Tax Cut Changes
chart courtesy of CNN/Money
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This chart is pretty stark in terms of who gets hit the hardest in the expiration of the Bush Tax cuts.
But this comparisons isn’t all that informative — how many of each of these taxpayers are there? What is the total amount of tax dollars collected in each grouping? Each bracket? How is this apportioned across the entire tax base? How does this compare relative to all of the tax cuts received since 2001-03?
The article adds a little color noting the following changes:
-If you make $382,650 you’ll owe an extra $4,095 in income tax.
-Single filers with $500,000 in taxable income would owe Uncle Sam an additional $9,492 from this year’s tax bill.
-Joint filers with taxable income of $700,000 would owe an extra $17,088
-$1 million dollars in taxable income = $32,493 more
I found the Washington Post chart (mentioned here) somewhat more informative than the chart above in terms of comparing the GOP and Democratic plans side by side in terms of brackets — but just as lacking terms of distribution of taxes across the entire taxpaying public . . .
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Previously:
A Closer Look at the Bush Tax Cuts (August 13th, 2010)
Source:
Higher taxes for the rich: What they’ll pay
Blake Ellis,
CNN, August 18, 2010
http://money.cnn.com/2010/08/18/pf/taxes/bush_tax_cuts_rich/index.htm
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August 18th, 2010 at 6:30 pm
a consumption tax would fix all of this, with beneficial structure
simple tax structure
no need for 1000′s of pages of tax code
IRS resources redirected to other more valuable activities (how about moving to financial crimes enforcement)
capture lost revenue from tax evaders
etc ….
August 18th, 2010 at 6:34 pm
Ask yourself, why did Bush and the GOP design them to expire if they like them so much?
August 18th, 2010 at 6:36 pm
And I thought my problems were bad, hope these folks can make it.
August 18th, 2010 at 6:38 pm
next discussion .. $216,493 more from $5M incomers .. would earn an interest @ ?% or spend it on vacations in happy places or buy some yacht bigger than they already own
as opposed to:
lesser taxes paid by lower income individuals pay’g for everyday living .. would earn $5M incomers interest on their stocks & bonds by increased sales at the register AND add in the less output by government to provide a minimal everyday living for the lower income individuals
of course you can’t be in the direct lending business to the government of said “Help” or in the providing of those “Help” services or in the business of build’g super yachts .. because we would be talking about business other than the usual
of course there is the age old incentive to work or die to consider .. or the age old incentive to do anything to live .. dream up a new business (90% fail – still no matter – cost of game) or work cheaper or deal drugs or sell your sex .. and those laws .. pay off the system to get the life back
I like to think there is a balance point for the general masses .. population will always mess with that balance point .. still looking for the sweet spot of not being between a rock and a hard place for the population in general
August 18th, 2010 at 7:16 pm
louis:
Tell me about it. When it comes down to brass tacks, it’s not a hit if you can still buy anything you need (left two columns). Doubly true if you can buy anything you want (right two columns). Plenty o’ Americans nowadays going without.
August 18th, 2010 at 7:19 pm
Well here’s something I dug up quickly…back to editing an article after this:
Number of tax returns, based on expanded income (2007):
All Returns: 143 million
Under $50,000: 92.6 million
$50k-$100k: 32.4 million
$100k-$200k: 13.4 million
$200k and up: 4.8 million
So according to that, the Obama plan is to give at least 138.4 million tax filers a tax cut. Up to 4.8 million will see their rates return to the normal level. The Republicans are filibustering the Obama plan because they want to ensure that 3.4% of tax filers get a massive tax cut.
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133289,00.html
August 18th, 2010 at 8:11 pm
franklin411:
Try explaining that to someone who doesn’t want to understand it. The Republican base doesn’t think in rational terms (calling Obama a Socialist, when he’s obviously a Corporatist, for example). They will vote against their own economic survival if they think it will defeat the liberal scourge that exists only in their troubled minds.
August 18th, 2010 at 8:28 pm
As Lewis Black said: I’m rich. If you take an extra 10% from me, I’m still rich.
