bbauska wrote:

rickyp wrote:bbauska

How about this... 15% for everyone with the exemption for the first 35,000 given to all people

?
So the actual tax rate for someone making $35,000 is 0%
For someone making $70,0000 is 7.5%
For someone making $150,000 is 11.5%
For someone making $1,000,000 is 14.47&

If you're willing to embrace this variability, perhaps you'd consider progressive steps in taxation increasing as people earn more money?
After all its the same principle. The less one makes, the proportion that goes to taxes effects the amount that can be applied against necessities.

No, EVERYONE has a $35,000 exemption and pays 15% above that. Please subtract the exemption first and then show me what the percentage paid would be. I think you will find it will be the same.

That is what he did. Try using "math" to check.

If you pay 15% for everything over a $35,000 exemption then:

$35,000 means 0 tax = 0%

$70,000 means 0 on the first $35,000, then 15% on the next $35,000 ($5,250) which is 7.5% of $70,000

$150,000 means 0 on the first $35,000, then 15% on the remaining $115,000 ($17,250), which is 11.5% of $150,000

$1,000,000 means 0 on the first $35,000, then 15% on the remaining $965,000 ($144,750), which is 14.475% of $1,000,000

Apart from ricky having rounded down the last figure, he is absolutely correct about the effect of your proposal of various income levels.

This is similar to how the UK personal Income Tax system works (but we have more than one taxable band):

the first £10,600 is tax exempt
income from £10,600 to £42,385 is taxed at 20%
income from £42,385 to £150,000 is taxed at 40%
income above £150,000 is taxed at 45%

This gives a progressive increase in taxation but in a much simpler way than the US system - we use the marginal rates to define it, whereas the US has loads of marginal rates.

Then you and RickyP would be good with this plan?

I would not like the UK system because of the tiered tax rates. If the levels are the same rates, then fine with me. Your system puts an added penalty on doing better financially. If a person makes more money they should pay more taxes, but not a higher rate.

I also would not have ANY tax exemptions for ANY person or corporation. Can you and RickyP say that? Freeman?

bbauska

Your system puts an added penalty on doing better financiall

Penalty? The higher rate means you've achieved a greater income. Its a reward!!!
And you only pay the higher rate on the income earned over the bracket.
Everyone pays the same rate on the first say $35,000 - say 0.
Then for every dollar you earn over $35,000 but below ($70,000) you are taxed at a rate of say 15%...
Even if you earn a million, for the portion of your income between 0 and %70,000 that income is taxed at the same rate as everyone else...
Its entirely equitable.
If you don't want to pay a higher tax rate, stop working when you've earned the amount that would put you over..
I'm being somewhat factious Bbauska. But the notion that higher tax rates at higher levels of income is somehow going to make people less eager to earn more is pretty silly. Its the same argument that says that capital gains, and investment income should be taxed at a lower rate because it then encourages people to invest. They are going to invest anyway. (But that people on welfare should be paid a minimum to exist as giving them more money would disincentive them from attempting to earn more money.)



bbauska

I also would not have ANY tax exemptions for ANY person or corporation. Can you and RickyP say that? Freeman?

I tend to agree..... except for things like medical expenses beyond a certain portion of your income.
If the government wants to intervene in certain things using the tax code is a clumsy way to do so. And not as effective as direct intervention.
For example giving people deductions for tuition payments ... Instead of deductions, provide free or subsidized tuition levels..

So you don't think every dollar should be taxed at the same rate with an exemption level. I do. You want differences. Fine. Again, we don't agree. I agreed with your "math exercise" you put forth showing how you thought it was progressive, and then you don't even want that!

Somewhat facetious? Sheesh! (BTW, I said "added penalty")

Yes, there are benefits for making more money. But that comes with penalties. To think it doesn't is wrong.

bbauska wrote:Then you and RickyP would be good with this plan?

I can't speak for ricky.

For me all I was doing was helping you to see that ricky had accurately described the effect.

I like the UK system better, and the rates are more to my view appropriate if you have a large deficit to pay off let alone continued spending. And I'd probably have another higher band.

The real question is deductibles.

geojanes wrote:

Ray Jay wrote:Geo:

There's no rational basis for those rates changing so much and big differences like that are a sign of injustice.

Yes, but justice means different things to different people. It is also a sign of political meddling and complexity.

Geo:

everyone can agree that Buffett shouldn't be paying the lowest tax rate in his office

What is your source and under what definition is this true?

It was news some years ago and we discussed it quite a bit. Here is a link from that time.

