The income tax has been slashed so many times since 1981 that it’s no longer a broad based societal tax; it’s a kind of luxury tax on upper income salary earners and the small share of households which garner most of the capital income from dividends, interest payments and capital gains…Stockman went on to point out that 60% of tax filers accounted for 5% of tax revenue. In addition, 35% of tax filers – more than 52 million filers at the bottom and middle of the income ladder – didn’t pay a single dime of taxes after deductions, exemptions and credits. I think Stockman was sloppy with his wording in saying, "the income tax has been slashed so many times". Tax rates go up and down regularly. I think he means the number of people paying income tax has been slashed.
Look at what he's saying. The top 40% of incomes pay 95% of tax revenues, and the bottom 35% don't pay a dime once all of the deductions, and all other systemic ways to avoid paying tax. The top 1% of earners pay 39.5% of all collected taxes.
From what I'm able to see, this isn't really a conservative plan it's more a populist plan. From a populist president and party that aren't conservative, so what a surprise, right? I hear the president insisted on leaving the highest tax bracket for the highest income earners where it is, at 39.6% so there's no "trickle down" aspect to this. Supposedly Trump said that people in the highest bracket can afford that 39.6% rate, and he insisted it stay there. Maybe that's his way of fighting the Evil party screaming that it's a "tax cut for the rich!!" Maybe he honestly thinks a 39.6% rate is a good thing.
So if the lowest half of the income range doesn't pay taxes, and the top rate stays the same, who's getting what changes? That's what the arguments are about. From what I hear, the big proposal is a return to three brackets, 12%, 28%, and that 39.6%. Exactly where those three brackets change will make all the difference in "who pays what". The simplification part of the plan (they still keep using the "fill out your taxes on a postcard" meme) raises the standard deductions so the lowest income people are expected to pay even less than now, while the highest grade may benefit a little.
The big deal is dropping the corporate tax rate from 35% to 20%. That will make investing in the US look much better to companies looking to build new facilities. Lower corporate taxes help everyone but this will have its greatest impact on small businesses and business start ups. Since it uses the word "corporate", you can be sure the core Evil party hates that part. Since they can't argue it's a tax cut for the richest, they'll fight that corporations are getting a break. Corporations pass on their taxes to their customers, so their customers pay them. Before this all started, Paul Ryan actually said something intelligent, when he said,
"We are actually unique in the world in the way we discourage capital from coming back to America and how we incentivize off-shoring jobs," ... "This is not the kind of exceptionalism we should aspire to ..."The overall progressive structure of the tax code doesn't change. We still penalize success. We have "sin taxes" on booze and tobacco to discourage their use. And we have our highest tax rate on our highest earners to discourage success.
BOHICA
ReplyDeleteIt is so much worse then this. The typical welfare queen receives over $400,000 of transferred wealth from taxpayers in her lifetime. The average middle class worker pays into the taxes $280,000 in his lifetime. This is shameful, disgusting, immoral, wrong and it can not last. We are $20 trillion in debt, maybe a lot more, who really knows. When that bites us in the ass, and it will, the real impact of our left wing wealth transfer agenda will destroy us.
ReplyDeleteI almost linked to a piece I did a few years ago on what's called The Welfare Cliff. It's short, but I think shows what you're talking about well.
Delete"a one-parent family of three making $14,500 a year (minimum wage) has more disposable income than a family making $60,000 a year."
"Why a single mom is better off with a $29,000 job and welfare than taking a $69,000 job".
So we incentivize staying on welfare. $29,000/year is not quite $14/hour ($13.95), well above minimum wage, but $69k is over twice that wage: $33.17/hr. Someone making $14/hr is going to have to put in some serious effort to get some marketable skills by going to school at night, or some other form of training to double their current pay.
And their reward is a worse lifestyle?
Staying on welfare is the logical thing to do.
Everyone should pay something. I realize that the 'buying votes' scheme would be hurt by this, however a flat tax, no deductions would fix the imbalance.
ReplyDeleteI can't believe the high end income brackets lose as much to taxes as this suggests. Not only are there many loopholes, but tax payments come back to the companies they own in the form of government contracts.
ReplyDeleteI think the income tax, welfare, and the minimum wage are all used to produce no-man's-lands in certain income ranges which are difficult to occupy. This prevents a lower class person from smoothly growing in income to compete with the next socioeconomic class up.
I can't believe the high end income brackets lose as much to taxes as this suggests. Not only are there many loopholes, but tax payments come back to the companies they own in the form of government contracts.
DeleteAren't you assuming the top earners are all company owners, and that they're all government contractors? Everyone in the top 1% isn't Mark Zuckerberg. I think you're combining a bunch of things into one assertion.
My definition of loophole: something completely legal that the person commenting doesn't approve of. If they're following the law, what more do you want? In the '30s, FDR, took a guy all the way to supreme court for not paying more tax than he was required by law to pay. When FDR lost that case, he tried to get an amendment to the constitution to add some more justices he could hand pick.
Now, as to if they really pay that, the numbers are from the IRS. I don't see the IRS would have any reason to lie about it. If anything, they'd be trying to get more. When it says "the top 1% of incomes pays 39.5% of the taxes collected", that's what it means.
What might be confusing you is when people refer to the 36.5% highest bracket, it doesn't mean they pay 36.5% of their income. Taxes are at different rates for different parts of income, and a step function. Plus, they're applied to the Adjusted Gross Income, not total income. Remember the crap where Warren Buffet was saying his secretary paid more taxes than he did. That's because his income was stock dividends, taxed at different rate than ordinary, hourly-type (or salary type) income. That's part of tax law and has been for decades. It's supposed to incentivize investing in companies, which helps them grow and therefore helps the economy grow.
Aren't you assuming the top earners are all company owners, and that they're all government contractors? Everyone in the top 1% isn't Mark Zuckerberg. I think you're combining a bunch of things into one assertion.
DeleteI mean "top" like 1% of 1% = 35K, not top like 1% = 3.5M. I believe the elites mostly hold their wealth in real estate and stocks, not federal reserve notes or non-government bonds. I believe nearly all the elite acquired most of their wealth as a transfer from taxpayers. There may be the odd cosmetics heiress or rock star who earned it, but the point of government is to advantage the official thieves over the capitalists. Maybe the last time an industrialist earned it instead of mostly reaping a monopoly was Standard Oil, who reduced the price of kerosene 10 times.
Now, as to if they really pay that, the numbers are from the IRS. I don't see the IRS would have any reason to lie about it.
The FDA lies about statins and cholesterol, the USDA lies about carbohydrate diets and diabetes, NOAA lies about global warming, SSA lies about solvency, the OMB lies about effects of tax changes...we could both list 50 more examples...but the IRS tells only the truth?
https://en.wikipedia.org/wiki/Base_rate
My definition of loophole: something completely legal that the person commenting doesn't approve of. If they're following the law, what more do you want?
I don't believe these good 1% people merely sit at home and clip their corporate bond coupons, and had nothing at all to do with creating that particular law detail. I call it a loophole because there's fraud (lie for undeserved gain) involved. In this instance the fraud is not the law-obeying taxpayers, it's the legislators and the executive agencies claiming the 0.01% rich pay, net after government contracts, far more taxes than they do.
I know it's old, but watch this:
ReplyDeletehttps://www.youtube.com/watch?v=ekKk4SkiC-w