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News How much the rich are being taxed

  1. Jan 10, 2013 #1
    I have been hearing talks about this along the aisle where one person says that the rich need to pay their fair share and another saying, no the rich do pay their fair share as it is. I am grossly oversimplifying the situation as the talks go much more in depth than what I've stated, but that essentially, from my own hearing and internalizations, is what it sounds like.

    To foster possibly a debate or discussion I wanted to know how much the rich are being taxed and that led me to a few google searches and under the new health care law, it would seem that the rich would be taxed a percentage and under these new rates that have been enacted to avoid the fiscal cliff, they are seemingly set at the Clinton rates of prior years.

    My sources from what I have stated so far:

    (3.8% surtax on investment income due to the new health care law or Obamacare)

    Fiscal Cliff Deal

    http://www.reuters.com/article/2012/12/03/us-usa-tax-irs-idUSBRE8B21HA20121203

    http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html

    My only concern is why are people saying Obama compromised severely and that he should have stuck with his election pitch? From those two links and a bit of other research, it seems to me that the tax rates are high as it is. Am I not getting something?
     
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  3. Jan 10, 2013 #2

    turbo

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    Re: Taxes!

    It depends (to a great deal) on who you are and how your income is derived. If you can classify much of your income as carried interest or capital gains, you will pay a much lower rate than people that pay taxes on regular income. In this case the tax laws are severely regressive.

    Obama did nothing to address this inequality, which is not surprising. He can't reform the tax code all by himself (no authority) and Congress is unlikely to cooperate with him, since they are beholden to the wealthy for their campaign cash. It's a messy situation.
     
  4. Jan 10, 2013 #3

    russ_watters

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    Re: Taxes!

    Clarification: since those two loopholes only affect the very-rich (of income-generating age), income taxes/rates only become "severely regressive" when comparing the tax rates of the almost-rich to very-rich to the tax rates of the very-rich. The vast majority of Americans (estimate 80-90%) still pay lower rates and taxes than those affected by those loopholes.
     
  5. Jan 17, 2013 #4

    russ_watters

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    [Edit]
    All debt ceiling posts (most of the thread) moved to the debt ceiling thread.
     
  6. Feb 4, 2013 #5
    Here's my take on taxing the rich, as a non-partisan independent.

    1. Higher taxes on the rich really do no harm (unless the increases are astronomical). The economy was doing well during the Clinton era.

    2. Republicans are ideologically defending tax cuts for the rich because they perceive taxing the wealthy as a slippery slope to increasing the size of the government. Seeing how big the government has gotten over the past few decades, if I were in their position, I would be scared of it too.

    3. Increasing the taxes of the wealthy back to Clinton-era rates is barely going to affect the budget. Yeah, it's going to reduce the deficit by 10% (if we rake in 100 billion in extra taxes for the wealthy a year), but other 90% is spending. Even if the government took ALL of Bill Gates and Warren Buffet's money combined, the government would still only pay it's bills for one month.

    4. I think we should raise taxes on the wealthy just to prove that they won't be a cure-all problem. Liberals in Congress keep saying a tax increase on the wealthy will fix the country without having to make serious spending cuts. Call their bluff.

    4. People aren't factoring in deductions. Deductions favor wealthy people. Conservatives have been using this as a form of welfare. Yes, people do get to keep more of what that made, but some people get to keep more of what they make than others, and that's not fair in my eyes.
     
  7. Feb 4, 2013 #6
    1. Higher taxes on jduster really do no harm (to me).
    2. Republicans are ideologically defending tax cuts for the rich because they believe in everyones freedom to strive for success and don't want to be penalized when they work their butts off and finally do succeed.
    3. Not even going to read the rest of that post.
     
  8. Feb 4, 2013 #7
    I didn't know people worked their butts off by earning massive inheritances, kicking back on government subsidies and trading derivatives.

    And please prove (with empirical evidence) that the Clinton era tax cuts have created disincentives for people to be financially successful.
     
  9. Feb 4, 2013 #8

    D H

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    What you're not getting is that "fairness" is an elusive concept. A couple of questions to which I don't quite have the answers:

    - What, exactly, makes one tax system more "fair" than another? I have a bit of a hard time seeing any tax system as being fair. Taxes, while absolutely essential, are inherently unfair. Taxation is essentially legalized robbery.

    - What is it with "fairness" that makes it a good metric? Minimizing unfairness is, to me, a better metric than is maximizing fairness.
     
