Who benefits from US tax-cut extension? [Chart]

Barry Ritholtz sez, "The NYTimes graphic department has your Sunday morning chart porn regarding the extension of tax cuts. Its an illustration fueled by data from the Tax Policy Center, a nonpartisan research organization. The graphic shows how much Americans have gotten so far broken down by income groups. And it calculates that extending all of the Bush Tax Cuts for the next decade will cost another $2.7 trillion (through 2020)."

Your Coming Tax Cut (or Not) (Thanks, Barry, via Submitterator!)


  1. Not extending all the tax cuts costs the american people 2.7 trillion dollars. Seems like a lot better way of phrasing things. The govt has not lost anything.

  2. I know some people hold dearly onto the idea that tax cuts are spending. They’re not. They cause a drop in revenue. By taxing people at a lower rate, you’re letting people keep the money they made to begin with.

    The government has no intrinsic right to the money you (or anyone else for that matter) made. You earned it. Keep it.

    1. Except that’s not true. Taxes are necessary to have a government. The wealthy should pay proportionately more, because they have so much more of the money. Reaganism has been holding the country hostage for 30 years now. Time to stop. We were a wealthier country in the late ’50s, when the maximum tax rate was 90%, in almost every way. Our economy was still expanding at rates that are astounding. The middle class was still solvent. There was a working class that was the most skilled and advanced in the world. Our manufacture was the greatest in the world. Ask Hitler.

      Some things are more important than “your right to keep all your money.” The upper classes are keeping too much of their salaries as it is.

      The point about a high marginal rate over say, $250,000, is that nobody paid it. The easiest way to escape taxes was to reinvest in the business, or hire new employees.

    2. Who is going to pay for your; public schools, police, fire dept., Forest service, BLM, Dept home land security, Air traffic controllers, Post office, Coast guard, roads, national parks, I could go on for a very long time. I know, you only want the services you use, to be paid for by others…

  3. Warning: true but atypical story

    For the last 7 years I’ve averaged just above minimum wage starting a medical device company working to break into a monopoly market. We were sued to keep us out of this $1 billion dollar market and I now owe over $1 million personally. But with a recent contract, we will get to market. With our pricing, we will save Americans over $100 million a year in medical costs. Plus manufacturing in the US instead of Mexico. I stand to make a couple million a year.

    Needless to say I want the frickin’ tax cut. I don’t know about any Wall Street denizens, but I at least deserve some money for the amount of cash I’m saving the rest of you.

      1. The device itself is irrelevant. It works effectively the same as the competitors device, but I won’t be raping hospitals for a 60% profit.

        The point of my rant is that not all wealth is created equal. I’m pissed that after living on the edge of poverty for years and about to finally get out of debt, taxes are going up. Innovate, save America money, create US jobs, all the things an inventor is supposed to do, and I get lumped with CEO’s because I’m going to make money from it.

        I’ve resisted making the stuff in China and putting the profits in an island bank. But maybe I should adopt the FU attitude of the people who replied to me and do just that. I thought Atlas Shrugged was BS, but damn if it doesn’t contain a grain of truth after reading this thread.

        1. Then you will sell your products, and you will make money.

          It’s not the duty of the American public to subsidize your investment.

          On a side note, threatening to send your labor-hours over to Chinese prison camps (or whatever) is not going to make people feel bad for you.

          1. You come off as something Antinous would probably prefer I didn’t call you. How can you hear an American inventor who has sacrificed of his income to ensure that he employs Americans and not Chinese sweatshop workers and insult him in such a manner? People like this Anon are the only reason for America’s affluence, and it is a damn shame that his ilk are demonized rather than honored for the real contributions they make to our economy and way of life. Inventiveness and ingenuity are invaluable, and the end result of tax policies that assume otherwise are exactly what this Anon states: American inventors and investors will be driven away from any activity that will directly benefit the American people.

            Don’t forget, ingenuity leads to progress unless it is stifled. The middle 50% of our country live better lives than the top 1% of the last two centuries. Sure, John D. Rockefeller probably had servants on call, but his wealth is the only reason you don’t know anyone, rich or poor, who’s died of Yellow Fever.

          2. And our current quality of life has nothing to do with the lazy 99% of the country that aren’t inventors.

            Thank god for the rich!

    1. You will, it is called profits. It isn’t the nation’s fault that your competitors tried to stop you with lawsuits. You need to contribute to the nation like everyone else.

  4. And this pattern is repeated the world round. It is funny how they always sell it to the lowest section, when it will benefit the highest section the most.

  5. How can it not strike any rational human being as indecent that people earning more than 97% of their fellow citizens are crying poor at the notion of paying what they paid during the last great economic boom.

    Millionaires and billionaires, many of whom did little more than win the genetic lottery by being born rich, have whole armies of politicians and pundits convincing the public that ending this tax cut is nothing short of a Marxist plot.

    All this at a time when 1 in 7 Americans are living in poverty, millions face foreclosure and millions more face long-term unemployment and under-employment.

    And the “tea party” supports who now? Sickening.

    1. And the “tea party” supports who now?

      They (in many cases unwittingly) support the Koch brothers and other corporatists’ agendas and unwittingly hurt themselves. It’s a sad situation.

    2. So, the right answer is to steal from the lucky and throw cash at the poverty, foreclosure and unemployment problems? I say no to that policy called redistribution, which only makes everyone equally poor in the long run. Redistribution deincentivizes people to produce things of value (real wealth).
      And, no doubt Washington is in bed with corporate powers, but like it or not, that is the fault of both the Big Government Right and your beloved Big Government Left.

      1. Well, in your scenario, we never should have revolted against the British, and we should have kept within the Monarchy, because they were entitled to the power they had? I’m assuming you don’t agree with that and that revolt was necessary in that case.

        Should we allow the ultra-rich and the largest corporations to have an inordinate amount of control over our political process, because right now, they do. I think you are forgetting that the wealth of corporations, where much of this wealth comes from, is in large part derived from policies set by the government. Corporations benefit from policies, which they and their agents (lobbyist) help to write, more often then not. I can start a lobby group as a individual, sure, but I’m guessing that unless I have a shitload of cash, it’s going to be hard to get senators and representatives to give me a listen. This completely distorts the political process, giving corporations more of a say than individual voters. It’s not my vote vs. Bill Gates or Donald Trump, but my vote vs. the power of Microsoft or Trump industries. Given their direct line to the halls of power, we can’t compete with that…

        If you think corporations and the ultra-rich care about the lower class members of the right, then I think you are mistaken. They care about the bottom line, and they don’t particularly care about others. Much in the same way that Monarchies generally didn’t care about everyone else, as long as they had the power…

      2. So, the right answer is to steal from the lucky and throw cash at the poverty, foreclosure and unemployment problems?

        Yes. That is precisely what I said. Bravo.

        No, the answer is not to “steal” from anyone. Taxes are not theft, they are part of living in a civilized society. They have been since antiquity. If you don’t care for them, do feel free to move to a nation that does not provide services (roads, police, fire-fighting, defense, any kind of social safety net) or collect taxes. I hear Liberia is lovely in the autumn.

        I say no to that policy called redistribution, which only makes everyone equally poor in the long run.

        This is delusional. How is taxing someone making over a million dollars a year at 39% and not 36% “making them poor”? Do you even understand the concept of poverty? To call anyone making more then $250,000 dollars a year “poor” shows a disconnect from reality.

        Redistribution deincentivizes people to produce things of value (real wealth).

        Pure drivel. This is the same kind of logic being put forth by the “tea baggers” who claim that people would rather stay on unemployment than take a job. The idea that taxes will cause people to simply shut down and stop trying to earn money is ludicrous. Cite me one example of someone refusing a raise or higher salary or payment for work because they would have to pay taxes. “Oh no, keep your money sir, I don’t want to owe tax on it.”

        And, no doubt Washington is in bed with corporate powers, but like it or not, that is the fault of both the Big Government Right and your beloved Big Government Left.

        My “beloved”? Again, delusions. And what do you care if corporate powers are in charge in Washington? Shouldn’t they be? I mean, by you logic, if they have the money they should be able to buy the very finest in congressmen and senators. Why not? Citizens United and all that rubbish, correct?

        Your argument lacks merit, substance and originality. Stick to misprinted signs at those lovely Bund rallies I keep seeing on television.

        1. No, the answer is not to “steal” from anyone. Taxes are not theft, they are part of living in a civilized society. They have been since antiquity. If you don’t care for them, do feel free to move to a nation that does not provide services (roads, police, fire-fighting, defense, any kind of social safety net) or collect taxes. I hear Liberia is lovely in the autumn.

          I wasn’t aware that the pre-industrial societies had taxes…did the Native Americans have taxes, or the first settlers? Taxes are used to pay for services and infrastructure. They are needed at this point because of our way of life. If you lived on a deserted island then paying taxes to yourself does nothing. They are not part of being civil, they are a necessity for our life style, one is not mutually dependent on the other.

          Pure drivel. This is the same kind of logic being put forth by the “tea baggers” who claim that people would rather stay on unemployment than take a job. The idea that taxes will cause people to simply shut down and stop trying to earn money is ludicrous. Cite me one example of someone refusing a raise or higher salary or payment for work because they would have to pay taxes. “Oh no, keep your money sir, I don’t want to owe tax on it.”

          This is a self creating fallacy. 90+% of people in the middle class have little to no idea how the tax system works. If you are on the edge of a tax bracket, then it is very possible that getting that extra 2% raise might push you into paying more, and thus getting less net income. However, that might be a trade off for raises in the future, which again would increase your net income. I can cite you no examples, because everyone I know would choose to make less in the interm to make more in the long term. I will cite you the example of my mother. She worked part time as a registered nurse, and as things with OSHA regulations got tighter and tighter she got fed up with it. At one point my parents set down, ran the numbers, and figured out it cost them more in taxes to pay for her to work than it did for her to not. She quite at the end of that year. It is not a dream that people will take the easy way out and take a hand off if offered. That is part of the American way.

          And what do you care if corporate powers are in charge in Washington? Shouldn’t they be?

