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Old 02-23-2009, 10:28 PM   #16
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Obama is right to take on the very rich
They're paying far less of their incomes in taxes than average Americans.



By Chuck Collins and Sam Pizzigati (op-ed)
Christian Science Monitor, February 24



We've seen, in recent weeks, an outpouring of public outrage over the mega millions that keep flowing--despite the escalating economic meltdown--into the pockets of America's top bankers and corporate executives...The amount of money that goes into executive pockets is staggering. So is the amount that comes out of those pockets in taxes: precious little. America's super-rich are paying far less of their incomes in taxes than average Americans who punch time clocks. This is grossly unfair. The good news: Under Mr. Obama's new plan to cut the deficit in half, the very richest Americans will start paying something closer to their fair tax share.

It's been a while since they've done that. As recent IRS data show, these elites are paying less in taxes--much less--than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each. Having trouble visualizing that? To pocket $263 million a year, you would have to take home over $60,000 an hour--and work 12 hours a day, seven days a week, for an entire 12 months. Sounds tiring, doesn't it? But most of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble. Uncle Sam taxes income from those assets--whether that income be capital gains or dividends--at a much lower rate than income from work.

The current top tax rate on "ordinary" work income sits at 35%. But dividends and capital gains from the buying and selling of most assets face only a 15% top rate. That's why in 2006, America's top 400 paid just 17.2% of their $263 million average incomes in federal tax. Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax. One particularly striking example from billionaire investor Warren Buffett: In 2006, he paid 17.7% of his income in total taxes. His secretary, who made $60,000, paid 30% of hers.

How did we end up with this sorry state of affairs? Lawmakers in Congress have spent the past several decades systematically slicing the tax rates on America's top income brackets. Their rationale? Lower taxes on the top, free up capital for investment, and boost productivity. In actual economic practice, those lower taxes have served instead to fuel speculation and increase budget deficits. For the ultrarich themselves, the tax savings have been nothing short of breathtaking. Back in 1955, America's top 400 paid more than 50% of their incomes in federal tax, almost triple the rate of today's top 400.

We can fix this. Obama just announced his plan to end the Bush administration's high-income tax cuts. This is an important step. We can insist, also, that lawmakers end the preferential treatment of dividends and capital gains. And we can raise the tax rate that kicks in when taxpayers start collecting more than $10 million and $20 million a year. Steps like these would help get our future in order. But what about the past--and all those windfalls the super-rich have been pocketing as our economy veered into the ditch? Are we going to have to watch these billions multiply, generation after generation, into a new American aristocracy of wealth?

Not if we save the estate tax, the only federal levy on grand accumulations of private wealth. The rich and their retainers have been trying to repeal the estate tax for 20 years now. They haven't succeeded, but they have slashed the tax rate on the fortunes the ultrawealthy leave their heirs. Congress is about to begin debating legislation that would freeze the estate tax at the current bargain-basement rate set by President Bush. We can't let that happen. More than ever, America needs its ultrarich to chip in more.
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Old 02-23-2009, 10:59 PM   #17
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Hmmm, of the 240k or so of income we had last year, I paid about 40% of income taxes. After everything (retirements, social security, healthcare, etc... and such), I brought home aboout 8k per month. What is that x12? 96k? Hmm... Take mortgages out, 1 car payment, and some furniture, and of course food, and I'm at break even.

Yay America!
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Old 03-01-2009, 11:09 PM   #18
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Christ on crutches. For better or for worse, the kind of state you would favour stopped being even remotely viable in the early 19th century. Mid 19th century at latest.

As for everyone else, what the fuck is supposed to be done? Financeguy's on here every second day telling us (correctly enough I think) that major doom is spreading around the globe. But a stimulus package... nooo, heaven forbid, that would be teh debt.

Although I favour saving money, the thing is: if everyone did as I do, the collapse would be swifter, deeper and sooner. As it is, I've no idea what will happen.

It certainly is not the fault of governments that a bunch of financial institutions have all the finesse of sweat-slicked high stakes gamblers at 4 in the morning. Or to clarify, it may be the fault of poor or ill-considered regulatory frameworks... but there you have it, folks. The bankers are little children, who cannot exercise any good judgement on their own behalf. Who have no responsibility for their own actions. But what the fuck, no stimulus packages, that would be teh debt.
People believe, rightly or wrongly (mostly wrongly, in my view), that private enterprise has failed them in this financial crisis. It's obvious that there's going to be a huge shift back towards a Keynesian demand-management economic model - even though the theory is questionable.
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Old 03-01-2009, 11:11 PM   #19
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Hmmm, of the 240k or so of income we had last year, I paid about 40% of income taxes. After everything (retirements, social security, healthcare, etc... and such), I brought home aboout 8k per month. What is that x12? 96k? Hmm... Take mortgages out, 1 car payment, and some furniture, and of course food, and I'm at break even.

