Mac Mcleod
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Except..

Since the early 1980's their share of the national income has increased from 9% to 24%.


Okay- so they should pay 24% of the national taxes-- why is it higher!!!!

How is it that they pay a lower tax rate but end up paying a larger share?

Well, we give everyone about a $6k deduction off of their income.
A 6k deduction for the bottom 4th basically drops them out of the lowest tax bracket. A 6k deduction for the top 1% isn't even a rounding error so their taxes are not really reduced by the deduction.

Okay so now we are at them paying may be 30% of the taxes while poorer folks pay less.

Then finally we have a lot of credits for the poor. EITC, (and the recently killed "making work pay"). While tiny-- about $475 and $400. These basically kill the piddling tax bill the poor do have. The rich do not get these credits.

So that's how we arrive at the top 1% paying about 35% of the total tax bill while making 24% of the income AND paying a lower rate (about 23% total tax load vs a 42% total tax load for the middle income folks).

Finally--- the top 1% is really a red herring.

The bottom of the top 1% make about $380k per year. They are basically beggers compared to the top of the top 1% who average millions of dollars to tens of millions of dollars per year in income.

---

The total tax load of the national budget is about $30,000 PER working citizen. So if you want to talk about spreading the load realize that everyone working would have a tax bill of $30k per year or about $10,000 PER citizen- even that 1 year old baby.

If you had a $30k tax bill, what's the point in working?

If we were to cut defense spending in half- it would help a lot. But basically, we need to cut the government to about 10 to 20% of its current size to have a system affordable by every citizen.

And that would basically permit anarchy.

If you want a simple tax system that's reasonably fair-- then I'd say give everyone a flat deduction of 1/2 the national median income (currently about $26,000). Then they pay an equal percentage above that amount of whatever is necessary to not run a deficit. Just adjust it each year if you ran a deficit the prior year. Or for the economist minded, if you ran a deficit above 5%, 8%, whatever. (apparently some debt is good).

---

This is where the Tea party has it right.

FIRST decide your budget, then decide how you are going to prioritize spending.

Right now spending decisions are first. You don't want to cut defense, funding for old people, school lunches for children, blah blah blah.

Will things get better?

Probably not. But the pain on the bottom 99.5% is getting bad enough that they are getting a mite irritable.

---
Notes:
http://www.lcurve.org/WealthDistribution-1998.htm
http://www.lcurve.org/index.html

It seems to me that as the top has more and more of the wealth that the return on any investment they could make will be lower and lower as there is less to extract from the bottom 80% to 99%.
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Xander Fulton
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maxo-texas wrote:
Finally--- the top 1% is really a red herring.

The bottom of the top 1% make about $380k per year. They are basically beggers compared to the top of the top 1% who average millions of dollars to tens of millions of dollars per year in income.


The "we are the 99%" is definitely a clever tagline, but the above point is something often missed. It's a distinct possibility that I may be in the 'top 2%' in my lifetime. Maybe. I'm pretty close, already, but that bar isn't THAT much further off. And that coming from growing up in trailers on poor-enough-but-too-prideful-for-foodstamps income levels.

But I have NO CHANCE - will never happen, under any possible sequence of events - of being in the top 0.5%. Forget the top 0.1% - it's just so much more astronomically higher.

I mean, really, there is as large a percentage difference in income between the "top 1%" and "top 0.1%" than there is between "the 99%" and "the 1%".

The NY Times had an interesting graphic in a story on that topic.



Note that it's the third block from the right that is the '99%' level...just about at the $500k line. Yes, there is clearly some increasing happening between the rest of the 99% and that top 1%, but...not as bad as it DOES get when are are looking at the top 1/10 of 1%.
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Rich Shipley
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maxo-texas wrote:

Since the early 1980's their share of the national income has increased from 9% to 24%.

Okay- so they should pay 24% of the national taxes-- why is it higher!!!!


Because that's how taxes work. People who can afford it should pay more, both in total and in percentage. Playing these kind of numbers games is a distraction.

The problem is that certain types of income are taxes at lower rates. If you work and get a paycheck, you pay the highest possible rate (once you hit the top rate). If you make money by investing, you pay the lowest rate. There is no real reason to differentiate by how you earned the money. It encourages shifting income to take advantage of the loophole. Even people who invest other people's money manipulate things so they pay the lower rate.
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James King
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Last fall, the nonpartisan Congressional Budget Office released a report revealing that in the 28 years between 1979 to 2007, after-tax income for the top one percent of wage earners in the nation grew by 275%.

