6 ms·

You're kind of missing the point. I'm middle class and I'm well aware that compared to Germany or Scandanavian countries, I pay lower taxes. However, the issue

You're kind of missing the point. I'm middle class and I'm well aware that compared to Germany or Scandanavian countries, I pay lower taxes. However, the issue is whether you "pay more" than the wealthy people in the US. So no, I don't "pay more" than people living in a completely different country (how is this even a comparison) but I do pay more, on a percentage basis, than the highest earners in the actual country I live in, which is complete lunacy.

yummyfajitas 10y ago
Rayiner's stats explicitly show that the wealthy pay more, on a percentage basis, than the non-wealthy. If the wealthy pay 45% of taxes while earning only 33.5% of income (ratio = 1.34), then simple arithmetic shows that the non-wealthy pay 55% of taxes while earning 66.5% of income (ratio = 0.82). So no, you don't pay more on a percentage basis. You pay a lot less.
- thrownaway2424 10y ago
  Rayiner's post has numbers that are made up. Here are actual numbers from University of California economist Emmanuel Saez: https://eml.berkeley.edu/~saez/lecture_saez_chicago14.pdf https://eml.berkeley.edu/~saez/lecture_saez_chicago14.pdf The top 10% have 50% of the income, and the top 1% have 22% of it.
  - yummyfajitas 10y ago
    Rayiners numbers come directly from income tax returns, which you'd know if you read his source. Where do Saez' numbers come from? He's certainly doing something nonstandard. From his slides: Caveats: Income concept used is narrower than National Income and focus is solely on pre-tax, pre-transfer income I'm guessing Rayiner's numbers include taxable wealth transfers while Saez excludes them, but I'm not really sure.
    - thrownaway2424 10y ago
      The article conveniently decides to draw the line at 10%, which is well below where income inequality really starts to hockey-stick. People in the 90th percentile have not seen their share of incomes grow in the last 30 years. Indeed, even the 99th percentile hasn't done all that amazing of a job increasing their income share. It is the top 10% of top 1% who have more than doubled their share in the last 30 years.
      - yummyfajitas 10y ago
        Actually drawing the line at 10% undermines their case - it's an extremely inconvenient place to draw the line. The US tax system is even more progressive for high earners. Top 0.1% pay an effective tax rate of 35.7%. The 10th-5th percentile pay 20.3%. The bottom 10% pay 3.1%. http://www.pgpf.org/budget-basics/how-much-do-americans-pay-in-federal-taxes http://www.pgpf.org/budget-basics/how-much-do-americans-pay-... Based on the graphs herein, the convenient place to draw the graph would have been at about 1%.
        thrownaway2424 10y ago
        I don't know if you intentionally sabotage your own argument by posting links to those sites, or if you really aren't aware of the self-interest behind their reports.
        yummyfajitas 10y ago
        I don't know what argument you are trying to make. You dislike the Brookings Institute (the original source of those #s), therefore the numbers I cited are wrong?
        thrownaway2424 10y ago
        These numbers are picked over to distort the conclusion. They include in total tax burden the estate tax but not the sales tax. That's funny in a "haha I dropped my monocle in my brandy again" sort of way but not in a way that's useful for evaluating tax policy.
  - maaku 10y ago
    > The top 10% have 50% of the income, and the top 1% have 22% of it. So? That's about income inequality. That's not the discussion here. The relevant question is: do that 10% or 1% pay a lower, higher, or equal effective tax rate?
    - thrownaway2424 10y ago
      If we're discussing the ratio of income to taxes, the number on the numerator seems relevant.
    - thatcat 10y ago
