7 ms·

What is missing is that the total income in the state in 2012 was $1.1 Trillion. So the top 1% earned 28% of the income, but paid 45% of the total taxes: http

What is missing is that the total income in the state in 2012 was $1.1 Trillion. So the top 1% earned 28% of the income, but paid 45% of the total taxes: https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...

daveguy 11y ago
As they should. That's what happens when you have a progressive tax structure. Do you think we should we shift some of that tax burden onto people who make less than $25k per year?
- aantix 11y ago
  I never understand why the term "progressive" gets painted in a positive light? If I eat a steak, the restaurant doesn't come to me and say "Hey, you make 10% more than the guy two tables down, so you'll pay 10% more for your steak". Why did this sliding rule ever get enacted for taxation? If you use something, you pay for it at the established price.
  - matthewmacleod 11y ago
    Oh, come on. I know you get it. Taxation is a generally accepted necessary evil way to fund projects and services for the common good. A progressive tax policy recognises that a person with a high income can bear a greater burden; taxing a minimum wage earner 30% of their income would have a much higher proportional effect on quality of life that someone earning, say, 200k. We seem to accept progressive taxation as fair, in the sense that it causes no more inconvenience to low earners than high earners. The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice.
    - msandford 11y ago
      > The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice. That's exactly what a lot of people are up in arms about, they get taxed hugely but get no real say in how the money is spent. Sure they get a vote, but if your candidate loses it's not as though you're exempt from paying taxes. In some way these people are right; if they choose to engage in commerce they aren't being forced to do anything and as such "whatever the market will bear" is a good metric. Taxes aren't about "whatever the market will bear" though because you don't have a choice to not consume and therefore not pay.
    - oldmanjay 11y ago
      A "progressive" tax policy is so named because it hijacks the positive associations of the word for political gain. Patiently explaining why we should all love the definition doesn't actually address the point being made.
      - matthewmacleod 11y ago
        Wait, what? I'm pretty sure it's called 'progressive' because the rate of taxation 'progresses' as income increases – not because of any association with progressivism per se.
    - theseatoms 11y ago
      An argument I've heard for income tax progressivity is that the very wealthy have far more to lose if the state crumbled and society devolved into a state of nature. In other words, the state, by upholding the rule of law (particularly property law), is providing the ultra wealthy with a service of far greater value than that which it provides those with lower wealth/income.
      - prostoalex 11y ago
        Those who are wealthy are generally not high-income (at least they can heavily tweak their income by using asset-backed loans and accrue capital gains only when it's beneficial). Those who are high income in California are generally not wealthy (as opposed to everyone's favorite high income poster boy - the NY hedge fund manager), but are subjects to windfall effect - a few years of work at below market wages in hopes for a giant payback (royalties in Hollywood, stock options of a successful tech startup in the Valley).
    - djsumdog 11y ago
      I agree entirely. I just moved to a tech city and make totally insane amounts of money. I looked at my tax burden and it's close to 30%..and I'm totally okay with that. My take home is still insane, even after the insane housing costs. It bothers me a bit though. I'd actually rather earn less and things be more affordable. The homeless situation in the city I moved to is truly insane and unsustainable. Tech companies drive up prices. I have a friend who lives in a neighbourhood where all the homes were around $100k when she was a kid; and now the same homes can go anywhere from $500k to nearly a million! You see some of the average working class taking those big payouts and moving further from the city (and potentially driving more; increasing the traffic problem). I'd rather earn less, my housing be more affordable and things be more equal for everyone. Supply and demand for housing really drive these crazy swings in gentrification.
      - jacobush 11y ago
        Move to Sweden. We are on the same curve but far behind...
  - avalaunch 11y ago
    When two people order a steak, regardless of their income, they get the same thing. On the other hand, one of the largest services a government offers its citizens is protection of the citizens' persons and wealth, both from domestic and foreign threats. The value of that protection is relative to how much each citizen is worth. If you're in debt, like many Americans, you're basically getting protection only for your person, as you have little to no wealth to protect. On the other hand, if you're worth billions, the government is protecting your wealth as well. It only makes sense that the more you have to protect, the more you should have to pay.
    - aantix 11y ago
      So, do you think you should pay more for Internet service if you consume more bandwidth? Or is it just a commodity that we all utilize and is payed for with a flat rate, regardless of the value/un-value is provides?
    - jasode 11y ago
