David Wessel of the WSJ notes these 5 tax factoids are necessary to an intelligent debate on policy:

1. The top marginal income-tax rate went from 7% in 1913 to 92% in the 1950s to 28% with the Tax Reform Act of 1986 to 39.6% in the Clinton years to today’s 35%.

2. The top 5%, top 1% and top 0.1% of Americans have been getting a bigger slice of all the income and paying a growing share of federal taxes.

3. Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger—except for those whose income mainly comes from capital gains and dividends.

4. The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income.

5. The tax system narrows the gap between economic winners and losers, but not enough to stop the gap from widening.

 

Discuss . . .

 

 

Source:
The Numbers Inside a Hot-Button Issue
DAVID WESSEL
WSJ, August 6, 2012
http://online.wsj.com/article/SB10000872396390444246904577571042249868040.html

Category: Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

54 Responses to “Know These 5 Tax Facts If You Want to Debate Fiscal Policy”

  1. wcvarones says:

    Tax policy can’t narrow the income or wealth gaps when the Dirty Fed is giving asset inflation to the rich and food and energy inflation to the poor.

    Almost half of America already pays zero income tax — and many of them actually get tax “refunds.” Further taxes on the “rich” and subsidies to the middle class will only decrease investment, production, and labor.

    I’d like to see lower rates across the board with no loopholes or subsidies.

  2. Bob A says:

    The only number that matters is the percentage of income consumed by ALL taxes and government fees combined.

    The wealthy pay a higher percentage of their income in federal income tax by a vastly lower percentage of their income in all of the other taxes lower income earners pay.

    Which includes but is not limted to FICA, Medicare, State & Local Sales taxes, license fees, property taxes whether paid directly or through rent, gas taxes, etc. etc. etc. And yes health insurance AND copayments should be included in these totals also if you want to make it a fair comparison with other countries in the world.

  3. Prinicipal Programmer says:

    Knock me over with a feather, David Wessel. I’d be worried about your job security at the WSJ with pieces like this. It’s a good thing you didn’t mention net worth and the estate tax (using its accurate name), or I’d be needing smelling salts.

  4. rd says:

    1. I keep seeing articles with Social Security, Medicare, and Medicaid spending in a big pie chart of federal government spending along with whining about how 50% of the population doesn’t pay income taxes. If they show FICA spending, then they need to include the FICA taxes as well which is the funding source for that spending when discussing income tax policy. However, that would totally eliminate the argument about how much of the population doesn’t pay income taxes.

    2. The data over the past thirty years have shown that the Laffer Curve with trickle-down economics resulting in massive capital gains and dividends tax cuts to the wealthy has been a massive policy failure. The reduction of interest rates from double digits to low single digits was liekly responsible for most of the employment gains and economic growth over the past 30 years. It is increasingly unclear why the unearned income tax rates should be dramatically lower than earned income tax rates.

  5. Frilton Miedman says:

    No mention of income from wealth, which I suspect is excluded here, and a couple of other relevant variables.

    The chart displays share of total taxes, but omits share of total income.

    1% of the populace owns 45%+ of all wealth, they net 50% of all cap gains income, that means they pay 15% in taxes on that portion of income, the proportion of income that comes from investment increases with wealth.

    Note, Reagan opposed a lower rate for cap gains.

    The numbers mentioned above are too crude, example, the top 0.1% avg effective tax rate is 17%, the hardest hit income group is the 100K to 250K group.

    No mention of entitlement COSTS relative to the effectiveness for targeted tax cuts (“job creating” or “trickle down”) – instead of spending. (namely healthcare)

    More than 50% of all healthcare is paid by the government, Healthcare costs have increased 600% over the last 3 decades – instead of cutting healthcare to offset tax breaks that are not “creating jobs” or “trickling down”, we should be cutting taxes in direct proportion to jobs created, while regulating margins & mark-ups for all government provided healthcare….and other government expenditures

    If you’re a pharmaceutical ceo, you shouldn’t be raking in a $30 mil salary when half of your revenues are tax subsidized.

  6. Prinicipal Programmer says:

    One nit pick, however:

    “Average tax rates have come down for everyone. ”

    Not on our children they aren’t. That’s what unfunded ‘tax cuts’ are.

