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One: right. The employee pays 7.65%. The employer pays the other half. Two: right (the rate is actually 1.45% on wages over $106,800 in 2010) - the idea bein

by jmulho 16y ago

One: right. The employee pays 7.65%. The employer pays the other half. Two: right (the rate is actually 1.45% on wages over $106,800 in 2010) - the idea being that you shouldn't have to pay in infinitely given that the benefits are capped. Three: it is ironic that you mention bankruptcy... that is what tends to happen when the people making spending decisions face no direct consequences. Let me give you a scenario for the sake of discussion. Suppose everyone paid a 10% federal income tax rate. Now suppose the government said, "We are considering a trillion dollar war, a trillion dollar bailout, and a trillion dollar stimulus package. You, taxpayer, can have all of the wonderful benefits of these things for the low cost of changing your federal income tax rate to 30% for the next 10 years. How about it?" You might have more people questioning these decisions.

tptacek 16y ago
I don't know what point you're trying to make. You cited a payroll tax rate that was half what people really pay in, and implied that it was the same rate that wealthy people paid. Of course you were wrong on both counts. It takes no great insight to notice this; the same observation is at the center of Warren Buffet's complaint that his tax rate is effectively lower than his secretary's. Your analysis is just dead wrong, and no hypothetical digs you out of it.
- jmulho 16y ago
  So far, my "overall point is bankrupt", my "analysis is just dead wrong", I am in some kind of hole I need to dig myself out of, and the point I attempted to defend is "pretty disingenuous". Ok, may we proceed? The original point is this: "There's a potentially dangerous line that the US is approaching where... a majority of the population will not be paying income taxes at all." That statement contains two contentions: 1) the US is approaching the line where 50% of the population will be paying no income tax at all, 2) this is potentially dangerous. The first contention hasn’t been disputed. The second is what I believe we are debating. You interject that the whole discussion ("the income tax debate") is "misleading"/"disingenuous" because it doesn’t consider payroll taxes - something that "lower middle-class people" pay a disproportionate amount of (relative to their income) compared to "wealthy people.' I attempted to point out that payroll tax isn’t really relevant to the question because everyone pays the same rate up until the point that the tax is capped, which is commensurate with the point at which the benefits are capped. I will give you that $100,000 per year isn’t all that "wealthy." And I'll give you the following: A person making $500,000 will pay 2.77% of wages in payroll tax (6.2% of the first $106,800, plus 1.45% of total wages). A person making $200,000 will pay 4.76% (same rules). People making $20,000 and $100,000, will both pay 7.65% (same rules). If I am wrong that the employee pays half of the payroll tax (7.65%) and the employer pays the other half (another 7.65%) please let me know. However, I don’t feel it is relevant to the central question under debate. I don’t feel your point about payroll taxes is significant enough to dismiss the question about income taxes. Is the 50% threshold "potentially dangerous" or not?
  - natrius 16y ago
    The person the government sends the tax bill to is rarely the person whose wealth is reduced by the tax. Since all employers must pay payroll tax, there are few practical alternatives for earning a living (inelastic supply of labor), and employers are price-sensitive and will employ fewer people if they cost more (elastic demand for labor), even the employer's portion of the tax comes from wealth that would've gone to the employees. http://en.wikipedia.org/wiki/Tax_incidence http://en.wikipedia.org/wiki/Tax_incidence

by jmulho 16y ago

tptacek 16y ago

I don't know what point you're trying to make. You cited a payroll tax rate that was half what people really pay in, and implied that it was the same rate that wealthy people paid. Of course you were wrong on both counts. It takes no great insight to notice this; the same observation is at the center of Warren Buffet's complaint that his tax rate is effectively lower than his secretary's. Your analysis is just dead wrong, and no hypothetical digs you out of it.

jmulho 16y ago
So far, my "overall point is bankrupt", my "analysis is just dead wrong", I am in some kind of hole I need to dig myself out of, and the point I attempted to defend is "pretty disingenuous". Ok, may we proceed? The original point is this: "There's a potentially dangerous line that the US is approaching where... a majority of the population will not be paying income taxes at all." That statement contains two contentions: 1) the US is approaching the line where 50% of the population will be paying no income tax at all, 2) this is potentially dangerous. The first contention hasn’t been disputed. The second is what I believe we are debating. You interject that the whole discussion ("the income tax debate") is "misleading"/"disingenuous" because it doesn’t consider payroll taxes - something that "lower middle-class people" pay a disproportionate amount of (relative to their income) compared to "wealthy people.' I attempted to point out that payroll tax isn’t really relevant to the question because everyone pays the same rate up until the point that the tax is capped, which is commensurate with the point at which the benefits are capped. I will give you that $100,000 per year isn’t all that "wealthy." And I'll give you the following: A person making $500,000 will pay 2.77% of wages in payroll tax (6.2% of the first $106,800, plus 1.45% of total wages). A person making $200,000 will pay 4.76% (same rules). People making $20,000 and $100,000, will both pay 7.65% (same rules). If I am wrong that the employee pays half of the payroll tax (7.65%) and the employer pays the other half (another 7.65%) please let me know. However, I don’t feel it is relevant to the central question under debate. I don’t feel your point about payroll taxes is significant enough to dismiss the question about income taxes. Is the 50% threshold "potentially dangerous" or not?
- natrius 16y ago
  The person the government sends the tax bill to is rarely the person whose wealth is reduced by the tax. Since all employers must pay payroll tax, there are few practical alternatives for earning a living (inelastic supply of labor), and employers are price-sensitive and will employ fewer people if they cost more (elastic demand for labor), even the employer's portion of the tax comes from wealth that would've gone to the employees. http://en.wikipedia.org/wiki/Tax_incidence http://en.wikipedia.org/wiki/Tax_incidence