120 Days to Go Until the Largest Tax Hikes in US History

[calculoso]

Originally Posted by Flames Fan, Ph.D.

Consider one of these claims in the article:

Mr. Upham notes that his taxes have increased 7 fold.

Although academics like to made differentiators as to what pocket money flowing out goes in to, most people see "money going to government" = "tax".

The sense that I got, reading the article, is that the "Taxes" he is paying also includes the medicare, etc. There are many other taxes other than just the Income Tax rate.

[peter12]

The more that I read both sides' arguments on this issue, the more that I think global capitalism as a functionary economic system is totally bunk.

[bizaro86]

Originally Posted by calculoso

Although academics like to made differentiators as to what pocket money flowing out goes in to, most people see "money going to government" = "tax".

Whatever you call it, if its going to the government, it counts as a tax. I also like to ask this question, "Is paying this money to the government optional?" If the answer is no, then its a tax.

[Canada 02]

Originally Posted by Flames Fan, Ph.D.

Mr. Upham notes that his taxes have increased 7 fold.

Well, that means that his maximum tax rate prior to the 7 fold increase was 14.3% (since 7 x 14.3 = 100).

more likely, he's talking about a hard number as opposed to a percentage. He was paying $10000 in taxes, and is now paying $70000 for example.

He does say revenues doubled, leading to the hiring of two additional agents - presumably this increased business for him allowing him to earn more money, possibly pusing him into a higher tax bracket, consequently paying more in taxes

[Flames Fan, Ph.D.]

Originally Posted by calculoso

The sense that I got, reading the article, is that the "Taxes" he is paying also includes the medicare, etc. There are many other taxes other than just the Income Tax rate.

Surely there is FICA and Medicare, as I noted.

However, neither have changed since 1990.

http://www.ssa.gov/OACT/ProgData/taxRates.html

[Flames Fan, Ph.D.]

Originally Posted by Canada 02

more likely, he's talking about a hard number as opposed to a percentage. He was paying $10000 in taxes, and is now paying $70000 for example.

He does say revenues doubled, leading to the hiring of two additional agents - presumably this increased business for him allowing him to earn more money, possibly pusing him into a higher tax bracket, consequently paying more in taxes

I have no doubt that the business owner was talking about hard numbers.

However, those hard numbers are still based on a tax rate.

Use your example and try to back-calculate a reasonable tax rate that increases his absolute taxes seven fold to $70,000. You'll see the inherent silliness in the WaPo example.

[calculoso]

Originally Posted by Flames Fan, Ph.D.

I have no doubt that the business owner was talking about hard numbers.

However, those hard numbers are still based on a tax rate.

Can you prove he was talking about Income Tax alone?

[Flames Fan, Ph.D.]

Originally Posted by calculoso

Can you prove he was talking about Income Tax alone?

FICA and Medicare rates haven't changed in 2 decades.

There aren't very many taxes left other than income.

Which ones are you thinking?

[calculoso]

Originally Posted by Flames Fan, Ph.D.

FICA and Medicare rates haven't changed in 2 decades.

There aren't very many taxes left other than income.

Which ones are you thinking?

There are a whole lot of ways that his tax bill could go up:

- Payroll taxes
- R&D taxes
- Real Estate taxes (including but not limited to Property tax)
- Sales taxes
- Capital gains taxes
- Tax credits that are no longer received
- Increased medicare costs due to more people
- etc etc

He said his tax bill went up sevenfold, not his tax rate. It could have been a bit here and a bit there. Attempting to limit it to one income tax in order to discredit him is extremely simplistic.

[Flames Fan, Ph.D.]

Originally Posted by calculoso

There are a whole lot of ways that his tax bill could go up:

- Payroll taxes
- R&D taxes
- Real Estate taxes (including but not limited to Property tax)
- Sales taxes
- Capital gains taxes
- Tax credits that are no longer received
- Increased medicare costs due to more people
- etc etc

He said his tax bill went up sevenfold, not his tax rate. It could have been a bit here and a bit there. Attempting to limit it to one income tax in order to discredit him is extremely simplistic.

Payroll taxes include income tax withholding (which doesn't impact the employer), SS and Medicare (constant for 2 decades now), and unemployment tax (hasn't changed and is capped in that only 7000 of the employee wage is taxed).

I can't speak to sales or real estate tax as it depends where they live. Ditto for tax credits as it relates to their area of work.

Capital gains haven't changed.


So yeah, there are unknowns. But these are the minority of taxes as compared to income, FICA and Medicare. I'll ask you to try and run some hypothetical numbers wherein someone's tax bill goes up sevenfold... the only solutions that come up are those whereby the total tax percentage they're paying is really low. Otherwise the numbers just don't work.

[Shazam]

There's an Obama tax, there's a You Voted Republican So Therefore Must Be Punished tax, and don't forget the Anal Lube tax.

