History US tax rate history - A return to the glory days

[WhoWee]

Nah. It can be solved if we as a country just have more children (and raise them better). It will take over 20 years to fix, but it will also be a GOOD fix.

Well, that's one long term strategy - you better get started as the heaviest part of the debt is falling squarely on you and your kids unfortunately.

 

[mege]

With rights to inheritance firmly protected by right-wingers. The GOP chants about "death taxes" are pretty lame. Wealthy people have all kinds of ways to shelter their assets, set up trusts, etc, and the GOP would have us believe that when a wealthy person dies, the government swoops in and scoops up all their assets. Sadly, some US voters swallow that with no education or knowledge on the law.

It is lost on many tea-partyers that inheritance taxes apply only to pretty large estates, and only on people who have failed to shelter their assets and incomes appropriately. The "death tax" is pretty much an "ignorant and failed to plan tax".

Why must someone 'shelter' their assets? So, creating a family corporation is the only way to do proper inheritance now? If the tax is really just a 'failed to plan' tax then something is horribly wrong.

I forget the cutoff now, but federal inheritance tax kicks in at $700,000 total assets? That's really not that much considering many career folks are going to retire with at least that much with minor effort. So a 65 year old middle-manager croaks, has a million dollar nest egg, had his will all lined up and the government takes half of it. What's the failure to plan there?

 

[OmCheeto]

Source on this please? I'm interested to see this, as I have seen that number thrown around a lot but have not personally seen anything reflecting that.

I always get depressed when I look into the numbers regarding income and taxes, and very seldom get involved in what I consider tunnel vision tax discussions.

Counting both income and payroll taxes, less than 13 percent of households would not pay tax

from CAC1001's link
http://www.taxpolicycenter.org/Uploa...income_tax.pdf



The misleading key words that has been bandied about here are "income tax".

If one counts all taxes: Federal, State, and Local, I'm sure that number drops to near zero.

On the following link: http://cfo.dc.gov/cfo/frames.asp?doc=/cfo/lib/cfo/09STUDY.pdf

one can extract from a city of your choice, who's paying how much.

Philadelphia is first on the lists, so I'll go with them:

ESTIMATED BURDEN OF MAJOR TAXES FOR A HYPOTHETICAL FAMILY OF THREE, 2009
income____tax burden
$25,000___16.4%
$50,000___13.7%
$75,000___12.4%
$100,000__12.1%
$150,000__10.9%

One of the federal tax numbers that is interesting to look at from one of the http://www.taxpolicycenter.org/numbers/displayatab.cfm?DocID=2974&topic2ID=150&topic3ID=159&DocTypeID=1":

23,767,000 filers, or 14.7% if the total filers, had an average income of $5788 , with a negative tax burden of $51.

bugeyes mine

I wonder what their state and local tax burden in the DC study would have been.

Oh. And here's some more http://www.dailyfinance.com/2011/06...low-taxes-on-the-rich/?icid=sphere_copyright".

 

[Al68]

...And here's some more http://www.dailyfinance.com/2011/06...low-taxes-on-the-rich/?icid=sphere_copyright".

LOL, you certainly labeled that link correctly: I had to stop reading after this in the first paragraph:

"In May, America's debt slammed against its officially set limit of $14.3 trillion, and almost everyone agrees that the federal government needs to come up with a lot more money."

On second thought, you left out the word "delusional".

 

[OmCheeto]

LOL, you certainly labeled that link correctly: I had to stop reading after this in the first paragraph:

"In May, America's debt slammed against its officially set limit of $14.3 trillion, and almost everyone agrees that the federal government needs to come up with a lot more money."

On second thought, you left out the word "delusional".

I actually didn't read the article, but only watched the video.

