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> I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — mayb

by nhebb 14y ago

> I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so. Personally, I don't care if the wealthy pay higher taxes. In the recent election, 8/10 of the wealthiest counties in the US voted for President Obama, and his stance on tax rates was clear. If those voters are willing to pay higher taxes, I'm fine with that. But what I really hate is the class warfare and populist messages driving fiscal policy. With the threshold at $250k, the tax hikes would still only bring in enough added revenue to cover 8 days of federal spending. And "fair share"? The top 5% pay 40% of the federal income taxes collected. In order to generate the kind of revenues that would make a significant impact on the deficit, taxes would have to go up across the board, which in turn would lead to an economic slow down.

sami36 14y ago
Or you could pursue a balanced approach. Raise taxes on the wealthy, a little bit & cut intelligently across all programs. The defense budget is bloated, SS could be means tested, Medicare must be both means-tested & some of the benefits curtailed.
r00fus 14y ago
> With the threshold at $250k, the tax hikes would still only bring in enough added revenue to cover 8 days of federal spending. Does that include the restoration of pre-Bush capital gains tax? Because I'm sure that would add up to a lot. In fact, I think that's the biggest thing that the ultra-rich have become addicted to in the past decade.
- cynicalkane 14y ago
  Talk about the "ultra-rich" becoming "addicted" to money is loaded nonsense, but never mind. The idea of taxing investment income leads to a lot of terrible, perverse outcomes. It steers wealth towards being locked up in big companies and funds, since this is how you compound investment fashion without that money being repeatedly taxed. It also makes sure the incentive to invest on one's own accord belongs primarily to capitalists, since the tax naturally compounds when you buy and sell on your own account. Non-capitalists must allocate their money in one of a handful of government-approved fashions, or be eaten by repeated capital gains taxes for things as simple as rebalancing. Capital gains taxes seem motivated by a broad desire to soak the rich, but you will find very few economists on the left (or the right) supporting this idea over alternatives like a progressive consumption tax. Capital gains taxes are one more example of a clueless "progressive" idea leading to outcomes that are poor to both progressive and non-progressive perspectives.
  - jshen 14y ago
    http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-capital-gains-taxes/ http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-c... http://krugman.blogs.nytimes.com/2012/01/19/the-dubious-case-for-privileging-capital-gains/ http://krugman.blogs.nytimes.com/2012/01/19/the-dubious-case...
    - cynicalkane 14y ago
      Lazily posting links without further comment is not really what I think constitutes a good discussion, but I'll bite because I happen to have a link of my own handy. NPR's Planet Money once brought together a bipartisan panel of economists and asked them what they agree on. Consumption taxes as a replacement for investment+income taxes got universal support: https://nathensmiraculousescape.wordpress.com/2012/08/08/planet-moneys-six-plank-economic-platform/ https://nathensmiraculousescape.wordpress.com/2012/08/08/pla... The effect of a consumption tax would be to never tax investment income until it is spent on something that isn't investment. Beware Krugman; he is brilliant but sees himself as a pundit in service of a political agenda, and has baldly admitted as much himself. I would be surprised if he disagreed with consumption taxes on grounds other than political expediency. I don't believe that particular question is raised in the posts you link.
      - jshen 14y ago
        You said economists are in agreement on this issue. I showed a prominent economists who isn't. I'm sure I can easily find others. You said that capital gains taxes have terrible consequences, but one of my links shows the history of capital gains taxes in the US, they used to be higher, and terrible things weren't happening. Your last comment is largely an ad hominem. Consumption taxes are typically regressive. Edit: your last link did not say what you said it said. It did not say to replace capital gains taxes with a consumption tax. It didn't mention capital gains at all.
      - MaysonL 14y ago
        Of course, the melange of changes they come up with is self-contradictory: eliminate the mortgage deduction (deducted from income on which you pay income tax), oh, and then eliminate income tax. ditto employer health care plan deductibility, and corporate income tax. i.e.: it's linkbait blogspam of the radio variety.
- a5seo 14y ago
  not precisely what you asked, but a useful approximation: "If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit." [2012] -- http://www.forbes.com/sites/danbigman/2012/04/03/john-stossel-tax-the-rich-the-rich-dont-have-enough-really/ http://www.forbes.com/sites/danbigman/2012/04/03/john-stosse...
  - markerdmann 14y ago
    That Forbes article seems highly politicized and doesn't cite a source for that number.
  - r00fus 14y ago
    That's exactly not what I was saying - I was talking about capital gains which isn't taxed as income. Currently that sits at 15%, but will rise to 25%.
    - a5seo 14y ago