  7. MidlifeNocrisis says:

    @PrincipalProgrammer

    Please expand on your thoughts about unfunded “tax cuts” since I do not understand that comment.

    I understand “tax cuts” because that is an increase in the available money supply by the private sector since taxes drain money out of the system.

    It is primarily the use of the word “unfunded” that confuses me since the government (in the USA) is the sole source monopoly creator and supplier of US dollars. What is unfunded?

  8. Frilton Miedman says:

    MidlifeNocrisis Says:
    August 6th, 2012 at 9:34 pm
    @PrincipalProgrammer
    “…I understand “tax cuts” because that is an increase in the available money supply by the private sector since taxes drain money out of the system.”

    Perhaps you might expound on my example of a healthcare CEO that makes $30 million, yet derives 50% of his company’s earnings from tax money for an industry that derives +50% of revenues from government spending.

  9. Been Around 1963 says:

    According to census figures, household income in the bottom 40% peaks at around $36,000 a year. The median household income within that bottom 40% is about $20,000 a year. Those are the people whom the GOP feels are getting a free ride.

    If Wessel looked at the top 1%, or the top 1/10 of 1%, the disparities would be dramatically skewed. Th0se are the people–private equity, hedge fund managers, inherited wealth, the Koch Brothers, Warren Buffet–who have made a windfall because of changes in the tax code. Witness Romney’s under 14% tax rate for the one incomplete return he is willing to show us.

    “On average, the tax bite on the rich is bigger—except for those whose income mainly comes from capital gains and dividends.”
    Duh!

  10. Frilton Miedman says:

    EDIT: “Frilton Miedman Says:
    August 6th, 2012 at 9:24 pm
    “The chart displays share of total taxes, but omits share of total income.” – I meant to say total wealth, not income.

  11. BillG says:

    Know this tax factoid: The federal government gets as much revenue (~40% of the total) from FICA as it gets from the primary individual federal income tax code ie the 1040.

    FICA is a flat tax with two major exemptions 1. All unearned income (interest, capital gains, dividends, etc.) is totally exempt and 2. All earned income above $110000 per calender year is exempt from the non-medicare portion of the tax. Obviously the rich benefit from those exemptions in a major way and the poor don’t benefit from them at all. That makes it effectively a regressive tax.

  12. JonBonanno says:

    I find it SHOCKING that the people with all the money pay all the taxes. Who woulda freakin thunk it?

  13. bonerici says:

    In summary:

    The rich get richer and richer they pay more taxes because they have so much more money. Oh the poor fellows.

    But Lucky Ducky has seen his income cut in half, so now he pays a lot less taxes.

    Oh that Lucky Ducky he always wins!

  14. VennData says:

    Bob A says “…I’d like to see lower rates across the board with no loopholes or subsidies…” so net/net it wouldn’t make any difference then right? So what’s the big deal if they get rid of the home mortgage interest deduction then, right? Casualty losses? You wanna get rid of them? Deductable Education out in your plan? How about Medical expenses? Easy to say, hard to really do.

    Frilton’s got another good idea here, says “If you’re a pharmaceutical ceo, you shouldn’t be raking in a $30 mil salary when half of your revenues are tax subsidized.” and that might apply to defense firms, too? Construction? Real Estate? Media?

  15. slowkarma says:

    I’d like to see an analysis of the makeup of the bottom 50%. Most of my friends worked for newspapers, and are now retired, and because of the dire condition of many newspapers, most retired early: ~63. Most of their income is from Social Security, augmented by modest newspaper pensions and some 401K savings. But because most of them worked for newspapers for a long time, and bought houses when housing was fairly cheap, they own their own (modest) houses and so have pretty low housing costs. I suspect that most of them have incomes of less than $50,000 a year, but pay fairly low property taxes because they live in modest houses, have no employment-related taxes, are on Medicare, etc. I wonder how big a chunk of that “bottom 50%” people like this represent? Because while they are not making much money, they are not exactly conventionally “poor,” either.

