4 ms·

The top 10% of earners pay ~75% of income tax in the US, income taxes at least are pretty progressive, especially when you include the standard deduction. Maybe

by ericd 2y ago

The top 10% of earners pay ~75% of income tax in the US, income taxes at least are pretty progressive, especially when you include the standard deduction. Maybe you mean the people who live off of investments rather than high earners? But you should consider that their effective tax rate is the corp tax rate plus cap gains/dividend rate. Anyway, to your earlier point, I’m very much in favor of more resources into fighting climate change than what has been put into it, but I don’t think that what is needed is anywhere near what is considered acceptable by most, and given that, I’m quite happy with what this administration was able to put forth. Of course it’s a compromise.

einpoklum 2y ago
Bottom line: I take back the claim that very little lies on the corporations and the rich; I should say very little (in relative and absolute terms) lies on corporations and not enough (in absolute terms) on the rich. ------------- 1. The fact you cited is weird to me, since the top tax brackets in the US are pretty close together, and overall, rather low: https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac... but - I guess I should have accounted for the skewed distribution of income in the US... for the top 10% to pay 75% of income tax, let's do some cocktail-napkin math to see how bad this is. So, if we have a flat tax rate, this situation would mean that the top 10% make 3x more in total than the bottom 90%, or, 27x more per capita. Assuming the average tax rate on the bottom 90% is, say, 12%, and on the top 10% is 36%, that would mean the average income in the top decile is 9x higher than in the average in the other 9 deciles. According to this: https://dqydj.com/income-percentile-calculator/ https://dqydj.com/income-percentile-calculator/ the average and median for the bottom 90% should be about similar, meaning that the average (not median) top-decile person makes 9 x $45,000/annum = $405,000/annum. The median top-decile person makes $201,000/annum, or about 4.5x than the median person on the bottom 90%. If we were to compare with the median person over the entire population - the median top-decile person makes 4x as much as the median person overall. Ouch. 2. I was naively interpreting this: https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/ https://fiscaldata.treasury.gov/americas-finance-guide/gover... i.e. that individual income tax accounts for 51% of US federal income, while corporate income/earnings tax accounts for 4%. I mistakenly assumed that the vast majority of workers pay the majority of taxes. I wonder, though, how that chart accounts for Capital Gains tax.
- ericd 2y ago
  Right, it's mostly because of the large skew in incomes, and I agree that that's not a great situation. It's kind of why I scoff when people say that you can't get Americans to do farm labor for any price. I'm pretty sure you can, just not while maintaining the huge purchasing power that white collar workers have gotten for themselves, and they really don't seem to like thinking about that scenario, preferring to just pretend that it's impossible. But yeah, specialist doctors and white shoe lawyers can pull down 10-20x that median, so they're paying a lot of income tax. The standard deduction really dings the effective tax rate of that median earner, not so much for the doctor.

by ericd 2y ago

einpoklum 2y ago

Bottom line: I take back the claim that very little lies on the corporations and the rich; I should say very little (in relative and absolute terms) lies on corporations and not enough (in absolute terms) on the rich. ------------- 1. The fact you cited is weird to me, since the top tax brackets in the US are pretty close together, and overall, rather low: https://www.irs.gov/filing/federal-income-tax-rates-and-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac... but - I guess I should have accounted for the skewed distribution of income in the US... for the top 10% to pay 75% of income tax, let's do some cocktail-napkin math to see how bad this is. So, if we have a flat tax rate, this situation would mean that the top 10% make 3x more in total than the bottom 90%, or, 27x more per capita. Assuming the average tax rate on the bottom 90% is, say, 12%, and on the top 10% is 36%, that would mean the average income in the top decile is 9x higher than in the average in the other 9 deciles. According to this: https://dqydj.com/income-percentile-calculator/ https://dqydj.com/income-percentile-calculator/ the average and median for the bottom 90% should be about similar, meaning that the average (not median) top-decile person makes 9 x $45,000/annum = $405,000/annum. The median top-decile person makes $201,000/annum, or about 4.5x than the median person on the bottom 90%. If we were to compare with the median person over the entire population - the median top-decile person makes 4x as much as the median person overall. Ouch. 2. I was naively interpreting this: https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/ https://fiscaldata.treasury.gov/americas-finance-guide/gover... i.e. that individual income tax accounts for 51% of US federal income, while corporate income/earnings tax accounts for 4%. I mistakenly assumed that the vast majority of workers pay the majority of taxes. I wonder, though, how that chart accounts for Capital Gains tax.

ericd 2y ago
Right, it's mostly because of the large skew in incomes, and I agree that that's not a great situation. It's kind of why I scoff when people say that you can't get Americans to do farm labor for any price. I'm pretty sure you can, just not while maintaining the huge purchasing power that white collar workers have gotten for themselves, and they really don't seem to like thinking about that scenario, preferring to just pretend that it's impossible. But yeah, specialist doctors and white shoe lawyers can pull down 10-20x that median, so they're paying a lot of income tax. The standard deduction really dings the effective tax rate of that median earner, not so much for the doctor.