Http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html It is dated, because it uses the old rates, but i expect it's still true because of the large difference between capital gains and earnings.

Since then the top long term federal capital gains tax rate went from 15% to 24% (including the ACA tax). The married individual income tax rate is 15% of taxable income up to $75,000. A married couple would have over $20,000 of exemptions and standard deductions. So your claim is based on everyone in Buffett's office earning more than $95,000 per year (in which case why are we worried about them?) or is no longer true..

Ricky, I would agree with you that at least some white working class middle-class males are angry and they are directing that anger at other groups. But the cause of that anger is that they are being economically marginalized and that is threatening their status. One would surmise that the reason that black and Hispanic working-class males did not see an impact on their life expectancies was that they were already marginalized and their life expectancies are still worse than white middle-aged working class males. So I do believe stratification is the root cause of what has happened to white working-class male life expectancies. Obviously causation is difficult to prove but I think it's a reasonable inference given the lack of reasonable alternatives.

As for Brad's plan, I am glad he has moved away from a total flat percentage plan (at least to compromise) to allow exemptions for income for basic necessities. But I think we have made a huge mistake deciding that any person could make as much income as they can and pay as little as they can in tax. It's an immoral ethos for a society to have. We--human beings--evolved in small tribes for several million years. In those small tribes no one could take the lion's share of wealth of the tribe--everyone had to cooperate to survive and that would not work if certain members were taking most of the food. Every since agriculture developed 10,000 years ago in most societies a small elite has determined to keep most of the wealth.

That certainly changed in the 20th century. Now we are faced again with that greed of the few to control most of a society's wealth. Contrary to libertarianism, people in the US do not make wealth and then the government seizes it from them. That wealth would not exist without the US government. It would not exist without the police and the military protecting it. It would not exist without an extensive legal system. It would not exist without, yes, an extensive government bureaucracy. It would not exist without an extensive infrastructure--roads, bridges, ports, educational system--supported by the government. It would not exist without our system of government created more than 200 years ago which many people gave their life to create and to thrive. Every person who makes money in the US is standing on the shoulders of the many that came before them and created this society.

And it is a society--it is not a collection of individuals trying to take as much wealth as they can from the US economy. A society--like a tribe--should be win-win not zero sum. Zero-sum means that when someone makes a billion dollars and pays 17% tax on it that literally has to come from somebody else in the society. There is simply no way that the hedge fund manager has created a billion dollars of real wealth so that his withdrawal of a billion dollars in wealth from the society is not negatively affecting others in the society.

So I disagree strongly with the idea that a person should be able to cart off a billion dollars in wealth from the US economy with a minimal contribution and pay only 17 percent tax on it. We should be doing what we can to ensure that people are not making withdrawals from the US economy far in excess of any contribution to the economy. We want a free economy, we want people to compete strenuously for societal wealth as that will benefit everyone, but we also need to put on nudges so that people cannot appropriate too much of societal wealth . When you escalate tax rates at certain levels of income you discourage people from trying to appropriate too much of the wealth created by society. When we had high rates from the 1930s to 1980 the rich still made a lot of money and they never paid the high rates. But they were nudged by the tax rates to allow more people to share in societal wealth.

Now unlike before where a certain class were anointed as aristocracy the theory is now the rich have made it on merit. Of course estate taxes have been largely done away making it easy to pass on wealth and capital gains taxes have been slashed over the past 35 years makes it easier to live on investments, but even if people at the top were there solely on merit it does not mean we should allow them to appropriate so much of societal wealth. Our societal infrastructure--from road, to education, to police, to safety--is threatened when too much wealth is concentrated in too few hands. Those few hands start to not want to spend money on infrastructure that benefits the many. So money is not spent on infrastructure.

So, no, I can 't subscribe to a flat percentage tax even allowing for exempting the first $35,000 for basic necessities. We need to curb excessive greed which is damaging our country and the only way to do that is sharply escalating rates at high levels of income.

freeman3

But the cause of that anger is that they are being economically marginalized and that is threatening their status. One would surmise that the reason that black and Hispanic working-class males did not see an impact on their life expectancies was that they were already marginalized and their life expectancies are still worse than white middle-aged working class males

True.
The problem with their perceived expediencies is that they were built up by the great leap forward for working and lower middle class that was achieved in the 50's and 60s. Largely enabled by social programs funded by the GI bill. (Free tuition, health care and low interest business loans.)
(Interestingly the GI Bill didn't include soldiers of color.)
Add to that the introduction of medicare which relieved adults of the worry of sickness in old age for both themselves and their parents...
The failure for this group began when the things that had fueled their parents success disappeared in the 80's. For a while the economy kept them afloat fueled by the false economy of housing credit ... but with the crash, of 08... wealth disappeared for this group enormously.
And the recovery hasn't benefited them.
So yeah, they are angry. But who and what should they be angry about? Mexicans?