          No they shouldn’t be. Running a corporation is not the same as running a country. Very, very few CEO’s or company Presidents would make good political people. (Well in the technical sense they would not….they would fit in quite well with those that run the government now.) Most publicly traded companies put the stock value, and thus share holders first. This for a better term is called greed, short term profit for long term instability. This is currently how our government works, and I for one think it is complete shit. Our government should not be focused on maximizing companies bottom line, they should be focused on increasing the citizens way of life. (You know the ones who pay to run the government.)

          1. Pre-industrial societies certainly had taxes! They’re discussed in the bible, for instance. (“Render unto Ceasar the things which are Ceasar’s.”) The Boston Tea Party took place just before the industrial revolution.

          2. I think the income tax is what people mean by taxes. It was used to pay for the Civil War, but only became law in 1913.

          3. 90+% of people in the middle class have little to no idea how the tax system works. If you are on the edge of a tax bracket, then it is very possible that getting that extra 2% raise might push you into paying more, and thus getting less net income.

            Huh? Taxes don’t work that way in a progressive tax system. You only pay the higher rate on income above that tax bracket.

            Say you have 4 brackets. $0-10k, $10k-20k, $20k-30k, and above $30k. Tax rates of 0%, 10%, 20%, and 30%. John makes $5k/year. He pays no taxes. Then he gets a raise to $15k/year. He pays $500 in taxes. Nothing on the first $10k, 10% on the $5k above $10k. Then John gets a better job. He now makes $40k/year and pays $6k/year in tax. $1000 on the amount between $10k and $20k, $2000 on the amount between $20k and $30k, and $3000 on the amount over $30k.

          4. If you are on the edge of a tax bracket, then it is very possible that getting that extra 2% raise might push you into paying more, and thus getting less net income.

            I’m sympathetic to your broader point, but you’re wrong here. It’s a marginal tax rate; you only pay the higher rate on the income above the line. As for your interlocutor:

            The idea that taxes will cause people to simply shut down and stop trying to earn money is ludicrous.

            You will get a lot further if you quit being hyperbolic. Can you really not imagine someone deciding that taxes take too much of their marginal dollar to make it not worth their while to work more? Of course nobody turns down more pay for the same work, but we all decide – at some point – that we’d rather earn less than work more. (Otherwise, we’d take a second job at night.) Taxes are part of that, and just because it seems odd that someone would do a job for $65 but not for $61 doesn’t mean that it doesn’t happen when you consider the population at large. It’s like the Laffer Curve: just because we’re probably not on the wrong side of it doesn’t mean it doesn’t exist.

            I grew up in a household that was right at the median in US income. My father was a college grad; my mother wasn’t. Even in bad years, we were never actually poor – we never went without food, or seriously worried about losing the house – but my mother made some of my clothes rather than buy them, and we didn’t take any vacations for a few years. My college search consisted of picking my favorite school among the ones that gave me a full scholarship. I’m now a practicing physician making over $250k a year, and I’m quite comfortable, but getting here took a lot of debt (interest not deductible; I make too much) and all of my twenties. I work about 55-60 hours a week. I don’t expect a lot of sympathy; my life is a good one, and it’s a path entirely of my own choosing. But you’ll forgive me if I’m not interested in paying half my income, or more, in taxes.

            Income taxes don’t beat up multimillionaires; they can take their income as stock options or other tax-advantaged streams. It’s upper-middle-class professionals – me, successful lawyers, CPAs, dentists, small business owners – who pay these taxes. If you want to tell me I should pay more, it’s your right to do so. But please don’t try to tell me that I don’t know what it’s like to work for a living, or what the problems of the American middle class are.

          5. Devilbunny, you have a fair point in regards to your current income and subsequent tax burden vs. the cost to get you where you are. We should adopt a tax code similar to the Canadian one in which you can deduct the cost of your education, not just in the year that the cost occurred, but going forward until the credit is consumed. Under this principle you would have ~100k in tax credits to carry forward while you are paying down your student loan debt.

          6. “If you are on the edge of a tax bracket, then it is very possible that getting that extra 2% raise might push you into paying more, and thus getting less net income. ”

            No. For someone in a high tax bracket, the lowest bracket’s rate applies to the first potion of income, the next higher bracket’s rate applies to the next portion, and so on. The “extra 2% raise” will only be taxed at the higher rate to the extent that it exceeds the higher bracket threshold; it will not affect the tax rate of the existing income.

            Some caveats apply with respect to the Alternative Minimum Tax (AMT), but that is more a matter of high deductions on high earnings than of earnings per se. In some cases a little more income and a little more deduction can cause much higher current-year taxes (which, however, can often be used to offset later taxes) The AMT is a mess and needs to be fixed.

            It would be better for sanity and the pocketbooks of the rich if they gave in to higher tax rates and in exchange got an exemption on nominal capital gains on inflated prices (a long-term asset can be worth the same in real terms but selling it can incur a large tax on nominal gains because of inflation.) Bonus: apply this only to domestic-destination investments, from any source country, thus keeping investments at home and attracting more investment from overseas.

            Also, the idea that labor should be taxed without allowing any real accounting for the cost to provide that labor needs to be changed. The oil industry gets depletion allowances, depreciates equipment and deducts every possible expense before declaring a profit to be taxed. A worker should be treated at least as well as a fake corporate “person”. Further, citizens working overseas should not be taxed in the US – one gets no services from the government and the current system treats its overseas citizens as property.

            Imports should be taxed to the extent of their labor dumping component – shipping in the crystallized product of labor from a country with low wages, no benefits and bad working conditions is exploitative, tax-evading, and it is destroying our real economic wealth and productive capacity. Similarly exports to labor-dumping countries should be subsidized by the revenues produced by the import tax. This creates a more level playing field for international trade where differences in per-worker productivity continue to matter while equalizing the treatment of those workers. The resulting framework gives a legal environment that allows for standardized conditions of trade, which will enhance trade based on true comparative advantage, enriching the populations of both more and less developed countries, while curtailing the current rent-seeking in the exploitation of differences in externality accounting in different captive labor markets.

      3. So, the right answer is to steal from the lucky and throw cash at the poverty, foreclosure and unemployment problems?

        It’s been pointed out by others, but.. the amount of tax dollars that go toward the poor, public education, and other “welfare” programs is minuscule compared to the amount that goes towards the military, infrastructure, and other programs that help the “lucky” do what they are doing. There’s no “steal” here. The problem is that most of the benefits wealthy people get aren’t immediately obvious, so they’re only noticed when they go missing… whereas everyone all too easily sees a loaf of bread on a poor person’s table.

    3. Could just be a lack of empathy on the part of those who are pushing those policies. They’ve never been poor, so they have no idea what it’s like and how hard it can be to get anywhere once you are there, especially in this economy. They just think, well, why don’t they just go to college and get a degree, ignoring that where you go matters, and that that is often dictated by who you know… As far as policy goes, they are protecting their interests, and they probably don’t think about how it affects others, financially speaking. Perhaps some of them truly believe in the mythology of the trickle down, or that redistributing wealth will causes laziness amongst the poor. Maybe it just comes back to the genetic lottery, and they just assume that the poor are poor because they are genetically inferior? It’s a new aristocracy, after all. At least maybe that’s what some of them tell themselves to assuage their guilt. Maybe they don’t feel guilty at all. I don’t know. But they aren’t rational, they just claim to be.

      But yeah, it’s indecent, and these same guys yell about class warfare and Marx, all while practicing a very asymmetrical class warfare of their own. And they play the part of the working man, while never having worked, really worked, a day in their lives.

      I think the Tea Party thinks that the left (or what passes for the left in this country) is full of elites, too. And to be fair, it is — at least those in power are anyway. The problem with the Tea Party, is that they think that Beck and Palin are some how less elite, and on their side while Obama is more elite and out of touch. Beck/Palin can speak their language, so to speak, while Obama doesn’t really, or they see him as not speaking their language.

      1. I don’t understand what is wrong with “elites”. Really, look at Fox News, it’s populated by talk show hosts, some of whom went to college, none of them with any distinction. Remember when the right was calling for the President to debate Rush Limbaugh, a sports broadcaster versus the former editor of the Harvard Law Review talking about the constitution? It would be like Stephen Fry debating a pair of trousers.

        I want smart people running my government. I want the best, the most capable hands at the wheel. Why is it we demand elite athletes and turn our noses up at elite minds? Anti-intellectualism is really an act of self-harm.

        1. But you seem to be arguing that the genetic lottery should define elites… Should it? Elites aren’t always the smartest cookies. Despite the rhetoric our system is not anywhere near a meritocracy, which is I assume what you’d like to see — where the most talented rise to the top. There are tons of smart folks out there, with good ideas, who are kept out of the halls of power because they have no economic power within the system. An argument for a meritocracy was not the argument you seemed to be making. Educational attainment does not equate to smarts at all. The schools you get into are often related to who you know, or who your family knows. In this way, the wealthy elite perpetuate themselves as an elite. Do you honestly think that those who get into harvard and yale and other top tier schools are by definition the smartest our country has to offer? Really? Cause those are the guys running our country.

          I agree about anti-intellectualism. I’m not against intellectual pursuits, far from it. My career path is all about intellectual pursuits… But you seem to think that smart people are somehow beyond biases because they are smart. You are arguing for a technocracy, I think, as much a Utopian ideal as Marxism — were disinterested intellectuals will rule, without bias.

          Just because you came out of the top tier schools doesn’t mean your by definition smart (Bush was a middling student at best — he got in because of who he was, not how talented he was). It just most likely means your parents could afford to send you to a top high school or maybe even attended those universities.

          1. No, I’m arguing for sanity in the face of irrationality. The notion that Glenn Beck, a shock jock, is on par with someone like the President (a constitutional scholar) or that said shock jock has more of a knowledge of history than those “ivory tower” types is fantasy.

            Only one of my parents graduated from high school and yet they instilled in me a deep and abiding respect for education. We have a small, but noisy, group in the US who seem to view education as a disadvantage to good governance. That horrifies me.

          2. I’m unclear as to what this has to do with a discussion on elites and tax policy. Tax policy is a reflection of the will of elites in this country, hence it tends to benefit the rich more than the rest of us. That was my argument.

            Did I argue that Beck is some champion of non-elites, rather than an elite masquerading as a genuine populist? Or that we should listen to Rush? Those guys are jerks who distort today’s political environment, and many tea partiers have misplaced anger, I think. They should be angry, but they are angry at the wrong things, due to Beck/Palin/Limbaugh and so on.

