"Buffet" Tax

[Ddrak]

So do we agree or disagree with the following statements?

In the fight for complete liberation the oppressed people rely first of all on their own struggle and then, and only then, on international assistance.

Every nation, big or small, has its strong and weak points.

After the enemies with guns have been wiped out, there will still be enemies without guns; they are bound to struggle desperately against us, and we must never regard these enemies lightly.

If we have a correct theory but merely prate about it, pigeonhole it and do not put it into practice, then that theory, however good, is of no significance.

Knowledge is a matter of science and no dishonesty or conceit whatsoever is permissible. What is required is definitely the reverse - honesty and modesty.

Dd

[Partha]

Federal taxes DO matter as regards your state and local taxes. After all, many of the increases in state taxes are to provide funding for things that the Federal government used to supply money for. As Federal money dries up, the states are driven to tax increases to continue basic services.

[Embar Angylwrath]

Embar,

Please answer these questions.

1) How did the share of total federal tax receipts increase for top earners even though their actual federal tax burden has decreased? Hint: The answer is in the chart I posted, and yeah... it does matter.

2) Can we have a working economy if more and more wealth is concentrated with fewer and fewer individuals?

3) Nobody, not even the most rabid Teapublican, has proposed enough spending cuts to resolve the deficit problem with cuts alone so any solution is going to require additional revenue. Where do you suggest we get that revenue? And if your answer focuses on anyone other than the top earners, see question 2.

For answer 1 - I'd say that tax deductions and credits for those making less than 50K had something to do with that.

For answer 2 - Concentration is a relative term, and you know it. My clarification to you is this: at what concentration point do you think our economy would stop working?

For #3 - Buried in there is the false premist that all spending is necessary spending. Its the same premise we get for ever increasing taxes and fees.. that all spending is necessary. I reject that notion. As to your question about where to cut... I'm all for across the board cuts to defencse and entitlements. I think the spending in both camps is too big. Do we really need a navy that is larger than the next 13 navies combined (most of which are our allies)? Even with entitlement reform, I'm all for means testing on entitlements. Start there and cut other parts if that's not enough.

This whole "pay their fair share" chest thumping though, is complete bullshit. The rich have been paying their fair share, and most of yours too.

[Lurker]

I'd say that tax deductions and credits for those making less than 50K had something to do with that.

Certainly, but a bigger factor is the fact that income for top earners has increased dramatically while it's remained stagnant for everyone else.

Concentration is a relative term, and you know it. My clarification to you is this: at what concentration point do you think our economy would stop working?

I think we're seeing signs of a broken economy now. Admittedly I don't know how much of our problems are caused by wealth concentration and a stagnant middle class that has, for decades, propped up their standard of living through borrowing.

Buried in there is the false premise that all spending is necessary spending. Its the same premise we get for ever increasing taxes and fees.. that all spending is necessary. I reject that notion.

There was no implication that all spending is necessary.

We have to deal with reality as it exists. We have to come up with solutions that can realistically make it through Congress. Your solution does neither. And as I said, even the most rabid Teapublican is not proposing enough spending cuts to eliminate the deficit. Any solution is going to require a combination of spending cuts and additional revenue. Where do you suggest we get that revenue?

[Embar Angylwrath]

Your first two comments are linked and find their answers in our unemployment rate, not the gap between large earners and smaller ones.

If you are implying the borrowing by the middle class was necessitated by the economic conditions, I call bullshit. No one needds a 52 inch plasma, a new car every three years, cell phones for 12 year olds, soccer camps, vacations in Hawaii, cable, satellite, etc., etc. No one needs to borrow against their house for a home remodel. The cause of just about every person's adverse financial position is bad fiscal choices, not a need to support income through borrowing.

I do not suggest we get more revenue. I do not think we need more revenue, as I do not think all expenditures on a federal level are required and necessary. My suggestion is we let the supercomitte enact across the board cuts, both to defense and entitlements, our two biggest expenditure draws. Both need reform, and both spend too much, and neither the Dems nor the Reps will give up sacred cows, no matter what they say in public. Lines are already being drawn on those.

[Lurker]

Your first two comments are linked and find their answers in our unemployment rate, not the gap between large earners and smaller ones.

The information showed "after-tax income". The wealthy have seen a dramatic increase in their income while everyone else has been relatively stagnant. I don't think unemployment rate is a factor.

If you are implying the borrowing by the middle class was necessitated by the economic conditions, I call bullshit. No one needds a 52 inch plasma, a new car every three years, cell phones for 12 year olds, soccer camps, vacations in Hawaii, cable, satellite, etc., etc. No one needs to borrow against their house for a home remodel. The cause of just about every person's adverse financial position is bad fiscal choices, not a need to support income through borrowing.

I agree completely.

But human nature being what it is a stagnant middle class propped up their standard of living (and the economy) through borrowing. We need to figure out a way to make sure that everyone benefits from economic growth, not just the wealthy.