But I see that the video seems to have taken excerpts from the article. The following is something I've been writing my congressmen about:

But base pay is only a fraction of (Ralph)Lauren's income. He also owns about $3.42 billion worth of stock in his company. In 2003, President Bush lowered the top capital gains rate to 15%, meaning that, if Lauren were to sell shares that he had held for at least a year, he would pay taxes on his profits at the same rate as someone who makes $8,400 per year. In 2010, he did just that, selling $850 million in shares -- and paying just 15% on the proceeds.

Even though I'm an investor now, and would see my profits drop, it strikes me as illogical for the richest people to pay the same tax rate as the poorest.

 

[Al68]

Even though I'm an investor now, and would see my profits drop, it strikes me as illogical for the richest people to pay the same tax rate as the poorest.

Me, too, but that's not the reality of the situation. Even in that example, the rich paid proportionately higher taxes than the poor, and that example was nonsense.

In reality, rich people don't just pay proportionally more, they pay a much higher percentage in taxes, and a disproportionately higher share of the total tax burden. This has been shown repeatedly in this forum, but here's the same link to CBO data I have provided many times: http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml.

Of course that still ignores the fact that the bulk of taxes collected "from the rich" is not taken from their pockets, it's taken from their investment capital. Unlike the poor and middle class, rich people invest most of their money. Capital gains taxes in particular come from the investment capital of rich people, not their pockets or fat cat cigar funds.

 

[russ_watters]

Even though I'm an investor now, and would see my profits drop, it strikes me as illogical for the richest people to pay the same tax rate as the poorest.

Like your comment above about payroll taxes, it is only illogical if you consider a lot of different forms of received money and taxes paid to be identical. The reason people talk about the federal income tax differently from the payroll tax is the federal income tax is what you pay to fund the normal functions of government. The payroll tax is basically funding a federally run insurance and investment company. The reason that it is important to separate SS, in particular, from regular taxes is that it was sold to the American people as a retirement savings plan, where what you pay in determines what you get out. If the pay-in is divorced from the pay-out, it just becomes another type of welfare. I'm sure liberals and poor people would love that, but it would be a much harder sell for conservatives and middle class+. And the reason including it makes the numbers seem less skewed is because the rich are mostly ineligible for the program.

 

[OmCheeto]

Me, too, but that's not the reality of the situation. Even in that example, the rich paid proportionately higher taxes than the poor, and that example was nonsense.

In reality, rich people don't just pay proportionally more, they pay a much higher percentage in taxes, and a disproportionately higher share of the total tax burden. This has been shown repeatedly in this forum, but here's the same link to CBO data I have provided many times: http://www.cbo.gov/ftpdocs/88xx/doc8885/EffectiveTaxRates.shtml.

Of course that still ignores the fact that the bulk of taxes collected "from the rich" is not taken from their pockets, it's taken from their investment capital. Unlike the poor and middle class, rich people invest most of their money. Capital gains taxes in particular come from the investment capital of rich people, not their pockets or fat cat cigar funds.

Ok then. Round and round we go.

As I've pointed out before, from your link, the top 5% of wage earners take home, after taxes, in one year, what the bottom 20% take home, after taxes, in 20 years.

I would do the math, as to what the deficit would now be if we'd kept multiple tax brackets. With the top one being at around 50%, but I've been summoned to the river.

And nothing, absolutely nothing, trumps life.

Salam

 

[Al68]

Ok then. Round and round we go.

As I've pointed out before, from your link, the top 5% of wage earners take home, after taxes, in one year, what the bottom 20% take home, after taxes, in 20 years.

I never said otherwise. You just pointed out something that neither supports your position nor refutes mine in any way.

The reason we go "round and round" is that after I showed your first claim to be utterly false, you just switched to a completely different claim, as if your second claim were the one in dispute, or supported your first claim in some way. Neither is true.

 

[turbo]

Ok then. Round and round we go.

As I've pointed out before, from your link, the top 5% of wage earners take home, after taxes, in one year, what the bottom 20% take home, after taxes, in 20 years.