    ~~~

    BR: Consider those people who don’t work, have no income — children, housewives, elderly, unemployed

  16. Prinicipal Programmer says:

    MidlifeNocrisis Says: “It is primarily the use of the word “unfunded” that confuses me…”

    I’ll explain it to you. “your dad” + “jimmy hat”. That equation is underfunded. I think we can all see the suffering that hath wrought. See also “ron paul” + “votes”, “mitt romney” – “phoniness”, “usa” + “morality”.

  17. Joe Friday says:

    wcvarones,

    Almost half of America already pays zero income tax

    And ?

    When the income tax was originally enacted, it only applied to income above $500,000. Even FEWER Americans paid any income tax.

    Further taxes on the ‘rich’ and subsidies to the middle class will only decrease investment, production, and labor.

    Nonsense.

    Our greatest periods of economic prosperity in this country were when the top tax bracket was 81%, 87%, and even 94%.

  18. sparta47 says:

    Use of the top rates is misleading as to the effective rates. The designer taxes lower the effective tax rate for the super well connected.

    See Bruce Barlett article on Federal Reserve study see
    http://economix.blogs.nytimes.com/2012/06/19/as-income-inequality-grows-some-movement-at-the-top-and-bottom/

    You can skip to the last table. It has the effective tax rate of the top 400 AGIncome for 1992 – 2009. Entrance fee started at $ 77 million & up in 2009. The first 5 yr average effective tax rate was 28.4% the last 5 yr ave. was 18.0%. My effective tax rate did not drop by 36% over the last 15 years. The designer tax cuts did the job the lobbyist & the influencial wanted them too. The super rich cleaned up & the rest of us got bones. Norquist, Koch brothers et al are winning.

    How can you justify Capital Gains treatment for compensation labelled “Carried Interest” when capital is not at risk?

    Over all total receipts of the federal gov’t are the lowest(1945 – 2011) over the last 3 years (ave 15.2%) as a percent of GDP than any year except 1949 & 50. The ave from 1945 – 2011 is 17.8%. These include retirement programs. How has the growth been the last 3 yrs? see Tax Policy Center http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205

    Individual income taxes ave 6.7% of GDP over the last 3 years, the lowest for any year since 1945 except for 1949 & 50. The 67 year ave is 8.0%.

    Not mentioned in the article is the role of other taxes which have a bigger impact on the lower 90%. Social Insurance & Retirement taxes have ave. 6.0% of GDP over the last 3 yrs. vs 6.o% vs the individual 6.7%. The lower 90% also pay more proportionately in local Sales, gas & property taxes. The lower 40% are not paying zero taxes when all taxes are included.

    I fail to see how the designer tax cuts have created more jobs & economic growth than the taxes of the 1980 & 90′s. If it hadn’t been for the unregulated explosion of credit & financial products in the 2000′s who knows how poor the economy would have been in the first half of the decade. We know how the decade ended & we have continued with much the same failed policies.

    Growth slows when inequality grows…. this is not a new “Fact”.

  19. nofoulsontheplayground says:

    Wikipedia has a table that shows the historic US top effective tax rates and the income at which they applied adjusted for 2011 dollars:

    http://en.wikipedia.org/wiki/Income_tax_in_the_United_States

    While the top tax rate dropped to 28% in 1988, the income threshold to get that rate was at a 70% lower level of income than it was the year before.

  20. kek says:

    Even when tax rates in US were at 90%, tax revenue never got much above 20% of GDP. Today the US Gov spends 24% of GDP (Clinton spent 18%)

  21. denim says:

    The 99% are basically wage slaves that are owned by the 1%. Just because there was no property transfer bill of sale on their body when they were “hired” does not mean they are not treated as owned slaves. The whole issue of taxation and entitlements (perks and benefits) of the 99% is really about how much the 1% wants to spend on the maintenance of the pool of slaves they collectively have control of. It’s how much the 1% wants to spend on maintenance…a good owner will repair and maintain his property. What is this bunch of owners trying to do? Cherry pick and leave the rest to rot.

  22. pm2416 says:

    There is always a critical number missing from this type of presentation: what has been the change in real (after-inflation) income of Americans since Ronald Reagan took office?

    If you were in the top 5% you have done spectacularly well over the last three decades.

    If you were in the bottom 40% you are doing worse now than you were 30 years ago.