During that same period, the top 20 percent of wage earners saw their average after-tax income grow by 65%.

The middle sixty percent of wage earners saw their after-tax income grow by roughly 40%.

The bottom twenty percent of the population making the least money saw their income grow only 18% from 1979 to 2007.

The nonpartisan Congressional Budget Office also revealed that the among the major reasons for the increase of income in the top 1% of the nation's income earners was that they had actively hired lobbyists and funded their efforts to get loopholes written into the tax laws not only to protect their self-interests but also to reduce the amount of taxes they paid. Naturally, the top 1% were well able to afford to hire lobbyists to work in their behalf.

So how in the Hell is *that* fair?

Answer: It's not.


> Excerpt from the January 7, 2012 opinion columby by Jon Talton, economics columnist of The Seattle Times entitled:

Our American Promise Is At A Crossroads

The nation emerged from the trial of depression and World War II with the American promise. Jobs were plentiful and wages rose along with productivity. Unionization was high and its gains influenced nonunion employers. Paid health care and pensions became the norm. The G.I. Bill opened college education to returning veterans, and their children were the beneficiaries of federal grants without which millions could never have attended a university.

Taxes were progressive and high for the richest. The economy was mixed, with vibrant private enterprise balanced by federal regulation and strong unions. Banks were constrained from the abuses of the 1920s. Most top executives shared the consensus of the times: We were in this together.

As a result, from 1947 to 1979, gains were enjoyed widely. Productivity rose 119 percent, and average hourly compensation doubled, according to census and other data analyzed by the Economic Policy Institute. The bottom fifth of earners saw their wages rise 122 percent, the middle fifth 113 percent and the top fifth 99 percent. It was the zenith of the American middle class.

On the other hand, while productivity increased 80% from 1980 to 2009, average hourly compensation rose by only 8%. A recent report from the nonpartisan Congressional Budget Office revealed that from 1979 to 2007, the top one percent of the nation's wage earners saw overall after-tax income, adjusted for inflation, grow by 275%. The average growth was 65% for others in the top 20 percent. Yet income increased only 18 percent for the lowest fifth....

When the bull market and dot-com run ended, Alan Greenspan's Fed eased credit and the housing boom began. The now-deregulated and highly concentrated banking industry turned it into the biggest, riskiest speculative bubble in history.

They weren't alone. Both political parties encouraged the binge. Many bought houses they couldn't afford. Houses became something to flip, a source of easy riches because, the experts assured us, prices would always go up.

Even with stagnant wages, average Americans kept up appearances. Until the bubble burst.

Consumer spending accounts for two-thirds of the economy, and even as more were falling behind, they kept spending. When two-paycheck families, or even multiple jobs, weren't enough, they went deeply into debt.

Then came the collapse. Millions were ruined. Not one major figure behind the dodgy schemes or outright swindles on Wall Street was prosecuted. A federal criminal investigation of Kerry Killinger, who built venerable Washington Mutual into a gigantic mortgage mill, was dropped. No one, it seemed, would be held accountable for the nation's biggest bank failure.

In the aftermath, the nation is divided more than it has been at any time since the Civil War. We're split into haves, have-nots and, increasingly, never-will-haves. Divided politically, even as officials of both parties depend on the corporate and Wall Street elite for campaign funding. Separated by arguments over how to fix the economy and restore the American promise.

Government debt threatens to pit generation against generation. This, even though America remains the richest nation in history and corporate profits are at record highs. But the plenty is not in the hands of those with unfulfilled consumer needs. Rather, it is held by the rich who use it for financial speculation and big corporations, many of which are American in name only.

The Great Depression taught us what not to do: When FDR tried to cut federal spending in 1937, the nation tipped back into severe recession.

The realities of the 21st century should show us what to do: Invest in education and infrastructure, prepare for a high-cost energy future, provide incentives to address climate change, fix a broken trade paradigm, end wars. And, yes, at some point taxes must be raised.

As Steve Jobs reportedly told Rupert Murdoch, "The axis today is not liberal and conservative, the axis is constructive-destructive."

