patrick.net

These charts never account that many lower income people are retirees that are drawing social security and Medicare benefits that they paid into for a long time.

I guess there is no sales tax in Mishland.

This is bullshit on several levels.

For one thing, the top 40% is not rich. It's all the way down to what, 65K or something ? That's not rich.

Secondly, people pay FICA on far lower levels of income which is accounted for by the government as if it were tax revenue. That is, when they talk about the budget deficit, the FICA proceeds are treated as tax revenues.

Third, yes sales tax.

But yes, of course those who really make a lot should pay more tax. Way more. Those that don't understand this simple fact, have been drinking too much of the cool aid that the plutocrats and right wing wackos have been giving them.

tr6 says

These charts never account that many lower income people are retirees that are drawing social security and Medicare benefits that they paid into for a long time.

They do. Just ignore the sensationalistic total and look at the "other transfer" category:

humanity says

But yes, of course those who really make a lot should pay more tax. Way more. Those that don't understand this simple fact, have been drinking too much of the cool aid that the plutocrats and right wing wackos have been giving them.

Thank you, Sir, for coherent and persuasive argument you laid out in support of your point of view re progressive taxation. I bet you learned the advanced technique you so brilliantly used in kindergarten.

Yes, but what if you account for the government subsidies that flow back out to the top tiers?

My conjecture is that in terms of work done, and hard dollars earned, the people making $50,000 to $120,000 are probably the ones getting screwed the most.

We're doing the real productive work that actually drives the economy (like science, engineering, research, development, professional services, project management, enforcement and investigation, knowledge workers) and getting taken to the cleaners with 25%-28% income taxes eaten up from both sides by welfare programs from the bottom, and fiat currency counterfeiters and subsidies on the top end.

Not only are we drained by taxes, but the system suppresses our wages which should probably be double or treble what is currently paid.

humanity says

But yes, of course those who really make a lot should pay more tax. Way more.

I disagree with this on first principles.

If we taxed rents, mortgages, and empty land first, we'd keep a lot more money in the working class (both with the massive revenue redirection from specuvestors to gov't and also via lower land costs) and wouldn't have to have so much social spending to begin with (since housing would be less inflated)

Ditto with reforming our health system; our current public spending alone is sufficient to fund a Japan or perhaps Canadian level of care for everyone.

http://research.stlouisfed.org/fred2/graph/?g=pVe

(per-capita gov't health spending) (!)

Only after these major reforms are done should we need to look at more aggressive rebalancing of the flows of the economy.

These two flows aren't small:

http://research.stlouisfed.org/fred2/graph/?g=pVg

hours per week per-capita (age 25 to 54) at average wage to pay for housing and (private) health care.

Alternative trend:

http://research.stlouisfed.org/fred2/graph/?g=pVh

housing + private health care percent of total wages

This is (largely) why we're broke; I'd like to think fixing these massive holes would be sufficient, but it's certainly necessary at any rate.

I'm not rich and I've paid more than 25% to 33% of my income in Federal income taxes every year since I was 22. That's not counting SS tax, Medicare tax, and local taxes. I've worked 70-90 hours a week every year for 15 years. I, and about 10,000 people like me, built the Internet with our bare hands. Collectively, we've produced tens of trillions of dollars of wealth.

Mitt Romney paid a 14.1% effective tax rate on an income of over $13.7 million in 2011 and he never produced any wealth in his god-damn life.

Fuck the rich. Fuck those who suck the balls of the rich.

Dan8267 says

I'm not rich and I've paid more than 25% to 33% of my income in Federal income taxes every year since I was 22. That's not counting SS tax, Medicare tax, and local taxes. I've worked 70-90 hours a week every year for 15 years. I, and about 10,000 people like me, built the Internet with our bare hands. Collectively, we've produced tens of trillions of dollars of wealth.

Mitt Romney paid a 14.1% effective tax rate on an income of over $13.7 million in 2011 and he never produced any wealth in his god-damn life.

Fuck the rich. Fuck those who suck the balls of the rich.

