OMB: Top 20% pay 95% of taxes, middle class 'single digits'

[Brian4Liberty]

The net amount people pay is irrelevant but the percentage sure is. I think the progressive tax system is THE biggest injustice in the US. Everyone should pay the same rate. And the idea that gas and cigarette tax is "regressive" is BS. Laws should be the same for everyone. If there's a gas tax, everyone should pay the same %. If there's an income tax, same percent. That's like saying we should have certain murder laws for people who make under 50k and certain laws for people who make over 50k.

The "progressive" system makes the greatest number of people happy. The low income social justice warriors think they are taxing (redistributing) the rich, and the rich know that they have enough loopholes to pay less than the middle class. It's win-win.

I would rather no one pay incomes taxes, but without that, I'd be happy with a progressive system that is zero all the way up to $1,000,000/year. Pretty sure that was the original sales job to get income tax passed in the first place.

 

[Brian4Liberty]

Ah, Keynesianism. Krugman would be proud. Cutting taxes without cutting spending will give a temporary boost to the economy, a bubble if you will, that will collapse as the inflation required to maintain national spending devalues the "extra" money now in private hands. A tax cut without spending cuts is no tax cut at all. It just obfuscates the tax by monetizing it.

Not that I would defend supply-side economics, but IIRC, it's not really considered Keynesianism.

Supply-side economics developed in response to the stagflation of the 1970s.[6] It drew on a range of non-Keynesian economic thought, including the Chicago School and New Classical School.

 

[Zippyjuan]

The "progressive" system makes the greatest number of people happy. The low income social justice warriors think they are taxing (redistributing) the rich, and the rich know that they have enough loopholes to pay less than the middle class. It's win-win.

I would rather no one pay incomes taxes, but without that, I'd be happy with a progressive system that is zero all the way up to $1,000,000/year. Pretty sure that was the original sales job to get income tax passed in the first place.

A couple of reasons. One, is to get people to agree to taxes, convince them that they will pay little to nothing themselves. Somebody else will pay (which is also why some here like the idea of tariffs- they think others, not them, will pay the taxes- though they ARE paying- the tax will be in the price of everything they buy- they would probably end up paying more in these hidden taxes than they currently pay in income taxes since half of all income tax filers end up not owing any net income taxes). "We won't tax the average Americans, just a few rich ones!"

Second, if you want money for the government, you need to get it from people who have money. Tax people making $20,000 a year, and you won't be able to collect very much revenue. Tax people with $1 million and you can get more money since they already have 90% of the money.

 

[Zippyjuan]

My household makes 110 k, in a suburb of nyc. We're poor as f. Childcare and rent are 3000 a month after taxes of course. That tax cut can't come fast enough.

$133,445 would get you into the "Top Ten Percent" club. You earn twice the median income (median meaning half the population earns less than that). Poor? http://www.investopedia.com/news/how-much-income-puts-you-top-1-5-10/

The top 5% of households earn an annual income of $214,462 or higher, according to the Census Bureau. That’s nearly four times the 2015 nationwide median household income of $56,516. The average income among those in the top 5% climbed to $350,870. Overall, this group lays claim to a 22.1% share of total household income in the U.S. Source:

To be certified as a one-percenter, you’ll need to bring in even more income each year. According to statistical data from the Internal Revenue Service (IRS), the top 1% had an adjusted gross income of $465,626 or higher for the 2014 tax year. The Washington Center for Equitable Growth put the average household income for this group at $1,260,508 for 2014.

If you want to cross the top 10% mark, you’ll still need a six-figure income but the numbers aren’t quite as high. The IRS sets the adjusted gross income cutoff required to be in the 10% group at $133,445, based on 2014 tax data. Once again, the average household income for the top 10% of earners is higher, at $295,845.

 

[Brian4Liberty]

$133,445 would get you into the "Top Ten Percent" club. You earn twice the median income (median meaning half the population earns less than that). Poor? http://www.investopedia.com/news/how-much-income-puts-you-top-1-5-10/

Which is why in general any fixed amount at the national level is ridiculous. Percentage solves that. I suppose the best substitute for a fixed amount would be an amount adjusted at the very local level. Perhaps based on the average cost of a single family home in the given city. Too complex though, and as usual, prone to manipulation.

