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RobbyS
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The bottom 50% makes about a third of all the income. IAC, if the Bush tax rates expire, they will pay more.
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sedonaman
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No representation without taxation?
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sedonaman
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The bottom 50% are those below the median. Is it right that they pay nothing? I think not for several reasons. If everyone had to pay something, the poor would learn that it takes money to run a government and that they have the ability to give of themselves too. We just might turn around peoples’ attitude that the government owes them something.
As far as the income gap goes, so what? How am I hurt by Bill Gates’ making tons of money? Some posts back, I challenged those who want to tax the rich more because it’s only “fair” [whatever that means] to post the numbers on what they consider the ideal distribution of incomes. No one has done it yet, and they never will because it is highly subjective.
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JimG
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No, the government debt is not like household debt, because households cannot print money at will in order to pay back debt.
But it is still debt. And it is debt because the government continues to spend more than it takes in.
It used to be that the debt was mainly “money that we owed to ourselves” because it was mostly U.S. citizens who bought Treasury bonds. No more. Now we depend on overseas investors to be willing to refinance our debt periodically.
Even if it were just money we owed ourselves, I would still worry. If I buy Treasury debt, why should I or anyone else accept 1% or less interest on money that I loan to Uncle Sam, just because Ben Bernanke artificially holds down interest rates? At some point, people who buy government debt, especially the overseas investors are going to demand higher rates.
The government’s only source of income is taxes and fees charged to its citizens. If it continues to spend more than it takes in, it has to borrow money from those same citizens or overseas investors.
And I wouldn’t worry too much about continuing debt if I thought that it would be accompanied by continuing economic growth. But I don’t think that’s going to happen. Real estate prices, both residential and commercial, have not yet hit bottom, and that will be a drag on the economy for at least a few years to come. The overhanging federal debt, even if the debt limit is raised, and attempts are made to reduce the debt, will continue to overhang the economy for year to come.
The huge baby boomer generation will begin retiring, which will place new demands on Medicare, Social Security, and Medicaid for decades, at precisely the time when we have a declining cohort of younger workers who must support all those programs.
During the Vietnam war, there were draft protesters who chanted: “H*** no, I won’t go!” I can imagine future debt protesters chanting “No way, I won’t pay!”
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Roman_Catechism
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Every single time I read about how much the wealthiest Americans are actually paying in taxes I just get more confused. When I try to study the tax code on the internet to see what’s really going on all I get is a bunch of partisan nonsense.
How much are they actually paying, and how much of a “burden” is it to them really, after all of the loopholes are factored in!? Is there anyone that actually truly understands our ludicrously complicated tax code that can answer me!!? Because I can’t honestly make a judgement on the morality of any particular political system unless I have a basic understanding of it.
How much are they actually paying, and how much of a “burden” is it to them really, after all of the loopholes are factored in!? Is there anyone that actually truly understands our ludicrously complicated tax code that can answer me!!? Because I can’t honestly make a judgement on the morality of any particular political system unless I have a basic understanding of it.
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copperblade
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Obama has not raised the debt more than Bush did in his entire presidency. He’s raised it more in his first term than Bush did in his first term though. And during a recession it’s necessary. I don’t blame Bush for TARP–I think it was needed. Likewise, I don’t blame Obama for spending during a recession. I also think it’s needed.
Bush instituted the tax cuts which Obama is continuing. Frankly, I see almost no difference between Obama and Bush except that Republicans like Bush, and Democrats like Obama. The biggest difference may be Bush wanted to privatize social security.
Our taxes are at historical lows right now, especially for the upper income earners who were paying obscene percentages in the past. I think if you want to call a state socialist, communist, or whatever word is being thrown around today, it means people get less of their earnings than society does–a tax rate of over 50%. I think the tax code is currently more fair than it has been in the past. The “welfare state” that some people complain about all the time is a legitimate complaint, however I think it’s been blown out of proportion.
Also, I’d like to point out that the President isn’t the only player here. For example, people want to give all the credit to Clinton for balancing the budget, but I think that’s unfair because I think Gingrich deserves some of the credit. Also generally we should be blaming Congress for budgetary problems. Seems that Republicans in the white house are no longer fiscally conservative.