August 18th, 2010 at 8:31 pm
@franklin411 The Republicans are filibustering the Obama plan because they want to ensure that 3.4% of tax filers get a massive tax cut.
—- Reply
I hope most people understand this with all of the information that has been published over the last couple of months. The biggest argument from the Rep (I am a registered rep as well – but the Tea Party is a possible destination if some credible leaders emerge) is that the 200k (250k) cut line will impact a large number of small business owners and that will stifle jobs. I say ok lets raise the cut line to 500K or even 1M, while they are at it they can set some kind of Alt Min for those with income over the cut line and only report capital gains and/or carry interest income and get those rich tax evaders too (take away the hiding places).
August 18th, 2010 at 8:50 pm
It’s funny how libs are so quick to give their opinion on how much of what you EARN you should be allowed to KEEP (or direct according to your own free will). It’s like they want to play God.
1. The truth is, income taxes are highly progressive. The wealthy pay a much higher percent of their AGI in taxes than lower income groups.
2. None of Barry’s fancy charts include how much government spending is directed to lower income groups. Not only are is their percent of taxes to AGI much lower than the wealthy, but they reap a windfall in government spending via direct payments, subsidies, etc.
3. Raising taxes on the rich will not improve the lower income group’s economic status one iota, and it’s doubtful any increased tax revenues will be directed towards deficit reduction or increased benefits. This is key. Higher taxes are a drag on economic growth and job creation.
4. Most clamouring for increasing rates on the rich is motivated by hatred and envy, not fairness.
5. Last but not least, wealth is not a collectively owned pie. It isn’t something that is to be divided up by politicians or a mob. If one person gets a larger “slice”, it isn’t because they’re doing so by forcing someone else to take a smaller slice. It simply doesn’t work that way. A more accurate analogy is we create our own pies, and liberals believe it’s the role of government to grab a slice of someone else’s pie…for themselves, or for the people that vote for them.
August 18th, 2010 at 8:51 pm
BR,
w/this: “..But this comparisons isn’t all that informative — how many of each of these taxpayers are there? What is the total amount of tax dollars collected in each grouping? Each bracket? How is this apportioned across the entire tax base? How does this compare relative to all of the tax cuts received since 2001-03?..”
are you asking for Facts? or, maybe, ‘Counter-Factuals’?
if so, take it from _ _____ , be Careful, you’re liable to be ‘Ejected from ‘the Fishing Club’ (“Reindeer Games”)
August 18th, 2010 at 9:07 pm
Under the current law IRS reports on its stats page that 0.3% of all individual income tax returns, those with AGI greater than $1M, accounted for 16.6% of total AGI and 4.5% of all collected taxes in 2008. We can not balance the deficits on the backs of the very rich, but they certainly can afford to pay more of their share of taxes. Under flat tax they would pay almost 4 times more.
August 18th, 2010 at 9:41 pm
“This chart is pretty stark in terms of who gets hit the hardest…”
Stark? In what way?
August 18th, 2010 at 10:14 pm
@VennData Says:
August 18th, 2010 at 6:34 pm
Ask yourself, why did Bush and the GOP design them to expire if they like them so much?
———-
Yeah! I’d like to know why, also. All that Hullabaloo…all the CNBC folks like Barteromo and the rest HAWKING and HOLLERING …from Sun Up to Sun Down on CNBC/CNN/FOX/MSNBC EARLY and the BLOGOSPHERE!
So…yeah tell me how the BUSH TAX CUTS EXPIRING are the DEATH OF AMERICA?
I really don’t see it……… Tax Cuts EXPIRING? Those put IN PLACE by a REPUG PRESIDENT…and it’s BAD NEWS?
August 18th, 2010 at 10:15 pm
The top 1% share of total AGI in 2007 was 22.83%. Their share of all income taxes paid was 40.42%.
The top 5% share of total AGI in 2007 was 37.55%. Their share of all income taxes paid was 60.63%
With the Bush tax cuts in effect, taxes are highly progressive.