Most of all, we must reclaim something at the heart of the American promise: A balance between individualism and the truth that we're all in this together. We're not just consumers but citizens, not merely economic actors but souls bound on the same journey.


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A 1% difference in the tax rate for a person in the top 1% means they don't take a third vacation or they don't buy their 7th Jaguar, or they don't buy their fifth $2,000,000 home. A 1% difference in the tax rate for a person in the bottom 1% might mean they don't eat.

I have never bought the "job creators" line - ever. Trickle down has had thirty good years to prove itself, and it hasn't. The budget can only be balanced by tax increases AND budget cuts.

There has never been a proven correlation between low tax rates and job creation. I don't believe tax rates have anything to do with investments or jobs - within reason. I've always seen it this way: if you want to complain about paying a 50% tax on your $600,000 income, I'll take your job and pay the higher taxes and you can have my job and pay my lower taxes. I'll still clear $360,000 this year, and you can have my $60,000.

Remember that tax rates are progressive (as I believe they should be). Everyone pays zero tax on their first $6,000 - even the Billionaires. And we all pay the same rate at the same bracket on up the ladder - it's just that some of us reach the top of the ladder, but most of us only reach up one or two rungs.

Here's a great article about taxation and Thomas Paine: http://www.politicususa.com/en/founding-fathers-liberal

The top 0.1% are essentially, at this point, nobility.

At least in the United States. They have enough money (yes, like the Kennedys, to name but one) to remain powerful and wealthy for essentially an infinite period of time - they accede to their wealth not by working for it but by virtue of their birth. The power this wealth conveys is self-evident (nearly all members of the Senate are multi-millionaires, IIRC). No person, in a single life-time, can ever really EARN the kind of money these individuals have. The money is earned for them by workers and labor and they take a small piece off the top of millions of workers' wages. And they were born to it. Is that democracy? Generations of individuals living off the largesse of their forebears? Individuals who have contributed nothing to the production and wealth of the country?

I don't argue here against wealth, but I do argue for responsible wealth. The problem is that the number of people collecting that piece continues to shrink (concentration of wealth with those who are already wealthy), and the value of the piece that is paid continues to increase (in the form of lower wages, but higher profits). The myth that "anyone can go from rags to riches because this is America" is just a myth. The odds are in the tens of millions to one in any given year. It is nearly statistically irrelevant. But because those who make it into that group generate news (e.g. Facebook guy, etc.), it appears that we have rags to riches stories every day. The truth is that out of 300,000,000 people, the top 0.1% represent 300,000 people, and of them, most of them inherited their money, or married into it. Roughly 6,000 people per state; or 15 people per county. It truly begins to resemble nobility when you think of it that way.

Such a system of perpetual concentration of wealth with a smaller and smaller percentage of the population is not sustainable in the long-term except, eventually, by force. A good, strong middle class with good paying jobs creates more wealth and more wealthy people in the long-term than a nation of minimum wage workers. The super-rich's percentage of ownership in national wealth would be lower (e.g. the 1950s), but the wealth as a value would actually be higher and spread among a larger percentage of the population.

Well-paid workers can buy more widgets - the problem is that the super-wealthy entrepreneur finds himself in a prisoner's dilemma: he wants all the OTHER super-wealthy individuals to pay their workers well while he pays his workers lower wages, that way he makes more money, both off the higher profits be makes by paying low wages as well as the increased sales he makes off his competitor's better-paid employees.

A bit of a rant here, and not too cohesive. For that, I apologize. But I hope the point was made that higher taxes and inheritance taxes are not a bad thing.
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DK Kemler
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The top 1% controls about 40% of the wealth in this country, so it seems to me they should sport about 40% of the nations tax debt.
 
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What is often left out of the equation:

The top 1% more than likely got rich at the expense of the rest of society and the national ecosystem we depend on. The best way to make a lot of money is to cash in other people's health and well-being.

Some examples:

"Food" companies making processed foods that are not very healthy, when compared to basic grains, vegetables, meat, etc.

Oil and gas companies extracting never-again-to-be-available resources, which are then burned and add to the climate change problem.

Heath insurance companies who actually try to deny payment whenever possible.