      Fair point, presumably "income" would just be earned income and dividends. The challenge is that when you change the rate, people change their behavior. Here's some interesting data showing the historical relationship between behavior and capital gains policy over time: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=161 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... If you assume currently capital gains collections are $150B, increasing them 33% will add $44B. From a pragmatical pov, that just doesn't seem like much. And that's assuming there's not a contraction in capital gains harvesting, which wouldn't square with history. Look, I'll admit, I'm not unbiased here. I generate 80% of my income from churning long-term assets. I sold a company that I bootstrapped a few years ago, and we got a good price. I'm able to generate about $120k per year after-tax. My goal is to never touch the principal and live off returns. Now, I'm bootstrapping my next startup... The $120k allows me to work 1 day a week consulting to "plug" the gap between my family's spending and my income. The other 4 days, I work on bootstrapping my startup. If taxes go up, that will cost me an addl $6700 per year in taxes. So my choices are... 1) take more consulting work -> Won't do this because my startup needs my time and I'm already working 60 hr days 2) try to generate higher returns, -> Not going to do this because I'm already maxed out with the risk I feel comfortable with 3) cut back my personal spending, -> Yes, this is what will happen. For the affluent retired, I suspect many of them will choose to cut back too. From where I'm sitting, the tax policy is going to hit me fairly hard, will only produce an additional $44B in taxes, and will probably cause a recession. So it doesn't seem very wise.
prostoalex 14y ago
wealth == accumulated assets, but wealth != income High-income people are frequently wealthy (outside of incomes derived through lottery winnings), but the two are not equal in their political views - those sitting on their wealth will be in favor of income taxes (since they barely have any), those who work for income will lean in favor of asset and consumption taxation (property, estate and sales taxes).
- notJim 14y ago
  This seems like a riskily reductionist point, as we know that people aren't always single-issue voters focused on achieving their financial best interests.
  - rhino42 14y ago
    But categorically I would expect it to be a reasonable heuristic.
  - prostoalex 14y ago
    Oh, definitely. Even folks who are single-issue voters realize that outside of supermajority years executive branch of government has to compromise. However, the anecdotal evidence of "stored wealth vs current income" tax is there, notice how "let's-back-tax-everybodys-income" Prop-30-happy California is also home to "dont-you-dare-to-raise-taxes-on-my-mansions" Prop 13. My original remark was to point out that wealthy people and high income people are frequently advocating opposite causes.
    - tsotha 14y ago
      >Prop-30-happy California is also home to "dont-you-dare-to-raise-taxes-on-my-mansions" Prop 13. Mansions? Hardly. More like "Don't raise taxes on my tiny tract home through the roof based on ridiculously inflated real estate values."
      - prostoalex 14y ago
        If you look at the places with highest volatility, it tends to be jobs-heavy SF Bay Area and LA. A farmer in Oxnard might see his farmhouse appreciate 10% here and there, East Palo Alto and Antioch (which I think you're describing) did not experience any significant swings even during the height of real estate bubble.
notJim 14y ago
This seems like a willfully ignorant reading of the op-ed. There is context here which any reasonably well-informed person should be aware of, which is that the gains made by top earners far outstrip the gains made by middle and lower income people. As a result, those people are worse off than they were in the past (their income has failed to increase relative to cost of living increases in recent decades.) So the reason people focus on the wealthy is that middle and lower income people are already at their breaking point. Also, it isn't clear to me if you're referring to the "Buffet Rule", or to a scheme like the one proposed by Buffet here. In any case, he admits that even if we did the first part of what he is proposing (the minimum tax for the wealthy), there would still be work to be done.
- a5seo 14y ago
  For more context: "You hear a lot, in books, in the blogosphere, among pundits that the middle class is being hollowed out, the incomes for all but the top 1% or maybe the top 20% are stagnating; that the gap between rich and poor has grown inexorably; that the American dream is dead" "[these claims] are basically wrong. And that's what 10 years of research by myself and James Sullivan at Notre Dame has shown. If you measure incomes better, accounting properly for inflation, median incomes have gone up by about 50% since 1980. And if you look at consumption, it's gone up by a similar amount over that whole period--though exactly when it went up is slightly different from the income pattern." http://www.econtalk.org/archives/2011/10/bruce_meyer_on.html http://www.econtalk.org/archives/2011/10/bruce_meyer_on.html
- nhebb 14y ago
  It wasn't a willful misreading. I was addressing the part that I quoted - because it's likely to be a debate point in the fiscal cliff negotiations.
tsotha 14y ago
>Personally, I don't care if the wealthy pay higher taxes. In the recent election, 8/10 of the wealthiest counties in the US voted for President Obama, and his stance on tax rates was clear. If those voters are willing to pay higher taxes, I'm fine with that. That's because they don't expect to pay higher taxes. When you have enough money you can route your income through offshore shell corporations and paper banks in the Mediterranean. Taxes are for the little people.