Your effective federal income tax rate was 25 to 33%?

Bellingham Bill says

I disagree with this on first principles.

If we taxed rents, mortgages, and empty land first, we'd keep a lot more money in the working class (both with the massive revenue redirection from specuvestors to gov't and also via lower land costs) and wouldn't have to have so much social spending to begin with (since housing would be less inflated)

I will agree that if we taxed rents it would be good, in that it keeps land speculation (the land component of housing) down and it funds the government at least partly.

But if more revenue is still needed by the government, we're not going to tax the guy who makes less than he needs to live, when there are others making WAY WAY more than even their luxurios level of living.

Also, if housing costs less, what's to keep employers from simply paying workers less ? I mean that's okay, of course they would, this is part of the benefit, and also would make government cost less.

But is there any reason to think that the working poor would be better off ? (other than that they don't have to worry as much that they don't own their housing ?)

Just do away with the federal income tax altogether, and print the "money" that the fed gov needs to fund itself

Why we aren't doing this already?

There's no reason that anyone should owe the federal government anything, for the privilege of working

Also consider the benefit of a two-tiered justice system. Sell drugs for the Mexican cartels - go to jail. Launder millions for the Mexican cartels - see you at the club this weekend.

errc says

There's no reason that anyone should owe the federal government anything, for the privilege of working

You must be kidding. And yet it's not funny. The government does a lot for us. Roads, schools, all sorts of public services. Then there's also the military and the back door way that it supports many industries and corporations.

Dan8267 says

I'm not rich and I've paid more than 25% to 33% of my income in Federal income taxes every year since I was 22. That's not counting SS tax, Medicare tax, and local taxes

Dan, I agree with your later point that it's wrong that Mitt etc pay 14% tax while workers pay more. But, are you sure you paid 25-33% in total tax? Not the highest bracket? Someone who makes $300k and has some normal deductions would pay about 20-25%. Paying 33% would be pretty tough, the taxpayer would have to have lots of income in the top bracket (was 35% until 2013, now 39.6%.)

Check this out: http://www.taxact.com/tools/tax-bracket-calculator.asp
in 2013 (with the higher top bracket), a single filer with $700k post deductions would pay 33.5% in federal income taxes. So it is possible, but unusual.

It is pretty common among the few-hundred-Kers to pay 25-33% including FICA and local.

Paralithodes says

Your effective federal income tax rate was 25 to 33%?

Yes

SiO2 says

But, are you sure you paid 25-33% in total tax?

Yes, varying quite a bit over the years, but yes that was the range of my effective, not marginal, rate.

Single people with no kids get raped on taxes. Renters get raped on taxes. People with income from production rather than owning (capital gains) get screwed on taxes. I met all three criteria. And I had nothing to itemize.

All the deductions are for the married, parents, home owners, and business owners.

It might be a shock to those who are married with kids, but yes, single people with no kids do pay way the hell more in taxes than you do. Homosexual couples have experienced this kind of discrimination, which is why marriage equality is a big deal today, but single, childless people are discriminated against even more than gays by our tax codes.

Taxes comprise over half of my living expenses. I wouldn't mind so much if those taxes were used to do something good like
- rebuild New Orleans
- upgrade our nation's infrastructure
- build fiber to every house
- lower poverty
- nationalize the education system and ensure everyone had access to any education they are willing to work at
- exploring and developing space and space-related technologies

What pisses me off is that my tax dollars are used to
- fight illegal and unjustifiable wars on the behalf of corporations
- spy on Americans and our allies (NSA)
- violate the human and civil rights of people (TSA, FBI, local police)
- militarize local police
- war profiteering (big defense contracts)
- paying interest on a debt we should not even have
- bailing out banks by letting them create money and loaning it to our government
- bailing out too-big-to-fail corporations and housing speculators

SiO2 says

Dan, I agree with your later point that it's wrong that Mitt etc pay 14% tax
while workers pay more.

Your question to Dan is valid - it is what I was also questioning. But which "workers" actually pay more than 14% effective tax rate?