      The divide is between those who live off investments and those who work. So since capital gains are taxed at a lower rate than labor, there is some tax rate bias against labored work. Although it is progressive, the capital requirements for entry are high so it is unlikely for low earners be able to benefit from this. from capital gains wiki: The tax rate on long-term gains was reduced in 1997 via the Taxpayer Relief Act of 1997 from 28% to 20% and again in 2003, via the Jobs and Growth Tax Relief Reconciliation Act of 2003, from 20% to 15% for individuals whose highest tax bracket is 15% or more, or from 10% to 5% for individuals in the lowest two income tax brackets
  - rayiner 10y ago
    Those numbers come from an OECD report.
- pm24601 10y ago
  You are also ignoring WEALTH and capital growth that does not generate income. For example, wealthy people can do 1031 property exchanges - which is non taxable way to sell and buy a replacement property. A wealthy person can construct corporations that generate lots of tax "losses". For example, Amazon does not make very little in terms of taxable profit. If Jeff Bezos wants to buy a house, he can use his Amazon shares as collateral against a loan that Amazon makes to Jeff to buy the house. Completely legal so long as it is disclosed. The wealthy make things that are after tax expenses to you and I - a before tax business deduction. Lunch? business deduction. Fancy car? Lease it for a business deduction - better yet have the company lease it. House? Host board meetings and company wine and cheese events in the house - leasing the house to the company at a very generous cost.
maaku 10y ago
No middle class person in the United States "pays more" than an upper class person, unless that person is actually evading taxes and destined for prison. It is simply mathematically impossible due to the AMT. The ONLY caveat to this long-term capital gains, which makes a wealthy hedge fund manager who is tax efficient about his investment strategy pay approximately the same or a few percentage points less than an upper middle class childless couple that rents. (And there the reasoning is about double taxation and the macroeconomic effects that would have.) Some on either side of the aisle may spin a yarn about the rich not paying their share, but as always I suggest ignoring the rhetoric, looking at the facts, and doing the math yourself.
- vostok 10y ago
  I think the LTCG issue is more common in VC and PE. That's not even touching QSBS. I probably disagree with the preferential taxation given to these categories, but I'm definitely willing to change my mind. Hedge fund managers will rarely pay LTCG on their investments. It's not uncommon for all of their investment gains to be counted as ordinary income. Note that I didn't say realized gains so they'll pay ordinary income tax on gains that haven't even been realized.
- jkyle 10y ago
  You're forgetting Social Security, which is a regressive tax system as it is not taxed on income over ~$118k. You're also forgetting things like Medicare. Both SS and Medicare carry an employer contributed tax, which is a hidden tax on the employee (employers just adjust wages to accommodate the extra taxation). Finally, within the context of comparison to other nation's benefits structures, you're forgetting health care expenses which are included in most western tax systems. Health care is also regressive in that it comprises a greater proportion of expense for lower income earners and carries a 'hidden cost' in the form of employer supplemental payments. It's perfectly valid to include these costs when comparing to other nations or to alternative tax & benefits proposals which include expanded health care. By including or excluding varying costs and expenses, the cost to earnings curves bend dramatically....even with the AMT. The fact is, the answer to this question is not a single acronym. And the discussion can't even legitimately begin until some ground truth on what services and benefits are and/or should be included.