Take your pick, Ricky--women, liberals, Mexicans, gays. It doesn't have to make sense. It's hard to get angry at economic forces largely beyond one's control and in any case there is not much of a consciousness of workers vs management/capitalists.

freeman3

Take your pick, Ricky--women, liberals, Mexicans, gays. It doesn't have to make sense. It's hard to get angry at economic forces largely beyond one's control and in any case there is not much of a consciousness of workers vs management/capitalists

When it stops making sense, when the anger becomes misdirected, that's when the minorities become victims. Demagogues who use the anger fr their own power grab have historically proven to be very dangerous to minorities, and to the neighboring countries if they seize power in their nations.
I do think Occupy Wall Street, Black Lives Matter and to some extent the Tea Party represent a conscious understanding of the gaming of the system. Both Elizabeth Warrens popularity and Bernie Sanders popularity owe something to this....
So does the rise of Trump. Perhaps Carson and Cruz too).
The difference being the first two have offered policies to change things positively. The latter three don't seem to have well formed policies that actually affect the relationship between the elites and the angry group of working and middle class. (Other than rounding up Mexicans)

Ray Jay wrote:Since then the top long term federal capital gains tax rate went from 15% to 24% (including the ACA tax). The married individual income tax rate is 15% of taxable income up to $75,000. A married couple would have over $20,000 of exemptions and standard deductions. So your claim is based on everyone in Buffett's office earning more than $95,000 per year (in which case why are we worried about them?) or is no longer true..

Clearly the difference is better than it was before the Obama tax increases, but apparently he thinks he's still the lowest in his office when you consider payroll taxes.

http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/

geojanes wrote:

Ray Jay wrote:Since then the top long term federal capital gains tax rate went from 15% to 24% (including the ACA tax). The married individual income tax rate is 15% of taxable income up to $75,000. A married couple would have over $20,000 of exemptions and standard deductions. So your claim is based on everyone in Buffett's office earning more than $95,000 per year (in which case why are we worried about them?) or is no longer true..

Clearly the difference is better than it was before the Obama tax increases, but apparently he thinks he's still the lowest in his office when you consider payroll taxes.

http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/

It's close, but the more important point is that you are mixing apples and oranges. I've looked at social security tax rates vs. benefits, and it is a very progressive program on its own. For people who make about $10,000 per year for their lifetime, their annuity is at 90% of earnings. For people making between about $10,000 and about $60,000 per year, their annuity drops down to a 32% of earnings level. For people making from about $60,000 to about $120,000 the annuity level is at 15%.

So, the lower paid employees will be getting a check from ages 67 to whenever which becomes a very good deal. You couldn't buy an annuity that good. However, people who make more than $60,000 are not getting a good deal as it relates to social security. Buffett's combining of social security with regular income taxes is slight of hand. It has become a Democratic talking point, but it is a sinister manipulation of what is really going on here.

P.S. The social security payments are not taxable for those who have lower income, but they are 85% taxable for higher income taxpayers. This reduces the higher income benefit even more. Therefore, it becomes an even more progressive program. Medicare is also extremely progressive. Everyone pays in at 1.45% of earnings, but the coverage is consistent no matter how much you paid in over the years.

Ray Jay wrote:It has become a Democratic talking point, but it is a sinister manipulation of what is really going on here.

You and I have very different definitions of the word sinister!

The fact the numbers are even close enough for us to be discussing the impact of social security is a symptom of the problem. As reported in the article I posted several days ago, there are crazy loopholes (as well as standard operating procedure) that allow the very wealthy to either pay much less, less, or roughly the same in taxes as their working counterparts. You know this to be true.

But think about the following:

What if we started measuring taxes paid as a percentage of wealth, not income? How do you think the Buffett / secretary thing would perform in that situation? How many thousands of times more in taxes is the secretary paying if we just change how we measure it? If you think of your taxes as just another liability on your balance sheet, this is not an unreasonable way of looking at what it costs you.

As long as wages are taxed at a higher rate than dividends and capital gains, there's going to be a problem. We should be doing the opposite of what we actually do, we should tax labor at the lowest rate, capital gains at the highest rate with dividends in-between. Then we'd have a system that would support work rather than passive income. But even Brad's flat tax would be a step in the right direction when compared with our upside down system.

And as you know, there's so much more.