            As I said, I agree about education. Book learnin’ is a good thing, no doubt. I wouldn’t have spent the last umpteen billion years in college if I didn’t think that… but education and knowledge and intelligence does not equate to elite. If you think that, you are mistaken. Financial resources, and access to power are indicators elitism, which is not tied to intelligence. And more often then not, those with financial means receive an elite education.

        2. …I want the best, the most capable hands at the wheel…

          Me too. But sometimes the “best, most capable” is Harry Truman (Independence High School) rather than George W. Bush (BA, Yale; MBA, Harvard).

          1. I would agree. Though I think Truman was a union-busting toad, I’d put his education against the legacy C+ student days of W. any day of the week.

            Education is not confined to the classroom, but to sneer at people who have achieved an education, to hold them suspect simply for being educated, that’s disquieting.

      2. Your blind hatred of the rich is disturbing. Excluding members of the Saudi royal family and a handful of children of the uber-rich, every wealthy person has worked their ass off to attain their wealth and hold onto it, in the face of early-life competition in academics and business as well as the constant threat of bad investments (side note: there is no way to securely keep wealth, as every market from houses to cash can collapse, so for a person making over $250,000 to actually accumulate any significant wealth requires a full-time job of investment management). The vast majority of rich people in America are simply more successful versions of you and me: there is no way to get rich without hard work. There’s a reason bankers, lawyers, doctors, and CEOs are exponentially more likely to have a heart attack than lower-income workers.

        I agree that the source of our country’s problems come from corporate control of the government. If you ever cared to ask any of the Tea Partiers who haven’t been swayed by idiots like Beck and Palin (I assure you, there are plenty; enough to split the movement in two between fundamental libertarians and social conservatives like Palin and Beck before it can even get off its feet), you would find that many of them argue the same point: if we stopped allowing unconstitutional bills that grant unfair contracts and leniencies to corporations, we could leave rich individuals alone and still be better off.

        Now, in specific reference to your comment on the “mythology of the trickle down”: you, sir, are an idiot, and so is everyone who has ever suggested that trickle down is anything other than an economic fact. Rich people do not keep their money in Scrooge-McDuck-style silos. They don’t eat money. They don’t wear money. They don’t drive money, or swim in money, or smoke money. Rather, they spend a good portion of what they earn on the same life necessities you and I need, and an even bigger portion on excesses that, while completely unnecessary to a wholesome life, contribute to our economy the same way smaller purchases do. If a rich person buys just one private jet, he allows a hundred other people to keep their jobs and feed their families. If a rich person puts several billion dollars into a hedge fund, a portion goes to the manager as salary (who in turn does all these described spending activities with their correlated benefits) and the rest is invested in ways that employ tens of thousands of stock brokers, bankers, computer technicians, and every single industry that supports them: construction workers who build financial buildings, network engineers who keep members of an investment fund in contact, waiters who serve them food during meetings and walk away with $50 tips for marked-up food that cost the restaurant much less than they actually make from their customers.

        I will repeat: your hatred of the rich disturbing. The people of this country made a mistake when they continued to elect lawmakers who bowed down to private corporations, because now we can only vote for people with $100 million bankrolls for their election campaigns. Hate the way corporations influence our government all you want, but all of us need to stop hating the rich as a group right now, or we’ll experience a brain drain that’ll make Cuba look like Versailles. The only thing a rich man ever did to you was sign the contract with your employer that allowed him to take on another worker (or, if you work independently, signed a contract with you personally). Jealousy of this type should be healthy: it should influence us to make successful choices in business or professional practice in order to become rich ourselves. A million-dollar-a-year salary is not beyond any of us. If you as an individual choose to incite class warfare by blaming the rich, calling them heartless, and taking money out of the hands of the only people who can afford to make new jobs, I will call you foolish. But if the vast majority of this country feels the same way, then I am truly terrified.

        1. Um… yeah. Chill out man. Have you even read anything I’ve said? Where did I say I hate the rich? I don’t. That’s just a crazy thing thing to say. I have no reason to be jealous. I’m happy and comfortable. I think some who are rich show an utter contempt for the rest of us. There are plenty who don’t, many with good intentions (Paul Allen) who contributed to the world, but we are talking structures here, not individuals. And now you’re defending the Tea Party? What? I though you weren’t keen on them. And no, not all of us can make a million dollars. And as having waited tables, the majority of waiters and waitresses do not get $50 tips… That happens in fancy restaurants and isn’t the reality of most working restaurant folks.

          No matter how much you wish it, you will not join the elites and rule the world. It happens much rarely then is portrayed in Hollywood. The vast majority of wealthy in inherited not earned.

          Hasn’t the past decade taught you that trickle down economics doesn’t really work the way it’s supposed to.

          1. I’m an immigrant. I went to a shitty public school. I never had any connections. I got the best grades I could and a fantastic SAT score, and that earned me a meeting with the dean of a private university. Now I’m in law school, studying tax. No part of my current (and hopefully future) success is due to inherited wealth. I’ve spent the last few years working part time jobs, sitting through over a hundred interviews just to land one. Life isn’t easy when humans are an expendable resource, but no legislative acts can ever alleviate that situation.

            I’ve just given you a rational argument for trickle-down economics as a fact, not just a thing that may or may not work. What are these parts of the past decade that have apparently indicated otherwise? If you really think someone can stay rich by hoarding money in savings then you clearly don’t understand inflation, which hovers between 7 and 10 percent and makes any investment (including savings accounts) that doesn’t earn at least 7 to 10 percent an immediate loss. Investment funds are the reason start-ups with ten employees exist – rather than automatically lose their money, rich people make potentially risky investments. If we didn’t have so many regulations defining who may or may not loan money to another person (because apparently it makes sense to stop individuals from privately contracting and investing their own money however they want), we wouldn’t have this problem. Anyone with money, whether inherited or earned, will soon lose it if they don’t manage it properly. Taxes are automatic management: they involve removing this money from the care of the person who earned or inherited it and putting it to public use. Tax cuts for the rich do not “cost” $2.7 trillion: they allow individuals to hold onto their share of that $2.7 trillions dollars, and they will either lose it to bad investments (in which case it goes to whoever their investee bought start-up products and services from), or make good investments and have even more to put back in the system.

            The mythology is your assertion that it’s possible for a rich person to have money without pouring it back into the market. Yes, when well-managed, wealth begets wealth, but it only does so though a risky process that entails putting that wealth in the hands of less wealthy people who use it to buy products and services. Go ahead and give me a counter-argument; I’m not opposed to changing my opinion on the issue, but after a few years of studying economics and tax law I just can’t see any method by which a wealthy person can fail to spread their wealth to other people, unless that wealth is taken from them and applied to paying off interest on a national debt that only exists on paper and computer records.

          2. Ah-hah. Anonymous is a student. Young, not yet in the full-time workforce, opinions formed by theories as opposed to life experience. That explains a lot.

            Trickle-down doesn’t work. For many, many reasons. Go do some research.

            If nothing else, think about the point I made up-thread: money made in the US isn’t always spent or invested in the US. For every dollar sent to family back in Mexico or Poland, there are hundreds of thousands of dollars sent overseas to off-shore accounts, foreign investments, boat builders, couture designers, villa contractors, etc. The fact that some servers and hairdressers in the US get a small percentage of their total tips from wealthy customers (who are *on average* notorious for being bad tippers, btw) doesn’t prove that trickle-down works.

          3. [quote]If you really think someone can stay rich by hoarding money in savings then you clearly don’t understand inflation, which hovers between 7 and 10 percent and makes any investment (including savings accounts) that doesn’t earn at least 7 to 10 percent an immediate loss.[/quote]

            FFS. You think wealthy people use savings accounts? Seriously?

            Or that they’re all making a minimum of 7-10% on their investments?

            Wow, are you wet behind the ears.

          4. Congrats! You worked hard, you deserve your success. But that is not an argument for trickle down economics, though. That’s your personal experience, and of course, mileage may vary. I have a rather similar story, without the immigration. But let’s face it, if you went to a private university from a shitty public school, I’m gonna guess that your experiences were different from those of your upper class classmates, no? Maybe your rich classmates did not have to work a part time job, or they had instant connections that you didn’t have access to. I’m not arguing against mobility here. It happens and it’s far more common now than ever (Zizek even agrees that in the West, we are far more prosperous than ever before). That’s good news. It’s been far more common since the end of World War 2, but the structures that facilitating that were not *just* hard work of the individuals (which were instrumental, as in your case) and capitalist cleverness. A high tax rate on the rich under Eisenhower (91%), a world market dominated by the US because of the damage done to our competitors and Friends during the war (Europe’s economy was in shambles, and it was in part our spending that facilitated their rebuilding across the board), government funded programs like the GI bill, which allowed returning vets to get a leg up, get an education, find a job that paid them a wage to support a family on a single income (blue or white collar – and in the case of blue collar, unions were part of middle classing of that segment of the working class), and the fact that a large minority of our population at the time was not allowed to compete fairly in the market regarding the selling of their labor to capital (the underclass of African-Americans under segregation) had much to do with it. It’s not just individual actions, in other words, the structure does matter. It is not either/or as some in this thread want to suggest. After the 60s revolt, however, things changed. In addition to what Joyce Appleby called the “democratization of the academy” (college education becoming far more common in our parents generation, as well as in ours), there was a steady erosion of these structures.

            An example is pensions. Workers were often provided a pension which they received on retirement. They were supported into their old age by the corporations they worked for all their lives. Now we put the money that would have been earmarked for pensions (both from us as employees and from the employers) into market driven accounts, which are prone to the fluctuations in the market (Granted, some of this is due to the mobility of the work force now, but I would argue that the mobility profits the corporations more than the individual overall). We know what happened to many of those after Enron and then after the recent tanking of the market. Savings that many were depending on to live after a lifetime of work were wiped out. Was it there fault that there became only one option? Again, you can now take your pension with you, but that contributes to some instability for the worker as well, while not really affecting the corporation nearly as much regarding their bottom line. Not by individual decisions, but due to the structure where we are all encouraged to get an 401K, eventually, making that the ONLY choice. In addtion, more individuals were let into the labor market, at a time when jobs were being shipped to places that were not here (more in the market competing for jobs, at a time when jobs were going overseas). The academy (the example I know best) became open to far more individuals than ever before (you can see that in the direction that scholarship took in the 60s and 70s). There is now a glut of phds on the market looking for jobs. You have to be amazing to rise through the slog of applications that departments get now (when we hired for a position recently, we got over 300 applications for one position!). Not surprisingly, the ones that rise to the top are those that have connections, and those who come from elite schools.

