5 ms·

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

by 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.
adevine 10y ago
OK, let's look at the facts of carried interest, which is taxed as capital gains, and do the math on that. A hedge fund manager is paid for his labor by his investors - it is quite literally a transfer of money from investors to the manager for a job performed. Why should that labor be only taxaed at 15% when his w2 secretary is taxed at a much greater rate. The discussion about "rich vs middle class" misses the point if, for example, you only look at the top 10%. The issue is really about the differences between earned and unearned income, and that is where you get this degree of what people believe is fundamentally unfair, like Warren Buffet paying a lower effective tax rate than anyone else that works in his office.
ArtDev 10y ago
Mitt Romney pays 14% tax. I pay about double his percent rate, on magnitudes less money. The math is simple. Rich people in America don't have to pay their fair share. The system is rigged against the middle class.
- ryguytilidie 10y ago
  Yeah, I'm getting the feeling that the guy who responded to my post thought I meant "more" as in "more dollars". I did not. I meant that I make 1/100th of people who pay 50% of the tax rate I do. I know that they pay more money total, but them having a LOWER tax rate is insane.
deleted 10y ago
[deleted]

by maaku 10y ago

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.

adevine 10y ago

OK, let's look at the facts of carried interest, which is taxed as capital gains, and do the math on that. A hedge fund manager is paid for his labor by his investors - it is quite literally a transfer of money from investors to the manager for a job performed. Why should that labor be only taxaed at 15% when his w2 secretary is taxed at a much greater rate. The discussion about "rich vs middle class" misses the point if, for example, you only look at the top 10%. The issue is really about the differences between earned and unearned income, and that is where you get this degree of what people believe is fundamentally unfair, like Warren Buffet paying a lower effective tax rate than anyone else that works in his office.

ArtDev 10y ago

Mitt Romney pays 14% tax. I pay about double his percent rate, on magnitudes less money. The math is simple. Rich people in America don't have to pay their fair share. The system is rigged against the middle class.

ryguytilidie 10y ago
Yeah, I'm getting the feeling that the guy who responded to my post thought I meant "more" as in "more dollars". I did not. I meant that I make 1/100th of people who pay 50% of the tax rate I do. I know that they pay more money total, but them having a LOWER tax rate is insane.

deleted 10y ago

[deleted]