For the last two years, $250,000 in annual income has been an arbitrary line in the sand of a renewed class war. Those above it must have their income taxes raised. Those below it are deemed more virtuous and so deserving of a tax cut.
But who exactly are the “rich”? Zillionaires such as Warren Buffett, Bill Gates, and George Soros surely are. But these wealthiest individuals have so much money at their disposal that they don’t care much about income-tax rates. Their tax lawyers have found ingenious ways to divert millions of what would be owed to Uncle Sam by funding tax-free pet causes, private foundations, and favored charities– in a way not available to those who make far less than a million dollars a year.
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Is annual income a good gauge of wealth? Who is richer — the architect in Monterey, Calif., who makes $250,000 a year and who paid $700,000 for a modest house while picking up the full tab of $50,000 a year for his daughter at a private liberal-arts college, or the engineer in Salt Lake City, Utah, making $100,000 a year who has a house twice as large at half the cost, and whose son is on a need-based scholarship at the university? Should annual income alone trump all other considerations when the costs of living vary widely by region, and eligibility for billions of dollars in federal and state subsidies is predicated on income levels?
By the same token, what exactly is “poor” in a globalized world of cheap imported TVs, cell phones, and high-tech gadgetry available to most Americans at Walmart and Target? The middle class today has better access to what were once called luxury items than did the super-wealthy just two decades ago.
How do we define tax “cuts”? Were the George W. Bush income-tax rates really “cuts” for the rich? Or were they across-the-board cuts only in comparison with the higher Clinton rates? In turn, were the Clinton rates actually “hikes” on top of the George H. W. Bush “hikes”? Both upped the lower Reagan rates, which in turn had been “cuts” from the higher Carter rates. In fact, every president’s newly adjusted income-tax rate is derided mostly on partisan political grounds as either a counterproductive hike that “kills small business” or an unfair “trickle-down” cut.
Income taxes don’t operate in a vacuum. That the “rich” should pay 39.5 percent on their income might seem justified in isolation. But what about property, state income, payroll, and other taxes that, combined with federal income taxes, can take up to 65 percent of some incomes in high-tax states?
In addition, income taxes are already graduated, so one pays a higher percentage of one’s income the more one makes. Yet 50 percent of Americans pay no income taxes at all, while 5 percent of taxpayers pay nearly 60 percent of the total collected. The result is that half of Americans are likely to favor both higher entitlements, which they may well receive, and higher income taxes, which they most certainly will not pay.
Did the staggering annual national deficit arise from a lack of revenue or out-of-control spending? California manages to have the highest income, sales, and gas taxes and the largest deficits. Over the last decade, federal income-tax revenue — and budget deficits — have increased almost every year.
Income levels are not static. Belonging to the upper brackets is not always a matter of privilege or inheritance. Some Americans go in and out of the top tax brackets depending on the economy. Others are “rich” for only a few years in their 50s and 60s — making far less before and after.
If we prefer high rates, we will see either more tax avoidance or a certain reluctance to work an extra day, buy new equipment, or hire a new employee — given that any additional income will be mostly eaten up in taxes. Those who make over $250,000 are those who would be more likely to hire new employees, and they usually can do it far more efficiently than the federal government.
Finally, if the goal is to increase federal revenue, then it is wisest to keep taxes as they are. That encourages Americans to make as much as they can and to hire and buy, thereby enriching the nation at large. But if the aim is instead to ensure that we mostly end up about the same, then raising taxes on the already highly taxed might make us more equal — and collectively all poorer as well.
The goal, unfortunately, is neither increasing federal revenue nor keeping revenue the same. The goal has nothing to do with revenue. The goal is simply to 'punish the rich' regardless of cost.
It is all about perpetuating class warfare, which is all the left has to fight with.
Those who hate the rich and wish to tax them should only look to Mayor Corey Booker's, Newark, NJ, new hire. He is a scheming public servant who is a double dip pensioner just hired as his aide at over $200,000 a year. those who hate the so called rich, starting at $200,000 a year, don't know that the self employed have to save well over a million dollars in their lifetime in order to create a self pension that doesn't even match the pension of many public employees who worked 9 to 5 as opposed to the 18 hours days that most self employed put in, the sleepless nights of worry that they won't get the next job and the worry for their employees.