On a different note, is the level of disposable income the ultimate good? What is the purpose of money, society, government policy, etc?
The latest statistic I have says the bottom 50% make 13% of the income, not 33%. They pay only 3% of the taxes. So they’re getting a 10% break, which the top 50% covers. Why do you feel Obama is so much worse than Bush if they’re the “Bush tax rates”?
I think it is appropriate for everyone to pay something, even if just for psychological reasons. People need to have a vested interest in the rest of society.
I have no idea what kind of job you do, how you make your money, what income level you are at, or what your relationship specifically to Gates is. Individuals in a society do not operate in a vacuum. Bill Gates’ money does probably affect you, and has affected a lot of people. We’re just lucky that Gates is a great guy. But even Gates and Buffet put together couldn’t use all their money to fix our current monetary situation. There’s much bigger things at work here.
So to answer your question, let’s take your example to the extreme: let’s say 1 person has 99% of the income, and the rest of the population gets 1% of the income, spread evenly. Let’s say the one guy at the top doesn’t even try to lobby to change laws or anything–he’s just making his money. First, you’ll notice that a flat tax rate means that one person is paying 99% of the taxes, and some people here feel that’s unfair. But how do you think it works that one person makes 99% of the income in a year? Is he doing 99% of the work in the country all by his lonely self? Or is everyone just really working for him? That’s how the top 1% affect society: they own it.
In the current state of affairs, I do think the tax should be flatter and that the breaks on both high and low incomes should be revoked. But I’m really not offended by the bottom 13% of earnings getting a 10% tax break.
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ComputerGeek25
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I understand your concern about the tax code and the relative burden on people.
I guess there are a few issues of morailty here that have to be considered:
- Is it moral to lobby a legislative body to increase the number of tax deductions/loopholes/exemptions? Especially at the expense of others? Should we just do away with all deductions/loopholes/exemptions? But if we did that and kept the rates the same, wouldn’t that just hurt as well?
- 50% of wage earners do not pay any type of federal tax, but they reap the rewards of having others pay taxes. And of course no one wants their taxes raised. How is this fair? Also, were do we draw the line of who should be paying taxes or not? People think “the rich” should pay more but that opens another pandoras box of morality (i.e. you shall not covet your neighbors goods, you shouldn’t steal).
- Lastly, government has provent they are an inefficient organization. They are not constrained by the forces that business and non-profits or even you and I are governed by. For one thing, the government can print it’s own money. it is expected that anyone should be good stewards of the money they recieve. If a business does not manage it’s money wisely, it goes out of business. If the government wastes it’s money it just goes out and prints or taxes more. How is that good stewardship of funds?
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Roman_Catechism
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But the wealthy supposedly pay a smaller percentage of their income in taxes… And yes, government is inefficient. It was even designed that way. But our businesses aren’t efficient either, or we wouldn’t have to bail them out all the time.
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ComputerGeek25
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Again, is it because they take advantage of any loop holes? If so, they have done it fair and square.
I say we elimiate any loop holes and deductions and just say you owe us X%. I am a proponent of the flat tax with no deductions and a nation sales tax.
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sedonaman
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I use Windows on my computer.
Not to get OT, but try telling some people that gay marriage has an effect on everyone and see how far that gets you.
This doesn’t even begin to answer my question of what is the ideal wealth distribution, as in a distribution curve.
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Roman_Catechism
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This bolded sentence makes no sense to me. They have not done it fair and square. The wealthiest members of our society have a disproportionate representation in Congress. (The Supreme Court even recently ruled that corporations are people.) They own our society.
Although I’m not sure what the consequences would be, I think I can almost agree with this flat tax idea. But that seems rather idealistic.
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sedonaman
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No. Every year at tax time, there is a program on TV about how to prepare taxes. Part of it involves giving a hypothetical tax return scenario to X number of tax preparer companies and asking them to figure the tax liability; they always get X number of different answers … from experts! They then announce the the right answer and the company that came closest to the right answer. Why the TV program’s is right and everyone else’s is wrong is not addressed.
When you find out, there’s probably a good job waiting for you. And please let me know.