      > The value of that protection is relative to how much each citizen is worth. [...] On the other hand, if you're worth billions, the government is protecting your wealth as well. It only makes sense that the more you have to protect, the more you should have to pay. Fyi, those sentences in your reasoning are already handled by a hypothetical flat tax percentage. It's the percentage that handles your cases as you stated them. For example, if a flat 15% tax was applied for everyone, the billionaire earning $30 million pays $4500000 in taxes, while the Walmart earning $20k pays $3000. Mathematically, 4500000 is greater than 3000. In that case, the billionaire has paid more taxes which satisfies your reasoning. On the other hand, the previous posters were emphasizing "progressive" taxes. That means that the percentages themselves are increased as income increases. Your rationale isn't specific to that. Probably the most common math rationale for progressive taxation is the concept of marginal utility of money[1]. In other words, a billionaire's $1 million of money made between $29 million and $30 million is less significant to him and therefore, can be taxed at a more "progressive" tax rate of 40% instead of 15%. On the other hand, the Walmart employees $1000 from $3000 to $4000 pays for food and rent and is not discretionary play money. [1]https://en.wikipedia.org/wiki/Marginal_utility https://en.wikipedia.org/wiki/Marginal_utility
  - sbov 11y ago
    Based upon your example, you seem to be arguing for a flat (as in dollar amount) tax. I have no idea how that would ever work unless there were no taxes at all.
    - aantix 11y ago
      Yes. No taxes except for the flat tax.
      - adwf 11y ago
        And how would the government pay for things? Clearly even with 200mn people, each paying $2000 in tax, you'd only have $400bn in tax revenue. The current total US tax revenue is $6.8tn (federal + state + other). If you upped the tax to $10k, you'd still only be talking about $2tn, but you'd have huge swathes of the country forced into poverty as they'd be unable to pay it. You'd need immense corporation taxes in order to make up the shortfall. Currently US business taxes make around 8% of the budget, compared to 36% for income tax. A flat dollar tax is nuts. The rich make their money from the labour of many, many people. They may only personally use the roads the same as others, but the thousands of their employees that need to drive to work need it a thousand times more. Without that, the rich would have no business. Ditto with healthcare. You need your workers healthy and they can't afford healthcare, you pay for it or you soon won't have many workers. $10k does not pay for much healthcare. Blindness to the social costs that are picked up by the government, does not mean that they don't exist. The rich can pay a bit more and still be rich. They need to pay a bit more or they won't be rich for long, their workers and customers won't exist anymore.
- yo-code-sucks 11y ago
  @antix accelerating returns on investments lead to an even larger gap. The taxes are fine, from me a 1% guy.
lisper 11y ago
But that too is as it should be. Extra tax on the wealthy means they have to settle for the Citation Jet instead of the Gulfstream. Extra tax on the poor means they have to choose whether to pay for food or rent this month.
- mc32 11y ago
  Right but that goes against the narrative which permeates indie media where the 1% are freeloading devils with offshore accounts who are running the state into the ground because they are not paying their fair share of taxes. Mind you I'm not a 1%er. Not that that should have any bearing. But indie media have their dead horse they like to climb on and it wears thin.
  - matthewmacleod 11y ago
    I'd point out though that the oft-cited '1%' is often shorthand for '0.1%' – that maybe lazy, but a different figure.
    - philangist 11y ago
      It also generally refers to the top '1%' with regards to wealth, not income.
  - lisper 11y ago
    > the 1% are freeloading devils Some are. Some aren't.
  - blazespin 11y ago
    You don't understand. 45% of 1 million means nothing. Maybe skimp on the next vacation to Paris. 20% income tax on 60k means someone might never be able to retire or help pay for his kids college degree.
    - bdcravens 11y ago
      As long as we can poke fun at what they spend their money on, and dehumanize them, we can justify any tax level. Maybe that extra 17% could have gone into angel investments. Perhaps the idea that those that earn 28% of the income need to be taxed at 45% is an indictment on California's spending.
GFK_of_xmaspast 11y ago
Does that "income" count capital gains?
- infogulch 11y ago
  The link says "adjusted gross income," which is "gross income" minus deductions. "Gross income in United States tax law is receipts and gains from all sources" [0] This includes wages, interest, gains etc. I'd like to see the same data with un-adjusted gross income. [0]: https://en.wikipedia.org/wiki/Gross_income https://en.wikipedia.org/wiki/Gross_income
deleted 11y ago
[deleted]
blazespin 11y ago
That's declared income. If it's sheltered, than who knows what they are paying.
deleted 11y ago
[deleted]
vannevar 11y ago
That's how a progressive tax system works. The poor pay fewer taxes, because as is well documented elsewhere, ordinary life taxes them at a higher rate than the wealthy. At the other end of the spectrum, the wealthy earn additional income much more easily, so they are taxed at a higher rate. What's astounding is not the 160% ratio of tax share to income share for the wealthy, but the 2800% ratio of their income share to their population share. This illustrates just how powerful the "rich-get-richer" rules of our economy are in transferring money from the poor to the wealthy.
vixen99 11y ago
Maybe hard to take but these people are wealth creators and make a terrific contribution to society in general (everyone in the state, in this case). Of course they're propping up everyone else. Assuming you're not subject to the naive 'wealth is a pie' fallacy, why are you so bothered about inequality of wealth? As a non-rich person, I don't get it! Questions of power and influence on the folk who sit in government and have really massive sums at their disposal with little ultimate responsibility if they foul up - are much more pertinent but should and can be dealt with separately.
foota 11y ago
Does anyone know why the tax liability/taxable income doesn't seem to reflect the state tax percentage? For instance the 9k to 10k bracket has tax liability = 2,970 and taxable income = 1,156,047 for liability/income = .0025 or .25%, which is significantly less than the tax rate of 1% for income under even 8k (http://www.bankrate.com/finance/taxes/state-taxes-california.aspx http://www.bankrate.com/finance/taxes/state-taxes-california...)

