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

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.

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?