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copperblade
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Hmmmm, sorry. I think the “ideal” is to have a bulk of the people in the middle like a nice bell curve. Right now I think we still have something decent, but it seems to be moving in the wrong direction. Here’s one idea of ideal distribution:
Figure 4: The actual United States wealth distribution plotted against the estimated and ideal distributions.
sociology.ucsc.edu/whorulesamerica/power/wealth.html
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copperblade
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So far this is the best thing I’ve seen on the net:
sociology.ucsc.edu/whorulesamerica/power/wealth.html
It says it’s been updated for 2010, gives a lot of information, and seems to indicate what you’re saying: all the arguments are really politics.
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copperblade
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sedonaman
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This is the first time anyone has offered some numbers. It’s going to take me a while to read over it. Thx.
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sedonaman
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Figure 4 is not really an ideal; it shows what it currently is, what the survey respondents think it is, and what the survey respondents think what the ideal distribution should be. People arrive at such conclusions in a highly subjective manner. It’s a good paper, but the author does not offer an opinion on what would be ideal. Such an opinion would * be based on some logic and therefore carry more weight than just what the people think.*
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sedonaman
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There are those who work to earn a living and there are those who vote to earn a living by taking from those who work for a living and pay income taxes.
The paper seems to exclude the wealth/income of transfer payments:
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Unemployment compensation -
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Public welfare programs (USG alone was $750,000,000 in 2010) -
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Public college scholarships / grants -
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Medicaid (USG and state government subsidized – USG alone was $482,000,000 in 2010 and the states add hundreds of billions more) -
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Medicare (USG mandatory spending, annual $468,000,000) -
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CHIP Medical Care – (USG and state government subsidized) -
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Social Security (USG subsidized – total is 20% of US budget - $761,000,000 in 2011) -
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Head-start -
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Public aid for K-12 education - Nutrition (formerly food) stamps
- All mandatory programs other then SS, Medicare, and Medicaid - $598,000,000. These programs include Food Stamps, Unemployment Compensation, Child Nutrition and Tax Credits, Supplemental Security for the Disabled and Student Loans.
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JimG
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We can tax the rich at a 95% rate, but it still won’t be enough to cover Medicare, Medicaid, Social Security, Unemployment Benefits, Food Stamps, and a host of entitlement programs.
I wish there were more rich people. Rich people spend more money, and that creates jobs for all kinds of people.
And all that wealth is not idle. Even if a billionaire just deposits all his money in the bank, the bank uses those deposits to lend to businesses, which create jobs and help the economy. Or the rich might put money into mutual funds or venture capital, or they buy IPO’s and that helps new business get started and old businesses to innovate. The only really idle money is that which is used to buy gold, which just sits around doing nothing productive.
Or, rich people could just give all their money to the government, which would waste a great deal of it, and make less productive use of what’s left than the private sector.
But business enterprise seems not to be much encouraged by governments. In Midway, Georgia, three girls started a lemonade stand on a private residence to raise money for a trip. The police closed it down, because they didn’t have a business license, peddlers permit, and food permit.
I wish there were more rich people. Rich people spend more money, and that creates jobs for all kinds of people.
And all that wealth is not idle. Even if a billionaire just deposits all his money in the bank, the bank uses those deposits to lend to businesses, which create jobs and help the economy. Or the rich might put money into mutual funds or venture capital, or they buy IPO’s and that helps new business get started and old businesses to innovate. The only really idle money is that which is used to buy gold, which just sits around doing nothing productive.
Or, rich people could just give all their money to the government, which would waste a great deal of it, and make less productive use of what’s left than the private sector.
But business enterprise seems not to be much encouraged by governments. In Midway, Georgia, three girls started a lemonade stand on a private residence to raise money for a trip. The police closed it down, because they didn’t have a business license, peddlers permit, and food permit.
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sedonaman
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In one of its relatively saner moments, The PBS News Hour had on the intellectual giant Sister Souljah en.wikipedia.org/wiki/Sister_Souljah to discuss the then economic situation. Her complaint with tax cuts “for the rich” was that they wouldn’t spend it, as though spending was the only way to stimulate the economy. She was obviously an authority out of her field.
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