daveguy 11y ago

As they should. That's what happens when you have a progressive tax structure. Do you think we should we shift some of that tax burden onto people who make less than $25k per year?

aantix 11y ago
I never understand why the term "progressive" gets painted in a positive light? If I eat a steak, the restaurant doesn't come to me and say "Hey, you make 10% more than the guy two tables down, so you'll pay 10% more for your steak". Why did this sliding rule ever get enacted for taxation? If you use something, you pay for it at the established price.
- matthewmacleod 11y ago
  Oh, come on. I know you get it. Taxation is a generally accepted necessary evil way to fund projects and services for the common good. A progressive tax policy recognises that a person with a high income can bear a greater burden; taxing a minimum wage earner 30% of their income would have a much higher proportional effect on quality of life that someone earning, say, 200k. We seem to accept progressive taxation as fair, in the sense that it causes no more inconvenience to low earners than high earners. The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice.
  - msandford 11y ago
    > The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice. That's exactly what a lot of people are up in arms about, they get taxed hugely but get no real say in how the money is spent. Sure they get a vote, but if your candidate loses it's not as though you're exempt from paying taxes. In some way these people are right; if they choose to engage in commerce they aren't being forced to do anything and as such "whatever the market will bear" is a good metric. Taxes aren't about "whatever the market will bear" though because you don't have a choice to not consume and therefore not pay.
  - oldmanjay 11y ago
    A "progressive" tax policy is so named because it hijacks the positive associations of the word for political gain. Patiently explaining why we should all love the definition doesn't actually address the point being made.
    - matthewmacleod 11y ago
      Wait, what? I'm pretty sure it's called 'progressive' because the rate of taxation 'progresses' as income increases – not because of any association with progressivism per se.
  - theseatoms 11y ago
    An argument I've heard for income tax progressivity is that the very wealthy have far more to lose if the state crumbled and society devolved into a state of nature. In other words, the state, by upholding the rule of law (particularly property law), is providing the ultra wealthy with a service of far greater value than that which it provides those with lower wealth/income.
    - prostoalex 11y ago
      Those who are wealthy are generally not high-income (at least they can heavily tweak their income by using asset-backed loans and accrue capital gains only when it's beneficial). Those who are high income in California are generally not wealthy (as opposed to everyone's favorite high income poster boy - the NY hedge fund manager), but are subjects to windfall effect - a few years of work at below market wages in hopes for a giant payback (royalties in Hollywood, stock options of a successful tech startup in the Valley).
  - djsumdog 11y ago
    I agree entirely. I just moved to a tech city and make totally insane amounts of money. I looked at my tax burden and it's close to 30%..and I'm totally okay with that. My take home is still insane, even after the insane housing costs. It bothers me a bit though. I'd actually rather earn less and things be more affordable. The homeless situation in the city I moved to is truly insane and unsustainable. Tech companies drive up prices. I have a friend who lives in a neighbourhood where all the homes were around $100k when she was a kid; and now the same homes can go anywhere from $500k to nearly a million! You see some of the average working class taking those big payouts and moving further from the city (and potentially driving more; increasing the traffic problem). I'd rather earn less, my housing be more affordable and things be more equal for everyone. Supply and demand for housing really drive these crazy swings in gentrification.