Dan8267 says

Yes, varying quite a bit over the years, but yes that was the range of my
effective, not marginal, rate.

You certainly did get, at the very minimum, the standard deduction. And then your income was taxed at various progressive marginal rates along the way. If your effective tax rate is what you say, then you are certainly "rich" compared to the vast, vast majority of the population.

Perhaps "rich" to you must be defined as those who have much more than you, despite your admission that you must certainly have been in the top 10% or so, if not closer to the dreaded "1%."

If you were really one of the 10,000 folks who built the Internet, I would be surprised if you weren't "rich" and I personally think you deserve to be.

But let's not play games. You are one of the "rich." And you are one of the "rich" who is whining about taxes.

(BTW, homosexual couples, where one is supporting the other, certainly do face the financia/tax discrimination you are talking about. Many homosexual couples, where both are working, can be faced with the "marriage penalty". Are you familiar with how that impacts some of the very things you complain about above?)

Paralithodes says

But which "workers" actually pay more than 14% effective tax rate?

Don't know.

Paralithodes says

If your effective tax rate is what you say, then you are certainly "rich" compared to the vast, vast majority of the population.

Rich has more to do with have much you have than how much income you have. The rich have acquired wealth over many years. In contrast, a young doctor may have a high income but that income goes to pay off medical school meaning the doctor lives a very materially conservative lifestyle, at least for the first 10 years of his career.

The NY Times has a nice app that shows what percentage you are in by income. I've vary between the top 15 to the top 6% during my career by this map. Granted, I was working two jobs at the time I made the top 6%, something that the rich do not do.

I consider being financially secure to mean that you can maintain a middle class standard of living without relying on having a job with any corporation. Financial Security is my goal, and it is a reasonable goal for middle class Americans.

I consider being rich to mean that you can maintain a luxurious lifestyle without getting in debt. As for what constitutes luxury? Things like yachts, mansions, country clubs, high end sports cars, and other things not readily available to the middle class. The economic system does not allow for the typical person to rich this level.

There's a big difference between rich and financial security. I'd be plenty happy with financial security.

I consider opulence to be the point at which you can maintain and even grow a luxurious lifestyle without doing any work. Few people reach opulence through producing. Those that do are almost certainly either entertainers (movie stars, professional athletes, etc.) or inventors (and that's usually not the case for inventors). Most people who reach opulence do so by finding a legal way to siphon wealth from multitudes of people. Such people never produce anything in their lives and do not deserve respect.

I don't have a problem with someone because he's rich or even opulent. I have a problem with how he became rich or opulent if he did so by taking wealth from others rather than by producing wealth.

Paralithodes says

If you were really one of the 10,000 folks who built the Internet, I would be surprised if you weren't "rich" and I personally think you deserve to be.

You shouldn't be surprised. The fundamental problem with capitalism is that it rewards one and only one thing: bargaining power. Capitalism does not reward productivity, wealth creation, or technological advancement. It's all about bargaining power.

Tim Berners-Lee created more wealth than all the billionaires in the world combined. He created more wealth than any other human being that has ever existed. He created the WWW. He made no money off of it and lives a middle class lifestyle with a middle class income (granted, years after inventing the WWW he did receive some prize money, but that's socialism, not capitalism).

Mark Zuckerberg has a net worth of $13 billion and he didn't create jack diddly shit. Facebook was just one of thousands of crappy "build your personal web presence" websites. There was nothing innovative about it. Zuckerberg simply stabbed his way to the top, manipulated people, and sold off their personal information. Why the fuck is he a billionaire and Tim Berners-Lee is not? Capitalism does not reward wealth production or technological advancement (which leads to greater wealth production in the future).

This story happens all the time in our economic system. Those who create the wealth do not control or distribute it. Those who control and distribute the wealth do not create it.

Paralithodes says

who is whining about taxes.

It is my right to complain about how taxes are raised and how they are used. It is also my right to advocate better mechanisms and distributions of taxes. I make no apology for trying to make my country better. Over half the ideas I propose go against my own interests. 'Nuff said.