I’m all for sunsetting the Bush tax cuts, but only if we see significant cuts in Federal spending – using 2007 as a baseline, not 2010.
August 18th, 2010 at 10:19 pm
@Tom K Says:
August 18th, 2010 at 8:50 pm
It’s funny how libs are so quick to give their opinion on how much of what you EARN you should be allowed to KEEP (or direct according to your own free will). It’s like they want to play God.
1. The truth is, income taxes are highly progressive. The wealthy pay a much higher percent of their AGI in taxes than lower income groups.
2. None of Barry’s fancy charts include how much government spending is directed to lower income groups. Not only are is their percent of taxes to AGI much lower than the wealthy, but they reap a windfall in government spending via direct payments, subsidies, etc.
3. Raising taxes on the rich will not improve the lower income group’s economic status one iota, and it’s doubtful any increased tax revenues will be directed towards deficit reduction or increased benefits. This is key. Higher taxes are a drag on economic growth and job creation.
4. Most clamouring for increasing rates on the rich is motivated by hatred and envy, not fairness.
5. Last but not least, wealth is not a collectively owned pie. It isn’t something that is to be divided up by politicians or a mob. If one person gets a larger “slice”, it isn’t because they’re doing so by forcing someone else to take a smaller slice. It simply doesn’t work that way. A more accurate analogy is we create our own pies, and liberals believe it’s the role of government to grab a slice of someone else’s pie…for themselves, or for the people that vote for them.
———-
“You Libs” is no more correct at labeling questioning American Voting Active and Engaged Public than the “Tea Partiers” that you might think are doing “Founding Fathers and Gods Work” are doing Engaging Public with their own view point.
Just think about it!
Should we just meat up on a HILL and DUKE IT OUT? Or, is there some kind of “Meeting Point” for a Dialog about what we’ve all been through that has more to do about Wall St. Give Aways by BOTH PARTIES …than it does our differences.
Aren’t we all in the same “Survivor Boat” paddling in hopes we will find a safe shore or that someone will rescue us…these Days?
Are there really “Enemies in Foxholes?”
August 18th, 2010 at 10:22 pm
@VennData Says:
“Ask yourself, why did Bush and the GOP design them to expire if they like them so much?”
Simple. The GOP didn’t have the votes without the sunset provisions.
August 18th, 2010 at 10:46 pm
tax v. reduce spending — not one or the other
#1 priority should be reduce spending
— the first place I would cut is State Dept budget by 50-75% — most of that budget targets spending outside the US border, we just don’t have the money to spend there now, time to say “I’m sorry were broke, ask China”
– Next cut dept of defense, initially take out 250B (forcing function to pull out of Afghanistan, now that we are pulling out of Iraq. Put a cap on the budget to control the runaway spending, cut defense contractor / mercenary spending 50% (sorry defense contractors – ask whatever country wants to contract military services to pay for it); Reduce US military presence around the world — we do not need to police the world, can’t afford it.
Restructure the tax system utilizing a consumption tax (e.g. fairtax.org) — stop the insane debate of the Bush tax cuts. If no to consumption tax, then leave the marginal tax just the way it is and add more tax brackets for the 1-10M; 10-50M; 50-100M; >100M with real progressive % increases. Apply all the extra revenue directly to the deficit – sorry congress you don’t get to spend it, because you already did.
And some dream time frame, pass a balance budget amendment and some dream scenario of having a congress that has the discipline to follow it.
August 18th, 2010 at 10:49 pm
Tom K.
Its sophistry to focus only on income taxes. Why not factor in FICA the most regressive structure possible? How about capital gains? Why should they be exempt from FICA, and taxed at lower rates than employment income. The system is skewed in favor of the rich.
Even Warren Buffett acknowledges that he pays a much lower overall tax rate than is secretary.
August 18th, 2010 at 11:00 pm
During the ’08 campaign, Obama tried to convince voters that the wealthiest 2% would bail out the remaining 98%.