by nhebb 14y ago

sami36 14y ago

Or you could pursue a balanced approach. Raise taxes on the wealthy, a little bit & cut intelligently across all programs. The defense budget is bloated, SS could be means tested, Medicare must be both means-tested & some of the benefits curtailed.

r00fus 14y ago

> With the threshold at $250k, the tax hikes would still only bring in enough added revenue to cover 8 days of federal spending. Does that include the restoration of pre-Bush capital gains tax? Because I'm sure that would add up to a lot. In fact, I think that's the biggest thing that the ultra-rich have become addicted to in the past decade.

cynicalkane 14y ago
Talk about the "ultra-rich" becoming "addicted" to money is loaded nonsense, but never mind. The idea of taxing investment income leads to a lot of terrible, perverse outcomes. It steers wealth towards being locked up in big companies and funds, since this is how you compound investment fashion without that money being repeatedly taxed. It also makes sure the incentive to invest on one's own accord belongs primarily to capitalists, since the tax naturally compounds when you buy and sell on your own account. Non-capitalists must allocate their money in one of a handful of government-approved fashions, or be eaten by repeated capital gains taxes for things as simple as rebalancing. Capital gains taxes seem motivated by a broad desire to soak the rich, but you will find very few economists on the left (or the right) supporting this idea over alternatives like a progressive consumption tax. Capital gains taxes are one more example of a clueless "progressive" idea leading to outcomes that are poor to both progressive and non-progressive perspectives.
- jshen 14y ago
  http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-capital-gains-taxes/ http://krugman.blogs.nytimes.com/2012/01/18/the-history-of-c... http://krugman.blogs.nytimes.com/2012/01/19/the-dubious-case-for-privileging-capital-gains/ http://krugman.blogs.nytimes.com/2012/01/19/the-dubious-case...
  - cynicalkane 14y ago
    Lazily posting links without further comment is not really what I think constitutes a good discussion, but I'll bite because I happen to have a link of my own handy. NPR's Planet Money once brought together a bipartisan panel of economists and asked them what they agree on. Consumption taxes as a replacement for investment+income taxes got universal support: https://nathensmiraculousescape.wordpress.com/2012/08/08/planet-moneys-six-plank-economic-platform/ https://nathensmiraculousescape.wordpress.com/2012/08/08/pla... The effect of a consumption tax would be to never tax investment income until it is spent on something that isn't investment. Beware Krugman; he is brilliant but sees himself as a pundit in service of a political agenda, and has baldly admitted as much himself. I would be surprised if he disagreed with consumption taxes on grounds other than political expediency. I don't believe that particular question is raised in the posts you link.
    - jshen 14y ago
      You said economists are in agreement on this issue. I showed a prominent economists who isn't. I'm sure I can easily find others. You said that capital gains taxes have terrible consequences, but one of my links shows the history of capital gains taxes in the US, they used to be higher, and terrible things weren't happening. Your last comment is largely an ad hominem. Consumption taxes are typically regressive. Edit: your last link did not say what you said it said. It did not say to replace capital gains taxes with a consumption tax. It didn't mention capital gains at all.
    - MaysonL 14y ago
      Of course, the melange of changes they come up with is self-contradictory: eliminate the mortgage deduction (deducted from income on which you pay income tax), oh, and then eliminate income tax. ditto employer health care plan deductibility, and corporate income tax. i.e.: it's linkbait blogspam of the radio variety.
a5seo 14y ago
not precisely what you asked, but a useful approximation: "If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit." [2012] -- http://www.forbes.com/sites/danbigman/2012/04/03/john-stossel-tax-the-rich-the-rich-dont-have-enough-really/ http://www.forbes.com/sites/danbigman/2012/04/03/john-stosse...
- markerdmann 14y ago
  That Forbes article seems highly politicized and doesn't cite a source for that number.
- r00fus 14y ago
  That's exactly not what I was saying - I was talking about capital gains which isn't taxed as income. Currently that sits at 15%, but will rise to 25%.
  - a5seo 14y ago
    Fair point, presumably "income" would just be earned income and dividends. The challenge is that when you change the rate, people change their behavior. Here's some interesting data showing the historical relationship between behavior and capital gains policy over time: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=161 http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc... If you assume currently capital gains collections are $150B, increasing them 33% will add $44B. From a pragmatical pov, that just doesn't seem like much. And that's assuming there's not a contraction in capital gains harvesting, which wouldn't square with history. Look, I'll admit, I'm not unbiased here. I generate 80% of my income from churning long-term assets. I sold a company that I bootstrapped a few years ago, and we got a good price. I'm able to generate about $120k per year after-tax. My goal is to never touch the principal and live off returns. Now, I'm bootstrapping my next startup... The $120k allows me to work 1 day a week consulting to "plug" the gap between my family's spending and my income. The other 4 days, I work on bootstrapping my startup. If taxes go up, that will cost me an addl $6700 per year in taxes. So my choices are... 1) take more consulting work -> Won't do this because my startup needs my time and I'm already working 60 hr days 2) try to generate higher returns, -> Not going to do this because I'm already maxed out with the risk I feel comfortable with 3) cut back my personal spending, -> Yes, this is what will happen. For the affluent retired, I suspect many of them will choose to cut back too. From where I'm sitting, the tax policy is going to hit me fairly hard, will only produce an additional $44B in taxes, and will probably cause a recession. So it doesn't seem very wise.