  10. Feb 4, 2013 #9
    If I choose to work my butt off and leave the fruits of my work to my children, what makes you think you deserve to be mentioned in my will? You already got your part when I paid my taxes.

    I'm not saying tax cuts are disincentives so I'm good with that.. I believe that capital gains rate reduction was from 28% to 20%. I say we do it again and take it to 12%...
     
  11. Feb 4, 2013 #10

    D H

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    To the left, the government obviously did not get enough. That's why we have estate taxes.

    To the left again, that cut was quite "unfair". What say we undo it, and then undo it again and take it to 56%?


    If you think I'm picking on you, you're right. I am picking on you. I'll pick on anyone who says that the tax system should be so and so without any justification for why they should be that way. It's bad enough when opposing sides take radically different points of view on how the tax system should be structured based on some weakly defined concept of fairness. A fiat "let's take it to 12%" (or my 56%) with no justification whatsoever is far worse.
     
  12. Feb 4, 2013 #11
    Thanks for clarifying. I honestly had no idea you were picking on me. Thought you were agreeing that the left just wants something for nothing and that raising taxes to rival France is absurd and self-destructive.
     
  13. Feb 20, 2013 #12
    Here's a question for all...
    Why should the rich pay more than anyone else in taxes?
    BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

    Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?
     
  14. Feb 20, 2013 #13

    russ_watters

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    Absolute taxes (for example, $5000 a person would be equal) must be progressive otherwise there would never be enough money to run the government. Tax rates don't necessarily need to be, but most people are of the opinion that the rates should be progressive to reduce inequality/allow for redistribution.
    As I said in the first part, it isn't possible for people to pay equal tax $ because the poor don't have enough money to do that. You wouldn't be able to fund the government that way. I suppose you could have a separate bracket for the poor and a flat $ tax for everyone else, though. But whether one likes it or not, a lot of our tax dollars go to paying social programs which by design are re-distributive. And if you're going to re-distribute the easiest way is simply via progressive tax rates.
     
  15. Feb 20, 2013 #14
    So, you're asking people to explain why taxes depend on a person's financial means without referencing their financial means?

    You can't even repeat your question and do that.
     
  16. Feb 20, 2013 #15
    The answer, by the way, is marginal utility.
     
  17. Feb 20, 2013 #16

    Evo

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    You are making the false assumption that being in a higher tax bracket means that they actually pay those taxes and don't have deducations/shelters that reduce their tax rate significantly, many rich people pay very low taxes, lower than many "lower middle class" that can't itemize, IMO. I'm going by personal experience, family members, etc... I know what everyone makes and the taxes we pay.
     
    Last edited: Feb 20, 2013
  18. Feb 20, 2013 #17

    D H

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    First let's look at the non-welfare aspects of government. Almost everyone benefits from a properly functioning government. Public roads, public schools, the rule of law, etc. return a net benefit to society. Who benefits more? Is the benefit proportional / disproportional to income? To wealth? I have my suspicions, but to be honest I don't know. I've yet to see one dispassionate study that analyzes taxation and benefits properly. What I have seen bogus studies by partisan authors (from the left and right) that somewhere along the line assume the very point they are trying to make.

    Next let's look at the welfare aspects of government. The intent is redistributive, so a progressive tax goes right along with the concept of welfare.


    I'm going to turn your question around on you. What makes you think that a flat tax on income is "fair"? Don't make an a priori assumption that a flat tax is obviously fair to prove your point. Why not, for example, a flat tax on accumulated wealth (which would be quite progressive), or a flat tax on consumer spending (which would be somewhat regressive)?
     
  19. Feb 20, 2013 #18

    Ryan_m_b

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    Two points:

    1) marginal decrease in utility of money means that taking 10% of Alice's $100,000 matters far less than taking 10% of Bob's $1000

    2) even if an individual doesn't directly use a government service they can still benefit indirectly. Simple example but a privately educated businessman still benefits from a social education service by having an educated population to hire from.
     
  20. Feb 20, 2013 #19

    russ_watters

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    The way you put that is odd: EVERYONE has deductions that reduce their effective tax rate, but overall/on average the effective rates are fairly smoothly progressive until you hit about the top 1%. And every bracket also includes "many" people who deviate substantially from the average.
     
  21. Feb 20, 2013 #20

    russ_watters

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    That's very tough to quantify and even perhaps contrary to point 1: A business owner gets a benefit from a better educated workforce, but the workers themselves also have a personal benefit. I would argue that it is a much bigger deal for the worker than the owner because of marginal utility.
     
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