Not gonna happen.
At least not in O’s first term.
August 18th, 2010 at 11:03 pm
obsrvr-1,
So how does a tax hike back to Clinton era levels “hurt” a small business?
The owner of that business is netting 250K. That money isn’t going back into the business, it isn’t used to hire someone. If it was used to hire someone, they wouldn’t be making the 250K… So in fact a tax hike raises the incentive to hire someone for that small business, it raises the incentive for them to spend down into their business
Tom K,
The wealthy DO NOT pay higher marginal rates. The wealthy do not pay Social Security. Medicare and get matching payroll taxes (which could be paid to them) after 100K. That’s 14% of additional tax.
Over 373K that’s 25%, so for 24-174K that 25% +14% for 37% Do the math you GOP shill.
And “…Hatred and envy?” Where is all the “limousine liberal” talk now? I thought the limousine liberal elite ran the Democratic party. The GOP switch their rhetorical tactics without a shred of consistency.
Your “list” is preposterous nonsense. We need to pay off the Bush debt.
August 18th, 2010 at 11:25 pm
There’s no harm in attempting to include FICA taxes in the analysis. However, at some point there’s going to be “means testing”. When that happens, it’s rather unlikely that the wealthiest 2% will get any sort of entitlement benefits. Hell, things may eventually get bad enough that the top two quintiles of the income scale will get no benefits at all.
August 19th, 2010 at 12:03 am
@VennData
Your argument is absurd. The wealthy DO NOT recieve SS or Medicare benefits greater than the cap. What you’re basically saying is the wealthy should foot the bill, EVERY BILL for everyone else.
Who’s the shill?
August 19th, 2010 at 12:06 am
Short answer to why they don’t provide this information is because no one is really sure how the contributions break down.
We hear all the time about ffederal income taxes, because those numbers are readily available, there’s a big form that’s a pain in the ass to fill out, and rich people care a LOT about income taxes.
In the rest of America, 75% of American families pay more in payroll taxes (Social Security and Medicare) than in income taxes (though, because there’s no long-ass form to fill out, few of them realize it). And Social Security/Medicare account for an EQUAL amount of federal revenue compared to income taxes (indiv income tax revenues account for 43% of federal revenues vs. 42% for payroll taxes). And note that the Social Security payroll tax doesn’t tax any income about $106,800, so it falls VERY disproportionately on non-wealthy earners (somewhat mitigated by the non-cap on Medicare). And that’s only looking at federal taxes.
When you try to calculate the “entire” amount of money the taxpaying public pays, it gets really complicated really fast–as this Leonhardt article shows: http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html.
You have things like different state taxes being deducted (how do we account for the progressivity of a state’s revenue code screwing up the federal income?), you have things like regressive state and local property and sales taxes that obviate the need for certain federal taxes (to fund roads, education, healthcare, public safety, sanitation, etc.) while taking a huge chunk out of lower income people’s pockets. Money collected as taxes by localities and states is, in fact, “taxes,” but for some reason we have a political system which allows people to argue that they aren’t. It’s weird.
What is clear are the trendlines. And they are very clear that when you look at ALL the money that makes up the public sector, rich people have been amassing more and more money but paying a steadily lower rate of taxes on this money since the 1950′s. Regressive taxes have risen as progressive taxes have been cut (always with MORE cutting at the top), and deficits make up the difference. To take one example, the hedge fund loophole alone, valued at $20 billion annually, is 1/2 of 1% of our nation’s federal budget. That doesn’t sound like a lot, until you realize we’re talking about a tiny number of well-off guys (I’m guessing, 1,000? 10,000 tops?) in a nation of over 300 million people. Something like 0.003 to 0.0003 percent of the population is getting a very special tax rate that has fiscal implications 100-1,000 times as large as you’d expect based on their numbers alone.
This takes the tiniest step towards a more progressive tax code, where rich people pay more because they CAN pay more without being forced to eat cat food or work 5 more years in the diner on their feet for 12 hours a day.
