I'm pretty sure that's what he meant. No wonder he thinks taxes are too high. I'd be marching on Washington myself if I paid 40% of my income in taxes.

I know you're not suggesting here that taxable income is the same as W-2 income. "Taxable income" can be derived from a number of sources. W-2 income = wages. I was pretty clear about what I was referring to: W-2 income. Why try to make this into something its not?

If you want to try calculating it with actual wages, the 35% tax bracket starts with income earned above $373650/yr. And yes, individuals do earn and are taxed on income at that level. Also, the increased Medicare withholding on wages/investment income starts in 2013, so that may be why you're not finding it in 2010 tax calculation data.

(edited- even THOSE numbers weren't right)

Estimated Federal tax with no itimized deductions etc. $105,331. $6,621 max for SS. 1.45% for Medicare is $5,417.

105,331 + 6,621 + 5,417 = 117,369

117,369/373,650 = 31.4%

Where's the 42.65%?

Is this apples to apples, country to country, are we talking total taxation to total taxation - we have state county and local taxes as well.

I'd like to see that.

Pete