    In the 30 years prior to Reagan taking office both groups saw their real incomes improve at roughly the same clip. In 1981 the roads fork and never see each other again.

  23. ilsm says:

    Time to study how Octavian (later named Augustus by the senate) financed his wars o empire against the republic, and how he settled his veterans on land…………………..

    Or Marie Antonette.

  24. romerjt says:

    I don’t think the rich should pay more income tax, anything above 33% is morally too much. However, all loopholes should be eliminated and capital gains should be taxed from a very high (say 75%) to very low (say 10%) depending on the time period from days to years (say 10 max). Also, everybody who works should pay some tax, if they get aid in another form, so be it, but everybody should pay something.

  25. Conan says:

    I am an Engineer that works in manufacturing. I can’t tell you how many times the Sales guys talk about “GROWING THE TOP LINE” which is revenue. This is important, but is only 1/2 of the equation. To be profitable and to stay in business during hard times you have to watch where is the money going and is there any value added in spending it that way, plus most likely you will have to make painful cuts. Not a pleasent thing to do, but if you want to stay in business, then it must be done.

    So if you want to know what is really happening, follow the money!! In fiscal year 2011, the federal government spent $3.6 trillion, amounting to 24 percent of the nation’s Gross Domestic Product (GDP). The Federal goverment does basically three things that make up 80% of what it actuall spends money on:

    1) Defence : Defense and international security assistance: In 2011, 20 percent of the budget, or $718 billion. We spend more on defence than the next 17 countries combined!!!!

    2) Social Programs most of which are automatic & are on auto pilot = 54% of all money spent!!
    A) Social Security: Another 20 percent of the budget, or $731 billion
    B) Medicare, Medicaid, and CHIP: Three health insurance programs – Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) – together accounted for 21 percent of the budget in 2011, or $769 billion.
    C) Safety net programs: About 13 percent of the federal budget in 2011, or $466 billion.
    3) Interest on the national debt: The federal government must make regular interest payments on the money it has borrowed to finance past deficits – that is, on the national debt held by the public, which reached $10 trillion by the end of fiscal 2011. In 2011, these interest payments claimed $230 billion, or about 6 percent of the budget.

    So items 1 – 3 are 80% of the budet = everything else you think of being the Federal Govermnment is just 20%

    Sources:

    http://www.cbpp.org/cms/index.cfm?fa=view&id=1258
    http://www.economist.com/blogs/democracyinamerica/2011/12/defence-spending

  26. BITFU Search Engine says:

    Everything you want to know about the Tax Policy Debate comes from Morton’s Fork, Buridan’s Ass and some Led Zeppelin.

    Morton’s Fork: Originated with the collection of taxes by John Morton, Archbishop of Canterbury in the late 15th century, who held that a man living modestly must be saving money and could therefore afford taxes, whereas if he was living extravagantly then he was obviously rich and could still afford them. Two prongs of a fork and regardless of whether the subject was rich or poor, he does not have a favorable choice. Essentially it places the populace between a rock and a hard place….

    So how does the citizenry avoid the uncomfortable position of being Forked?

    By acting like a colossal ass…Buridan’s Ass.

    Buridan’s Ass: The opposite of being between a rock and a hard place (ie Forked). It refers to a hypothetical situation wherein an ass is placed precisely midway between a stack of hay and a pail of water. Since the paradox assumes the ass will always go to whichever is closer, it will die of both hunger and thirst since it cannot make any rational decision to choose one over the other. The endless, go-nowhere debate leaves us hungry and thirsty.

    Cue the Zep: And the Song Remains the Same…

  27. mopman says:

    Wouldn’t these facts and figures be a lot more helpful with some context about the marginal benefit of money? I have no idea how an actual analysis of the MB of cash could be performed since money itself is the incremental unit that marginal benefit is usually measured with, but it’s an obvious, never talked about, and necessary idea for any intelligent conversation about progressive tax rates.

    Who cares if the wealthy pay the majority of taxes if they’re paying with money that doesn’t matter to them and who cares if the lower income brackets are paying a very small share of the total tax amount if they’re paying with dollars that they absolutely need?