    - jacobush 11y ago
      Move to Sweden. We are on the same curve but far behind...
- avalaunch 11y ago
  When two people order a steak, regardless of their income, they get the same thing. On the other hand, one of the largest services a government offers its citizens is protection of the citizens' persons and wealth, both from domestic and foreign threats. The value of that protection is relative to how much each citizen is worth. If you're in debt, like many Americans, you're basically getting protection only for your person, as you have little to no wealth to protect. On the other hand, if you're worth billions, the government is protecting your wealth as well. It only makes sense that the more you have to protect, the more you should have to pay.
  - aantix 11y ago
    So, do you think you should pay more for Internet service if you consume more bandwidth? Or is it just a commodity that we all utilize and is payed for with a flat rate, regardless of the value/un-value is provides?
  - jasode 11y ago
    > The value of that protection is relative to how much each citizen is worth. [...] On the other hand, if you're worth billions, the government is protecting your wealth as well. It only makes sense that the more you have to protect, the more you should have to pay. Fyi, those sentences in your reasoning are already handled by a hypothetical flat tax percentage. It's the percentage that handles your cases as you stated them. For example, if a flat 15% tax was applied for everyone, the billionaire earning $30 million pays $4500000 in taxes, while the Walmart earning $20k pays $3000. Mathematically, 4500000 is greater than 3000. In that case, the billionaire has paid more taxes which satisfies your reasoning. On the other hand, the previous posters were emphasizing "progressive" taxes. That means that the percentages themselves are increased as income increases. Your rationale isn't specific to that. Probably the most common math rationale for progressive taxation is the concept of marginal utility of money[1]. In other words, a billionaire's $1 million of money made between $29 million and $30 million is less significant to him and therefore, can be taxed at a more "progressive" tax rate of 40% instead of 15%. On the other hand, the Walmart employees $1000 from $3000 to $4000 pays for food and rent and is not discretionary play money. [1]https://en.wikipedia.org/wiki/Marginal_utility https://en.wikipedia.org/wiki/Marginal_utility
- sbov 11y ago
  Based upon your example, you seem to be arguing for a flat (as in dollar amount) tax. I have no idea how that would ever work unless there were no taxes at all.
  - aantix 11y ago
    Yes. No taxes except for the flat tax.
    - adwf 11y ago
      And how would the government pay for things? Clearly even with 200mn people, each paying $2000 in tax, you'd only have $400bn in tax revenue. The current total US tax revenue is $6.8tn (federal + state + other). If you upped the tax to $10k, you'd still only be talking about $2tn, but you'd have huge swathes of the country forced into poverty as they'd be unable to pay it. You'd need immense corporation taxes in order to make up the shortfall. Currently US business taxes make around 8% of the budget, compared to 36% for income tax. A flat dollar tax is nuts. The rich make their money from the labour of many, many people. They may only personally use the roads the same as others, but the thousands of their employees that need to drive to work need it a thousand times more. Without that, the rich would have no business. Ditto with healthcare. You need your workers healthy and they can't afford healthcare, you pay for it or you soon won't have many workers. $10k does not pay for much healthcare. Blindness to the social costs that are picked up by the government, does not mean that they don't exist. The rich can pay a bit more and still be rich. They need to pay a bit more or they won't be rich for long, their workers and customers won't exist anymore.
yo-code-sucks 11y ago
@antix accelerating returns on investments lead to an even larger gap. The taxes are fine, from me a 1% guy.