prostoalex 14y ago

wealth == accumulated assets, but wealth != income High-income people are frequently wealthy (outside of incomes derived through lottery winnings), but the two are not equal in their political views - those sitting on their wealth will be in favor of income taxes (since they barely have any), those who work for income will lean in favor of asset and consumption taxation (property, estate and sales taxes).

notJim 14y ago
This seems like a riskily reductionist point, as we know that people aren't always single-issue voters focused on achieving their financial best interests.
- rhino42 14y ago
  But categorically I would expect it to be a reasonable heuristic.
- prostoalex 14y ago
  Oh, definitely. Even folks who are single-issue voters realize that outside of supermajority years executive branch of government has to compromise. However, the anecdotal evidence of "stored wealth vs current income" tax is there, notice how "let's-back-tax-everybodys-income" Prop-30-happy California is also home to "dont-you-dare-to-raise-taxes-on-my-mansions" Prop 13. My original remark was to point out that wealthy people and high income people are frequently advocating opposite causes.
  - tsotha 14y ago
    >Prop-30-happy California is also home to "dont-you-dare-to-raise-taxes-on-my-mansions" Prop 13. Mansions? Hardly. More like "Don't raise taxes on my tiny tract home through the roof based on ridiculously inflated real estate values."
    - prostoalex 14y ago
      If you look at the places with highest volatility, it tends to be jobs-heavy SF Bay Area and LA. A farmer in Oxnard might see his farmhouse appreciate 10% here and there, East Palo Alto and Antioch (which I think you're describing) did not experience any significant swings even during the height of real estate bubble.

notJim 14y ago

This seems like a willfully ignorant reading of the op-ed. There is context here which any reasonably well-informed person should be aware of, which is that the gains made by top earners far outstrip the gains made by middle and lower income people. As a result, those people are worse off than they were in the past (their income has failed to increase relative to cost of living increases in recent decades.) So the reason people focus on the wealthy is that middle and lower income people are already at their breaking point. Also, it isn't clear to me if you're referring to the "Buffet Rule", or to a scheme like the one proposed by Buffet here. In any case, he admits that even if we did the first part of what he is proposing (the minimum tax for the wealthy), there would still be work to be done.

a5seo 14y ago
For more context: "You hear a lot, in books, in the blogosphere, among pundits that the middle class is being hollowed out, the incomes for all but the top 1% or maybe the top 20% are stagnating; that the gap between rich and poor has grown inexorably; that the American dream is dead" "[these claims] are basically wrong. And that's what 10 years of research by myself and James Sullivan at Notre Dame has shown. If you measure incomes better, accounting properly for inflation, median incomes have gone up by about 50% since 1980. And if you look at consumption, it's gone up by a similar amount over that whole period--though exactly when it went up is slightly different from the income pattern." http://www.econtalk.org/archives/2011/10/bruce_meyer_on.html http://www.econtalk.org/archives/2011/10/bruce_meyer_on.html
nhebb 14y ago
It wasn't a willful misreading. I was addressing the part that I quoted - because it's likely to be a debate point in the fiscal cliff negotiations.

tsotha 14y ago

>Personally, I don't care if the wealthy pay higher taxes. In the recent election, 8/10 of the wealthiest counties in the US voted for President Obama, and his stance on tax rates was clear. If those voters are willing to pay higher taxes, I'm fine with that. That's because they don't expect to pay higher taxes. When you have enough money you can route your income through offshore shell corporations and paper banks in the Mediterranean. Taxes are for the little people.