Yay America!

Erhm, it's your choice to have that high a mortgage. And the other stuff. Anyone can live on around 20k a year. Many live on less.
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Old 03-01-2009, 11:12 PM   #20
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Originally Posted by MadelynIris View Post
Hmmm, of the 240k or so of income we had last year, I paid about 40% of income taxes. After everything (retirements, social security, healthcare, etc... and such), I brought home aboout 8k per month. What is that x12? 96k? Hmm... Take mortgages out, 1 car payment, and some furniture, and of course food, and I'm at break even.

Yay America!
I am not sure that in the current economic situation you're going to get a lot of sympathy for having a family income of about a quarter million dollars.
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Old 03-02-2009, 09:29 AM   #21
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I noticed on my recent paycheck that I'm already getting a federal tax break.

Honestly, I'd be ok paying MORE taxes, provided that they are spent more responsibly. Used for things our country actually needs.....
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Old 03-02-2009, 10:02 AM   #22
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Originally Posted by MadelynIris View Post
Hmmm, of the 240k or so of income we had last year, I paid about 40% of income taxes. After everything (retirements, social security, healthcare, etc... and such), I brought home aboout 8k per month. What is that x12? 96k? Hmm... Take mortgages out, 1 car payment, and some furniture, and of course food, and I'm at break even.

Yay America!
I got laid off three weeks ago. My rent and student loan payments are due tonight, my cell phone bill was due a week ago, and I have a grand total of 48 cents in my bank account.

You can stuff your whining about only having $96,000 in disposable income right up your you-know-what.
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Old 03-02-2009, 10:08 AM   #23
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Hmmm, of the 240k or so of income we had last year, I paid about 40% of income taxes. After everything (retirements, social security, healthcare, etc... and such), I brought home aboout 8k per month. What is that x12? 96k? Hmm... Take mortgages out, 1 car payment, and some furniture, and of course food, and I'm at break even.

Yay America!
Looks like the war in Iraq has been good to you.
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Old 03-02-2009, 05:24 PM   #24
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I've got a pretty low mortgage payment, probably less than most on this board.

I guess the point I'm trying to make is, whether we, combined make 240k a year, or 50k a year) it seems the same to me -- that at the end of the day, taxes are a great equalizer. That there simply is a point, where it makes more sense to make less.

AliEnvy -- Much of my time in Iraq was donated, without pay, in fact the entire last month I was there.

DaveC, I'm terribly sorry for your situation. I've been there before, and who knows, might be there again, but what level of taxation do you advocate? Do you want everyone to have the same income?
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Old 03-02-2009, 05:27 PM   #25
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I guess the point I'm trying to make is, whether we, combined make 240k a year, or 50k a year) it seems the same to me. That at the end of the day, taxes are a great equalizer. That there simply is a point, where it makes more sense to make less.
Yeah I hear this argument a lot.

Would you be willing to live on $50K/year instead?

I can only speak for myself but I'd rather pay my 46% of tax and stay in my lofty income bracket than go down to living on $40K. If you feel differently, I don't think it would be difficult for you to take a job that's low paying.
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Old 03-02-2009, 05:43 PM   #26
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Yeah, Anitram, I understand. I also do some of this through charity and donations, but those at least, are choices that we make.

There are a few things that I would like you all to consider about this...

1) When we talk about raising the taxes on certain indivuals, (above certain income levels)etc... that we have some of those people as part of the discussion here. We really get behind the whole 'let's stick it to those guys' thing is a bit scary. The argument can't simply be "yeah, but since you make more you can pay more". It's really a twisted logic. I'm happy to pay more by virtue of making more, but not to exponentially crank up the percentage.

2) We don't get a lot of breaks in this category. At a certain point, we don't get the deductions, the write-offs, the tax breaks -- they just GO AWAY. I love those moments in turbo tax....they try to explain it to you in such polite terms too. Things like college -- I will pay a higher 'percentage' of my income for my kids' college. Why? Because I can. Seems fair right? When the family next to you gets to go at a 50% discount, or even free because of a variety of reasons.