[troutman]

Bill Maher rant on wealthy cry-babies:

http://www.huffingtonpost.com/bill-m..._b_737429.html

I've done some math that indicates that, considering the hole this country is in, if you are earning more than a million dollars a year and are complaining about a 3.6% tax increase, then you are by definition a greedy a-hole.

And let's be clear: that's 3.6% only on income above 250 grand -- your first 250, that's still on the house. Now, this week we got some horrible news: that one in seven Americans are now living below the poverty line.

Who do you think outsourced all the jobs, destroyed the unions, and replaced workers with desperate immigrants and teenagers in China. Joe the Plumber?

We have more billionaires here in the U.S. than all the other countries in the top ten combined, and their wealth grew 27% in the last year. Did yours? Truth is, there are only two things that the United States is not running out of: Rich people and bull. Here's the truth: When you raise taxes slightly on the wealthy, it obviously doesn't destroy the economy -- we know this, because we just did it -- remember the '90's? It wasn't that long ago. You were probably listening to grunge music, or dabbling in witchcraft. Clinton moved the top marginal rate from 36 to 39% -- and far from tanking, the economy did so well he had time to get his dick washed.

Even 39% isn't high by historical standards. Under Eisenhower, the top tax rate was 91%. Under Nixon, it was 70%. Obama just wants to kick it back to 39 -- just three more points for the very rich. Not back to 91, or 70. Three points. And they go insane.

[Shazam]

I want to see those Nixon rates again.

What's really strange is that whenever I talk to older Americans about the top tax rates in the past, they're always shocked as to how high they were. Makes me wonder just how much they were paying attention back then.

[Flames Fan, Ph.D.]

Originally Posted by troutman

Bill Maher rant on wealthy cry-babies:

http://www.huffingtonpost.com/bill-m..._b_737429.html

Here is one a-hole (in Maher's words) who wrote a post that got quite a bit of discussion happening in the US:

We are the Super Rich « Truth on the Market: Posted by Todd Henderson on September 15, 2010

The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t.

I, like the president before me, am a law professor at the University of Chicago Law School, and my wife, like the first lady before her, works at the University of Chicago Hospitals, where she is a doctor who treats children with cancer. Our combined income exceeds the $250,000 threshold for the super rich (but not by that much), and the president plans on raising my taxes. After all, we can afford it, and the world we are now living in has that familiar Marxian tone of those who need take and those who can afford it pay. The problem is, we can’t afford it. Here is why.

The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home. (If my wife and I divorced or were never married, the government would write us a check for tens of thousands of dollars. Talk about perverse incentives.)

Our next biggest expense, like most people, is our mortgage. Homes near our work in Chicago aren’t cheap and we do not have friends who were willing to help us finance the deal. We chose to invest in the University community and renovate and old property, but we did so at an inopportune time.

We pay about $15,000 in property taxes, about half of which goes to fund public education in Chicago. Since we care the education of our three children, this means we also have to pay to send them to private school. My wife has school loans of nearly $250,000 and I do too, although becoming a lawyer is significantly cheaper. We try to invest in our retirement by putting some money in the stock market, something that these days sounds like a patriotic act. Our account isn’t worth much, and is worth a lot less than it used to be.

Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.

If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

If these cuts don’t work, we will sell our house – into an already spiraling market of declining asset values – and our cars, assuming someone will buy them. The irony here, of course, is that the government is working to save both of these industries despite the impact that increasing taxes will have.

The problem with the president’s plan is that the super rich don’t pay taxes – they hide in the Cayman Islands or use fancy investment vehicles to shelter their income. We aren’t rich enough to afford this – I use Turbo Tax. But we are rich enough to be hurt by the president’s plan. The next time the president comes home to Chicago, he has a standing invitation to come to my house (two blocks from his) and judge for himself whether the Hendersons are as rich as he thinks.




Original link and discussion can be found at:

http://delong.typepad.com/sdj/2010/0...henderson.html

One interesting comment from the link is that the psychology of the rich has been impacted by the burgeoning income of the uber rich. In other words, the "ordinary" rich are having trouble keeping up with the super rich, and that is making them *feel* that they're no longer wealthy.

[valo403]

Originally Posted by Flames Fan, Ph.D.

Here is one a-hole (in Maher's words) who wrote a post that got quite a bit of discussion happening in the US:

We are the Super Rich « Truth on the Market: Posted by Todd Henderson on September 15, 2010

The rhetoric in Washington about taxes is about millionaires and the super rich, but the relevant dividing line between millionaires and the middle class is pegged at family income of $250,000. (I’m not a math professor, but last time I checked $250,000 is less than $1 million.) That makes me super rich and subject to a big tax hike if the president has his way.