            If trickle down economics work and we are a leveled society with the only difference between individuals being laziness, explain why unemployment is so high, the housing market is still in free fall, and how wages for the middle/lower classes have largely remained static over the past 3 decades (when adjusted for inflation, I mean — a dollar now does not mean the same as a dollar then, etc)? The gap between the richest of us and the poorest of us has continued to grow, and mobility is less prevalent. Is this all a function of human failings of the working/middle class? The structure in place plays no role in inequality? Really? Exploitation in the work place is rampant (via immigrant undocumented labor and in factories overseas that provide us with all our toys and now even in the white collar world, often devoid of unions, where corporations now hold most of the cards regarding the marketplace, due to lack of choices by employees). I will not argue that taxes is the way to fix that. Frankly, I don’t know, but I do know that there are structural inequalities that are in desperate need of being addressed and that corporations interests are not always the interests of the rest of us. If we want to compete in the world market against China, SOMETHING needs to happen to address the growing gap. We cannot rely solely on FIRE going forward, as I think the market crash suggests…

            My argument here is that the structures put in place after the war that supported the unprecedented growth of the middle class and of personal wealth has been slowly eroded via legislation over the course of the last 30 or so years.

            And by the way, thanks for not assuming because I disagree with the logic of trickle down economics, that I “hate rich people”…

        2. You seem angry. Angry and rich.
          But…a buck is a buck is a buck: tax ALL realized capital gins at the marginal rate of the taxpayer: that is, equalize the tax treatment of all income.


          Ultan wins this thread, IMHO….
          Shhesh! The way some cleave to the belief that “only private interests can behave in an economically responsible manner”, it seems to me that those whom wish to return to the “happy days” when the government itself was the patrimony and thus the property of a private family: that is, a return from democracy, to absolute monarchy.

          1. My last comment seems to me to be grammatically ugly, but I think that i made my point.
            When government itself was a private interest, how did things work out?

            Anon #100, here’s alink to an economice blog which you may find enlightening…or do I mean infuriating?:)


            And you’re welcome!
            Now it’s time for me to get to work. I owe, I owe, it’s off to work I go:

          2. Taxing flatly on all income is foolish. I can understand a tax based on original sale of property – if you buy a $20 million house, you should pay more taxes proportional to someone who buys a $200,000 house. But taxing income on face value just takes money from the rich before they have a chance to invest it. I assure you, the money the rich could keep as a result of continuing these tax cuts will go to investing in businesses and creating new jobs. If the government takes the same money, it will be mismanaged, and much less of it will have any direct impact on employment. Kurgman has made a career out of denying this fact, stating simply that rich people are comfortable and therefore have no grounds to complain while completely ignoring any question of what actually happens to taxed money compared to what would happen to money that is not taxed. I have no sympathy for the financial problems of the uber-wealthy because they have no financial problems, but that alone is not an argument for taking their money, allocating it inefficiently, reducing the growth of our economy, and then turning around and saying that the rich are still mean and stupid and greedy. Even if you could prove that all rich people are heartless assholes, that would not change the fact that the economy will be healthier if they are allowed to hold onto more of their money, because the idea that a rich person would hold onto money in a savings account (and thus lose 7-10% of it per year to inflation) rather than investing it back into the economy of their own free will is just absurd.

          3. You remember the 50s but you call this deflation? I speak of inflation and deflation in the true sense of management of the money market and money supply, not just the price of goods. What looks like deflation right now is only the desperate acts of businesses to retain their customers. If you remember the 50s I’m sure you remember the 80s, when we experienced history’s first recorded deflationary recession. This is not the same situation. By measure the cost of goods, yes, we are experiencing price deflation, but we are artificially expanding the money supply through such markets as student loans and, of course, the bailouts. We invented $1.4 trillion dollars overnight when Congress and the Fed simultaneously passed measures to inject $700 billion each into the economy. That makes each dollar in a rich person’s hands worth less. Yes, if they want new shoes or a car they’re in a fantastic position, but their stockpiles of savings are losing value at a rate we can’t even fully measure because when the currency exchange market is this unstable and speculation on gold “stocks” is through the roof, the only thing we know for certain is that your dollar can buy more goods but is worth way less to the companies you give it to when you buy those goods. Perceptual deflation may be affecting all consumers, but the massive portion of this country directly or indirectly employed by the retail and manufacturing industries are hurting as a result, manifested primarily in massive lay-off binges and hiring freezes.

          4. What part of my arguments for lower taxes across the board makes you think I support handouts or bailouts of any sort? Bailouts reward failing businesses and bankers. Failing businesses and bankers will continue to fail because they are managed by stupid people, not because they lack assets.

            And if you continue to insist that money is sitting idly in the bank accounts of rich people, then I give up. I have given you plenty of rational arguments why it is simply impossible for a rich person to stay rich without investing their money back into the economy. Your continued assertions otherwise, with no support other thank unrelated links to people spouting policies I have already refuted, borders on the bizarre, and I can’t keep wasting my time trying to teach logic to people wholly incapable of forming an independent rational thought without failed businessmen turned horseshit-spewing academics like Krugman jamming it down their throats first.

          5. Lower taxes “across the board” means nothing for the unemployed – but it does mean threats of unemployment, and lower pay, for those whose incomes depend upon public spending.
            The real question is, upon which projects ought those public revenues be expended?
            The last time I checked, the Department of Defense spends upwards of 700 billion a year of “taxpayers’ hard-earned $$” to perfect the art of exterminating the human species.
            Is that number still declining as a percentage of GDP?
            That’s usually the case made for maintaining or increasing DoD spending, of late. But I’ve not heard that argument since the Great Recession started.

          6. My experience both personally and in the blogosphere is that seventy plus percent, of both the left and the right, are opposed to bailouts of failing businesses. As am I.

            This began with the TARP bailout of 2008 (one of the worst decisions in my lifetime), opposed by all except Wall Street and the Beltway.

            So far, the Bush 3…excuse me… Obama administration has stayed firmly on the bailout path.

          7. I hate the comment delay, but you pointed out a mistake in my last post. I did mean to say “inflationary recession,” as of course every recession other than that of the Reagan-era was deflationary. I meant to compare our situation to the 80s by saying that we’re experiencing a second inflationary recession – even though the CPI indicates deflation, this is just the result of panicking businesses lowering their prices. The dollar is still worth less as an independent economic value indicator even though it is at the moment worth more to consumers. This is because the management of companies that are currently lower their prices do not have the option of taking the rational approach and raising their prices along with inflation, because consumer confidence is lower today than in the recession of the 80s and thus businesses cannot raise prices while reasonably expecting to keep a single customer. The result is that companies are going out of business, driving themselves into the ground by lower their prices.

            I’ve said enough. The pieces of a rational interpretation of tax policy are in my posts. I have a law review paper on this very subject to work on, and as I said in my last post, I’d rather spend my time trying to convince people who aren’t so adverse to logic that they’ve denied the relevancy of my position before I’ve even stated it.

          8. I have a law review paper on this very subject to work on

            Perfect. Then you’ve got links to factual data at your fingertips and can provide them without undue hardship.

            Why don’t you try that?

          9. And I do not support a flat tax: my comment was intended to argue that income from capital gains ought not to be taxed differently than income from employment.
            I support a strongly progressive tax structure: the top earners ought to pay 50%, OF ALL INCOME, including realized capital gains.

            Flat tax = dark ages, IMHO.

        3. [quote]Excluding members of the Saudi royal family and a handful of children of the uber-rich, every wealthy person has worked their ass off to attain their wealth and hold onto it[/quote]


          [quote]There’s a reason bankers, lawyers, doctors, and CEOs are exponentially more likely to have a heart attack than lower-income workers.[/quote]


    4. ….many of whom did little more than win the genetic lottery by being born rich….

      You are right in that those who are born rich often pay very little in tax, because in America we tax -income-, not -wealth-.

      Someone who has inherited fifty million and just spends it all (or swims in it a la Scrooge McDuck) pays not a penny of federal income tax.

      Whereas in many cities, a fire lieutenant who is married to a school principal find themselves classified as “the wealthy” by the current administration.

      The failure to tax wealth is what accounts for the likes of George Soros and Bill Gates being completely on board with increasing income taxes on what to them is the lower middle class.

      1. Yes, if they do nothing with the money save put it in their hypothetical money bin. Which, save for a few mad fools, none of them do. They make a great deal of money from their money, through investment and property. Wealth begets wealth.

        The richest among us can afford to shelter their money well. Being able to afford tax attorney, create off-shore accounts, invest heavily in foreign capital, allows for a whole economic world far beyond the reach of the tax man. Why waste your tears on them?

        Your hypothetical Fireman and Principal (funny, it used to be Doctor and Nurse, or some other combination of skilled professions) making over a quarter of a million dollars a year are wealthy. I’m sorry if that notion offends your sensibilities, but they make 5x what the median US income. That is wealth.

        They are not being “punished” by paying taxes. They are paying in so that our infrastructure, which they use in equal or greater measure than those with less means, remains intact. They are paying in so that we have a basic education system such that when they are infirm they are not at the whims of illiterates. They are paying in so that the elderly, the ill and the infirm can have some decency in their lives. They are paying in so that we, as a nation of unparalleled wealth and power can say that even our poorest can access basic health care, feed themselves and their children.

        1. If you want to tax the wealthy, TAX THEIR WEALTH. Go after their estates, their bonds, their family owned companies.

          At least that would be honest. Unlike the current administration, which will never attack the capital of its Wall Street allies while it can instead wring the necks of Subchapter S small businesses and the upper middle calss.

      2. This is where the estate tax comes to play. You may only pay income taxes once in your life, but it tends to be hefty. Unless you die this year as currently there is no estate tax.

        And I agree that the 250k point is relative to where you live in the country. A duel income of 250k in San Francisco or New York is not exceptional, in bum-fuck Idaho or where ever it very much is. This produces a complicated problem in which very complex solutions could be derived, but our system is certainly complex enough. Maybe we should define the wealthy spot by our highest cost of living areas. So, define wealth by what it would take to be wealthy in NY city. Those in the lower-cost areas would benefit disproportionately, but it would eliminate classifying those who truly are middle-class as wealthy in the higher cost areas.

