US POLITICS SPRING 2011: Let's just call off this country.

hah well obviously 250K is a pretty arbitrary number, but the top 2% Obama was talking about in today's speech make multiple millions of dollars a year so if its a huge sticking point the number could be raised a bit I think...

Unless 250k isn't arbitrary and that's literally as high as our tax brackets go... which honestly would not surprise me, and in that case we need some serious tax code reform.

the tax bracket goes to something like 350k, or so someone said above, which came from some comments on some other site. very reliable I know.

im having a hard time imagining the tax rate on a $350k salary that would make it difficult for someone to "fully" support a family?

Meanwhile, Emily Feldman Wiesenthal, originally from Florida and now living in New York, said grouping a couple making $250,000 a year is not exactly fair.
"Plenty of people just starting out have a good salary but have things like student loans, mortgages, young children, etc., that make raising taxes for this group a hardship," she said on the Facebook post. "A household making 250,000 with $100,000 of student loan debt left to pay off isn't necessarily rich."

http://www.nypress.com/article-22306-tax-the-rich_.html

The Republicans and a key Democrat, Senator Charles Schumer of New York, fought to keep the tax rate on hedge fund managers at 15 percent, arguing that the profits from hedge funds should be considered capital gains, not ordinary income, which got a lot of attention in the news.

What the news media missed is that hedge fund managers don't even pay 15 percent. At least, not currently. So long as they leave their money, known as "carried interest," in the hedge fund, their taxes are deferred. They only pay taxes when they cash out, which could be decades from now for younger managers. How do these hedge fund managers get money in the meantime? By borrowing against the carried interest, often at absurdly low rates—currently about 2 percent.

Lots of other people live tax-free, too. I have Donald Trump's tax records for four years early in his career. He paid no taxes for two of those years. Big real-estate investors enjoy taxfree living under a 1993 law President Clinton signed. It lets "professional" real-estate investors use paper losses like depreciation on their buildings against any cash income, even if they end up with negative incomes like Trump.

Frank and Jamie McCourt, who own the Los Angeles Dodgers, have not paid any income taxes since at least 2004, their divorce case revealed. Yet they spent $45 million one year alone. How? They just borrowed against Dodger ticket revenue and other assets. To the IRS, they look like paupers.

In Wisconsin, Terrence Wall, who unsuccessfully sought the Republican nomination for U.S. Senate in 2010, paid no income taxes on as much as $14 million of recent income, his disclosure forms showed. Asked about his living tax-free while working people pay taxes, he had a simple response: Everyone should pay less.

perfect dn for that post

I've been hesitant to get into this guy, but I really can't find anything assailable about this piece:

http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411?page=1

It's like he writes what at first sounds like needlessly inflammatory hyperbole, but then when you go over it everything he's saying is true.

Taibbi is great, as long as you don't watch him live on the Daily Show, etc..

taibbi is one of the best journalists in america

yeah taibbi is a hero

It's like he writes what at first sounds like needlessly inflammatory hyperbole, but then when you go over it everything he's saying is true.

Yep. He still curses too damn much.

Financial crises brought few prosecutions

A household making 250,000 with $100,000 of student loan debt left to pay off isn't necessarily rich."

Yeah, paying off the entirety of your family's student loan debt in one year and being left with only $150,000, that must really suck.

did you even spend like 3 seconds thinking before you wrote that

did you even spend like 3 seconds thinking before you wrote that

of all the occasions upon which I've called for a new ILE board description, I feel that this one merits especially close consideration

like i get how a family of say five living in NYC bringing in ~$250,000 would not think of themselves "rich" (250k in NYC would be like 135k around here), especially after fed and state taxes, but it's still a pretty sweet friggin life. also, i'm prompted to ask (again) why the hell a family bringing in $373,000 (or whatever the top marg rate is) is in the same bracket as some dude pulling in hundreds of millions of dollars a year?

of course, dudes making hundreds of millions are probably exploiting the shit out of the loopholes described in Morbs' link

Fed and state and city taxes. But I wouldn't spend 3 seconds thinking about that sentiment, either. $250,000 is like 5x the average income for most of this country, right?

also here's a Politifact rundown of all the GOP weeping and and gnashing of teeth w/r/t the communist-supported expiration the Bush tax cuts and ZOMG AMERICA"S ECONOMIC ENGINE SMALL BUSINESS

http://www.politifact.com/truth-o-meter/article/2010/nov/23/top-5-falsehoods-about-bush-tax-cuts/

I'm not trying to say that $250 a year isn't a lot of money for a family; it is! However, chopping $100K off the top all in one year is going to have a non-negligible impact on your bottom line, especially if you live in NYC/DC/LA/Boston/SF/insert your favorite expensive US city here.