I would do the math, as to what the deficit would now be if we'd kept multiple tax brackets. With the top one being at around 50%, but I've been summoned to the river.

And nothing, absolutely nothing, trumps life.

Salam

Please don't be too sensible. You'll be called a Marxist Commie.

 

[Al68]

Please don't be too sensible. You'll be called a Marxist Commie.

Only if he uses the word "sensible" to mean considering a large portion of privately created wealth to be a collectively owned resource.

 

[turbo]

Only if he uses the word "sensible" to mean considering a large portion of privately created wealth to be a collectively owned resource.

Wealth earned under a highly regulated and protected economic system should be taxed. The people that benefit the most from our economic system should be taxed proportionately to support that system. Anything less is welfare. And the "right" hates welfare, right?

 

[Al68]

Wealth earned under a highly regulated and protected economic system should be taxed.

Nice logic. Impose unwanted regulations, then try to claim that people owe money for the privilege of being regulated. Is that a joke?

Of course maintaining law and order, etc. has a cost, but nobody is objecting to the rich paying that cost, since that is what they benefit from.

The people that benefit the most from our economic system should be taxed proportionately to support that system. Anything less is welfare. And the "right" hates welfare, right?

You're making no sense here. The U.S. has no taxpayer supported economic system in any sense relevant to this issue. The economic system in the U.S. is supported within by private wealth creation.

You seem to have everything backwards in some incomprehensible way, and a gross misunderstanding of how capitalism works.

 

[russ_watters]

Wealth earned under a highly regulated and protected economic system should be taxed.

[regardless of the characterization of "highly regulated and protected"] It is! Posting that the rich make a lot of money doesn't say anything useful at all unless the implication is that we need to take a lot more of that money from them than is already taken.

The people that benefit the most from our economic system should be taxed proportionately to support that system. Anything less is welfare. And the "right" hates welfare, right?

Oy.

1. The tax is to support the government, not the economic system.
2. They are already taxed more than proportionally - are you suggesting we switch to a flat tax? How would the lower half that pays no federal income tax now respond to that?
3. IMO, the people who "benefit most" are the ones who get benefits without paying for them, not those who pay for the benefits that are then given to others for nothing. It's a twisted way of thinking to say that those who pay are getting the benefits while those who get the benefits (those actual money pay-outs) aren't.

 

[russ_watters]

Ok then. Round and round we go.

As I've pointed out before, from your link, the top 5% of wage earners take home, after taxes, in one year, what the bottom 20% take home, after taxes, in 20 years.

What does that have to do with anything? We know the rich are rich. The issue is how much to tax them and everyone else. It's almost like you are saying that you think it is unfair that the rich are rich.

Honestly (both of you!): Do you consider it fair that roughly half of our population is exempt from paying taxes to support the primary functions of the federal government? Heck, ironically, Obama only works for the rich, since they are the ones who pay his salary! The poor pay him nothing!

 

[Al68]

Honestly (both of you!): Do you consider it fair that roughly half of our population is exempt from paying taxes to support the primary functions of the federal government?

At this point, if the top 10% only had to pay 100% of the cost to support the (constitutional) primary functions of the federal government, that would be a monstrous tax cut.

That's what's so absurd about those red herring arguments: the bulk of the federal budget has nothing to do with actually funding government at all, much less just funding its legitimate primary functions.

 

[WhoWee]

Wealth earned under a highly regulated and protected economic system should be taxed. The people that benefit the most from our economic system should be taxed proportionately to support that system. Anything less is welfare. And the "right" hates welfare, right?

Let's be honest - ok?

Personally - I want to be free to earn obscene amounts of money - is that (now) wrong in America? I want my family to enjoy life and prosper under a blanket of security.

The flip side - I could care less about making sure illegal immigrants and (2nd and 3rd generation of) welfare recipients have HUD/Section 8/food stamps/free education/Medicaid, EITC, and etc.

