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Soaking the Rich
Topic Started: Jul 21 2008, 01:03 PM (247 Views)
Jeffrey
Senior Carp
http://online.wsj.com/article/SB121659695380368965.html

Their Fair Share
July 21, 2008; Page A12

Washington is teeing up "the rich" for a big tax hike next year, as a way to make them "pay their fair share." Well, the latest IRS data have arrived on who paid what share of income taxes in 2006, and it's going to be hard for the rich to pay any more than they already do. The data show that the 2003 Bush tax cuts caused what may be the biggest increase in tax payments by the rich in American history.
[Their Fair Share]

The nearby chart shows that the top 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years. The top 10% in income, those earning more than $108,904, paid 71%. Barack Obama says he's going to cut taxes for those at the bottom, but that's also going to be a challenge because Americans with an income below the median paid a record low 2.9% of all income taxes, while the top 50% paid 97.1%. Perhaps he thinks half the country should pay all the taxes to support the other half.

Aha, we are told: The rich paid more taxes because they made a greater share of the money. That is true. The top 1% earned 22% of all reported income. But they also paid a share of taxes not far from double their share of income. In other words, the tax code is already steeply progressive.

We also know from income mobility data that a very large percentage in the top 1% are "new rich," not inheritors of fortunes. There is rapid turnover in the ranks of the highest income earners, so much so that people who started in the top 1% of income in the 1980s and 1990s suffered the largest declines in earnings of any income group over the subsequent decade, according to Treasury Department studies of actual tax returns. It's hard to stay king of the hill in America for long.

The most amazing part of this story is the leap in the number of Americans who declared adjusted gross income of more than $1 million from 2003 to 2006. The ranks of U.S. millionaires nearly doubled to 354,000 from 181,000 in a mere three years after the tax cuts.

This is precisely what supply-siders predicted would happen with lower tax rates on capital gains, dividends and income. The economy and earnings would grow faster, which they did; investors would declare more capital gains and companies would pay out more dividends, which they did; the rich would invest less in tax shelters at lower tax rates, so their tax payments would rise, which did happen.

The idea that this has been a giveaway to the rich is a figment of the left's imagination. Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts. These tax payments from the rich explain the very rapid reduction in the budget deficit to 1.9% of GDP in 2006 from 3.5% in 2003.

This year, thanks to the credit mess and slower growth, taxes paid by the rich may fall and the deficit will rise. (The nonstimulating tax rebates will also hurt the deficit.) Mr. Obama proposes to close this deficit by raising tax rates on the rich to their highest levels since the late 1970s. The very groups like the Congressional Budget Office and Tax Policy Center that wrongly predicted that the 2003 investment tax cuts would cost about $1 trillion in lost revenue are now saying that repealing those tax cuts would gain similar amounts. We'll wager it'd gain a lot less.

If Mr. Obama does succeed in raising tax rates on the rich, we'd also wager that the rich share of tax payments would fall. The last time tax rates were as high as the Senator wants them -- the Carter years -- the rich paid only 19% of all income taxes, half of the 40% share they pay today. Why? Because they either worked less, earned less, or they found ways to shelter income from taxes so it was never reported to the IRS as income.

The way to soak the rich is with low tax rates, and last week's IRS data provide more powerful validation of that proposition.
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George K
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Finally
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Horace
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HOLY CARP!!!
Let me get this straight, the moral of that story is that there is no way the law can ever stipulate that rich people pay more, because if it tries, the rich will simply find ways, legal or not, to not pay. So the gov't shouldn't even try.

Gee, how convenient.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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Kincaid
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HOLY CARP!!!
Move up aside, and let the man go thru.

I've never figured why people begrudge the wealthy their due. If you want what they got, get off your butt and earn it. Not smart enough? Guess what, that's why you're not doing so well. Accept it. Takes too much effort? Fine, lazyass, you get what you earn.

It is simply jealousy. I'll never be more than comfortably well off, but I know I'm not smart enough or willing to risk what it takes or ready to devote myself so completely to a career, idea or business to get to that upper level. Frankly, I would not want to do what it takes to get there and I am satisfied with that. Others seem to be happy to tear people down (with taxes) and demand freebies.

Bread and circuses.
Kincaid - disgusted Republican Partisan since 2006.
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Horace
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HOLY CARP!!!
Kincaid
Jul 21 2008, 02:03 PM
Move up aside, and let the man go thru.

I've never figured why people begrudge the wealthy their due.  If you want what they got, get off your butt and earn it.  Not smart enough?  Guess what, that's why you're not doing so well.  Accept it.  Takes too much effort?  Fine, lazyass, you get what you earn.

