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> That’s exactly the arbitrary definitions used to distort what’s going on. I am not saying it’s inaccurate data based on defines used, but all choices are subj

by darawk 7y ago

> That’s exactly the arbitrary definitions used to distort what’s going on. I am not saying it’s inaccurate data based on defines used, but all choices are subject to spin. Choices like using 6.2% or 12.4% for Social Security tax rates make a huge difference, and really should be included in these discussions. Ya, I can certainly see the case that you don't want to include those numbers. However, I don't think excluding them changes the rank ordering of who pays higher rates. Those sorts of transfers will only be salient for the bottom 20%, and excluding them doesn't get them anywhere near what the top 20% or the top 1% pay. > PS: Progressive also implies the top 0.1%, and 0.0001% also have higher effective tax rates not just an arbitrary top bucket of say 1%. Using words like ‘top’ is again arbitrary. I'm sure you can find a few instances in the continuum where a wealthier person or small group pays less than a poorer person or small group. But I don't think that justifies the claim that our system is not progressive. Broadly speaking, for significantly sized buckets of people, our system is quite progressive. That isn't to say we shouldn't try to address the issue that prevents the 0.00001% from paying the same rate or higher as the top 1%. We should. But I don't think it is the sort of existential issue that people seem to want to frame it as, and I really don't think it justifies the conclusion that our system is not progressive. > PPS: Anyway, do you have a link for that report your referencing? I'm just referencing the CBO report: https://www.cbo.gov/system/files/2019-07/55413-CBO-distribution-of-household-income-2016.pdf https://www.cbo.gov/system/files/2019-07/55413-CBO-distribut...

Retric 7y ago
I personally feel the US taxes are generally progressive though not massively so, but significant exceptions exist. For example, the social security tax stops at $132,900 so there is a significant drop in marginal tax rates at that point. Similarly, including or excluding donations, inheritance, and home sales from income can really change these numbers. I have seen analysis that says are system is progressive, regressive, and flat based on different definitions. Honestly, that’s what I find most interesting about the system. The collision of a huge number of different interests result in a system that can be perceived mathematically different based on viewpoint. It’s like watching a magic trick in action. PS: One of the most extreme divergent analysis focused on the sales and sin taxes paid by a group of homeless drunks. It varies by area but with 40+% percent alcohol taxes they where paying a rather shocking effective tax rate when you exclude benefits.
- darawk 7y ago
  Ya, certainly. I mean, I think the most regressive part of the system that almost nobody talks about is the fact that unrealized capital gains compound untaxed. People focus a lot on the differential treatment of long term capital gains vs income, but I think that mostly misses the point. The real wealth building effect from capital gains comes from allowing them to compound completely untaxed for decades, if the gains are never realized. Unfortunately there's not any obvious workaround for that that doesn't have serious negative consequences.

by darawk 7y ago

Retric 7y ago

I personally feel the US taxes are generally progressive though not massively so, but significant exceptions exist. For example, the social security tax stops at $132,900 so there is a significant drop in marginal tax rates at that point. Similarly, including or excluding donations, inheritance, and home sales from income can really change these numbers. I have seen analysis that says are system is progressive, regressive, and flat based on different definitions. Honestly, that’s what I find most interesting about the system. The collision of a huge number of different interests result in a system that can be perceived mathematically different based on viewpoint. It’s like watching a magic trick in action. PS: One of the most extreme divergent analysis focused on the sales and sin taxes paid by a group of homeless drunks. It varies by area but with 40+% percent alcohol taxes they where paying a rather shocking effective tax rate when you exclude benefits.

darawk 7y ago
Ya, certainly. I mean, I think the most regressive part of the system that almost nobody talks about is the fact that unrealized capital gains compound untaxed. People focus a lot on the differential treatment of long term capital gains vs income, but I think that mostly misses the point. The real wealth building effect from capital gains comes from allowing them to compound completely untaxed for decades, if the gains are never realized. Unfortunately there's not any obvious workaround for that that doesn't have serious negative consequences.