No one should feel bad for the $250K family but it's kind of stupid to assume they're rolling in luxury (unless of course your definition of "luxury" isn't really that luxurious)

lol $250K

families making 250k in NYC might 'feel poor' but whenever someone writes one of those 'this is why you shouldn't tax me, look at my expenses!' articles, they're loaded with 'keeping up with the joneses' spending. big house in the right neighborhood, private schools, nice cars, whatever.

I kind of feel like any education expenses a family chooses to take on should be exempt from ridicule/scorn, but this is partially because I wish that we'd get taxed at like 60% and have most of that go into federally-funded education and research.

Obama said yesterday he envisions "a final agreement on a plan to reduce the deficit ... by the end of June."

If he's gonna keep his word and not preserve the Bush tax cuts this time, and the Republicans refuse to do what even Ronald Reagan did 7 times (raise taxes) that leaves us where?

Right, we all agree about the total lack of pity for their terrible plight angle. But also, in the example given (by that idiot woman), she's talking about YOUNG people, which means you come out of college knowing your debt load and you don't even EXPECT to be keeping all of that $250,000 that you're somehow (magically) making. You don't assume the expenses of a $250,000-household because you AREN'T that household yet.

And student loans don't get paid off in one year. She's an idiot.

6 figure student debt is basically its own problem and shouldn't be used to defend our horrible tax system. most people with that much debt don't make 250k + pay a greater % of their disposable income for loans.

The only person who said anything about paying off your entire student loan in one year is Adam

I'm all for raising tax rates, but I can also see why this seemingly wealthy sub-class of modestly rich folk - generically well-off? - bristle. No, $250,000 is honestly not that much money, as far as wealth goes (though it may seem that way, since so many Americans are not wealthy), and if you factor in a certain level of housing, school, that sort of stuff, plus take out existing taxes, it does goes pretty fast. And that's definitely one conundrum of this. We all know how little one can live on, but obviously it's not fair (right?) that everyone should sacrifice everything and live on the minimum income. The question, then, is how much should anyone be allowed to make? What is an equitable scale of comfort? Someone making $250K shouldn't be hammered by a big tax hike, but they should pony up a couple grand more a year, which is a modest tax burden to bear. The truly wealthy, whatever that is - the point at which bills don't matter? - can afford to put in some number much greater than that. I don't know what that number should be, but just tiny little tax hikes generate state and federal revenue pretty quickly, I imagine.

^^^ I think this is OTM.

'if you factor in a certain level of housing, school etc.' is where you lose me. that 'certain level' that is expected from someone who makes that much is still a voluntary spending decision. huge mortgages are not an obligation - even in NYC!

The current budget deficit can't be closed by raising the top bracket. According to the most recent IRS breakdown of taxable income and federal revenue (2008), total taxable income for the 4,359,936 Americans making more than 200 K was 2.06 billion, of which they paid 531 trillion in taxes. Tax them at 100% (including all income below 200 K), and you still wouldn't close the 1.5T deficit.

If we get a bit more nuanced and look at all income taxed at the top 35% rate, (which includes an additional 12.4 million people making between 100K and 200K), income taxed at that rate was 622 billion, of which (naturally) 218 billion was already taxed. Raise the top marginal tax rate for all Americans to 100%, and you would generate an additional 404 billion, which would close the 2011 deficit by all of 27%.

The top marginal rate under FDR started at $200,000 in 1937 dollars which would be $3,039,000 in 2010. That would effect a little under the 120,330 people who make more than $2 million but less than the 34,641 made more than $5 million. Looking first at the 120k over the $2 million threshold: Out of their $702 billion of income they presently pay $187 billion at all tax rates. Taxing their entire income at 94% would generate $472 billion in incremental income. Looking instead at the 34k over the $5 million threshold: Out of their $477 billion of taxable income they presently pay $122 billion. A 94% tax rate, applied to their entire income, might generate $325 billion in incremental income. Given the power law distribution of income, the bulk of that income is under a $3 million, so I'd expect FDR-level rates would close maybe $200 billion, or 30% of the current deficit.

I think its reasonable social policy to reduce social inequity by taxing high earners more, and there is very good cause to eliminate investment tax-breaks (capital gains & dividends) that reduce effective tax rates of the wealthy to well below that of middle-class. But its not enough.