Sorry friend but that's a fantasy.

it holds true for a small subset of the rich; business owners and entrepreneurs spring to mind.

If you believe, for instance, lawyers or wall street types "earn" what they make in proportion to the work they put in, the risks they take, the talent they have, or the amount they produce for the economy, you are quite mistaken IMO.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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Kincaid
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HOLY CARP!!!
I respectfully disagree. I know a lot of bad attorneys. They aren't making much money at the end of the day. I've certainly seen a lot of CEO's run companies into the ground as well, but they didn't get to the top by being bad.
Kincaid - disgusted Republican Partisan since 2006.
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blondie
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George K
Jul 21 2008, 01:06 PM
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Is THAT all you pay ?

I'd be so proud to be American.
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Jack Frost
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Horace
Jul 21 2008, 05:09 PM

If you believe, for instance, lawyers or wall street types "earn" what they make in proportion to the work they put in, the risks they take, the talent they have, or the amount they produce for the economy, you are quite mistaken IMO.

I can't speak for wall street types really, but the bonuses seem obscene. Most lawyers are anything but super-rich and work very hard. There are a few, of course, who take a contingent fee on a huge case and get very wealthy.

jf
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Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.
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Kincaid
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HOLY CARP!!!
True, Jack. The bonuses and golden parachutes of CEO's and the like seem all out of proportion with the actual value they bring to their companies. Still, that's the "going rate" and if you can command it you need to get it. I should add I know a lot of very good attorneys and they are also not extremely wealthy. Attorneys that live off contingency fees have to get some big hits to offset all the losers they take.
Kincaid - disgusted Republican Partisan since 2006.
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George K
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blondie
Jul 21 2008, 06:43 PM
Is THAT all you pay ?

Doesn't include State, Local and sales taxes. State sales tax can range from 9.4% (Tennessee) to zero. Income tax can also be as high as 9.5% (Vermont). When you add those in, it gets pricey. My real estate taxes are 4% of my gross income.
A guide to GKSR: Click

"Now look here, you Baltic gas passer... "
- Mik, 6/14/08


Nothing is as effective as homeopathy.

I'd rather listen to an hour of Abba than an hour of The Beatles.
- Klaus, 4/29/18
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jon-nyc
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Cheers
blondie
Jul 21 2008, 07:43 PM
George K
Jul 21 2008, 01:06 PM
Posted Image Posted Image

Is THAT all you pay ?

I'd be so proud to be American.

Look at the numbers again - tax rates weren't there. It was the relative share of taxes paid by various income groups. So it needs to add to 100%.


In my defense, I was left unsupervised.
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jon-nyc
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Cheers
As usual with these graphs this ignores marked regressiveness at the tippy top, where eared income dwindles and household earnings come in the form of dividends and capital gains.
In my defense, I was left unsupervised.
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Free Rider
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Fulla-Carp
I pay way too much taxes.

Every quarter comes around i cringe, the worst is April 15.

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blondie
Bull-Carp
Okay, I misread George's graphs.
But tell me how much tax does a rich person pay, let's say with an income of $500,000 per year?
I'd like to know.
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George K
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Finally
Federal Taxes? I'd guess about $120-$160K. Add to that State Income tax (which could be as high as another $40K) and local taxes.
A guide to GKSR: Click

"Now look here, you Baltic gas passer... "
- Mik, 6/14/08


Nothing is as effective as homeopathy.

I'd rather listen to an hour of Abba than an hour of The Beatles.
- Klaus, 4/29/18
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Horace
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HOLY CARP!!!
Kincaid
Jul 21 2008, 04:01 PM
True, Jack. The bonuses and golden parachutes of CEO's and the like seem all out of proportion with the actual value they bring to their companies. Still, that's the "going rate" and if you can command it you need to get it. I should add I know a lot of very good attorneys and they are also not extremely wealthy. Attorneys that live off contingency fees have to get some big hits to offset all the losers they take.

When one talks of wall street and lawyers, one talks of industries populated by people who spend a large amount of time and effort tying to invent ways in which to create artificial demand for their services so they can extract from the economy as much money for themselves as possible. They are very far removed from 'create something and sell it' which is the fundamental building block of any economy.
As a good person, I implore you to do as I, a good person, do. Be good. Do NOT be bad. If you see bad, end bad. End it in yourself, and end it in others. By any means necessary, the good must conquer the bad. Good people know this. Do you know this? Are you good?
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