9 ms·

Really rich people are suddenly paying quite a bit more in taxes

64 points by ourmandave 11y ago

anu_gupta 11y ago
Good. About time some of these people paid their fair share instead of exploiting loopholes that they can access because they have so much wealth.
- bobby_9x 11y ago
  The top 10% pay over 80% of the federal taxes in the US. This, combined with one of the highest corporate tax rates in the world means they are already paying more than their "fair share".
  - njharman 11y ago
    If they own more than 80% of wealth then paying over 80% of the taxes is exactly fair.
    - poke111 11y ago
      Wealth != Income
    - bobby_9x 11y ago
      Exactly my point. Taxes don't need to be raised.
  - waybull 11y ago
    If that's true, then it almost exactly matches the percentage of wealth they control.
  - ebola1717 11y ago
    The top 10% also controls 80% of the wealth.
golergka 11y ago
It would be interesting to compare these yearly figures with movement of capital between US and other international markets. For example, how connected is this late raise in effective tax rate with the fact that US seemed (at least, from what I seen) increasingly interesting for investors compared to other markets in this period, especially with the slowing growth of China? Could it be that when the capital flows in, US decides to get a bigger cut, but when investment is slowing down, US tries to slow the process by making capital taxes lower? The article mentions that Bush's tax cuts happenned in 2001, right in the recession and after dot-com burst, when growth stopped and investors started to pay more attention to China. This is just a thought; I honestly don't know enough to understand if I'm right about it.
rayiner 11y ago
The top marginal long-term capital gains rate in 1992 was 28%. From 2003-2012 it was 15%. In 2013 it went up to 20%. I bet the difference between 20% and 28% explains the rest of the gap noted in the NYT article.
- rubyfan 11y ago
  What does this translate to in terms of dollars from the 400 so called high earners? And then what portion of US overall tax revenue is from that group vs other segments? Any such data broken out like that exist?
madlynormal 11y ago
I better call my local representative, I'm going to be rich any day now...
- horsecaptin 11y ago
  Don't bother. This only applies to the really reach.
jgalt212 11y ago
The key takeaway: > But today's IRS report suggests the biggest reason the super-rich paid lower tax rates over the last decade was the fact that Congress lowered taxes on the super-rich, particularly taxes on capital income.
gopi 11y ago
Most of the these articles never consider state/local level income taxes. For a person in California the total top capital gain tax rate is more than 33%. This is actually the second highest in the world. If you consider the regular income tax its even much worse, currently the combined income tax rate in California is more than 50%
- SlowComputer 11y ago
  I live in California. I'm not "super rich" but we earn more than $1MM/year. For every additional dollar I earn, I only get to keep 47 cents of it, just counting _income_ taxes. In reality, only high earners pay taxes. And high-salaried people are getting screwed under Obama's war against the most productive citizens.
  - chongli 11y ago
    You're caught in the middle ground. If you were a billionaire earning hundreds of millions per year you could afford to spend 10 million a year to hire a team of experts to hide all your money in the Caymans.
    - acchow 11y ago
      Where did you get these prices from? Why do you think it costs $10 million a year to hide all your money in the Caymans?
      - enraged_camel 11y ago
        It's from the NYTimes piece linked in the article: http://www.nytimes.com/2015/12/30/business/economy/for-the-wealthiest-private-tax-system-saves-them-billions.html?_r=0 http://www.nytimes.com/2015/12/30/business/economy/for-the-w...
        harryh 11y ago
        It's a real mystery what that piece never explains that the biggest reason for the drop in % of income paid in taxes is just the drop (from 28% to 15%) in the top cap gains rate.
programmarchy 11y ago
I'd be happier if taxes were cut from the bottom up, instead of increased from the top down.
- wonderlust 11y ago
  I too would be happy if I got every service the government offers for a cheaper price.
  - programmarchy 11y ago
    Same here, which is why I'm a proponent of market anarchism. Central planning does not have an effective price discovery mechanism, which is one reason why we've been getting much less for much more. Just look at our shitty education system or our police, which both seem to get worse and worse the more we spend on them. Markets allow experimentation and level the playing field, whereas states ossify corporate power and centralize wealth. Not to mention, they're based on mutually beneficial transactions between consenting individuals rather than a monopoly on violence.
jmspring 11y ago
I'm not a Trump fan, and despite likely tax hits, his proposal of simplifying the tax code (as many have done before him), getting rid of the IRS (yes jobs lost, but really, I got a certified letter owing $0.51 and they were "too busy with this category to answer. click") would be a positive thing. One short summary of his proposal -- http://www.thepoliticalinsider.com/donald-trump-unveils-his-bold-income-tax-proposal-this-is-a-big-deal/ http://www.thepoliticalinsider.com/donald-trump-unveils-his-... I think a pure flat tax would actually be bad for the country implemented immediately, but maybe a gradual rescinding of tax breaks (mortgage, etc -- i use said benefit) might be worth considering. Wall Street bankers running off pure capital gains is a big problem.
- skywhopper 11y ago
  The challenge of a "flat tax" is defining "income". It's not as easy as you think, and basic intuitive "fairness" will result in a lot of income being excluded. Given that today's graduated tax system results in top-earners paying lower percentages, a "flat" tax will surely be worse. As for getting rid of the IRS, who will collect, administer, and audit the flat tax?
  - paulddraper 11y ago
    That's why "fair tax" advocates flat sales tax. It still leads to questions, but sales taxes are usually simpler than income and capital taxes.
    - themartorana 11y ago
      This is my favorite proposal to date. Sales tax applies equally to a pencil and a yacht. It also encourages savings at lower income levels.
      - jsankey 11y ago
        That's the problem, too -- it applies equally to necessities and luxuries. Sales taxes are regressive because there is a certain amount of non-discretionary spending everyone has to make, regardless of income, just to live.
OneMoreGoogler 11y ago
> It showed that the effective tax rate paid by those Americans jumped in 2013 to nearly 23 percent. As a data point, my family paid 28% average federal tax, on AGI of $355k. We are California residents. Taxes are regressive on the higher incomes, and that doesn't seem right.
- maratd 11y ago
  > As a data point, my family paid 28% average federal tax You made the mistake of earning that money by working. I am making the same mistake. If you factor in sales taxes, property taxes, state income taxes, etc. I'm pretty sure you're giving half of what you earn to the government.
anigbrowl 11y ago
Some had argued that allowing taxes to rise would lead to an epidemic of capital flight, but this has failed to take place in the two years since tax rates went up. While I'm not hopeful, it would be nice if economic debates in the coming election year were firmly grounded in empirical evidence. With the increased computer power at our disposal it should be easier to model the impact of policy changes on wealth distribution, economic activity and so on.
- muzz 11y ago
  Yes those arguments often turn out to be false. In California, we had an income tax increase on the "job creators" that many argued would cause the affluent to leave the state, and an "Amazon Tax" that many argued would reduce jobs in the state. Those predictions couldn't have been more at odds with the eventual reality.
gnaritas 11y ago
Good; they should be.
tmaly 11y ago
who creates the jobs in this country? Think about it, if you start taxing capital, what does that mean?