Paralithodes says

can be faced with the "marriage penalty". Are you familiar with how that impacts some of the very things you complain about above?

The "marriage penalty" is utterly insignificant compared to the "single penalty". Just count up all the dollars for each penalty. And then consider that single, childless people use less than a tenth the services that married with kids people do.

We single and childless pay way more than our fair share of the tax burden and have way too little say. When was the last time you heard anyone say "Will somebody please think of the singles?"? Nope, never heard that. Government gives a big fuck-you to all single people, something that single women are starting to complain about now that they realize that they are paying a lot more in taxes over their lifetime than their married counterparts.

Call it Crazy says

You need a better accountant...

Like Mitt...

No, like Mitt's accountant.

But seriously, the tax code is set up to allow the rich to have tax loopholes not available to the middle class.

Blurtman says

Also consider the benefit of a two-tiered justice system. Sell drugs for the Mexican cartels - go to jail. Launder millions for the Mexican cartels - see you at the club this weekend.

When the wealthy are prosecuted for crimes, they just pass the costs onto consumers, and we end up paying more.

bgamall4 says

Mish is shilling for the 20 percent?

Why is that surprising? Approximately half the country has been convinced that their interests align with the 1% and vote accordingly...and the plutocrats laugh all the way to their off-shore accounts.

Dan8267 says

The "marriage penalty" is utterly insignificant compared to the "single penalty".

I think the balance of that has changed significantly since ACA ties health insurance costs to income. I've actually wondered (okay, I was a little tipsy at the time) if it's tipped the scales enough to consider divorcing my husband, on paper that is.

For example, he would pay me alimony (tax deductible to him, thus lowering his tax bracket), I would collect alimony as my income. I would rent him a room in my house. We would file separately. We would get back all of the deductions that get phased out at his income because I would claim everything on my taxes, and my alimony and rental income would be set at just the right amount to maximize all possible deductions. Then, I could go on the exchange and get insurance for me and the two kids. We'd qualify for all the credits so insurance for the three of us would be subsidized. Then, my husband would just have to insure himself. I think if you did it just right, you could save thousands each year. What could possibly go wrong with this plan? :)

Dan8267 says

Zuckerberg simply stabbed his way to the top, manipulated people, and sold off their personal information. Why the fuck is he a billionaire and Tim Berners-Lee is not? Capitalism does not reward wealth production or technological advancement (which leads to greater wealth production in the future).

Because Zuckerberg is at the center of a FED-enabled pump and dump scheme. Berners-Lee was on the payroll work hours of a government-funded entity (CERN) when expanded on hyper-card. Neither the FED nor the CERN were particularly capitalistic entities.

Dan8267 says

This story happens all the time in our economic system. Those who create the wealth do not control or distribute it. Those who control and distribute the wealth do not create it.

funny you got a downvote for that. Touchy millionaires on this site I guess.

marcus says

But is there any reason to think that the working poor would be better off ? (other than that they don't have to worry as much that they don't own their housing ?)

yeah, LVT isn't a cure-all. Still other systemic issues to deal with -- lack of labor collective bargaining power is becoming a big one.

http://research.stlouisfed.org/fred2/graph/?g=pXH

profits as % wages

Call it Crazy says

Dan8267 says

It might be a shock to those who are married with kids, but yes, single people with no kids do pay way the hell more in taxes than you do.

Well... There you have your answer....

Go get married and have like 8 kids....

Problem solved!!!

No way. No amount of unfair taxation is worth getting married to avoid. Why? Read below.

turtledove says

I think the balance of that has changed significantly since ACA ties health insurance costs to income. I've actually wondered (okay, I was a little tipsy at the time) if it's tipped the scales enough to consider divorcing my husband, on paper that is.

For example, he would pay me alimony (tax deductible to him, thus lowering his tax bracket), I would collect alimony as my income.

When women do that kind of math it scares me. And TurtleDove is actually one of the few women actually looking out for her husband's interests as well as her own. Image the math done by women who loathe their husbands.