  28. whskyjack says:

    romerjt

    Everybody does pay some tax, if they work or not.
    Everybody who works pays some form of federal income tax

    BTW if we taxed every bit of income at the at the obscene rate of 33% we would just have enough income to balance the budget. That is really the base line we need to be discussing.

    Jack

  29. wcvarones says:

    Joe Friday,

    “When the income tax was originally enacted, it only applied to income above $500,000. Even FEWER Americans paid any income tax.”

    Yeah, but government spending wasn’t 24% of GDP. If you want to shrink government back to that size, I’ll second that motion.

  30. AHodge says:

    I can think of a dozen more key points no one should argue
    i ll mention four
    1` there is huge tax bracket creep. most of the cuts in the 80s 90s naughties only kept the revenue/gdp share roughly constant at 16-20%. congress constantly doing us favors back then??? works for them
    2 revenues are highly leveraged to growth. cap gains/ profits/ AMT in particular. Historically revenues-excluding changes– grow double digits in decent recoveries
    3 revenues collapse in recessions, cap gains nearly disappear often down 70% or more
    4 there is massive evasion at all levels but esp at high end. think Mitts tax rate is the 15% of his actual income? cant hide a W2 though

    Wessell BTW is a massive concealed Wall st stooge. Sometimes sounds good in public. But i was observing our aristocracy in their natural habitat……..
    the Chamber of Commerce annual investment summit.
    If you know anything about the Chamber i need not say more.
    Wessel was kissing serial ass and saying all the right things to them about taxes and anything else they favor.

  31. Jim67545 says:

    I am bothered that anyone pays no federal income taxes (directly and therefore of which they are aware. I’m not talking about taxes buried in the goods and services they buy.) Yes, they may pay social security but they are likely to think of this not as taxes but as their pseudo retirement account.

    If someone has no skin in the game they may not vote and they may not care what is occurring with their government. If they are net beneficiaries (unemployment, welfare, etc.) they may endorse the status quo.

    When 40% of citizens pay no federal income tax, when we fight wars with a professional (paid) army instead of conscripts, when we finance wars off budget so it seems not to be costing us anything (HT to W), bad things happen in that environment of indifference. The minority who do care or can gain personally are the only ones left on the field.

    ~~~

    BR: Are you figuring the 40% of who pay no taxes are because they have no income?
    Retirees, children, housewives, unemployed

  32. ironman says:

    Another factor to consider is that the data, especially for inequality, is not controlled for the changing household composition of income earners over time (or really, the IRS’ taxpayer unit equivalent). Much of the so-called “gap between economic winners and losers” may be accounted for by this single factor.

  33. The Retired CNBC Sucks says:

    First, props to Bob A, rd, Frilton Miedman, Been Around Since 1963, BillG, Joe Friday, and sparta47 for their arguments which are at least as good as those made by the likes of Mannwich, wunsacon, and yours truly from the good ole days of TBP. I wonder how many of you are simply posting under new usernames. ;) But the win goes to mopman for his marginal benefit of money argument, which always somehow finds itself missing in these “fiscal policy debates”. I tried to make the same basic argument when I wrote “Taxation is the lifeblood of civilization, and only the rich can pay” back in December 2008, but in reality that argument was only in the title:

    http://cnbcsucks.wordpress.com/2008/12/18/taxation-is-the-lifeblood-of-civilization-and-only-the-rich-can-pay/

    We are now at the point where we need gut-wrenching levels of high taxation on the rich (including asset taxes) AND sickeningly massive across-the-board spending cuts for government at all levels, neither of which will happen, ever. So I might as well vote for Mitt Romney (for other reasons) and the question becomes not the “fiscal policy debate” itself but how you survive the ultimate consequences of our collective failure as a nation to effectively resolve it.

  34. ThatsNotAll says:

    It really is not complicated folks. If you want to make millions and keep the largest possible percentage of it then operate a hedge fund and then donate your assets to charity.

    Warren Buffet knows exactly how the game is to be played.

  35. DarthBeta says:

    USA Monetary Policy has evolved from bimetallism, to full gold standard, to partial gold standard, and finally to fiat (monetary sovereign) currency. Taxes paid with currency related to a commodity are not similar to taxes paid with a fiat currency.
    Comparing one 1900’s decade to another makes little sense and maybe a good analogy is comparing sports teams from the 1900’s to those of modern day. Let’s compare William Beattie “Big Chief” Feathers to Matt Forte, shall we?