The American dream used to be a goal of success - IMO - now it's to get onto the Government dole (shame - shame - shame - shame - shame!).

 

[Ivan Seeking]

Nice logic. Impose unwanted regulations, then try to claim that people owe money for the privilege of being regulated. Is that a joke?

What in a free market prevents "too big to fail"?

And saying that we should allow market corrections that destroy the global economy is not an answer.

 

[Ivan Seeking]

[regardless of the characterization of "highly regulated and protected"] It is! Posting that the rich make a lot of money doesn't say anything useful at all unless the implication is that we need to take a lot more of that money from them than is already taken.

No, that this country was built on a top marginal tax rate two and almost three times higher than what we have now, and capital gains taxes twice what they are now, does. That is what suggests that we should take more money from the rich - precedence, a history of success, and the model on which we built the often mentioned "American dream". Things have really only gone to hell in terms of debt since Reaganomics ruled the day. There is no evidence that today's historically low tax rates have done anything but to help destroy the country.

 

[russ_watters]

Does the growing fraction of people who pay no federal income tax imply to you a similar trend that should also be reversed?

 

[Al68]

What in a free market prevents "too big to fail"?

Competition. The lack of competition due to regulation causes the "too big to fail" problem.

No, that this country was built on a top marginal tax rate two and almost three times higher than what we have now, and capital gains taxes twice what they are now, does.

Total nonsense. This country was built from nothing to the greatest nation in history with NO INCOME OR CAPITAL GAINS TAX WHATSOEVER.

Then other nations started catching up after we started the income tax. You're not seriously trying to claim we taxed ourselves into prosperity, are you?

 

[Ryumast3r]

Competition. The lack of competition due to regulation causes the "too big to fail" problem.Total nonsense. This country was built from nothing to the greatest nation in history with NO INCOME OR CAPITAL GAINS TAX WHATSOEVER.

Then other nations started catching up after we started the income tax. You're not seriously trying to claim we taxed ourselves into prosperity, are you?

Income tax was introduced in 1913. The United States was NOTHING compared to the rest of the world until after World War I (You could argue a little before that, but really... we just had a nice looking navy that couldn't really do jack), and even then, we only caught up/out-did the rest of the world During/After World War II.

 

[WhoWee]

Income tax was introduced in 1913. The United States was NOTHING compared to the rest of the world until after World War I (You could argue a little before that, but really... we just had a nice looking navy that couldn't really do jack), and even then, we only caught up/out-did the rest of the world During/After World War II.

Didn't the so called "Robber Barons" play a role in growing the economy and power of the US?

 

[russ_watters]

Income tax was introduced in 1913. The United States was NOTHING compared to the rest of the world until after World War I (You could argue a little before that, but really...

The US had the world's largest GDP by 1900: http://www.ritholtz.com/blog/2010/08/history-of-world-gdp/

 

[Ryumast3r]

The US had the world's largest GDP by 1900: http://www.ritholtz.com/blog/2010/08/history-of-world-gdp/

India was a part of the British Empire at the turn of the century 1900's. The chart does not make note of that fact, and probably doesn't include Canada, Africa, Australia, parts of the Middle East, and the Pacific Islands that were a part of the British Empire. However, I do not see any list of what is "Britain" on that list, so I can't be sure.

It also doesn't note whether or not it includes French territories, American territories, German territories, etc.

Edit: Saying we were nothing was a mistake, but the fact is, we weren't recognized as the top dog until after the 1913 Tax was put in. My point is that you cannot really say it's because of this tax that we declined in world standing. I don't think you can also necessarily say that it's because of this tax we became #1, but we certainly didn't lose this spot because of the tax.