lisper 11y ago

But that too is as it should be. Extra tax on the wealthy means they have to settle for the Citation Jet instead of the Gulfstream. Extra tax on the poor means they have to choose whether to pay for food or rent this month.

mc32 11y ago
Right but that goes against the narrative which permeates indie media where the 1% are freeloading devils with offshore accounts who are running the state into the ground because they are not paying their fair share of taxes. Mind you I'm not a 1%er. Not that that should have any bearing. But indie media have their dead horse they like to climb on and it wears thin.
- matthewmacleod 11y ago
  I'd point out though that the oft-cited '1%' is often shorthand for '0.1%' – that maybe lazy, but a different figure.
  - philangist 11y ago
    It also generally refers to the top '1%' with regards to wealth, not income.
- lisper 11y ago
  > the 1% are freeloading devils Some are. Some aren't.
- blazespin 11y ago
  You don't understand. 45% of 1 million means nothing. Maybe skimp on the next vacation to Paris. 20% income tax on 60k means someone might never be able to retire or help pay for his kids college degree.
  - bdcravens 11y ago
    As long as we can poke fun at what they spend their money on, and dehumanize them, we can justify any tax level. Maybe that extra 17% could have gone into angel investments. Perhaps the idea that those that earn 28% of the income need to be taxed at 45% is an indictment on California's spending.

GFK_of_xmaspast 11y ago

Does that "income" count capital gains?

infogulch 11y ago
The link says "adjusted gross income," which is "gross income" minus deductions. "Gross income in United States tax law is receipts and gains from all sources" [0] This includes wages, interest, gains etc. I'd like to see the same data with un-adjusted gross income. [0]: https://en.wikipedia.org/wiki/Gross_income https://en.wikipedia.org/wiki/Gross_income

deleted 11y ago

[deleted]

blazespin 11y ago

That's declared income. If it's sheltered, than who knows what they are paying.

deleted 11y ago

[deleted]

vannevar 11y ago

That's how a progressive tax system works. The poor pay fewer taxes, because as is well documented elsewhere, ordinary life taxes them at a higher rate than the wealthy. At the other end of the spectrum, the wealthy earn additional income much more easily, so they are taxed at a higher rate. What's astounding is not the 160% ratio of tax share to income share for the wealthy, but the 2800% ratio of their income share to their population share. This illustrates just how powerful the "rich-get-richer" rules of our economy are in transferring money from the poor to the wealthy.

vixen99 11y ago

Maybe hard to take but these people are wealth creators and make a terrific contribution to society in general (everyone in the state, in this case). Of course they're propping up everyone else. Assuming you're not subject to the naive 'wealth is a pie' fallacy, why are you so bothered about inequality of wealth? As a non-rich person, I don't get it! Questions of power and influence on the folk who sit in government and have really massive sums at their disposal with little ultimate responsibility if they foul up - are much more pertinent but should and can be dealt with separately.

foota 11y ago

Does anyone know why the tax liability/taxable income doesn't seem to reflect the state tax percentage? For instance the 9k to 10k bracket has tax liability = 2,970 and taxable income = 1,156,047 for liability/income = .0025 or .25%, which is significantly less than the tax rate of 1% for income under even 8k (http://www.bankrate.com/finance/taxes/state-taxes-california.aspx http://www.bankrate.com/finance/taxes/state-taxes-california...)