yummyfajitas 10y ago

Rayiner's stats explicitly show that the wealthy pay more, on a percentage basis, than the non-wealthy. If the wealthy pay 45% of taxes while earning only 33.5% of income (ratio = 1.34), then simple arithmetic shows that the non-wealthy pay 55% of taxes while earning 66.5% of income (ratio = 0.82). So no, you don't pay more on a percentage basis. You pay a lot less.

thrownaway2424 10y ago
Rayiner's post has numbers that are made up. Here are actual numbers from University of California economist Emmanuel Saez: https://eml.berkeley.edu/~saez/lecture_saez_chicago14.pdf https://eml.berkeley.edu/~saez/lecture_saez_chicago14.pdf The top 10% have 50% of the income, and the top 1% have 22% of it.
- yummyfajitas 10y ago
  Rayiners numbers come directly from income tax returns, which you'd know if you read his source. Where do Saez' numbers come from? He's certainly doing something nonstandard. From his slides: Caveats: Income concept used is narrower than National Income and focus is solely on pre-tax, pre-transfer income I'm guessing Rayiner's numbers include taxable wealth transfers while Saez excludes them, but I'm not really sure.
  - thrownaway2424 10y ago
    The article conveniently decides to draw the line at 10%, which is well below where income inequality really starts to hockey-stick. People in the 90th percentile have not seen their share of incomes grow in the last 30 years. Indeed, even the 99th percentile hasn't done all that amazing of a job increasing their income share. It is the top 10% of top 1% who have more than doubled their share in the last 30 years.
    - yummyfajitas 10y ago
      Actually drawing the line at 10% undermines their case - it's an extremely inconvenient place to draw the line. The US tax system is even more progressive for high earners. Top 0.1% pay an effective tax rate of 35.7%. The 10th-5th percentile pay 20.3%. The bottom 10% pay 3.1%. http://www.pgpf.org/budget-basics/how-much-do-americans-pay-in-federal-taxes http://www.pgpf.org/budget-basics/how-much-do-americans-pay-... Based on the graphs herein, the convenient place to draw the graph would have been at about 1%.
      - thrownaway2424 10y ago
        I don't know if you intentionally sabotage your own argument by posting links to those sites, or if you really aren't aware of the self-interest behind their reports.
        yummyfajitas 10y ago
        I don't know what argument you are trying to make. You dislike the Brookings Institute (the original source of those #s), therefore the numbers I cited are wrong?
        thrownaway2424 10y ago
        These numbers are picked over to distort the conclusion. They include in total tax burden the estate tax but not the sales tax. That's funny in a "haha I dropped my monocle in my brandy again" sort of way but not in a way that's useful for evaluating tax policy.
- maaku 10y ago
  > The top 10% have 50% of the income, and the top 1% have 22% of it. So? That's about income inequality. That's not the discussion here. The relevant question is: do that 10% or 1% pay a lower, higher, or equal effective tax rate?
  - thrownaway2424 10y ago
    If we're discussing the ratio of income to taxes, the number on the numerator seems relevant.
  - thatcat 10y ago
    The divide is between those who live off investments and those who work. So since capital gains are taxed at a lower rate than labor, there is some tax rate bias against labored work. Although it is progressive, the capital requirements for entry are high so it is unlikely for low earners be able to benefit from this. from capital gains wiki: The tax rate on long-term gains was reduced in 1997 via the Taxpayer Relief Act of 1997 from 28% to 20% and again in 2003, via the Jobs and Growth Tax Relief Reconciliation Act of 2003, from 20% to 15% for individuals whose highest tax bracket is 15% or more, or from 10% to 5% for individuals in the lowest two income tax brackets
- rayiner 10y ago
  Those numbers come from an OECD report.
pm24601 10y ago
You are also ignoring WEALTH and capital growth that does not generate income. For example, wealthy people can do 1031 property exchanges - which is non taxable way to sell and buy a replacement property. A wealthy person can construct corporations that generate lots of tax "losses". For example, Amazon does not make very little in terms of taxable profit. If Jeff Bezos wants to buy a house, he can use his Amazon shares as collateral against a loan that Amazon makes to Jeff to buy the house. Completely legal so long as it is disclosed. The wealthy make things that are after tax expenses to you and I - a before tax business deduction. Lunch? business deduction. Fancy car? Lease it for a business deduction - better yet have the company lease it. House? Host board meetings and company wine and cheese events in the house - leasing the house to the company at a very generous cost.

maaku 10y ago

No middle class person in the United States "pays more" than an upper class person, unless that person is actually evading taxes and destined for prison. It is simply mathematically impossible due to the AMT. The ONLY caveat to this long-term capital gains, which makes a wealthy hedge fund manager who is tax efficient about his investment strategy pay approximately the same or a few percentage points less than an upper middle class childless couple that rents. (And there the reasoning is about double taxation and the macroeconomic effects that would have.) Some on either side of the aisle may spin a yarn about the rich not paying their share, but as always I suggest ignoring the rhetoric, looking at the facts, and doing the math yourself.

vostok 10y ago
I think the LTCG issue is more common in VC and PE. That's not even touching QSBS. I probably disagree with the preferential taxation given to these categories, but I'm definitely willing to change my mind. Hedge fund managers will rarely pay LTCG on their investments. It's not uncommon for all of their investment gains to be counted as ordinary income. Note that I didn't say realized gains so they'll pay ordinary income tax on gains that haven't even been realized.
jkyle 10y ago
You're forgetting Social Security, which is a regressive tax system as it is not taxed on income over ~$118k. You're also forgetting things like Medicare. Both SS and Medicare carry an employer contributed tax, which is a hidden tax on the employee (employers just adjust wages to accommodate the extra taxation). Finally, within the context of comparison to other nation's benefits structures, you're forgetting health care expenses which are included in most western tax systems. Health care is also regressive in that it comprises a greater proportion of expense for lower income earners and carries a 'hidden cost' in the form of employer supplemental payments. It's perfectly valid to include these costs when comparing to other nations or to alternative tax & benefits proposals which include expanded health care. By including or excluding varying costs and expenses, the cost to earnings curves bend dramatically....even with the AMT. The fact is, the answer to this question is not a single acronym. And the discussion can't even legitimately begin until some ground truth on what services and benefits are and/or should be included.