Entitlements, especially the runaway growth of Medicaid and Medicare expenditure, must also be cut, OR middle-class taxes increased dramatically to cover them. We can't subsidise HFCS in every processed food and also pay for the inevitable diabetes epidemic. Ultimately, my party will have to look at its constituencies and determine that wealth transfers to from the young to the aged, sick, and their caretakers are now cutting into investments in the future like education, research, and infrastructure. I don't want to live in a nursing home nation.

total taxable income for the 4,359,936 Americans making more than 200 K was 2.06 billion, of which they paid 531 trillion in taxes.

uh

^ 3rd para should read "would close maybe $200 billion, or 13% of the current deficit.

xp DJP obv labels got reversed.

Someone making $250K shouldn't be hammered by a big tax hike, but they should pony up a couple grand more a year, which is a modest tax burden to bear.

what kind of "should" are we talking about here? morally?

total taxable income for the 4,359,936 Americans making more than 200 K was 2.06 billion, of which they paid 531 trillion in taxes

By "trillion" you mean "million," right? Those numbers, according to the spreadsheet, are $2,058,031,131 and $531,301,056, respectively.

2008 wasn't a particularly good year for rich people

xp Phil D. the spreadsheet is in thousands. To clarify the errors: In 2008 total taxable income for the 4.36 million Americans making more than $200 K was $2.06 trillion, of which they paid $531 billion in Federal taxes.

The public can and should demand a greater contribution from them, but there just aren't enough of the very wealthy to close the budget gap solely through soaking the rich.

then we put the cherry on top by halving the defense budget.

I don't think anyone here thinks the budget gap can be closed solely through soaking the rich...?

we still want to do it though

No, but as per the Leonhardt column I posted yesterday, letting the Bush tax expire (e.g. "doing nothing") is a start.

Right, that is the position that I think everyone here is arguing from.

Nah that woman from Florida said, "A household making 250,000 with $100,000 of student loan debt left to pay off isn't necessarily rich." Adam just pointed out that it doesn't constitute a real deduction of $100,000 in one year. xxxxxxxp Sorry, I had to run off to a meeting.

Anyway regardless of whether 250,000$ per year is "rich", those people aren't even the ones who need to be slammed on the tax front. Hell, you could start raising the taxes at $500,000 and it probably wouldn't substantially change the amt of wealth that's under-taxed -- the system is so unbelievably top-heavy that it would take a bigger jump that that to even make a NICK.

what kind of "should" are we talking about here? morally?

mathematical. the bottom 90% saw their income decline on average by $300 under bushco. the top 1% saw their income increase by an average of $250,000. we have a 'budget crisis,' we keep being told. fine. go after the money then to help pay the debt off, or shut up

http://grijalva.house.gov/uploads/CPC.Budget.112th.Memo.pdf

The Progressive caucus proposed budget includes the following:

Extend marriage relief, credits, and incentives for children, families, and education, but
let the upper-income tax cuts expire and let tax brackets revert to Clinton-era rates
2. Index the AMT for inflation for a decade (AMT patch paid for)
3. Rescind the upper-income tax cuts in the tax deal
4. Schakowsky millionaire tax rates proposal (adding 45%, 46%, and 47% top rates)
5. Progressive estate tax (Sanders estate tax, repeal of Kyl-Lincoln)
6. Tax capital gains and qualified dividends as ordinary income

Letting Bush tax cuts expire is an absolute necessity. Of greater importance in dollar terms is removing the exemption from drug price negotiations on Medicare part D.

Also, at present, pharmaceutical companies provide most foreign socialized health care systems with drugs under patent at close to manufacturing costs (in order to compete with nearly as effective generics). This means Americans foot nearly all the bill for global drug development (and, yes, marketing). In other industries, this sort of differential pricing would be in violation of WTO rules. Part of getting America's costs under control will be requiring common costs for all purchasers, perhaps in return for longer patent lifes.

the tax bracket goes to something like 350k, or so someone said above, which came from some comments on some other site. very reliable I know.

That was me. It's $379,150 (single, married or head of household.)

http://www.obliviousinvestor.com/2011-tax-brackets/

$0-$8,500 10%
$8,500-$34,500 15%
$34,500-$83,600 25%
$83,600-$174,400 28%
$174,400-$379,150 33%
$379,150+ 35%

that should increase incrementally all the way up to $1 billion. then there wouldn't be as much of a deficit. if that's what people really care about, that is.