I’m the president’s neighbor in Chicago, but we’ve never met. I wish we could, because I would introduce him to my family and our lifestyle, one he believes is capable of financing the vast expansion of government he is planning. A quick look at our family budget, which I will happily share with the White House, will show him that like many Americans, we are just getting by despite seeming to be rich. We aren’t.

I, like the president before me, am a law professor at the University of Chicago Law School, and my wife, like the first lady before her, works at the University of Chicago Hospitals, where she is a doctor who treats children with cancer. Our combined income exceeds the $250,000 threshold for the super rich (but not by that much), and the president plans on raising my taxes. After all, we can afford it, and the world we are now living in has that familiar Marxian tone of those who need take and those who can afford it pay. The problem is, we can’t afford it. Here is why.

The biggest expense for us is financing government. Last year, my wife and I paid nearly $100,000 in federal and state taxes, not even including sales and other taxes. This amount is so high because we can’t afford fancy accountants and lawyers to help us evade taxes and we are penalized by the tax code because we choose to be married and we both work outside the home. (If my wife and I divorced or were never married, the government would write us a check for tens of thousands of dollars. Talk about perverse incentives.)

Our next biggest expense, like most people, is our mortgage. Homes near our work in Chicago aren’t cheap and we do not have friends who were willing to help us finance the deal. We chose to invest in the University community and renovate and old property, but we did so at an inopportune time.

We pay about $15,000 in property taxes, about half of which goes to fund public education in Chicago. Since we care the education of our three children, this means we also have to pay to send them to private school. My wife has school loans of nearly $250,000 and I do too, although becoming a lawyer is significantly cheaper. We try to invest in our retirement by putting some money in the stock market, something that these days sounds like a patriotic act. Our account isn’t worth much, and is worth a lot less than it used to be.

Like most working Americans, insurance, doctors’ bills, utilities, two cars, daycare, groceries, gasoline, cell phones, and cable TV (no movie channels) round out our monthly expenses. We also have someone who cuts our grass, cleans our house, and watches our new baby so we can both work outside the home. At the end of all this, we have less than a few hundred dollars per month of discretionary income. We occasionally eat out but with a baby sitter, these nights take a toll on our budget. Life in America is wonderful, but expensive.

If our taxes rise significantly, as they seem likely to, we can cut back on some things. The (legal) immigrant from Mexico who owns the lawn service we employ will suffer, as will the (legal) immigrant from Poland who cleans our house a few times a month. We can cancel our cell phones and some cable channels, as well as take our daughter from her art class at the community art center, but these are only a few hundred dollars per month in total. But more importantly, what is the theory under which collecting this money in taxes and deciding in Washington how to spend it is superior to our decisions? Ask the entrepreneurs we employ and the new arrivals they employ in turn whether they prefer to work for us or get a government handout.

If these cuts don’t work, we will sell our house – into an already spiraling market of declining asset values – and our cars, assuming someone will buy them. The irony here, of course, is that the government is working to save both of these industries despite the impact that increasing taxes will have.

The problem with the president’s plan is that the super rich don’t pay taxes – they hide in the Cayman Islands or use fancy investment vehicles to shelter their income. We aren’t rich enough to afford this – I use Turbo Tax. But we are rich enough to be hurt by the president’s plan. The next time the president comes home to Chicago, he has a standing invitation to come to my house (two blocks from his) and judge for himself whether the Hendersons are as rich as he thinks.




Original link and discussion can be found at:

http://delong.typepad.com/sdj/2010/0...henderson.html

One interesting comment from the link is that the psychology of the rich has been impacted by the burgeoning income of the uber rich. In other words, the "ordinary" rich are having trouble keeping up with the super rich, and that is making them *feel* that they're no longer wealthy.

He lost me at 'I'm a professor at one of the top law schools in the country and my wife is a doctor and we barely make over $250k combined'. Sorry, but that's BS. Unless he's a first year writing professor and she's a volunteer there's no way that's accurate. Not to mention the fact that to become a professor at UC he'd almost certainly have spent a pretty substantial amount of time at a large firm pulling down a minimum of $160k a year, and that's to start. After a few years he would have been making $250k himself easily.

The point is legitimate, but this particular guy is blowing smoke IMO.

[Flames Fan, Ph.D.]

Originally Posted by valo403

He lost me at 'I'm a professor at one of the top law schools in the country and my wife is a doctor and we barely make over $250k combined'. Sorry, but that's BS. Unless he's a first year writing professor and she's a volunteer there's no way that's accurate. Not to mention the fact that to become a professor at UC he'd almost certainly have spent a pretty substantial amount of time at a large firm pulling down a minimum of $160k a year, and that's to start. After a few years he would have been making $250k himself easily.

The point is legitimate, but this particular guy is blowing smoke IMO.

Quite assuredly he well understated the family income. Here are a few more comments about this poor man's plight.

http://www.samefacts.com/2010/09/eco...#comment-48552

http://delong.typepad.com/sdj/2010/0...henderson.html