Entertainment and media which pump out emotionally damaging products (excessive violence, overstimulation for kids, sexual objectification of women, etc.) or just plain misinformation (I'm looking at you, Mr. Limbaugh).

Drug companies pushing their often dubious products - "don't bother to exercise, etc - just pop our pills."

Pick an industry at random, and likely you can come up with your own examples...

Not to mention, many industries pump out tons of pollutants, and then resist any efforts to produce their products more sustainably.
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If the goal is to reduce wealth inequity, then income tax is a bad way to do it. The only way most Americans have to obtain wealth is by working (collecting income). If the goal is to equalize wealth, then at least approach it logically.
 
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Dave G
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tesuji wrote:
What is often left out of the equation:

The top 1% more than likely got rich at the expense of the rest of society and the national ecosystem we depend on. The best way to make a lot of money is to cash in other people's health and well-being.

Some examples:

"Food" companies making processed foods that are not very healthy, when compared to basic grains, vegetables, meat, etc.

Oil and gas companies extracting never-again-to-be-available resources, which are then burned and add to the climate change problem.

Heath insurance companies who actually try to deny payment whenever possible.

Entertainment and media which pump out emotionally damaging products (excessive violence, overstimulation for kids, sexual objectification of women, etc.) or just plain misinformation (I'm looking at you, Mr. Limbaugh).

Drug companies pushing their often dubious products - "don't bother to exercise, etc - just pop our pills."

Pick an industry at random, and likely you can come up with your own examples...

Not to mention, many industries pump out tons of pollutants, and then resist any efforts to produce their products more sustainably.


Reading your first paragraph I was prepared to cautiously agree with you, but the only one of your examples I can even start to wrap my head around is the one about health insurance. Even that is more a product of our for-profit healthcare system than an individual decision by some "one percenter" to rip people off.

The rest of your examples strike me as non-sequiturs. What difference does it make if someone accumulated their wealth by creating media you don't agree with or foodstuffs that you think are unhealthy? What bearing does that have on anything? I have a healthy contempt for companies like Liberty Tax, Cash-4-Gold, or predatory mortgage lenders--companies that solely exist to take advantage of the poor and/or uneducated. Those are businesses I think are truly parasitic for society.
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maxo-texas wrote:
It seems to me that as the top has more and more of the wealth that the return on any investment they could make will be lower and lower as there is less to extract from the bottom 80% to 99%.


True, except those devious rich are investing and receiving returns elsewhere, not just the USA. Which is all the more reason to ensure they help keep the US economy afloat.
 
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Mac Mcleod
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Just so you know Sam, we are both about 100% in agreement.

The slant should be subverted by the facts stated. The entire point is to address the "the top pay XX taxes while the bottom pays NO taxes".

All I have time for. Posting today is really a sign of the mini burnout I just had at work. Hopefully 9 hours and won't post again for a couple weeks. Posting generally means I'm in trouble mentally and losing focus on the impossible tasks they have me assigned too right now.

Liked your post- not sure you understood where i was coming from tho.

---

Addressing the high points.
I'm not paying numbers games. I'm adding state,local and federal taxes. The total tax rate load of those taxes is higher on the poor than the wealthy, and much higher on the middle income than the wealthy or the poor.

---
I didn't slip companies in to the mix. The data is from Forbes, the IRS, and the Lcurve site. You can find most of it by googling for "total tax load" or "who pays taxes".

---

The bottom half of the top 1% does not have nearly the wealth or income that the top half does. They are not even in the same league. My point: .5% of the country is having tax laws written to benefit them and taking most of the countries wealth and income. Compared to the top .5%, the bottom .5% has much more in common with the rest of the country.

---

Proportional taxation- yes- but there is heavy propaganda for a much flatter tax with much lower deductions. The fair tax would raise federal taxes on just about everyone but the top 5%.

---

I disagree that adjusting your tax rate up or down by 1 or 2% would destroy the economy. People would rapidly adapt. Seeing the country was running an excessive debt would give you a head's up that tax rates were going to be adjusted up.

---

$300k is 15x 20k. 15x 300k is only 4.5 million a year. The top .5% is making more like 10 million a year and that rapidly scales up to 30 million or more.

3k is to 300k is to 30mil.k. the 300k has more in common with the 20k than they do the 30mil. k.

cheers.
 
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