64 points by ourmandave 11y ago

Good. About time some of these people paid their fair share instead of exploiting loopholes that they can access because they have so much wealth.

bobby_9x 11y ago
The top 10% pay over 80% of the federal taxes in the US. This, combined with one of the highest corporate tax rates in the world means they are already paying more than their "fair share".
- njharman 11y ago
  If they own more than 80% of wealth then paying over 80% of the taxes is exactly fair.
  - poke111 11y ago
    Wealth != Income
  - bobby_9x 11y ago
    Exactly my point. Taxes don't need to be raised.
- waybull 11y ago
  If that's true, then it almost exactly matches the percentage of wealth they control.
- ebola1717 11y ago
  The top 10% also controls 80% of the wealth.

golergka 11y ago

It would be interesting to compare these yearly figures with movement of capital between US and other international markets. For example, how connected is this late raise in effective tax rate with the fact that US seemed (at least, from what I seen) increasingly interesting for investors compared to other markets in this period, especially with the slowing growth of China? Could it be that when the capital flows in, US decides to get a bigger cut, but when investment is slowing down, US tries to slow the process by making capital taxes lower? The article mentions that Bush's tax cuts happenned in 2001, right in the recession and after dot-com burst, when growth stopped and investors started to pay more attention to China. This is just a thought; I honestly don't know enough to understand if I'm right about it.

rayiner 11y ago

The top marginal long-term capital gains rate in 1992 was 28%. From 2003-2012 it was 15%. In 2013 it went up to 20%. I bet the difference between 20% and 28% explains the rest of the gap noted in the NYT article.

rubyfan 11y ago
What does this translate to in terms of dollars from the 400 so called high earners? And then what portion of US overall tax revenue is from that group vs other segments? Any such data broken out like that exist?

madlynormal 11y ago

I better call my local representative, I'm going to be rich any day now...

horsecaptin 11y ago
Don't bother. This only applies to the really reach.

jgalt212 11y ago

The key takeaway: > But today's IRS report suggests the biggest reason the super-rich paid lower tax rates over the last decade was the fact that Congress lowered taxes on the super-rich, particularly taxes on capital income.

gopi 11y ago

Most of the these articles never consider state/local level income taxes. For a person in California the total top capital gain tax rate is more than 33%. This is actually the second highest in the world. If you consider the regular income tax its even much worse, currently the combined income tax rate in California is more than 50%

