Top Income Tax Rate: How's 83% Sound?

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Zute
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Zute » Fri Dec 16, 2011 8:24 pm

Dollar for dollar? Sure doesn't sound like it. From the sources I've found, including the IRS, it sounds like they're paying a much lower percentage.
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Tudamorf
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Tudamorf » Fri Dec 16, 2011 9:53 pm

Zute wrote:Dollar for dollar? Sure doesn't sound like it. From the sources I've found, including the IRS, it sounds like they're paying a much lower percentage.
Only because you're comparing the overall tax on a very large income with the overall tax on a very small income.

So yes, for example, once you go over $110K in wages you stop paying social security tax, and your marginal rate for the next dollar is therefore much lower. And the more money you make above $110K, the less that social security tax is going to figure into your total percentage. But that doesn't mean you didn't pay the social security tax up to that point; in fact, you paid the maximum.

That's why the comparison between Buffett and his secretary is wrong (and he knows it, he's just trying to fool people to get them angry).

Now, if your complaint is about the long term capital gains rate being lower (for all classes, rich and poor) than the rate for ordinary income, you have an entirely different point. That argument is not about what the rich and poor pay, but about whether certain types of income should be taxed at different rates. As I've said before, Reagan had the right answer: there should be the same rate, in between the current long term capital gains and current ordinary income rate, for all income no matter what the source.

Fyyr
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Fyyr » Sat Dec 17, 2011 1:43 am

Well,

There are obviously a lot less of them now than when I originally stated it. The welfare that homeowners get with regard to having their debt interest tax free should be wiped, for both first and second homes. Home improvement deductions should be axed too. You are still just buying stuff, why is your stuff better than my stuff and goes untaxed?

That would bring in a lot more revenue, if revenue is what you are after.

And if stock dealers have to pay cap gains on every single sale, then why are homeowners exempt from that too? Sell a home, then buy a home within two years, the seller pays no cap gains. Remove that loophole, and it would bring in more revenue. We consider stock dealers slimy when they try and avoid paying the tax on the appreciation of their assets; why not Joe and Jan Homeowner?

Or make it fair for both, give the stock seller the same time to reinvest his or her gains untaxed.

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Re: Top Income Tax Rate: How's 83% Sound?

Post by AbyssalMage » Sun Dec 18, 2011 2:51 am

Tudamorf wrote: Buffett's quip about his secretary is misleading, and he knows it.
Ok...

BUT....

How exactly is he misleading? You have stated this twice and I've listened to every Republican pundit repeat this, yet none have explained it. They just state it like its a fact.

How do we (the tax payer) "know" he's misleading American's? I'm asking in all honesty because like I said, I've heard it stated, "like its fact", but no one has actually proven it and said, "here's the numbers to show he's misrepresenting himself (and his secretary)."

In contrast, the opposite has been done to support his assertions. So is there some media "blackout" and there are real "number crunchers" out there who have proven this misleading?

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Re: Top Income Tax Rate: How's 83% Sound?

Post by Fyyr » Sun Dec 18, 2011 8:53 am

Abyssal,

It is because he is basing his 'income', on what is not income, in his statement.

When his assets, mostly shares in Berkshire Hathaway, appreciate, he is saying that he made money, that he is not taxed on. Unless he sells the shares, which he doesn't do, he pays no tax on the appreciation. When he does sell, he will pay tax.

It is misleading at best, and really is a lie.

Most of his spending money is going to be from the dividends from the stocks he owns. That is taxed as income. But it is a much smaller amount than the total appreciation in value of his assets.


Also iirc, at one time, it was possible to roll dividends back into additional stock purchases untaxed. I don't know if that is true today.

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Tudamorf
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Tudamorf » Sun Dec 18, 2011 11:04 am

AbyssalMage wrote:
Tudamorf wrote: Buffett's quip about his secretary is misleading, and he knows it.
Ok...

BUT....

How exactly is he misleading?
That's what I just explained.

His secretary's top marginal rate is higher because (1) he/she is earning below the social security threshold (~$110K) and therefore is still paying 6.2% social security tax, and (2) he/she is earning ordinary income (taxed at higher rates), not from long term capital gains (taxed at lower rates).

So if the secretary earns $50K and is taxed at 25% marginal + 6.2% social security + 1.45% medicare, the average rate on the $50K of income would be higher than the average rate on someone who made $100 million, most of which was long-term capital gains (taxed at 15% only).

But unless that investor made every cent from long-term capital gains -- highly unlikely -- if you look at the first $50K that each of them made, you will see that they paid the same taxes, at the same rate. You will also see that the secretary gets many additional tax breaks that are not available to the investor because of income limits.

Dollar for dollar, the secretary is paying less in taxes, not more.

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Re: Top Income Tax Rate: How's 83% Sound?

Post by Tudamorf » Sun Dec 18, 2011 11:15 am

Fyyr wrote:Most of his spending money is going to be from the dividends from the stocks he owns. That is taxed as income. But it is a much smaller amount than the total appreciation in value of his assets.
Most people don't grasp this either. When they see a list of rich people with $XX billion next to someone's name, they think of that person having suitcases of money or gold in that amount in some vault. When in reality, that number is just the estimated value of their assets. For the most part, if they actually want to use that money, they have to pay taxes on it. They're not avoiding income taxes, just deferring them as long as they can.

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Zute
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Zute » Wed Dec 21, 2011 1:47 pm

An Inequality Tax Trigger: The Brandeis Ratio Explained
An Inequality Tax Trigger
By Ian Ayres and Aaron Edlin
A central idea behind our Brandeis tax proposal was to have a tax that is triggered by increases in inequality. Our Brandeis tax does not target excessive income per se; it only caps inequality. Billionaires could double their current income without the tax kicking in — as long as the median income also doubles. The sky is the limit for the rich as long as the “rising tide lifts all boats.” Indeed, the tax gives job creators an extra reason to make sure that corporate wealth does in fact trickle down.
Problem with that whole "trickle down" thing is the trickle down never happens, but trickle up happens a whole hell of a lot.
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Tudamorf
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Tudamorf » Wed Dec 21, 2011 2:28 pm

Problem with that whole "trickle down" thing is the trickle down never happens, but trickle up happens a whole hell of a lot.
Really? Who pays your proletariat? Which way is that money trickling?

How many poor people pay rich people? Can you give me some examples?

Who pays society's bill? Divide $2.3 trillion in tax revenue by 100,000 households, please.

It's one thing to be a Marxist, and just have a wrong opinion, but quite another to be willfully blind to facts that are staring you right in the face.

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Tudamorf
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Re: Top Income Tax Rate: How's 83% Sound?

Post by Tudamorf » Wed Dec 21, 2011 2:29 pm

Zute wrote:An Inequality Tax Trigger
An "inequality tax" assumes that people are equal, and that their income should reflect that equality. How can you possibly have a coherent tax system based on a fundamentally flawed assumption? You'll end up sounding like Fyyr on global warming.

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