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

'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.

This is all the legacy of St. Ronnie. People now believe that having only a handful of brackets is necessary for "tax code simplification" when in fact the number of brackets and the rates at which they're taxed have NOTHING to do with simplification. That all comes from a) treating different types of income differently and b) the number and types of different deductions.

If you've never taken a look at what the highest earners have been taxed throughout our history:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=213

whenever someone writes one of those 'this is why you shouldn't tax me, look at my expenses!

It's called living within your means, a concept that i guess should only apply to poor people that get their homes foreclosed upon.

To be fair to St. Ronnie for a second, his and Rostenkowski's tax code reform closed lots of corporate loopholes which were reopened...under the Clinton administration.

love these hacks. wisconsin representative paul ryan (r) voted "yes" on a union bill

http://www.guardian.co.uk/commentisfree/michaeltomasky/2011/apr/14/congress-paul-ryan-didnt-read-the-damn-bill

Ryan explains that it was an "accident."

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

It was kinda implied in the original sentence, where the figures $250,000 and $100,000 are eerily close together, sort of subconsciously implying that it's a huge chunk of her income, almost 50%. It was this sleight of hand which i attempted to lampoon with my 3-second response.

(xpost) Yeah, I'm no student of tax code history, but I look at the top bracket going from about 70% (since 1965) to 50% and then 28% under Reagan. I know there's a lot of gross simplification in that chart, but here's my gross simplification: historically, the richest have paid far more than 35% in taxes and this country prospered. We can't cut our way out of the deficit by gutting entitlements alone. The rich can pay more than 35%. That's my story and I'm sticking to it.

commie

Haha, actually to the contrary that chart makes it appear that during times of trouble in this country taxes were raised to pay for a solution (look at the WWII years.) I'm patriotic!

via sully, how have i never seen this

From the ADN, April 3, 1993:

Sarah Palin, a commercial fisherman from Wasilla, told her husband on Tuesday she was driving to Anchorage to shop at Costco. Instead, she headed straight for Ivana. And there, at J.C. Penney's cosmetic department, was Ivana, the former Mrs. Donald Trump, sitting at a table next to a photograph of herself. She wore a light-colored pantsuit and pink fingernail polish. Her blonde hair was coiffed in a bouffant French twist.

''We want to see Ivana,'' said Palin, who admittedly smells like salmon for a large part of the summer, ''because we are so desperate in Alaska for any semblance of glamour and culture.''

I suspect you've never seen it because no one but Sully cares

boy he sure does hate that woman!

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.

xpost Isn't this what it was like in the UK for a while? Why the Stones, Beatles, et al. - "Taxman" - decamped to other countries, to avoid paying the 98% tax or whatever on their earnings?

thing is aren't most of those multi-millionaire/billionaires at this point basically living off dividends or otherwise working it so they're probably only paying like 15% at the capital gains rate?

damn yall i just thought it was funny

they're probably only paying like 15% at the capital gains rate?

Bingo!

My mom is all about capital gains tax butthurtedness right now because she feels she's already been taxed to Hell and back on all the money she managed to save to spend on her business premises. She is selling this now because she's heading for 67 - I suspect one of the reasons that grassroots conservative types baulk at cap gains tax increases and further income tax burdens on 'the rich' (and why this reticence is so useful to every stripe of Republican) is that they see the biggest one-off tax bill they'll ever get when they're thinking 'retirement funds' and feel entitled to keep it. My mom has never made more than 50K a year so a $200K tax bill is an idea that makes her *crazy* not to mention it's the common ground that tilts her towards Fox favourites. How do we help people like her while more effectively taxing people with big salaries and bonuses etc who are properly rich?

I love your first sentence, suzy

I saw a letter from a senior to the Washington Post also saying that he didn't want his capital gains taxed at a regular income rate. But nearly all capital gains and dividend income goes to the very wealthy. Hmmm, is there a way to tax it differently based on one's other income or the amount of capital gains and dividend income, or should it be simply that all income is taxed the same and not even these non-rich seniors should get to pay only 15%?

Basically, my mom paid $200K for her office building and will sell for around $600K. This is 2/3 its value pre-crash, but it was a canny late '90s buy - my mom doesn't invest in anything she can't see doubling in value in seven years. To be sitting on $1M worth of property when you've pinched the life out of every penny you meet and have seriously never felt well-off means she can see why someone who has access to that much money is faraway/so close to her, and she feels badly served by the system and a bit 'oh, thanks for that' re. the crash effectively cutting her retirement fund in half before the taxman arrives to take 40 per cent of the second $200K. I don't blame her for feeling like she's gotten a little bit hosed, but I don't like it when she blames her misfortune on the poor, because it takes a rich bastard or an idiot middle manager to approve that person's mortgage to truly initiate the shonkiness.

Maybe it would be helpful to be able to (around retirement age) sell something that is liable to capital gains, but in this sole instance there would be a higher threshold of $500K before the tax kicked in on any further funds. This would be good for people who have no other income save Social Security - I think there are a lot of people my mom's age that are staring this situation in the face.

speech of the year so far

https://www.youtube.com/watch?v=_ZCl2bi-JDY

Man, that's a lot of paper.

Your tax money at work.

boomshackalaka

that was pretty good though.

crazy amounts of finger-licking

US POLITICS SPRING 2011: I'm surprised stunned shocked speechless

It's funny reading the Republicans get mad at those specifics on the budget cuts--just millions of dollars in specific cuts, and billions of dollars of cuts of IOUs or something.

Also, watching Paul Ryan moan cliches in response to Obama and others criticism of his plan in an ideal world would cause David Brooks and others to say oops he's not "serious" and not a brilliant mind, but that's not gonna happen.

LOL Digby:

Am I hallucinating or didn't we just go though months of caterwauling about how the health care bill was thousands of pages of words, nothing but words, too many to read, when all we need is a simple paragraph explaining everything in plain English?

Well, it looks like things have changed. I just watched GOP economist Douglas Holtz-Eakin and a bunch of faceless Republicans having a fit on Fox News because the president didn't produce a gigantic pile of paper like Paul Ryan's. It means he's "unserious."

that's bc republicans make fun of democrat seriousness + intellect + whatever bc of insecurity that they don't possess those skills themselves. if you think your opponent is killing you on the being serious front, you need to change the dialogue to something that undervalues seriousness. once they had someone who they could get some agreement around that he's serious, like ryan, now they want to compete on that front too. it's pretty much exactly like 4th graders fighting with each other.