  36. DarthBeta says:

    USA Monetary Policy has evolved from bimetallism, to full gold standard, to partial gold standard, and finally to fiat (monetary sovereign) currency. Taxes paid with currency related to a commodity are not similar to taxes paid with a fiat currency.
    Comparing one 1900’s decade to another makes as much sense as comparing sports teams from the 1900’s to those of modern day. Let’s compare William Beattie “Big Chief” Feathers to Matt Forte, shall we?

  37. Frilton Miedman says:

    Conan Says:
    August 7th, 2012 at 8:02 am
    “…B) Medicare, Medicaid, and CHIP: Three health insurance programs – Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) – together accounted for 21 percent of the budget in 2011, or $769 billion. ”

    More than 50% of all U.S. healthcare is entitlement, paid by tax money, yet the industry refers to itself as private.

    U.S. cost per citizen = $8,500

    British cost per citizen = $3,500

    Britain’s system is Socialized, ours is only “socialized” on the payment side, profits & earnings are “private”.

    If we went to the same model Britain uses, we’d save $453 billion per year in spending.

    We’d save even more on the Consumer side, putting more money into the hands of consumers, albeit with a tax at a lesser rate than previous insurance premiums.

    Imagine the economic impact of an extra $14,300 in the hands of every U.S. household.

  38. DeDude says:

    Outrageous; even thought the rich have been gracious enough to take on the burden of all the income gains – the little people are refusing to share the burden of giving government increased tax revenue. When are those losers going to stop these remarks about “shaving the hair of a bald guy” and just pony up as much “hair” as everybody else.

    DeHamptonianDude

  39. rct01 says:

    I don’t know WTF people can constantly say “the rich aren’t paying their share” when 5% of tax payers in the U.S. pay 40% of all the income taxes, the bottom 40% paid 5.9% of all income taxes, and 46% of households didn’t pay ANY income taxes. But a lot of those 46% who paid NO income taxes, have no trouble voting to tax the “rich”. Of course not, they don’t have to pay sh#t, why not? And what’s considered “rich” is such a joke, $200,000 a year with kids in Coastal CA is barely freaking middle class.

    You continue to get punished for financial prosperity, hard work & putting your nose to the grindstone… you get to carry the tax burden for the whole county, you don’t get to contribute to a Roth IRA, if you pay your mortgage on time you don’t get any of the goodies the deadbeats get like loan mods, principle reductions, free rent squatting in your house for 3+ years, you don’t get to take the loss on rentals over $150k in AGI, etc…. and it goes on and on an on.

  40. Lugnut says:

    Back when Bush and Cheney took their ‘deficits don’t matter’ stance to justify passing the Bush ‘feed the wealthy’ tax cuts, it bears noting that they bargained with the Democrats who only allowed passage after they too negotiated across the board cuts for the lower classes.

    So now we find Washington has painted itself into a revenue trap corner whereby it can only ‘reasonably’ extract $2.4T in net revenue from the populace and corporations of the country. Juxtapose this with their seemingly inability to be able to spend less than $3.8Trillion per year, and you find the heart of the issue.

    If you could somehow convince the Congress and Senate to commit political suicide and pass legislation that would increase net taxes by 50%, you would STILL have a budget defici of $200BB per year. And this excludes all of the off budget obligations which nobody dares speak to (especially in an election year).

    Both Obama, and Romney, from what I’ve read of his supposed economic plans, are big government, low tax status quo guys. Neither of whom are going to provide any benefit whatsoever to this countrys’ imperiled fiscal situation. Au contraire, they would both (along with the House and Senate) punt any and all fiscal policy responsibility to Bernanke, who is running dangerously low on aces up his tailored sleeves, and can only monetize our debt requirements until the CBs of the world eventually force his hand on a realistic coupon for a 10 yr. In short, discussion of tax policy is irrelevant, man the life boats. My $.02

  41. Joe Friday says:

    wcvarones,

    Yeah, but government spending wasn’t 24% of GDP.

    And ?

    If you want to shrink government back to that size, I’ll second that motion.