[Jarochai Alabaster]

No one needds a 52 inch plasma, a new car every three years, cell phones for 12 year olds, soccer camps, vacations in Hawaii, cable, satellite, etc., etc. No one needs to borrow against their house for a home remodel. The cause of just about every person's adverse financial position is bad fiscal choices, not a need to support income through borrowing.

I don't know any middle-class families that are buying a new car every 3 years, vacationing in Hawaii, or buying 52" plasma TVs. I don't know any middle class families that remodeled their homes, let alone did it by taking a loan out against the house. I also don't know any families with teenagers (My generation isn't there yet), but I can't imagine $40/month is an unreasonable expense in the interest of keeping your kid no farther than a phone call away. I'd also wager that a majority of kids don't go to "soccer camp," but I could be wrong.

I do, however, know quite a few middle-class families that are struggling to make ends meet, to pay their utilities, to keep their 10-year-old cars running, and to keep their medical bills from going to collections. All without attempts to prop up their income through borrowing (Frankly, anyone who does that is an idiot - it only takes a couple properly firing neurons to figure out that you have to pay that money back...plus interest).

I'm not saying there aren't people making these bad decisions. I'm saying that there are people in equally dire straits who didn't make these bad decisions, and that I'd wager you're summarily dismissing them as a negligible minority when they likely make up a larger portion of struggling families than you'd care to admit. I'm saying that the claim that "the cause of just about every person's adverse financial position is bad fiscal choices" is an absurd blanket statement.

[Lurker]

Great points, Jaro. While there are certainly people who propped up their lifestyle through credit or taking out equity from their home there are many more in the situation you describe.

[Embar Angylwrath]

If i wasn't clear, I was referring to pre-2007, before the housing crash. Now that LOCs have dried up, that source of cash has largely disappeared for Americans. I would ask Jaro to stretch his memory back to that time, and re-evaluate his statement. My experience out here in California was different. People used homes as ATMs.

[Jarochai Alabaster]

I would ask Jaro to stretch his memory back to that time, and re-evaluate his statement.

No changes to my statement are necessary - I was thinking back over the past decade when I originally made it. Can you substantiate the claim that "the cause of just about every person's adverse financial position is bad fiscal choices" with some form of evidence or economic study?

I have no doubt that many people used their homes as ATMs. But the overwhelming majority? I find that suspect. Of course, while you're relaying California anecdotes, I'm relaying Nebraska anecdotes. From everything I've heard, the past few recessions haven't hit us nearly as hard here, our unemployment rate has almost always been below the national average, and maybe Nebraskans are generally more fiscally responsible than Californians. Either way, I'd be much more interested in national statistics than those of individual states, although state comparisons could be interesting too.

[Embar Angylwrath]

http://moneyland.time.com/2011/09/06/le ... -continue/

I don't think I said overwhelming majority, but I don't think you'll find anyone credible who doesn't agree the practice was rampant.

The cause of most people's financial position is bad (or good) financial deciscions. Not all, but most. I understand the family that gets thrown in chaos because of unforseen medical bills, but that doesn't really reflect the vast majority of people. The vast majority ran up credit cards, bought more than they should have, and saved less than they should have. There's plenty of stats out there that showed Americans had a very low saving rate. Yet in the years before the crash, consumption was up. They made purchasing choices over saving ones.

Those that didn't save and ran up bills, found themselves in a pickle when they got downsized, or got hours reduced, or lost part of the household income because a spouse gor reduced inhours or laid off.

I don't think many will disagree that in good times and in bad, most Americans live from paycheck to paycheck. Saving just isn't (or wasn't, until recently) a part of the American culture.

[Ddrak]

Household borrowing increased steadily until 2007 and then dried up, which is the primary reason the recovery is so anemic. Like it or not, the US economy is primarily based on debt and when the average American is paying off their debts rather than creating new ones the economy stagnates.

Screen+shot+2011-08-16+at+7.27.18+AM[1].png

I believe most of that spending was actually people buying houses, with the average house price rising far more rapidly than household incomes pre-2007:

PriceIncomeQ42010[1].jpg

Basically, this was unsustainable.

Dd

[Embar Angylwrath]

Absoutley it was unsustainable, but people got greedy, from the average Joe to the heads of banks. Anyone with any education in basic economic principles knew the housing swing was unsustainable, but only a few were disciplined enough to not get on the ride, or to not over-leverage themselves. Whn homes are increasing 20%-50% y-o-y, anyone with half a brain knows that the housing market was in some kind of tulip cycle. But most just couldn't reist the allure of easy money, and they made some very bad financial decisions. And now they (we) are paying for it. I say we, because not only did the average Joe have to take a hosing, he had to chip in to pay for the bank bailouts.

Well.. anyone with an income over $50K did anyway. the rest of Americans got a pass on paying for the bailout, since they aren't paying federal taxes anyway.

It should make Partha and Lurker happy that since the rich pay most of the taxes, they are paying for most of the bailout.

[Lurker]

It should make Partha and Lurker happy that since the rich pay most of the taxes, they are paying for most of the bailout.