  6. While the chart is pretty, I gotta say that it is fallacious to refer to the tax cuts a “cost” to the federal government (like Cory did). To call the cuts a cost implies that this money is somehow lost to Uncle Sam, when it was never really Uncle Sam’s money in the first place (as much as our bankrupt Washington establishment wants it to be).

    1. The money has to come from somewhere. If rich people are going to be paying less, then that really does mean that the rest of us will end up paying more.

      Unless you want to start cutting services, which rich people of course wouldn’t miss at all.

      1. You are are assuming the economy is a zero sum game. Someone doesn’t lose money because someone else makes money. That’s the flaw in peoples thinking. If every one worked and produced everyone would be wealthier. When only half the people produce and the other half consumes, that’s where the problem is.

  7. I’m confused. To me, this chart implies that taxes will go down in 2011. So, for example, the bottom 125 people at the top of the chart will get a $5 tax cut, and a 0.1% increase in after tax income.

    But what is that referenced against? I thought these tax cuts were already in effect, and the only question was whether or not to extend them.

    If they’re already in effect, then don’t those bottom 125 people already have the $5 from the tax cut being in effect in 2010? So, extending the tax cut doesn’t really give them a 0.1% increase in after tax income, since they’re already getting back that money.

    Conversely, letting the tax cuts expire would cause a $5 increase in tax, and a 0.1% decrease in after tax income.

    Isn’t that a more correct way to look at it? Or did I totally misread the chart?

  8. To use the word “cost” is ridiculous and assumes the government “owns” all the money and should decide how much we get to keep. The Bush tax cuts reduced the taxes paid by the lowest income earners by 50% (from 15% to 10%). Meanwhile, the top earners were only reduced from 39.5% to 35%. The problem is that we already have a system where over 50% of citizens pay nothing in Federal taxes. That is a very dangerous system where their only objective is to see how much more they can get the achievers and innovators to pay, so they can get more. A flat tax where everyone pays the same rate is the only fair system. Those earning a million would pay many more dollars than those earning $100,000. The more you make, the more you pay. Meanwhile, everyone would have some skin in the game. Making less should not excuse those people from paying at least something for the services they receive as citizens. A flat tax would fill our governmental coffers so full that our debts would mrlt away and we would have enough money to run a very efficient government. I would also point out that those who bandy about the term “cost” also overlook the alternative: “cut costs,” We are spending too much and even if we confiscated 100% of the earnings of the top 5% of earners, we would still be short. Our priorities should be to spark innovation and create jobs, not penalize success while excusing everyone else through the use of class warfare.

    1. definitely on board for a flat tax… While I would pay more, it would definitely be more fair!

      Has anyone calculated what rate would balance the budget (with a healthy goal of paying down the national debt)?

  9. Mediumwhitecoat, if taxes are so stifling, why don’t you go to the libertarian paradise of Somalia and see how well you’ll do businesswise there.

  10. I think one of the beefs is the Administration defining Wealthy at $250,000 per year. Millionaires and billionaires are one thing – wealthy at $250,000? Comfortable, yes, for a two-income family. But if that’s wealthy, what is Trump?

    1. According to the chart, just under 5% of the population makes over $200,000. If that’s not “wealthy”, then only a small group is “comfortable.”

  11. Actually, this graphic was pretty informative in that it shows how small the cuts really are across the board even at high income levels — not only does it disprove the right wing propaganda that claims the cuts help the common people, it also disproves the left wing propaganda that claims that the tax cuts for the rich are massive.

  12. The portion I “savd” is slightly more than my share of the two wars we are in, and it doesn’t even come close once you factor in the wall street bailouts.

    “…Wealthy Americans, they say, can use their tax savings to create jobs.”
    Like, house keepers, nannys, landscapers and pool boys?

  13. The reality is that tax revenue has stayed at about 17 to 18 percent of GDP for quite a while. The current deficits result largely from a drop in GDP and the resulting loss of revenue. The increased cost of necessary services during times of recession need to be offset somehow if you want the deficit reduced. Obama’s argument that we should extend the lower income tax cut, and let the upper income tax cut lapse makes logical sense as the modest increase in tax burden is not likely to have much of a drag on economic activity (despite fallacious trickle-down economic arguments) and will make a substantial dent in the deficit.

    That said, ending a couple of wars would help substantially.

  14. What a lot of folks are forgetting is that the left is ALSO supported by huge corporations…..sometimes the same corporations as the folks on the right, as well as the unions (who have mostly become huge corporations solely intent on their own success and prosperity at any cost…..and damn those workers who think they own the union) and the environmental lobbyists (who are backed by super wealthy individuals and corporations that are profiting by the so-called “green” movement). The problem here is out of control spending by BOTH sides of the fence, and most recently the Left (mostly because they are in power now). The key is shrinking the HUGE and out of control government spending we have right now, by getting as many career politicians (mostly incumbents) out of office and putting in people of all political stripes that are absolutely dedicated to shrinking out of control spending, waste and pork. And of course, holding THEIR feet to the fire if they fail to live up to their promises of controlling spending, shrinking government and eliminating wasteful spending on pork. The AVERAGE federal government worker makes over 100,000 dollars a year. This is unsustainable by anyone’s calculations.

  15. We can have all the tax cuts we want – IF we have the political will to decide which government services and government-funded jobs we don’t want. Note than here I am not arguing for or against taxes, nor painting the government as good or bad, I’m trying just to use a simple logical argument (which may be futile, I know, since we’re talking about a bureaucracy).

    One problem I always have with reportage and discussion on this topic is that they treat it like taxes are a separate issue from government spending, but the two are inextricably linked.

    Your representatives in Congress (this _was_ a US-related post, so to all of our international readers translate as your government fits) are always happy to cut down government spending _except_ when it comes to government spending in their own district (shipyards, clinics, roads, VA, etcetera). One district’s pork is another district’s “lifeblood”.

    Let’s have a national discussion to break the budget up into different sections:

    1. Things we MUST have (military spending which actually defends the country from invasion and the like; anything which is mandated in the constitution like the Census)
    2. Things ALL of us WANT to have
    3. everything else (new weaponry, federally-funded research, etcetera)

    Then, tell us how much money we have to come up with for each section.

    After that, let us decide whether we want to ‘opt in’ on spending for items 2 and 3. If we want to federally fund something, then we can send the money in; otherwise we don’t.

    Remember, for those who say ‘this critical thing will never be funded by the taxpayers’ – if the thing is critical, people will find a way to fund it, even if the funding is _not_ government based.

    Someone else can tell me whether what I’ve written is conservative, radical, liberal, libertarian or just plain naive – I don’t label myself as one or the other. I just want to inject some logic into the discussions.

    1. The problem is that the general public doesn’t really know what is needed — nor should they have to. The point in a representative democracy is that we elect people who are experts (or at least have expert staff to advise them). Not that the system is perfect, obviously there are corrupt and/or ignorant politicians, but it makes a lot more sense than expecting the public to truly understand without a civil engineering background whether a new light rail system will reduce traffic congestion or not.

  16. Interesting propaganda graphic…..but why does it stop at $29,000??? That is bordering on poverty in any major city in America. How about also showing how many millions a year the corporations bringing in billions save. That’s where the really interesting part lies. $10,000-$29,000 while perhaps the majority of America are NOT the majority of spenders. The money flowing into the system comes from the $80,000+ that have enough to spend money and don’t have to save every penny to make ends meet.

  17. People who make under $10k/year DON’T pay taxes!! They just get money back via low income credits.

    $200k single, $250 married? So, nice $150k marriage penalty? Pays to get divored!

  18. It’s been said that extending the tax cut for people with incomes over $200,000 will stimulate the economy, so those cuts should be left in place. But why them? And will those cuts really stimulate the economy?

    What it comes down to is that the wealthiest taxpayers do and will use their share of cuts for recreation and/or savings, while the rest of us will use it to buy things we NEED or to pay down debt already incurred buying things we NEED.

    What stimulates the economy more? Recreational spending, or spending on necessities?

    The complaint of financial analysts is that the economy is flat because people aren’t spending their money in stores. Extending tax cuts to millionaires isn’t going to change that, and NOT extending the cuts to the middle class will result in a worse economic situation for retailers than we already have.

    1. “What it comes down to is that the wealthiest taxpayers do and will use their share of cuts for recreation and/or savings, while the rest of us will use it to buy things we NEED or to pay down debt already incurred buying things we NEED.”

      Exactly right. Moreover, the recreation and even sometimes the savings are often not paid in this country. Tax cuts for the wealthy can end up funding the income of yacht makers in Italy or scuba instructors in Belize, for example.

  19. I’m not sure how things work in the United States, but the numbers seem not too bad from my perspective. If you make under $10,000 a year, you probably shouldn’t pay much tax if any at all. How is a tax cut going to affect you. If you aren’t paying any taxes, a tax cut isn’t going to help that much. As you move up in income, your money gets taxed more. When you make a deduction from your taxes, you take it off the top end, the part that gets taxed more. So it comes as no surprise that a tax cut is better for those in higher income brackets. Unless you specifically make a tax cut that only applies if you make less that X, and the less you make, the more you get back (which is possible, but generally doens’t happen), then in general tax cuts will always seem like they are favouring the rich.

  20. Let the taxes return to the level before Bush cut them. Call the resulting rise a war tax. Because somebody has got to pay for the frigging wars. The poor people sent the people over that got killed and maimed. The wealthy people, and if only 5% of the country makes over 250,000 that’s them, can contribute a little dough. It isn’t enough, but I can’t think of what else they’re good for.

    Every society in the history of the world that fights wars has to raise taxes to pay for them. Bush’s wars are not the exception.

  21. Speaking of “fairness,” according to the Economic Policy Institute, the wealthiest 1% pay 17.9% of all federal taxes. On the other hand, they own 38% of our nation’s wealth. (Let’s ignore wealth held overseas, shall we? Because that’s difficult to trace in any case, which is why it’s held overseas.)