I don't mean to whine, just want a chance to be represented, and heard.
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Old 03-02-2009, 06:02 PM   #27
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i think you should take a look at what the overall societal costs would be if your taxes were cut and overall revenue went down.

i'm guessing your kids probably have the option of good public schools, and i'm also guessing that the police probably keep your neighborhood pretty safe so you don't have to sleep on the floor for fear of a bullet crashing through the window. i bet your kids also benefit from being able to get lots of one-on-one time with other caring adults via arts, music, sports, extra tutoring. chances are, your kids are going to be just fine.

is it so bad that the family who makes $65K gets some deductions or a refund that they can then use to put towards whatever things might help their kids grow up well? or do you want it all to be fair, and then their kids through lack of a variety of things set up a crystal meth lab in the basement.

society treats you well -- should you not treat society well in return?

i suppose the bigger thing is the sense that you have, through your own merit, "earned" that $240K. have you? no one helped you earn that? you weren't given advantages through sheer luck of the birth lottery enabled you to make an income like that? it was all elbow grease and gumption? and not to say that you don't have both, but i think that there are people who make only $40K who have every bit the talent and work ethic that you do, but due to a variety of circumstance beyond their control, they have not had the opportunities afforded to you by ... taxes.
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Old 03-02-2009, 06:16 PM   #28
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There are a few things that I would like you all to consider about this...

1) When we talk about raising the taxes on certain indivuals, (above certain income levels)etc... that we have some of those people as part of the discussion here. We really get behind the whole 'let's stick it to those guys' thing is a bit scary. The argument can't simply be "yeah, but since you make more you can pay more". It's really a twisted logic. I'm happy to pay more by virtue of making more, but not to exponentially crank up the percentage.
I'm one of those individuals and I fully support raising taxes on MYSELF as well. And the progressive tax rate that we are exposed to is not exponential, or anything close to that. That is a word that gets thrown around for impact.

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2) We don't get a lot of breaks in this category. At a certain point, we don't get the deductions, the write-offs, the tax breaks -- they just GO AWAY.
Except that we can also afford good tax planning that is out of the reach of pretty much the entire middle class. Who here is ready to pay a tax lawyer at a large corporate firm some $600-700/hr (and those are just your junior partners I might add) to do their tax planning? The amount of income saved by this means is enormous, and let us not forget the time value of money that we benefit from by deferring certain taxes which you can only do if you have a proper investment base and adequate legal advice or a very good accountant.

I don't know about your social circles, but in mine, you'd be hard pressed to find ANYBODY who is in the highest 46% tax bracket who is not paying substantially less tax by structuring their affairs in the (financially) best possible way.
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Old 03-02-2009, 06:37 PM   #29
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Things like college -- I will pay a higher 'percentage' of my income for my kids' college. Why? Because I can. Seems fair right? When the family next to you gets to go at a 50% discount, or even free because of a variety of reasons.

I don't mean to whine, just want a chance to be represented, and heard.
OK, this may be off topic but I want to touch on this. I think my parents would have given their right arms to help us through college. It's something we never really talked about because I presume it's rather disheartening as a parent to NOT be able to help in some way, but it is what it is. The public school in our district is downright dangerous and I won't even get into their academic standards. So my parents lived in a shithole for years and poured everything into our elementary and secondary education (which costs more than many colleges/universities and there is no FAFSA or grants helping with that). My husband and I are nearly one hundred thousand dollars in debt with three degrees between the two of us. I pay more in rent per month than my parents may on their mortgage in a house that I could be perfectly happy in for 20 years, not to mention the student loan payments, and yet, even *we* can manage above break even. Granted, we drive lemons and do not live above (more like below) our means. I pay my bills on time, I have decent health insurance, I get some paid vacation, and I have enough money to enjoy my dogs and my other hobbies like photography and impromptu road tripping. Yes, I just got a tax break on my paycheck but I didn't need that to survive. I will assume based on your statement that you CAN afford to pay or help pay for your childrens' educations and based on that alone I would say that I know dozens of people and parents who would trade places with you in a minute, taxes and all, if it's such a burden.
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Old 03-02-2009, 06:55 PM   #30
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Except that we can also afford good tax planning that is out of the reach of pretty much the entire middle class.
Something like this is true of college financial aid as well; when I was in college I had several classmates whose parent(s) made considerably more than mine, yet got more aid because they'd been able to afford expert advice on the various ways of tweaking the system. I would love it if my kids don't wind up having to work full-time throughout college and any grad school (plus years of debt afterwards) like I did--I had no social life, which I think is regrettable--but still, ultimately the education is the most important thing, so if that's what happens, that's what happens.
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