Really? And here I thought that the Bush tax cuts, the medicare expansion, the Iraq war, the bailouts and the stimulus were being "paid" for with borrowed money through deficit spending. Which means it's not paid for yet.

But hey, lets shift more burden to the middle class and eliminate programs that benefit the middle class so that we can eventually pay for all this, because as seen in the data the wealthy have gotten such a raw deal the last several decades. It's just not fair! *pout*

[Jarochai Alabaster]

I don't think I said overwhelming majority

The cause of just about every person's adverse financial position is bad fiscal choices

"Overwhelming majority" is synonymous with "just about every person," just to clarify what I was referring to.

Apparently the people I know and associate with are more responsible than "just about every person." Of course, when your credit score is low enough that you can't get a credit card in the first place, it's hard to run up those kinds of debts.

I also know several households that had to tackle huge medical expenses for relatively minor issues because their insurance companies refused to abide by the dictates of their policies. I know one family that had to file bankruptcy because of an emergency appendectomy after the insurance company declared it a preexisting condition (Funny, the individual in question had carried insurance through his employer for more than a year before he was admitted to the hospital), and another that faced ~20k in hospital bills for a toddler with pneumonia (Both parents carried insurance - both parents' carriers refused to pay), for two examples.

[Ddrak]

Well.. anyone with an income over $50K did anyway. the rest of Americans got a pass on paying for the bailout, since they aren't paying federal taxes anyway.

Seriously, you need to get over this one. It's not a useful argument even if you did have your facts straight (it's 30k, and federal INCOME taxes) because as I've shown before it wouldn't make any significant difference on the overall federal tax revenue to stick further hardship on people earning that little.

Just for reference, people on $50K paid an effective tax rate of around 10%, on average.

Definitive article on who pays no income tax: http://www.taxpolicycenter.org/Uploaded ... o_pays.pdf
Distribution of total federal taxation: http://www.taxpolicycenter.org/numbers/ ... ocTypeID=7

Dd

[Embar Angylwrath]

It should make Partha and Lurker happy that since the rich pay most of the taxes, they are paying for most of the bailout.

Really? And here I thought that the Bush tax cuts, the medicare expansion, the Iraq war, the bailouts and the stimulus were being "paid" for with borrowed money through deficit spending. Which means it's not paid for yet.

But hey, lets shift more burden to the middle class and eliminate programs that benefit the middle class so that we can eventually pay for all this, because as seen in the data the wealthy have gotten such a raw deal the last several decades. It's just not fair! *pout*

You're absoultely correct, those weren't paid for... yet. But they'll have to be paid for sooner or later, and when the bill comes due, if nothing changes, the top 10% of earners will be paying most of the bill, and half of the wage earners out there will get a free ride.

[Fallakin Kuvari]

11 Ways Warren Buffett is lying about Warren Buffett.

some of you probably won't even click on this to read it and instead just bloviate about where the link comes from.

[Lurker]

Seriously, you need to get over this one. It's not a useful argument even if you did have your facts straight (it's 30k, and federal INCOME taxes) because as I've shown before it wouldn't make any significant difference on the overall federal tax revenue to stick further hardship on people earning that little.

Unfortunately, Embar is impervious to knowledge and doesn't have the capacity to process information that contradicts what he wants to believe, as evidenced by his very next comment.

=====

Fallakin,
That "Warren Buffett is lying" article you linked is incredibly moronic so it's no surprise that Beck, and by extension you, were so impressed by it.

The article contains the same meaningless statistics that Embar constantly uses to make it seem like the wealthy have an onerous burden, like that the top 10% pay 74% of the income taxes. The article also accuses Buffett of lying for getting the tax rates wrong. The "mistake" the article made is that Buffett was talking total tax burden, not just income or capital gains taxes.

On top of all that, the article contains completely misleading information about the affect of lowing the capital gains tax rate. Basically, they are pushing the false notion that lowering taxes increases revenue. Yes, when the capital gains tax rate is lowered there is a temporary, and it must be stressed, temporary surge in capital gains revenue as people take advantage of the lower rate. But other than the brief surge the revenue brought in by the lower rate is much lower. Tax cuts, even cuts to capital gains rates, have a cost. They bring in less revenue than would have existed without the cuts.

The article was a great example of misinformation and propaganda.

[Embar Angylwrath]

What was incorrect in my very next comment?

Ddrak got caught up in semantics. Fine.. a family making 50K or less pays no federal income taxes (on average). That doesn't change the fact that 51% of wage earners in this country pay no federal income taxes, however you want to parse the language. That means that 49% of the wage earners pay ALL of the income taxes. And of the entire population, the top 10% of wage earners pay the largest portion of the income tax.

My statement still stands and has been unaddressed by you, Lurker. That statement is: The top 10% of wage earners pay the largest share of income taxes, by percentage and by amount. Therefore, the top 10% of wage earners pay for most of the federal programs. The top 10% of wage earners will pay for the vast majority of the deficit spending, if the tax structure isn't changed. So the top 10% of wage earners largely finance the federal government, at least as far as income tax receipts are concerned.

Was any of that false?