    And yet, in terms of taxes paid vs. amount of wealth owned (17.9% divided by 38%), the richest 1% are seriously UNDERtaxed… paying into the collective kitty about 47% of what they should be paying based on the wealth they own. Which leaves the rest making up the difference.


    “Fair,” would be each of us paying taxes based on the amount of wealth each of us controls.
    If we are good stewards and our wealth grows, we become better off economically BECAUSE WE ARE GOOD STEWARDS. If we are poor stewards and our wealth shrinks, we become worse off economically BECAUSE WE ARE POOR STEWARDS.

    My question is, especially in light of the corporate and banking and investment fiascos of recent years, “Why do we continue to reward poor stewardship?!?”

  22. What nobody can seem to see is that personal income tax is by itself immoral for the rich and poor when by law a corporation only pays tax on profits.
    Corporations should have less rights than humans not more.
    The legal fiction of a nonhuman corporate entity owning anything is itself a big problem and ends up breaking much of the common sense of English common law.

  23. I for one am glad to have been able to keep 28K of my OWN money over the past several years. Thinking about what that means to my family I’m sure I’d still be driving my 1995 Explorer rather than the my new higher mileage car. And I’d be shelling out more and more every year for repairs. Or we’d not have been able to put a new roof on our house which sorely needed it.

    The real tax reform needs to come in stopping people from running their lives as private corporations. As an example, Arianna Huffington paid a total of 700 dollars in income tax for a 2 year period a few years ago. She was living in 7 million dollar home in Brentwood at the time. She was bringing in hundreds of thousands of dollars yet she only owed 700. Thats because she was able to place herself in the first group of taxpayers in the chart. Her “taxable” income was under 10K because her corporation wrote everything off as a business expense.

    And thats what people do. They game this system to death. If we want to fix anything we need to overhaul the whole tax system.

  24. It fascinates me that people actually buy that personal income tax increases for the very wealthy will dis-incentivize job creation and hurt business. The best way for a business owner to not incur personal income taxes is to re-invest the money in the business instead, therefore growing the business and creating jobs. If you really want to stimulate the economy and prevent vast collections of wealth sitting idly in bank accounts remove corporate taxes and tax personal incomes above, for example purposes we’ll say 500k at 90%. Want to remain rich and powerful? Keep investing. It worked for our country from the 40’s to the 80’s, highly arguably, the most prosperous time in our country.

    1. Conservatives fantasize that by cutting back regulation and federal spending we can bring back the golden postwar decades.

      Liberals fantasize that by raising taxes and union membership we can bring back the golden postwar decades.

      Neither is grounded in reality. The economy of the 40’s – 70’s was based in (1) the rest of the world being in the crapper as result of WWII, (2) America not yet being an importer of oil, and most of all (3) other countries being decades behind us in manufacturing know how.

      None of this stuff is ever coming back again.

      1. Charlotte, I don’t disagree with those points. My question is, during those decades did the tax structure, which heavily taxed high personal incomes, reduce job creation as is the current argument?

        Also, during those decades we had a very even distribution of wealth through the classes which is arguably a result of the tax structure and not due to the factors you stated. Very likely we will never see boom decades like those again, but that doesn’t mean we should continue on our Lord and Serf trajectory.

  25. Anon #1- If we want gov’t services, we have to pay for them. People want Social Security, universal health care & the social safety net. Even if you don’t.
    Also, look at a dollar bill. It has “Federal Reserve Note” stamped on it. ‘Federal’ is the US government. So yes it IS the government’s money. I find it amusing that people who were screaming about ‘the deficit’ are now screaming about ‘tax increases.’ Which were designed into the original legislation of the Bush Administration as a gimmick so they could use reconciliation to pass the tax cuts in the first place. To keep ANY of the tax cuts, Congress will have to pass a new bill. Otherwise they will disappear on the last day of 2010.
    Speaking of deficits, several people have pointed out that with interest rates around 2.3%, it would be a good idea for the gov’t to borrow butt-loads of money to pay for, oh, new infrastructure, mass transit, high speed rail, wind farms & solar panels, a modern version of the WPA, etc. Stimulus is the only way to really get out of Japan style stalling of the economy.

    1. You are confusing “money” with wealth. The type of payment we receive is as irrelevant as your argument. the government does not own wealth in America, as much as it wants to think it does.

  26. I think discussion of taxes acts like a sex pheromone on Randroids. They swarm from miles around, emitting their bizarre mating calls: “Wealth confiscation!” “Redistribution!” “Reward the innovators!” “It’s your money!”

    I especially like the guy in comment #10 who thinks that going from 15 to 10 is a 50% reduction, and seems to think that the only federal tax is the income tax.

  27. Most people pay zero federal taxes so no tax cut can help them.
    Any tax cuts will only benefit those that pay taxes.

    Regarding those with high incomes. What do people think they do with the money they earn? Hide it in their mattresses? People with high incomes spend the money on many things. Nice, expensive cars, clothes, houses, etc., etc.
    Do these products just appear out of air? No. They are built by not so wealthy people. If it were not for the wealthy people purchasing these expensive products those people employed at those factories would have no jobs. (And every time they make a purchase they usually have to pay some type of sales tax.) More tax revenue is brought in on that $100,000 Mercedes than my $1,000 used car.

    People with high incomes also invest the money in companies new and old that provide jobs and wealth for others.

  28. It’s annoying how anyone with intelligence calls tax cuts “costs”. If tax cuts are “costs” then what are tax increases to the tax payer?

  29. BUT… but… but… The people in the lowest tax bracket PAY NO taxes. The TAX CUT is really FREE MONEY. This is quite different from the highest bracket which actually paid INTO the tax system…

  30. To poster #3.

    You do not have any right to make additional “profit” from tax payers because you saved someone money. In a free market economy, of which you seem to be a proponent of, your income is reward enough for selling a better product. You do not earn special tax breaks because you built a better mouse trap. Your level of entitlement is disturbing and disgusting.

    The last average income numbers that I have are from 2007. In 2007 the avg. income was $50,233.00. In 2007, filing as married, that puts you in the 15% tax bracket. this means that end the end of the year, including tax refund, you will have pocketed $42,698.

    If you are in the top 1% of earners, as #3 claims he will be in, that means you are averaging over $410,000 per year. This puts you in the 35% tax bracket. Using the same status as above, you will pocket $266,000 at the end of the year.

    Now I do not know about you, but where I’m from it is a hell of a lot easier to live on $266K/yr than it is on $43K/yr. This is why you do and should pay more. Your quality of life will not be affected by your tax bracket, but the average person’s will.

  31. The part that gets me about all of this is that the upper 10% the missing cut doesn’t really mean they’d need to change their lifestyle (which is very comfortable). They may have to buy a 40k car instead of a 50k car this year. Though, the tax cut being gone for much of the middle and lower class makes a huge difference – it may be the difference in having a car at all.

  32. Taxes, government spending, deficits. . . .

    It’s our government, I have no problem paying more in taxes if it’s going to good use, but it’s debatable if the money IS going to good use.

    I’m not a greedy man, I would gladly pay MORE in taxes if we had better public transit options; the amount of money I would save on gas and repairs and parking would make it worthwhile.

    I’m not a rich man. Face it– most of us will never be rich either, and those people who are rich now are not worried about their rent or bills or feeding their kids, they’re worried about whether they make a million dollars this year or two million, and how much the government will take. Wow, life’s tough for them.

    The argument that tax cuts (particularly for the rich) drive the economy is kind of suspect– does that drive the economy more than all the other aspects like the size of the deficit or interest rates?

    I recall hearing Sean Hannity complain about his taxes being too high (AFTER all the Bush tax cuts, too!), and some working-class caller questioned him on the idea of tax cuts for the wealthy, and Sean of course cut him off and spouted the party line about tax cuts for the wealthy drive the economy because they “buy houses and boats and cars”, and all I could think was “wow, what a douche– was he thinking about the boat he wanted to buy when he shouted that guy down? What a selfish prick.”

  33. How many years need to elapse before we stop referring to a continuation of tax policy as “costing money”, as if we have to buy the current tax rate all over again?

    How about “Increasing taxes through a lapse of current policy will cost the American people $2.7 Trillion over 10 years”.

    Current policy is the status quo. Proposed change from the status quo is an increase in taxes, regardless of how some want to reframe the discussion.

  34. I added up all the people in the graph. It seems there are 992.

    I belong to a group that comprises just under 12% of the 992 population, yet pays 25.8% of federal taxes, which is to say more than twice my fair share if everyone gets the same share of government resources.

    It’s hard for me to feel bad for the horrible tax burden on poor people. The bottom group on the graph makes up about 12.5% of the population and pays 0.2% of federal taxes, which is to say they pay about 1/125th as much as I do for the same interstate highways and congress and military and everything else as I do.

    1. You do realize that while you pay more to have a functioning society you also earn more from it right? Consider it an investment without which you would have substantially less ability to make your gobs of money. I’ll give you an example: Today is Talk Like a Pirate Day, if we didn’t have public safety systems and political stability you could call this Pirate Day and ARRR I be coming to take your booty and there’s no one around to care or enforce civility.

      Fair share does not mean equal amounts.

      1. Piracy within the borders of the United States was not significantly more rampant five years before the institution of the income tax than it was a hundred years thereafter.

        But really I am not so much concerned with who pays, provided that the overall level of government spending as a fraction of GDP comes down to a saner level.

      2. Besides shannigans, I’m also replying to Anon and Ultan who referenced my post:

        shannigans (and Anon, who makes essentially the same point): You are sort of right, but sort of not. My federal taxes are not simply “quality of life insurance” that scale up to cover a higher quality of life. If that were the case, you would be correct, but even still that doesn’t imply that the rate as which my taxes scale is reasonable to cover my increased quality of life (you would think taxes would scale linearly with net worth in such a case, not non-linearly with income).

        Regardless, much of my federal taxes do not go to pay for police and firefighters and military and things that would general fall into the category of “quality of life insurance” that this line of reasoning implies. Other things *do* apply pretty much equally, regardless of income — if you’re fishing and you get swept off the beach by a rogue wave and out to sea, the coast guard will try and rescue you regardless of your income.

        Ultan: Your argument is essentially that the information presented in the graph is wrong or incomplete. You present more information that changes my numbers a bit, but not the overall conclusion.