Class warfare is the underlying hateful tool of the far left and we should shun such propaganda.
Thank you for acknowledging that "income levels are not static". I'm so sick of hearing about the "rich" as if God handed them $250,000 per year jobs that they were destined forever to keep. Until I was laid off in 2009, I was "rich" with my $250,000 job. Now I make $19,000 on unemployment with no jobs in sight. And if I do get a job, I'm pretty darn sure I won't be making anything close to what I made before.
Spencer there is no class system in the US. You must not be from here. As for that debt spending tosh and accumulated debt, well as any class act knows you get yourself out of debt by spending less. Most people who want generally low tax rates are not rich, but they would like the chance to become rich some day if they work hard enough. And most honest people don't want other people forced by gunpoint to buy them the things they cannot buy for themselves
A child with a a parent who has an income of 100K getting a needs based scholarship? I'd like to know which school this is, I'll send my high schooler there.
This is why Warren Buffett should keep his pie hole shut about income taxation. *He has a frickin' billion dollars.* He doesn't *need* income. You could tax him at 100%, and he wouldn't care.
Discussing taxes with libs is so frustrating. They can't distinguish funding the gov't from social engineering so they fail at both.
The tax code should be used to fund the gov't, end of story. If the purpose is to fund the gov't, then the objective is to maximize revenue with minimal disruption to choices by citizens. Our current tax code is a running list of preferences for whom should pay more or less based on membership in some sainted group (home mortgage, child care, charitable giving, blind, Katrina)
If libs are truly concerned with "spreading the wealth around" then cut out the dog and pony show and confiscate assets. Pick an arbitrary number and say "if you have more than X we say you don't need it and we're taking it". At least be honest with the purpose.
Obama's approach of angry condemnation of people w/ INCOME over certain amounts is very different than targeting people for the amount of WEALTH they have.
Who should be the object of liberal ire: The dandy in Naples that lives debt free and receives dividend income off muni-bonds of 100K/yr? or the 30 yr old cardiologist earning 300K supporting wife, 2 kids, mortgage and student loans of 200K? The doc is the evil income earner. The dandy has millions in liquid assets much of which is in the sainted muni bond so he doesn't meet the threshold for greedy.
Spending needs to be cut but there is no way to cut it enough to balance the budget and reduce the debt without collecting more tax revenue. This is especially true with the baby boomers about to retire. I think we all agree that Medicare, now about 20% of the budget is set to increase dramatically.
Here is the allocatioin of the budget. EXACTLY what should be cut and how much to BALANCE the budget. Generalities won't cut it. Second, the Republicans who have had both houses of Congress and the presidency, did not have the stomach to cut anything. In fact, George W. oversaw the biggest increase in spending since Johnson. BTW, where were were the tea partiers during Bush's presidency?
Here is the allocation. For all you baby boomers used to winging it, please be specific. Your kids and grand kids would appreciate some precision math from you. Thanks.
20% - Defense
20% - Social Security
21% - Medicare, Medica...id, and the Children’s Health Insurance Program (CHIP)
Safety Net Programs - 14%
Scientific and Medical Research - 2%
Transportation and Infrastructure - 3%
Education - 3%
Non Security International - 1%
Benefits for Federal Retirees and Military - 7%
All Other - 4%
Interest on Debt - 6%
And to think the situation was so different just 10 to 15 years ago.
In his book "Age of Turbulence" Alan Greenspan discusses the budget situation of the late 90's when we were running surpluses for a few short years. Greenspan wrote that the fed was concerned, because, to everyones surprise, paying off the national debt entirely was in sight and without debt the fed did not have a model for controlling the currency. Greenspan and others encouraged Clinton and the congress to spend more until they figured out a new model for controlling the currency.
Little did they know that the revenue spike due to a hot economy and the Dot-Com bubble would end all too quickly with the Dot-Com bust.
Based on that situation, I think the solution to our financial troubles is to stimulate growth. This requires reducing taxes (especially the corporate tax rate), reducing spending AND reducing unnecessary regulation (something not emphasized as much in recent discussion).