 

[Krugminator2]

Ah, Keynesianism. Krugman would be proud. Cutting taxes without cutting spending will give a temporary boost to the economy, a bubble if you will, that will collapse as the inflation required to maintain national spending devalues the "extra" money now in private hands. A tax cut without spending cuts is no tax cut at all. It just obfuscates the tax by monetizing it.

Cutting tax rates, which is what is being proposed, is not Keynesianism. There is a good chapter on supply side economics in the Economic Way of Thinking which is a very easy to read introductory economic text. The book is almost free on Amazon. It is worth learning basic economics.

https://www.amazon.com/Economic-Way...7095&sr=8-3&keywords=economic+way+of+thinking

And just in case you don't make the effort, I'll put it very simply. A tax is a disincentive. Income comes from production. Income taxes are therefore a disincentive to production. Lowering and flattening rates encourages more production.

 

[Swordsmyth]

SPENDING IS THE PROBLEM, WE MUST DRASTICALLY CUT SPENDING SO WE CAN CUT ALL TAXES

 

[Zippyjuan]

SPENDING IS THE PROBLEM, WE MUST DRASTICALLY CUT SPENDING SO WE CAN CUT ALL TAXES

What items would you cut? Social Security and risk getting blamed for putting grannie out on the streets and making her eat catfood and losing your re-election? Medicare/ Medicaid? Again, making it tough on grannie (Ron Paul said he would not cut those but "honor commitments" to those who have qualified for benefits)? Maybe the Department of Defense? Gotta take care of those terrorists. Can't be soft on them. That would cost Republicans votes. They are big on defense. Leave those off and the maximum you can cut is about $500 billion in a $4 trillion budget.

Talking cuts is good- people like that idea. Until you tell them the things you want to cut. Then they start getting upset.

You are right though, it is more important to cut the spending than to cut taxes at this time. Cutting taxes only piles on more debt (proposals for tax cuts total some $4.5 trillion over the next ten years- the budget resolution would allow them to try to pass $1.5 trillion of those). Details of tax cut proposals are supposed to be out later this week.

 

[Krugminator2]

SPENDING IS THE PROBLEM, WE MUST DRASTICALLY CUT SPENDING SO WE CAN CUT ALL TAXES

You should do both. To me, they are both issues of efficiency. My thinking.\:

Government spending diverts resources away from the productive private sector which means the economy will grow slower over time.

Progressive income taxes with high marginal rates lower production on the margin. High rates also encourage people to shift income to places with low rates. The US has the highest marginal corporate income tax rate so companies shift operations on the margins away from the US which makes the country less productive.

 

[Krugminator2]

Really? From your link:

The second link show Ireland lower and it uses 2015 data. The chart you showed used 2014 data, so I went with the more recent data.

What items would you cut?. Social Security and risk getting blamed for putting grannie out on the streets and making her eat catfood and losing your re-election? Medicare/ Medicaid? Again, making it tough on grannie (Ron Paul said he would not cut those but "honor commitments" to those who have qualified for benefits)? Maybe the Department of Defense? Gotta take care of those terrorists. Can't be soft on them. That would cost Republicans votes. They are big on defense. Leave those off and the maximum you can cut is about $500 billion in a $4 trillion budget.

Medicare is the budget and is the most important thing to cut. It is underfunded by infinity The most politically feasible thing to do would be to means test SS/Medicare. The Dems can "stick it to the rich" and Republicans can be fiscally responsible. Then the age of eligibility should be aggressively raised. People are living much longer than the when the programs started and it should be explained that the programs are in horrible shape.

And it is horribly immoral to "honor commitments" to people who left the programs in such bad shape. The programs are bankrupt and that should be the mentality for those getting benefits. They should get a fraction of what is promised. The easiest way politically to dothat would be to cut benefits for people who need them least.

 

[Zippyjuan]

The second link show Ireland lower and it uses 2015 data. The chart you showed used 2014 data, so I went with the more recent data.