        So, maybe I only pay 17x more than people in the lowest income bracket, instead of 125x more. Do you have a job? Do you provide a product or service to people? Do you charge poor people 17x less than people in the upper middle class? If not, then fck y too. You either have to swap places with poor people, you have to give them a 94% discount on any product/service you offer for sale, or fck y, apparently.

        And your counterexamples are pretty weak. Yes, poor people drive on the interstate all the time. I used to live near Oakland. There’s an interstate that goes right through it. Some of the people driving on that road are rich. Others are quite poor. It has nothing do do with their proximity to an interstate highway.

        If the poor don’t get the same level of representation in congress that I do, that’s not my fault. They can vote. Voting is free. If they have poor representation you can blame corrupt or incompetent representatives, or you can blame a disillusioned electorate, but you can’t really blame *me*.

        And I would *gladly* not pay to fund wars for oil and big government contracts to defense companies. I have no choice. I’m obligated to pay tens of thousands of dollars every year to fund wars I can’t support or justify. You really think I’m a lobbyist for Halliburton and I only make $100-200k/year? Poor people in shitty situations join the Army out of desperation, yes, but the reasons that the army sends them to be shot at in unjustifiable wars are out of my control.

        Your argument is basically “it sucks to be poor, therefore whatever I want.” Yes, it sucks to be poor, I agree. That doesn’t mean I have to feel bad for you when the tax laws are altered slightly so that instead of paying 17x more for the same services as you, now I only pay 15x (or whatever) as much as you.

        I never even complained about paying taxes. I just said I don’t feel bad when taxes get adjusted slightly in my favor consider I’m paying a lot more than a lot of other people already.

        So, in conclusion, fck y too.

    2. It’s hard for me to feel bad for the horrible tax burden on poor people. The bottom group on the graph makes up about 12.5% of the population and pays 0.2% of federal taxes, which is to say they pay about 1/125th as much as I do for the same interstate highways and congress and military and everything else as I do.

      You realize the bottom group of people are probably getting a lot less benefit from those things than you are, right?

      1. Your suggestion is probably not true. Relative to less successful, less wealthy people in undeveloped countries, “poor” people in the US maintain manifestly far higher qualities of life. It is impossible to allocate the interconnected benefits of our society in the way you’re suggesting.

    3. “The bottom group on the graph makes up about 12.5% of the population and pays 0.2% of federal taxes, which is to say they pay about 1/125th as much as I do for the same interstate highways and congress and military and everything else as I do.”

      So according to the chart, you make between $100,000 and $200,000.

      Going directly to the IRS numbers for adjusted gross income for 2007 (latest year for complete statistics), actually only 9.4% of all returns were in that income bracket. They received 20.6% of all adjusted gross and 21.7% of all taxable income reported. They paid 20.5% of all income tax. Their effective income tax rate was only 12.8% of AGI. Factoring in Social Security, Medicare, and an approximation of all state taxes, this group had about 16.8% of all disposable income. (1.79 times an equal share).

      All those earning under $11,000 (approximating the bottom group you referred to) made 2% of the total after-all-tax income while constituting 18.7% of all returns. (0.105 times an equal share). Thus their after-tax income was 17 times lower per return than your group. This level of income is usually not enough to buy necessities, so on an after-subsistence basis, their net income is almost certainly negative as a group.

      “they pay about 1/125th as much as I do for the same interstate highways and congress and military and everything else as I do”

      Y ft whnr. Why don’t you swap places with one of those Lucky Duckies if you think they’re getting such a great deal? Do you think that they actually get to use those interstates much? (Which are paid for out of fuel excise taxes BTW.) Do you really think they get anything like the same attention or representation as your group does in Congress?! Which group do you suppose gets those fat government contract profits? And which group has to “volunteer” to get shot at in those profitable wars that make us so much safer? Fck y. No, really, fck y.

    4. There was a little note down at the bottom right that said 0.8% (i.e. 8 little people icons) were left out because they had no income.

  35. As someone who is not (and never plans to be) in an upper-class tax bracket, I’d gladly pay double in income tax if I could stipulate that none of it goes to the military, or anything related to it.

  36. It’s my money, you fat cat jerks!

    So I hereby declare that I, Trav Q. Citizen, will never again use: roads, bridges, Welfare, Medicare, unemployment, public transportation, grants, subsidized college, subsidized food, technology developed for the space program, public education for my children, parks, fire departments, post offices, or anything else I used to take for granted in my tax-and-spend fugue state.

    I can be reached in my shack. But don’t send any mail unless by private courier! Good luck losing all your money, guys!

  37. It should be pointed out that:
    (1) The reason these tax cuts are expiring now is that the only way the Bush administration could make their fuzzy math work to hide the real cost of their tax cuts for the wealthy was to assume that they would expire in 2010. This let them leave the hide the real cost of the tax cuts and leave a big political turd for the next administration to step in.
    (2) The congressional budget office recently did a cost-benefit analysis of ways to help the economy and these tax cuts for the wealthy was the least effective way to stimulate the economy.

    It seems pretty disingenuous that the republicans are so worried about the national debt going up unless it is to start wars (1-10 trillion for Iraq and Afghanistan depending on how you do the math) give themselves and the richest few percent of Americans another tax cut which could increase the debt by as much as 1.4 trillion (http://www.democracynow.org/2010/9/16/headlines#3). They only seem to be angry when people want to spend money on something other than war or rich people. oh wait I guess avoiding war and helping people who aren’t rich is socialism?

  38. Private citizens have long proven to be better stewards of the future (both wealth and income) than the government. If they’re not, we have in place the “meta” structure to stop coercion: laws which regulate private behavior.

    Whereas, there is no example of an active government being a good long-term guardian of society’s capital or the direction of resources. Further, governments do not fail gracefully in their efforts.

    We fight this backwards over taxes only because of a short-term focus, incited by politicking. In the long run, the choice is clear.

  39. I’m concerned that some may look at the chart and believe that someone that earns $1M will be getting a $128K tax break.

    It says that that is the average for the $1M plus (so a $100,000,000 income earner would fall into that bracket).

    It says that the average for that bracket is $7.1M. So $128k is NOT very much out of that amount of money.

    *** Let me ask you a question – how much of YOUR money gets invested? How much for the lower brackets? Is investment a lubricant for growing the economy? And how much is invested by someone in the $1,000,000+ bracket?

    For those of you who are all against our culture of consumption, you also seem to think it’s great to give to the people that wear the Jordans, the throwback jerseys, and blow all their money each week on crap.

    The folks at the top that created businesses, the ones who would invest what extra they have? Yeah tax the hell out of them sumbitches.

    That doesn’t make sense to me.

  40. The trick that a lot of people use is to put themselves in group 1 or 2 on that chart even though they make hundreds of thousands per annum. They do it by creating LLCs. The idea is to “lose” money each year on your corporation so that you have NONE or a very low amount of taxable income. Arianna Huffington did this during the 2 years of tax returns she made public. The same year I paid 30K in income tax she paid ZERO. Yet she lives in a 7 million dollar home.

    The whole tax system needs to be scrapped and redone.

    For years I have always paid my taxes. part of my civic duty. But I know more and more people who create “corporations”. They make more money than I do yet pay many times less in tax than I do. Makes me sick and it makes me feel like a fool. So I’m about to go LLC.

    1. That’s messed up. “Won’t somebody please think of the rich people”

      Why do we even ask any other Americans to pay taxes anyways? I mean, People that earn more than $250k already pay the biggest percentage of the taxes. Why don’t we just not ask any American to pay taxes and just stick it all on them.

      I mean if we don’t have to be fair about it anyways, doesn’t that just make sense?

      I’m glad at church we all pay 10% tithing. The widow puts in her Mite, and the rich guy pays his 10%. Nobody says – well thats bullCRAP! He has a boat! I could have used this money to buy another game system! He should have to pay more than me!

      All Americans should pay a percentage of income. And just because someone makes more doesn’t mean they have to pay more.

      Apparently society doesn’t benefit from a free market in any way – so we should just do away with people that make more than others.

      Then you can stop saying “Won’t somebody please think of the rich people.”

      1. First day at Boing Boing – me thinks I wouldn’t have tried to be smart with a moderator on first day. We’re all just wasting time and having fun anyways right? :) I just hope to be rich someday is all.

  41. Private citizens have long proven to be better stewards of the future (both wealth and income) than the government

    Really? Interstate highways. Education for all. Blah blah blah. Without that nasty gummint the bulk of the people would have nothing – including most of the poor overtaxed wealthy. It would all go straight into the coffers of the local warlord at the same time that you daughter went to said warlord’s barracks as a camp whore.

    There’s a reason you tax the wealthy. They have the frakking money.

    1. …There’s a reason you tax the wealthy. They have the frakking money….

      Yes, but we don’t tax the truly wealthy. We tax the absolute shit out of the $100K – $500K income group. Because they don’t have enough money left, after taxes, to buy Congressmen and Senators.

  42. Defending rich people’s right not to be taxed is no way to get rich. youre doing it in the wrong order. and seeing as how americans actual wages (what the money we get paid will buy us) has gone down for the past 30 years, im pretty sure most are not going to get rich soon.

    for FSM sake, why can people NEVER act like the tax bracket they are?

    1. There are always a few wildebeests who think that getting really close to the lions is a good way to be accepted into the pride.

      1. … and get dead quick.

        Still waiting for Randroids praising Somalia. It’s everything they want, and the one point they never answer.

  43. And inflation is a nominal threat.

    Deflation effects real production: inflation only effects nominal prices, while actual production continues.

    But only those of us who remember the early 1950s can recall deflation in the USA: so you guys are singularly unprepared to even think about it.
    For residents of the USA, deflation is outside the conscious experience of anybody less than 70 years old.

    1. The generation which lived through the Depression as adults had pretty well died off by 1995, and America was NOT the better off for it.

      I credit the tightwad habits ingrained in me as a child by my Gran and Gramps with my current, relatively secure, financial situation.

      1. Not yet all of them, though: and some of us actually listened, and yet listen, to what they had, and have, to say.

  44. Oh: and in a deflationary environment, cash is king: you can buy that stuff you want, be it DVDs or stocks, tomorrow, for less.
    NO incentive for any body, in deflationary times, to spend those $$ : rather the reverse!