Hell hath no fury like a woman scorned, especially when she hires a lawyer.

Reality says

Berners-Lee was on the payroll work hours of a government-funded entity (CERN) when expanded on hyper-card. Neither the FED nor the CERN were particularly capitalistic entities.

The World Wide Web went far beyond CERN. My question stands. If capitalism rewarded wealth creation and innovation, why isn't Tim Berners-Lee the richest man who ever lived?

Bellingham Bill says

Dan8267 says

This story happens all the time in our economic system. Those who create the wealth do not control or distribute it. Those who control and distribute the wealth do not create it.

funny you got a downvote for that. Touchy millionaires on this site I guess.

There's at least one person -- probably TommyWong or Homeboy -- who down votes everything I post. I posted a link to FAQs on Health Saving Accounts and that got a down vote.

If you aren't getting dislikes, you aren't saying anything worthwhile.

Dan8267 says

Mark Zuckerberg has a net worth of $13 billion and he didn't create jack diddly shit. Facebook was just one of thousands of crappy "build your personal web presence" websites.

Capitalism isn't just about creating something it's about providing something that people want/need. Obviously Zuckerburg provided something people want out of facebook.

Dan8267 says

Reality says

Berners-Lee was on the payroll work hours of a government-funded entity (CERN) when expanded on hyper-card. Neither the FED nor the CERN were particularly capitalistic entities.

The World Wide Web went far beyond CERN. My question stands. If capitalism rewarded wealth creation and innovation, why isn't Tim Berners-Lee the richest man who ever lived?

Well i don't know too much about Tim Berners but is the .www even patented? Can it even be patented? And if it could I don't think Tim Berners would be the owner of the .www I believe that ownership would go to CERN since I believe he was working for them at the time.

Dan8267 says

Taxes comprise over half of my living expenses. I wouldn't mind so much if those taxes were used to do something good like

- rebuild New Orleans

- upgrade our nation's infrastructure

- build fiber to every house

- lower poverty

- nationalize the education system and ensure everyone had access to any education they are willing to work at

- exploring and developing space and space-related technologies

there is no point rebuilding a city below the sea levels.. it should be abandoned.
if you want rebuilding infrastructure, get more people employed and tax revenue will increase
no need for fiber cable.. already obsolete.
you reduce poverty by getting jobs to people.. see lower tax policies and building factories.
fire all the union teachers.. just like Steve Jobs said..

want Space Tech.. build factories.. as we did before.. with all the nasty chemicals and metal forging.

Dan8267 says

When women do that kind of math it scares me. And TurtleDove is actually one of the few women actually looking out for her husband's interests as well as her own. Image the math done by women who loath their husbands.

Hell hath no fury like a woman scorned, especially when she hires a lawyer.

The commitment to my family has nothing to do with a piece of paper or some supposedly holy book. If it reaches a point that it harms my family financially to have that piece of paper then I would have absolutely no qualms with reorganizing things, a bit.

What's a shame here is that we have reached a point where we bend over backwards for single mothers to the point that I would even be thinking such things. ACA is just another straw on the camel's back.

As a family of four, we are harmed by the fact that my husband makes a bit over 250k/year of w-2 income. We pay the most for everything. By the time taxes and health insurance are paid, we are definitely at 50%. After the house is paid, there's not much left. So, despite being a supposed member of the 1%, I find it more than a bit galling when we are all portrayed as living in mansions overlooking the Long Island Sound, with yachts, and fleets of foreign cars. We are the weakest members of the 1%, and we are the ones they are going after. If a piece of paper changes that calculus, is it really such a terrible thought? (I'm not saying that you were saying it's a terrible thought, it's a rhetorical question.)

thomaswong.1986 says

fire all the union teachers.. just like Steve Jobs said..

Many teachers, unionized or not, make shite wages especially given the importance of their work to society. Why is the first impulse here to lash out at the ones who actually perform the core task? Why not clear out goldbricking administrators and others by measure of their usefulness toward actual teaching, pay teachers better, and still save money but turn out better students?

turtledove says

As a family of four, we are harmed by the fact that my husband makes a bit over
250k/year of w-2 income. We pay the most for everything.