SlowComputer 11y ago
I live in California. I'm not "super rich" but we earn more than $1MM/year. For every additional dollar I earn, I only get to keep 47 cents of it, just counting _income_ taxes. In reality, only high earners pay taxes. And high-salaried people are getting screwed under Obama's war against the most productive citizens.
- chongli 11y ago
  You're caught in the middle ground. If you were a billionaire earning hundreds of millions per year you could afford to spend 10 million a year to hire a team of experts to hide all your money in the Caymans.
  - acchow 11y ago
    Where did you get these prices from? Why do you think it costs $10 million a year to hide all your money in the Caymans?
    - enraged_camel 11y ago
      It's from the NYTimes piece linked in the article: http://www.nytimes.com/2015/12/30/business/economy/for-the-wealthiest-private-tax-system-saves-them-billions.html?_r=0 http://www.nytimes.com/2015/12/30/business/economy/for-the-w...
      - harryh 11y ago
        It's a real mystery what that piece never explains that the biggest reason for the drop in % of income paid in taxes is just the drop (from 28% to 15%) in the top cap gains rate.

programmarchy 11y ago

I'd be happier if taxes were cut from the bottom up, instead of increased from the top down.

wonderlust 11y ago
I too would be happy if I got every service the government offers for a cheaper price.
- programmarchy 11y ago
  Same here, which is why I'm a proponent of market anarchism. Central planning does not have an effective price discovery mechanism, which is one reason why we've been getting much less for much more. Just look at our shitty education system or our police, which both seem to get worse and worse the more we spend on them. Markets allow experimentation and level the playing field, whereas states ossify corporate power and centralize wealth. Not to mention, they're based on mutually beneficial transactions between consenting individuals rather than a monopoly on violence.

jmspring 11y ago

I'm not a Trump fan, and despite likely tax hits, his proposal of simplifying the tax code (as many have done before him), getting rid of the IRS (yes jobs lost, but really, I got a certified letter owing $0.51 and they were "too busy with this category to answer. click") would be a positive thing. One short summary of his proposal -- http://www.thepoliticalinsider.com/donald-trump-unveils-his-bold-income-tax-proposal-this-is-a-big-deal/ http://www.thepoliticalinsider.com/donald-trump-unveils-his-... I think a pure flat tax would actually be bad for the country implemented immediately, but maybe a gradual rescinding of tax breaks (mortgage, etc -- i use said benefit) might be worth considering. Wall Street bankers running off pure capital gains is a big problem.

skywhopper 11y ago
The challenge of a "flat tax" is defining "income". It's not as easy as you think, and basic intuitive "fairness" will result in a lot of income being excluded. Given that today's graduated tax system results in top-earners paying lower percentages, a "flat" tax will surely be worse. As for getting rid of the IRS, who will collect, administer, and audit the flat tax?
- paulddraper 11y ago
  That's why "fair tax" advocates flat sales tax. It still leads to questions, but sales taxes are usually simpler than income and capital taxes.
  - themartorana 11y ago
    This is my favorite proposal to date. Sales tax applies equally to a pencil and a yacht. It also encourages savings at lower income levels.
    - jsankey 11y ago
      That's the problem, too -- it applies equally to necessities and luxuries. Sales taxes are regressive because there is a certain amount of non-discretionary spending everyone has to make, regardless of income, just to live.

OneMoreGoogler 11y ago

> It showed that the effective tax rate paid by those Americans jumped in 2013 to nearly 23 percent. As a data point, my family paid 28% average federal tax, on AGI of $355k. We are California residents. Taxes are regressive on the higher incomes, and that doesn't seem right.

maratd 11y ago
> As a data point, my family paid 28% average federal tax You made the mistake of earning that money by working. I am making the same mistake. If you factor in sales taxes, property taxes, state income taxes, etc. I'm pretty sure you're giving half of what you earn to the government.

anigbrowl 11y ago

Some had argued that allowing taxes to rise would lead to an epidemic of capital flight, but this has failed to take place in the two years since tax rates went up. While I'm not hopeful, it would be nice if economic debates in the coming election year were firmly grounded in empirical evidence. With the increased computer power at our disposal it should be easier to model the impact of policy changes on wealth distribution, economic activity and so on.

muzz 11y ago
Yes those arguments often turn out to be false. In California, we had an income tax increase on the "job creators" that many argued would cause the affluent to leave the state, and an "Amazon Tax" that many argued would reduce jobs in the state. Those predictions couldn't have been more at odds with the eventual reality.

gnaritas 11y ago

Good; they should be.

tmaly 11y ago

who creates the jobs in this country? Think about it, if you start taxing capital, what does that mean?