August 19th, 2010 at 2:18 am
@Tom K.
I take issue with your point above:
5. Last but not least, wealth is not a collectively owned pie. It isn’t something that is to be divided up by politicians or a mob. If one person gets a larger “slice”, it isn’t because they’re doing so by forcing someone else to take a smaller slice. It simply doesn’t work that way. A more accurate analogy is we create our own pies, and liberals believe it’s the role of government to grab a slice of someone else’s pie…for themselves, or for the people that vote for them.
This is an important issue, because I’ve heard this argument before. There is something very fundamentally wrong with it that argument that I can’t quite fully put my finger on. I’ll try and dissect it:
You reject the notion of the wealth as a pie because nobody “takes” from anyone elses pie. But then you say the government does take from someone else’s pie. So is it a pie or isn’t it?
I would say it is a pie. According to the first law of thermodynamics energy can neither be created or destroyed, only transferred. It is likewise with wealth: it is neither created nor destroyed, only transferred. I consider wealth to be the assets, and there is only so much of anything. There is only so much gold in the world. There is only so much land. There are only so many trees we can cut down. If you own half the land in world, it means that the rest of the world doesn’t own that half. You can’t “create” wealth, only coax it from the hands of others, maybe with pie. But there are a finite number of assets in the world, and they can be represented in pie chart format.
I think what people are really saying when they use Tom’s argument is that as a wealthy person they don’t like paying a higher percentage of taxes because as an individual they see less return on their money than someone who pays less taxes and is getting more. That would be a valid complaint, not very persuasive, but logical and understandable.
August 19th, 2010 at 2:24 am
I take it all back. Just read an article about Bernie Madoff and remembered, you can make your own pie! Damn the government for taking his pie away!
August 19th, 2010 at 2:29 am
VennData Says:
obsrvr-1,
So how does a tax hike back to Clinton era levels “hurt” a small business?
— Reply
I am not saying it does, what I am saying is that is the crux of the debate from the GOP — so take away the fodder from the argument so the focus can be appropriately applied to the upper 1% income (earned and unearned) bracket.
August 19th, 2010 at 6:28 am
In the not too distant future we may be focused on other issues besides the tax system:
http://questioneverything.typepad.com/
August 19th, 2010 at 7:00 am
Tom K’s points resonate with my views.
The practical effect of “raising taxes on the rich” is to hit double-income, corporate-salaried employees living in high tax northeast states trying to get by on low 6 figure incomes. The very rich, like Sen Kerry’s wife, have their wealth and income in tax-free or tax-sheltered investments.
August 19th, 2010 at 8:37 am
IanMc@2:18am .. I was with you with the pie analogy .. “wealth as a pie because nobody Takes from anyone elses pie” .. the top dogs at a corporation have thru work and power of persuasion .. remember it takes a community .. those communities need water systems and roads to get his/her workers to the doors and the bathrooms need to work – the electrical system costs need to be dispersed over a large territory of users
I’ve written this before .. we need a long tail gradually increase’g tax system .. everyone pays taxes .. the more wealthy you are the more . gradually . no favors along the way . at some point the Kudlow free market system of I want more . I won’t do that for that . works …
again ..
why pay more in taxes gradually – because this system needs a community with capital in their hands .. if it all collects into one pile – what next ? game over you win – give it back so we can play some more – NO – bang bang – government is the robinhood to keep the peace in the forest ….. granted that ‘ism dreams up work for friends to create jobs that don’t exist – because the population just keeps growing
August 19th, 2010 at 9:31 am
“With the Bush tax cuts in effect, taxes are highly progressive.”
Income taxes are progressive. Payroll taxes are not. And since individual income taxes=payroll taxes as a share of federal revenues, it’s ludicrous to say that what’s true of federal income taxes is true of all federal taxes, much less ALL taxes (which include property taxes, sales taxes, state and local taxes, etc).
I can just as easily say “With the Bush tax cuts in effect, taxes are highly regressive” and be just as accurate as you are.