This is a fine example of the fourth and much of the fifth quintile being screwed over by the tax code written to favor the upper single digit percents who can afford to manipulate the tax code in their own favor. The trope of "The rich pay all the taxes" has really been making the rounds this week. It usually lumps the upper 40% together. A finer breakdown would give a better picture. Remember the illustration of the L curve of wealth distribution.

turtledove says

We are the weakest members of the 1%, and we are the ones they are going after.

Clearly, it's not the top 1% that's the problem. It's the top 0.1%, and then only a subset of them. It's probably more like the top 0.01%, but that doesn't have the same ring as "we're the 99%".

The parasites are the rich who gained their riches, not by producing goods or services, but by siphoning off of others. It's the owner/controller class.

There's nothing wrong with rich doctors, inventors, actors, professional athletes, etc. They produce wealth, even those in the entertainment business. And they do not steal wealth from others.

The executives at Goldman Sachs, Bank of America, etc. are the ones who acquire their wealth by stealing from others using means that are legal because they bribed politicians to make those means legal.

People don't hate the rich. People hate some of the rich, and only then not because they are rich, but because of how they got rich.

Certainly people have it much harder than we do. It just pushes my buttons to be lumped in with multi-millionaire wallstreeters, when at the end of the day after taxes, health insurance, and house payment, we're left with a whopping $5k/month. Of course, we have yet to pay a single bill -- or eat, yet.... and yes, we chose to live in a high-cost area. However,

My husband is a pretty average earning employed doctor (specialist). So, we don't just get it from the side of tax policy (the rich aren't paying their fair share, etc....), we also get it from the masses who are under the impression that doctor's are super-rich and completely to blame for the rising healthcare costs in this country. Yes, there are some doctors out there who've scammed the system and profited from their profession in a way that violates the spirit of the oaths they've taken. But, I've never met one, personally. The "evil" doctors taking advantage of the system are hardly representative of the profession as a whole.

The point of all this is.... If a generally recognized higher paying profession has difficulty cutting the mustard, and 99% are in a worse situation than us -- then we've got a pretty f'ed up system.

turtledove says

Certainly people have it much harder than we do. It just pushes my buttons to be lumped in with multi-millionaire wallstreeters, when at the end of the day after taxes, health insurance, and house payment, we're left with a whopping $5k/month. Of course, we have yet to pay a single bill -- or eat, yet.... and yes, we chose to live in a high-cost area.

$5k/mo ain't bad! Your non-shelter related bills shouldn't amount to more than half that. That leaves you with at least $30k/yr

Do you work or is that all your husbands income?

Dan8267 says

There's nothing wrong with rich doctors, inventors, actors, professional athletes, etc. They produce wealth, even those in the entertainment business. And they do not steal wealth from others.

Well, there's something wrong with the medical sector since our costs are way out of line with the rest of the world.

Regulatory capture by the looks of it.

I don't have any (first-order) problem with the millionaires in sports and entertainment. Everyone parts with those dollars freely.

Health care is different. There are super-stars in medicine who earn their premium, but they're exceptional.

http://research.stlouisfed.org/fred2/graph/?g=pZC

per-capita (age 16+) health costs, US

Here's what Churchill said about professional fees back in 1909:

"If a doctor or a lawyer enjoys a better practice, it is because the doctor attends more patients and more exacting patients, and because the lawyer pleads more suits in the courts and more important suits.

"At every stage the doctor or the lawyer is giving service in return for his fees, and if the service is too poor or the fees are too high other doctors and other lawyers can come freely into competition. There is constant service, there is constant competition; there is no monopoly, there is no injury to the public interest, there is no impediment to the general progress."

He was comparing these fees to land rents, and he's correct as far as he goes, but clearly competition is not so "free" in the US currently.

We have a glut of lawyers and a lack of health professionals apparently.