 

[mheslep]

http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-2009.xls" The American colonies started from essentially zero infrastructure and savings in comparison to Europe at the time. After which, the US/American colonies progressed as follows:

GDP per capita and rank against all other European nations
1700: $527, colonies last behind all European countries
1820: $1202, US above European average, rank 7th out of 30 European countries.
1851: $1806. Great Britain is 1st in the world, remains 1st in Europe for the next half century.
1880: $3184, US second behind Great Britain (now UK). US completes world's greatest suspension bridge and transcontinental railroad.
1905: $4642, surpasses the UK for 1st.

All the above managed without a federal income tax.
(China and India did not reach the US's 1820 GDP per capita until the 1980's)

 

[russ_watters]

India was a part of the British Empire at the turn of the century 1900's. The chart does not make note of that fact, and probably doesn't include Canada, Africa, Australia, parts of the Middle East, and the Pacific Islands that were a part of the British Empire. However, I do not see any list of what is "Britain" on that list, so I can't be sure.

It also doesn't note whether or not it includes French territories, American territories, German territories, etc.

Edit: Saying we were nothing was a mistake, but the fact is, we weren't recognized as the top dog until after the 1913 Tax was put in. My point is that you cannot really say it's because of this tax that we declined in world standing. I don't think you can also necessarily say that it's because of this tax we became #1, but we certainly didn't lose this spot because of the tax.

I have an interpretation of that first part, but I don't think it really matters: I think by your edit, you would agree that the US went from nothing to being a superpower in about 100 years, right?

 

[Al68]

Income tax was introduced in 1913. The United States was NOTHING compared to the rest of the world until after World War I (You could argue a little before that, but really... we just had a nice looking navy that couldn't really do jack), and even then, we only caught up/out-did the rest of the world During/After World War II.

Russ and mheslep beat me to it, but that's just untrue, unless you were referring to military strength only instead of the economy in general?

My point is that you cannot really say it's because of this tax that we declined in world standing. I don't think you can also necessarily say that it's because of this tax we became #1, but we certainly didn't lose this spot because of the tax.

We can say that taxation is harmful to whatever is being taxed as a matter of simple logic and basic economics. You can't take a slice of a pie then claim it didn't leave less pie. But the effect of taxation is harmful in an exponential way, when the part of the pie being removed is the part used as "seed" to make future pies (ie taxing private investment profit).

Of course a tax may have a necessary purpose (such as national defense) that outweighs its harmful effect, but denying that the harmful effect exists is either fraudulent or ignorant.

 

[Al68]

http://www.ggdc.net/maddison/Historical_Statistics/horizontal-file_03-2009.xls" The American colonies started from essentially zero infrastructure and savings in comparison to Europe at the time. After which, the US/American colonies progressed as follows:

GDP per capita and rank against all other European nations
1700: $527, colonies last behind all European countries
1820: $1202, US above European average, rank 7th out of 30 European countries.
1851: $1806. Great Britain is 1st in the world, remains 1st in Europe for the next half century.
1880: $3184, US second behind Great Britain (now UK). US completes world's greatest suspension bridge and transcontinental railroad.
1905: $4642, surpasses the UK for 1st.

All the above managed without a federal income tax.
(China and India did not reach the US's 1820 GDP per capita until the 1980's)

It should be noted that all those dollars were real money dollars (gold coin, or silver coin/notes redeemable for gold), not fiat paper dollars that devalue over time due to inflation.

I only bring that up to point out that the dramatic increases in prosperity shown above are far more dramatic than they may appear at first glance.

 

[czelaya]

What in a free market prevents "too big to fail"?

And saying that we should allow market corrections that destroy the global economy is not an answer.

Too big to fail isn't brought about, in general, by free markets.

What does create too big to fail is corporatism.

But of course, the answer by interventionist is let's subsidize failing companies.

Case in point, GM. How many more bailouts are we going to give a company that continues to fail. If you want to talk about governments creating unfair business models that's a prime example.

Honda, Toyota, and so forth create above average cars: they continue to fight tariffs from domestic automobile makers. GM creates automobiles that aren't up to market standards, hey, it's OK we will throw money at you. Who creates the moral hazard?