But I’m neither ignorant nor interested in misleading the audience. Overall, it appears taxes are slightly progressive, and state and federal income taxes are largely the reason why. And the super-rich play by a totally different set of rules than the merely very wealthy, so overall our nation’s taxes are actually probably only progressive up to the millionaires’ level.
August 19th, 2010 at 9:51 am
Obsvr-1;
If a small business owner (even after all the special tax-brakes and reductions for anything related to investing in the business and salaries to employees) haul home more than 200K of pure taxable profit – then he/she can afford to pay a little more to the society that provided such grand opportunities. You may even question if the 1% of small business owners who have that kind of taxable income should even be called small businesses. Furthermore, the incentive actually works the opposite way. Most people hate paying taxes, so the larger the taxrate the bigger the incentive to invest the money made in the business rather than taking it out as taxable profit.
August 19th, 2010 at 12:38 pm
Tom K,
When you think that “Most clamoring for increasing rates on the rich is motivated by hatred and envy, not fairness,” you should how fair is it when the wealthy have become more and more wealthy not by doing anything to improve society but rather by “buying legislators” in order to get more favorable tax treatment, which creates debt that the rest of us and our grandchildren have to pay.
When you think that “we create our own pies,” you need to ask what percent of the wealthy actually got that way by creating jobs or other real benefits to society compare to what percent inherited their fortunes (or at least were placed in a position to build their fortunes by their good luck being born into wealthy or well educated families), and what percent of the currently wealthy got that way by creating toxic investment products based on lies and deceit and plunging the entire world into catastrophe, and what fraction of the currently wealthy CEOs increased their incomes from four times that of the average worker not long ago to 100 times, while cutting health care for their workers, underfunding or ending retirement plans, and sending jobs overseas.
August 19th, 2010 at 2:11 pm
I believe the Feds have expanded the HARP program. I just received an invitation from my servicer (Wells Fargo) to participate in the HARP program to refinance my mortgage (owned by Freddie Mac) with no closing cost or fees. Mycurrent loan is for less than 50% LTV with an 30 year interest rate of 4.75%. You can only refinance into a 20 year or 30 year fixed loan in the program. Why on earth would they be sending me this except for the fact they are sending thousands of them out in blanket format.
August 19th, 2010 at 6:49 pm
The debate on the Bush tax cuts is nothing more than a great misdirection. Get everybody fighting over a small revenue source and the important discussion can be put off once again.
According to President Obama extending the tax cuts for the top 2% of income earners will cost $700 billion over the next 10 years, an average of $70 billion per year. Meanwhile the OMB projects that the deficit for the next 10 years will be $8.53 trillion. Repealing the Bush tax cuts will do almost nothing to reduce the deficit. If we are serious about the deficit (and we better be) we need to attack spending.
From 2011 to 2020, total governmental outlays are projected to increase by 49%. There are three ways to close this gap.
1. Increase revenue by an average of 23% per year. (The actual amount is higher in the early years and then decreases)
2. Reduce mandatory spending. Mandatory spending on things such as Social Security, Medicare, Medicaid, welfare, unemployment, agricultural subsidies, and interest on the debt makes up 61.3% of the budget.
3. Reduce discretionary spending by 50%
As we argue about an amount equal to 8% of the deficit, politicians are once again let off the hook from making the hard decisions they were elected to make. Repealing the Bush tax cuts doesn’t solve our fiscal problems. In fact, it doesn’t even begin to solve them.
August 19th, 2010 at 7:46 pm
I know a fair amount of people who make 1+M and they are pretty much like the rest of us. They want to keep what they can. These people also know that the system is totally rigged and is crashing. People are people, no matter their income. Some are really smart, some really lucky, some just in the right place at the right time, but none are any happier because of their wealth.
August 19th, 2010 at 10:02 pm
Does this data reflect AMT? The Alternative Minimum Tax is very punishing and will effect $28 million Americans. Some States also have an AMT Tax. Income tax rates is only one facet of the total equation. That’s just a starting point. Check this link http://www.mytaxburden.org/