We also need to STABILIZE our taxing, spending and regulation. Quit changing the rules on everyone every five minutes so that businesses and individuals can plan.
With strong growth, the revenue will come and with even the limited fiscal discipline of the late 90's the debt will fall.
You people don't realize you're the ones being hurt by the current tax scheme? News flash. You're not going to be rich. Ever. While the actual rich people you're all cheerleading for will continue to pay fewer and fewer taxes you're going to get just far enough to lease a new BMW every couple of years until that job you hate gets shipped to china so your boss can squeeze a few more percentage points for quarter. But keep screaming about class warfare and evil liberals. Your capitalist overlords will have an easier time cost/benefiting you out of the equation if you're gorged on Fox News talking points.
There is a difference between wealth and income. If the Democrats really wanted to tax the wealthy they would propose a national property tax on the value of property over 1 or 2 or 10 million dollars. If they wanted to get really serious they would come up with a version of the taille - wealth tax - used in France prior to the revolution. Hit a lot of the liberal trust fund babies in their sanctimony filled wallets.
"In addition, income taxes are already graduated, so one pays a higher percentage of one’s income the more one makes."
Not true at all. For one thing, no billionaire EVER paid 39% of his 'income' (however you define that term) to the feds. In reality, most of their income is capital gains, taxed at 15%.
I'll have more posts on this, but I will start off with one juicy data point:
$500,000 a year. That's what it takes to live in Manhattan, family of four, two kids, separate bedroom for each, one in private school, car in garage downstairs, taxis only when you need them, dinner out now and then at a moderately priced restaurant, takeout from the diner or the nearest pizza or Chinese joint on a semi-regular basis. Nothing extravagant, nothing fancy, just chugging along. No Hamptons summers, no four star dinners, no art on the wall.
I won't say whether I make less or more than that.
What do you mean by "should" when you say, "The tax code should be used to fund the gov't, end of story"?
Here's what "should" means to me when it comes to public policy: What we hear in the pews on Sunday "should" be public policy on Monday. We acknowledge our own shortcomings as human beings in doing what we "should" do in God's eyes, so we bind ourselves by legislation to compel, in moments of weakness, actions that we know in moments of reflection that we "should" take. We fully understand that doing so constitutes coercion of others not so inclined. However, we consider that coercion, including the collateral effects of that coercion, to be a price worth paying for fulfilling certain responsibilities to our fellow human beings in accordance with what we perceive to be God's will.
For the fella who thinks conservatives are dupes whose "job will get shipped to China." I've got a news flash for you: get a job that doesn't get shipped to China. I'm in the top five percent of income earners and not yet 33. My job will never get shipped to China and I will always be in the tip five percent or higher because I am highly productive. Get some new skills and stop blaming people who are productive/successful for your own shortcomings.
NROreader,
If you do not remember lots of people complaining about Bush's spending then you need to pay better attention. His brand of 'compassionate conservatism' was lamblaster before he was elected, during his terms in office, and afterwards. However, what you have now is spending and intrusion into the private sphere that is an order of magnitude greater than when Bush was in office.
MikeB said: "$500,000 a year. That's what it takes to live in Manhattan, family of four, two kids ... Nothing extravagant"
LIVING IN MANHATTAN IS EXTRAVAGANT. It's a huge luxury. You've chosen to forgo a great many other luxuries -- large living space, inexpensive food -- for the single tremendous luxury of living in the heart of a great city. Increasingly, this is something that is available only to the very wealthy, such as those making over $500,000 a year. Enjoy your wealth; don't whine that you need more for other luxuries.
Ha! Wait, so it's unjust to raise taxes on the rich because income taxes are only part of the story and when you fold in other forms of taxation tax rates are a whopping 60%!
But at the same time, it's also unjust because many poor people pay zero income taxes ... and nevermind all the property taxes, sales taxes, excise taxes, etc, all of them regressive, that the same poor people do pay, that make it a sham to claim they've got zero tax liability.
Clearly, your intention here is to promote honest debate.
Also, the average real (not marginal) income tax rate for the top 1% of filers is 23% of AGI. That's from the IRS data. Now tell me how you get to 65% of real income from there, you absolute embarrassment of a paid liar.