Thanks.

 

[Swordsmyth]

What items would you cut? Social Security and risk getting blamed for putting grannie out on the streets and making her eat catfood and losing your re-election? Medicare/ Medicaid? Again, making it tough on grannie (Ron Paul said he would not cut those but "honor commitments" to those who have qualified for benefits)? Maybe the Department of Defense? Gotta take care of those terrorists. Can't be soft on them. That would cost Republicans votes. They are big on defense. Leave those off and the maximum you can cut is about $500 billion in a $4 trillion budget.

We have had this discussion before, DOD is the prime target, $500B in a $4T budget is a significant fraction in and of itself, and there are lots of government departments that can be eliminated entirely, all the rest can be drastically cut by eliminating waste, fraud and abuse.

And don't allow any new enrollments on SS or medicare etc.

 

[TheTexan]

Just as I thought, that Fed study based that figure on total tax burden compared to national GDP, not on an individual level.

https://www.chicagofed.org/publications/chicago-fed-letter/2017/382#ftn7

An individual, or a family of four, pay over 50% of their income every year in combined taxation.

Sure, the effective tax rate is right at 50% for anyone earning a half decent living, but thats a small price to pay for roads, police, fire, and 4000 military bases around the world

 

[Zippyjuan]

We have had this discussion before, DOD is the prime target, $500B in a $4T budget is a significant fraction in and of itself, and there are lots of government departments that can be eliminated entirely, all the rest can be drastically cut by eliminating waste, fraud and abuse.

And don't allow any new enrollments on SS or medicare etc.

Get rid of every single department and you are still spending $3.5 trillion. That would about balance your budget. If you cut 100% of EVERYTHING except defense, Social Security, and Medicare. Waste, fraud, and abuse are pennies out of the $4 trillion. Can't get to a balanced budget that way. And again, whatever you want to cut, you piss off voters which costs you votes in the next election.

 

[TheTexan]

And even a lower tax rate of 25% is a perfectly reasonable, rational amount.

I mean, all the other countries do it

 

[Swordsmyth]

Get rid of every single department and you are still spending $3.5 trillion. That would about balance your budget. If you cut 100% of EVERYTHING except defense, Social Security, and Medicare. Waste, fraud, and abuse are pennies out of the $4 trillion. Can't get to a balanced budget that way. And again, whatever you want to cut, you piss off voters which costs you votes in the next election.

Cut government regulations and tax receipts will rise dramatically, and we can gut the DOD budget without losing votes by closing all overseas bases, stopping the wars and bringing the boys back home.

 

[Krugminator2]

And don't allow any new enrollments on SS or medicare etc.

The problem is SS/Medicare are Ponzi schemes. The government would be paying benefits for the next 70+ years and if you stop enrolling people those payroll taxes will go away which would make the underfunding much worse. So you you would still end up at the solution of having to cut benefits.

Cut government regulations and tax receipts will rise dramatically, and we can gut the DOD budget without losing votes by closing all overseas bases, stopping the wars and bringing the boys back home.

Philosophically I am for that. But the United States spends less now as a percentage of GDP than at most points in the last 100 years. Military spending is historically low right now. Entitlements are the bulk of budget.

 

[Swordsmyth]

The problem is SS/Medicare are Ponzi schemes. The government would be paying benefits for the next 70+ years and if you stop enrolling people those payroll taxes will go away which would make the underfunding much worse. So you you would still end up at the solution of having to cut benefits.

They could keep the taxes until all the beneficiaries are dead but stop adding beneficiaries, that is not good but it is the best option we have had since the inception of the entitlements.

 

[Krugminator2]

They could keep the taxes until all the beneficiaries are dead but stop adding beneficiaries, that is not good but it is the best option we have had since the inception of the entitlements.

So you would be dicking over anyone just entering the labor force, making them pay for the generation who was irresponsible with government spending.

 

[Swordsmyth]

So you would be dicking over anyone just entering the labor force, making them pay for the generation who was irresponsible with government spending.

I don't like it, but do we have any better way out of the system?