  45. Neither trickle-down nor trickle-up economics work.
    If I stick money in a bank, it fuels the economy (the bank use it as leverage against borrowing, allowing people to buy or build houses and borrow business loans).
    If I buy shares, I fuel the economy as the business employs more people and makes more stuff.
    If I buy food, I fuel the economy by helping farmers, haulage companies, supermarkets, etc.
    If I buy a chocolate-flavoured diamond-encrusted back-scratcher, it fuels the economy of by providing work for chocolate-flavoured diamond-encrusted back-scratcher engineers and salesmen (while making it prettier, nicer-smelling and more hygenic).
    Unless I literally burn, bury or hide my money such that it can never be spent – it will fuel the economy.
    The government uses money to employ people or buy things that also fuel the economy (and even though bureaucracy is an inefficient use of work, it will still fuel the economy)

    All that matters is who should get to benefit from spending the money. Should I get a bigger share of the nation’s wealth? Should the poor? Should the rich? Or should the state get to spend more money on what it thinks is for the good of the nation?

    Suprisingly enough, everyone thinks they are entitled to more than they currently have – and will make up nonsensical arguments to back up their claim.

    1. And if the banks should stop lending, it all comes to a halt.
      Better keep the bank regulators working, making sure that the banks are doing just that – lending.

    2. It is a fact that one dollar in the hands of any citizen will fuel more economic growth than that same dollar in the hand of government bureaucracy. Taxes need to be reduced massively for everyone. This is not a question of proper shares of wealth. Government mismanagement of taxed money is a detriment to our economy as a whole, which means every resident of this country and most residents of the world.

      @Ugly Canuck: 50% of all income including capital gains? We approached that once, in the 1980s. It takes a lot of work to make that much money, with the inevitable result that people just stopped working. Why would I work extra hours at a more difficult job just to let Uncle Sam take a larger chunk of my money? I’d rather work fewer hours, thereby contributing less to the economy than multiply my work by a factor not matched by a proportional rise in after-tax income.

      1. Anon #118: if you don’t need the extra money, I’m certain that there are others who would do the work that you would leave undone.
        And with your leisure, you’d have more time to spend your money, to get the economy moving.

        1. And in a healthy economy I would work to my fullest extent AND that hypothetic other person would have other work of their own to do. That another person may take up the slack just assumes higher-than-desirable unemployment and destroy your argument as you make it.

  46. Anon, the current long-term deflation is partly a result of technological progress. Automation and productivity are way up: we can literally do more, make more, using less.
    We simply do not need the same number of workers to do what we need to do to physically maintain our collective existence: and the population numbers behind the economic statistics show that more are living better on this planet than ever before.
    It becomes more a matter of the just (re)distribution of resources. Consider the person who works hard all his life, and lives most frugally, and as a result leaves a vast fortune, but without heirs or a Will: the property reverts to the State – as it should!!
    Consider also the very many edicts and laws passed throughout history to prevent the accumulation of wealth into the hands of the few (or into the dead hands of the church) – had previous generations of American leaders not “busted the trusts”, today you’d have American trillionaires…and how good would that development have been, for democracy or the economy?
    But I suppose that Mr.Emerson had it right, when he said: “Can anybody remember a time when money was not scarce, and the times were not hard?”

    IIRC, his solution for the problems of our society was for people to “love more” – not for them to “work harder”.

  47. Well, there’s always an ‘other hand’: I feel that tax cuts do in fact make good sense in a recession: so long as government spending is also
    increased, or at least, not reduced. (From what I’ve read, the problem seems to be that people are NOT spending their tax cuts, but saving them : and thus, whatever macro economic stimulative effects were sought or aimed at, have not been as robust as was hoped.)

    But, when the economy is doing well, then taxes ought to be increased, and overall Government spending cut.
    I suppose I’m a “counter-cyclical” kind of person: some complex systems need the “steering” turned to the right, in order to move to the left, and vice-versa.

    1. From what I’ve read, the problem seems to be that people are NOT spending their tax cuts, but saving them : and thus, whatever macro economic stimulative effects were sought or aimed at, have not been as robust as was hoped.

      Exactly. And the spending has been inversely related to economic class: the poorer you are, the more likely you spent your tax cut – on necessities, no less – whereas the wealthier you are, the more likely your tax cut was just kept in the stock investment account.

      Anon doesn’t seem to understand that there’s a point after which the necessities are covered and any further spending is discretionary. Yes, some wealthy people spend every penny they make and then some, and have to keep making more to keep up (and usually end up losing their wealth over time as a result), but most don’t increase their lifestyle to 100% of income because there’s no rational NEED for it. A poor person spends everything paying for rent, utilities, groceries…a middle class person spends everything or nearly everything on all the necessities plus family vacations, braces and piano lessons for the kids, and upgrades on home, car, clothes, etc….a wealthy person upgrades even more in most areas, but then saves and re-invests the difference, because there IS leftover money after all needs and (reasonable) wants have been met.

      1. ..and those poorer persons tend to pay a greater proportion of their income as tax: sales taxes, that is.

        A song for the poor hard working rich people, working so hard to keep their loved ones in luxury:

        …and for the tax-men, trying to get every cent that’s due and owing:

        5% appear too small?
        Be thankful they don’t take it all….

  48. the 16th amendment is plain unconstitutional. the constitution states that no direct tax can be un-apportioned, meaning you cannot tax individuals directly at different percentages.

    1. Text of the 16th Amendment:

      “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”


      “Apportionment” seems to refer to the division of the tax amongst the States: not to individual tax-payers.

      And how can a duly passed amendment to any constitution be “unconstitutional”?

    2. I think the problem with that is that the amendment itself changed the constitution making the income tax constitutional (it was the point of the elasticity of the document itself). They had tried an income tax before it, and it was indeed ruled unconstitutional. By definition an amendment to the constitution changes the constitution. Now, I think you can certain make the argument against an income tax, that it’s wrong, etc, but you can’t really call it unconstitutional…

      1. Well, it worked. Here we are, completely distracted, arguing about scraps from the table. Operation Wool Pull is a GO.

        “but you can’t really call it unconstitutional…”

        The three-fifths compromise appeared in the Constitution at one time, yet no one would agree that it was “Constitutional”.

        Furthermore, “Income” is not “wages” – Income is corporate profits, capital gains (personal or corporate) and other gambling winnings. Income is money working for you, not the other way around. Very few Americans have income.

        Beyond that, the system of automatic taxation is highly abused. Because the government gets their cut of your paycheck before you get yours, they’ve all but eliminated the power of the people to protest their government by tax protest. Government waging a war no one approves of? We all stop paying taxes. The current system negates that ultimate veto power. They just take the money and do with it what they please, and if you have a problem with that, politely write your Senator so he can ignore you in an official capacity.

        1. I agree with what you said about the 3/5ths clause in the constitution, which was overturned by a constitutional amendment. Income taxes became constitutional with the 16th, right? It was what I was arguing. So, we agree…. Changes to the constitution equals changes to what is unconstitutional.

          Income v. wages? Hmmm… That’s an interesting argument. But most people’s wages are counted as income, no? Or am I wrong on that point? Perhaps that is where your point of the wool being pulled over our eyes comes from. Of course, what these things mean has changed over time. These definitions aren’t static.

          Over all, there are few here who disagree about the need to overhaul the tax system. I could be persuaded by a consumption tax, given that necessities are not taxed, or taxed far less than luxuries (of course, then there is the problem of defining that). Otherwise, the poor would carry a heavier tax burden then they already do, as Ugly Canuck points out at 150, which would be bad for them in the long run, unless there is more of an outlay to services for the poor. And none of these arguments address other means of taxation, some of which have become heavier as the federal income tax is cut, such as local and state taxes (property taxes).

  49. Here in Canada we went with a value-added tax (GST), and it was the best thing we ever did.

    People gripe about it, but it’s an absolute money-making machine. Everybody pays- criminals, rich, poor, everyone.

    For one thing it forces people to be aware of what the government is spending money on. Every time you buy something you’re reminded of it.

    It also gives immediate feedback to the goverment as to how the economy is doing.

    1. I tend to agree: taxation applied to consumption, rather than income, seems fairer, somehow: and if it is applied broadly enough – I would have preferred that the GST/VAT apply to food and indeed all transactions, and be set at a much lower rate, at say 2%, versus the 7% that it is at now, IIRC – the rate could be set pretty low. It could even lead to a reduction in the overall income tax rates.
      Not to mention making participation in any black market for otherwise-legitimate goods and services more difficult (ie those contractors who would work on a “no-tax” basis, from the customer’s point of view): GST (or in Europe, the VAT) paid by a business is a deductible expense for that business, like any other expense. It’s therefore the consumer who pays: and IMHO that is who ought to pay. ( Arguably, they’d pay anyway, in a less efficient and transparent way, perhaps, under the other system, that of taxing income alone.)

      1. The great drawback to GST/VAT, is the one which it shares with sales taxes of all kinds: it’s regressive, in that those with no discretionary income, the low-income people, end up paying a greater proportion of their income (which they have little choice but to spend) over as tax, compared to those who have more income which they can save. In Canada, we refund some small amount to our poorer taxpayers, in an attempt to redress that perceived imbalance.

        1. Well, not only “poorer taxpayers”, but poorer citizens in general – even those who would otherwise pay no income taxes, at all.

  50. and as someone who makes $31k a year and who, all said and done gets to keep $21k of it in a city where a studio apartment in a crummy neighborhood runs well above $900 a month, I can’t help but feel incredibly raped. NOBODY should be paying more than 10% tax and our government can figure out how to do all it can with what its given. I’ll tell you this – my government doesn’t do $10k worth of shit for me every year except pay chicken shit cops to bust me for 5mph over.

  51. Regarding the chart, unless you cap people’s income at 1 million dollars, you’re always going to have have an excess on the rich end.

    Put it this way, take the rich guy’s $339,473, and split it among the 999 remaining citizens; you give $340 to each of them. Sounds great, but what do you do next year? And what does the rich guy do? He’s going to take a holiday once he reaches the max. And what does it cost to print to $340 cheques? How much will be wasted in spending it? And who benefits the most? The politician who controls it. Not a recipe for a healthy society.

  52. It has been my experience that businesses, in any given year, only make enough profit to pay their taxes.
    Regardless of where the rate is set!

  53. Government also helps innovation with anti trust policies, and taxes fund these efforts.
    (OMG head xplodes!)

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