4 ms·

In practice; we currently have a very UN-progressive system. Where the very wealthy get excessive tax breaks, and pay even less than the middle and upper-middle

In practice; we currently have a very UN-progressive system. Where the very wealthy get excessive tax breaks, and pay even less than the middle and upper-middle class (who are getting fucking murdered: at least that's my experience). Would a flat-tax fix this? In theory: but if we set that "flat tax" to 15-17%; (and simply pocket the cost savings from simplification of tax code) - that seems like a win. But the very poorest quintile can't pay that. (and are equipped to dodge that, by simply not working and collecting aid or taking black-market work - cash-basis labor, or selling drugs, etc.) - the top quintile will also have the means to avoid paying their fair share. As always. It's those in the middle, who have to work REAL jobs, and can't hide their income though either black-market means, or tax-shelters: which still work in a flat-tax system. The government will need to raise overall rates to compensate for this, and the middle gets screwed even more. That's an IDEAL system. In the REAL world: the wealthy will still lobby for special deductions. Personally, I'd like to see the mortgage deduction go away for non-primary residences. Stuff like "dancing-horses" deductions and the absolute murder "small businesses" get away with, (like; taking their personal Truck as a deduction, by calling it a "work truck") - that can be horse-traded around. But I think there is the most to be gained from the mortgage deduction on non-primary residences. This is probably America's most sacred cow. And therefore, is most likely politically impossible. This is why we've been at a stalemate over tax-reform since 1980.

djrogers 10y ago
> taking their personal Truck as a deduction, by calling it a "work truck" That's simply tax fraud, it's completely different from the other examples you're calling out..
tbihl 10y ago
While most of what you said is spot on, people often misunderstand what constitutes the super rich group with big tax breaks. It's way less than one percent, because it's the big investment money that's getting out of so much taxation. People who earn high salaries are actually paying quite substantial taxes. For some perspective, "the 1%" starts at about $350k annual salary (think middle-of-the-pack surgeon.) At that level, you're paying a lot of taxes. There's an excellent recent Econtalk on taxation in the US.
- deelowe 10y ago
  Smart money finds ways to reduce that income as much as possible and lives instead off capital gains. I find that there's a lot of smart money once you get above 350 or so annual.
  - hwillis 10y ago
    For these purposes, income includes everything, down to and including appreciation of assets. Capital gains make up the majority of income only for people making 2 million+ annually.
deelowe 10y ago
Upper middle class taxes are INSANE. It's so weird to be taxed at 50% or more (state + fed) and then see others around you taxed at 15% or less. And let's not even get started on corporate taxes. How does any of this make sense?
hwillis 10y ago
>In practice; we currently have a very UN-progressive system. Where the very wealthy get excessive tax breaks, and pay even less than the middle and upper-middle class (who are getting fucking murdered: at least that's my experience). That's not really true. 99.9% of the tax system is progressive[1] and the middle (14% effective tax rate on 59k annual) and upper middle (17.5% on 95k) classes pay less than the highest quintile (27% on 260k). Even the top 1% (35% on 1,570k) pays fairly reasonably, although capital gains eats into that- it would be closer to 45% if it was taxed at the same rate. The real problem is the .1%, the people who's annual income is in the hundreds of millions. These are athletes/actors and "businessmen" who are really just investors in their own company, and they form two distinct taxpayers. The athletes/actors pay rates ranging from 20% to 35%. The ultrarich businessmen are heavily clustered around 10-20%. So heavily that both groups together paid an average rate of 16.62%[2] in 2007. That's just... incredibly insane. I think part of the opposition to fixing this problem comes from framing it as a middle class issue. It's not even a middle class + rich issue, it's an issue for even the extremely rich. It's not an "us vs. CEOs" issue. It's "everybody vs a subset of the richest thousand people". There isn't an income level above which you are the enemy, the enemy is all of the people who skirt by paying taxes. Long term capital gains taxes are too low and ultrarich tax loopholes are abused liberally. [1]: see page 35 of this CBO report- https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-HouseholdIncomeFedTaxes_OneCol.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-... [2]: page 10 of this IRS report: https://www.irs.gov/pub/irs-soi/07intop400.pdf https://www.irs.gov/pub/irs-soi/07intop400.pdf
some1else 10y ago
> the absolute murder "small businesses" get away with, (like; taking their personal Truck as a deduction, by calling it a "work truck") How about "work computer"?

djrogers 10y ago

> taking their personal Truck as a deduction, by calling it a "work truck" That's simply tax fraud, it's completely different from the other examples you're calling out..

tbihl 10y ago

While most of what you said is spot on, people often misunderstand what constitutes the super rich group with big tax breaks. It's way less than one percent, because it's the big investment money that's getting out of so much taxation. People who earn high salaries are actually paying quite substantial taxes. For some perspective, "the 1%" starts at about $350k annual salary (think middle-of-the-pack surgeon.) At that level, you're paying a lot of taxes. There's an excellent recent Econtalk on taxation in the US.

deelowe 10y ago
Smart money finds ways to reduce that income as much as possible and lives instead off capital gains. I find that there's a lot of smart money once you get above 350 or so annual.
- hwillis 10y ago
  For these purposes, income includes everything, down to and including appreciation of assets. Capital gains make up the majority of income only for people making 2 million+ annually.

deelowe 10y ago

Upper middle class taxes are INSANE. It's so weird to be taxed at 50% or more (state + fed) and then see others around you taxed at 15% or less. And let's not even get started on corporate taxes. How does any of this make sense?

hwillis 10y ago

>In practice; we currently have a very UN-progressive system. Where the very wealthy get excessive tax breaks, and pay even less than the middle and upper-middle class (who are getting fucking murdered: at least that's my experience). That's not really true. 99.9% of the tax system is progressive[1] and the middle (14% effective tax rate on 59k annual) and upper middle (17.5% on 95k) classes pay less than the highest quintile (27% on 260k). Even the top 1% (35% on 1,570k) pays fairly reasonably, although capital gains eats into that- it would be closer to 45% if it was taxed at the same rate. The real problem is the .1%, the people who's annual income is in the hundreds of millions. These are athletes/actors and "businessmen" who are really just investors in their own company, and they form two distinct taxpayers. The athletes/actors pay rates ranging from 20% to 35%. The ultrarich businessmen are heavily clustered around 10-20%. So heavily that both groups together paid an average rate of 16.62%[2] in 2007. That's just... incredibly insane. I think part of the opposition to fixing this problem comes from framing it as a middle class issue. It's not even a middle class + rich issue, it's an issue for even the extremely rich. It's not an "us vs. CEOs" issue. It's "everybody vs a subset of the richest thousand people". There isn't an income level above which you are the enemy, the enemy is all of the people who skirt by paying taxes. Long term capital gains taxes are too low and ultrarich tax loopholes are abused liberally. [1]: see page 35 of this CBO report- https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/51361-HouseholdIncomeFedTaxes_OneCol.pdf https://www.cbo.gov/sites/default/files/114th-congress-2015-... [2]: page 10 of this IRS report: https://www.irs.gov/pub/irs-soi/07intop400.pdf https://www.irs.gov/pub/irs-soi/07intop400.pdf

some1else 10y ago

> the absolute murder "small businesses" get away with, (like; taking their personal Truck as a deduction, by calling it a "work truck") How about "work computer"?