    The overwhelming problem is lack of revenue, not spending, on other than the Military Industrial Complex and interest on the Reagan/Poppy Bush/Chimpy Bush federal debt.

  42. Bridget says:

    BillGsaid:
    At
    FICA is a flat tax with two major exemptions….Obviously the rich benefit from those exemptions in a major way and the poor don’t benefit from them at all. That makes it effectively a regressive tax.

    Oy! The Benefits. The folks who argue that FICA is regressive always ignore the benefits.

  43. Conan says:

    Well said Lugnut – spending has to be controlled. Even further I have ZERO faith that even if taxes were raised, they wouldn’t just spend more money. Does a drunk drink less just because you give him more beer? Does anyone ever remember when there was any sibilance of control in spending??

    There are two sides to this equation…We need complete tax reform…just cut through all the BS & loop holes and put in a FLAT Tax, say start at 10% for the lowest fifth and go to 30% for the highest fifth, no exemptions. Further more put in a plan to cap Federal Spending at 20% of GDP. The problem is this is too straight forward & pleases no special interest group.

    Something like this would be true Leadership and change….but unfortunately our President & Congress are average or less.

  44. BillG says:

    @Bridget “Oy! The Benefits. The folks who argue that FICA is regressive always ignore the benefits.”

    First, we don’t talk about the benefits with anything else so I don’t know why FICA should be any different. Give me a comparison of how someone making $100M/yr benefits from the defense department compared to someone making $10K/yr.

    Second, Social Security is a ponzi scheme and FICA is a tax. If the benefits were actually directly proportional to what you paid in and it gave you some set return then maybe we could call them benefits or a forced investment system or something. Right now Social Security is basically a welfare system funded almost totally by the middle class but it provides everyone a modest annuity on the side. The return on “investment” for anyone in the middle to upper middle class is so paltry that it should be considered a crime. Any subsidy to the poor or disabled should be funded by ALL US taxpayers – not just the middle class.

  45. Frilton Miedman says:

    Conan Says:
    August 7th, 2012 at 2:08 pm
    Well said Lugnut – spending has to be controlled. …. Does anyone ever remember when there was any sibilance of control in spending??

    There are two sides to this equation…We need complete tax reform…just cut through all the BS & loop holes and put in a FLAT Tax, say start at 10% for the lowest fifth and go to 30% for the highest fifth, no exemptions. Further more put in a plan to cap Federal Spending at 20% of GDP. The problem is this is too straight forward & pleases no special interest group…..”

    You’re one of the most sensible commenters on the topic here.

    What is missing on the spending – COSTS, no one is discussing costs vs spending, just cutting spending alone.

    Healthcare spending, revolves around an industry that owns Congress, and we outspend any other country by 200% per capita.

    An industry replete with executives taking in 8 figure salaries, more than 50% subsidized by government spending.

    To top it off, as stated above, the bulk of these corporations pay little or no taxes, executives can very easily manipulate the system to claim incomes as cap gains or utilize the plethora of tax loopholes at their avail.

  46. Conan says:

    Thanks Frilton Miedman, when I say cutting costs as an Engineer I look at the efficiency of the expenditure. Maybe you just take a knife too it and lower it period. But most likely there is a better way or more efficient way to get the job done and this lowers costs also. I have used both, the first usually as an emergency measure as there was no time to wait, but the second is my preferred method.

    Lastly as a person orientated to math, I have noticed when people talk too much or expend too much time explaining something, there is most likely some type of BS they are trying to cover up or some type of agenda they are selling. To find the true root cause and thus a solution you have to cut to the chase and deal with the way it really is. Then robust, workable soultions are easier to see / implement.

  47. Conan says:

    Lastly going directly to your comment on Health care costs, my sister is a Director at a Pharmaceutical company, my daughter is a Doctor. I see what you are saying very clearly. Every time I talk to them or hear their stories about the business it is amazing as to the waste that the system generates. The amount of money that is spent on everything, salaries, benefits, travel and entertainment, sales..it is astounding. I have worked in Consumer Product manufacturing and even in the Auto Industry and nothing remotely compares.

    This point even goes further as I travel like 200 k miles per year on the plane all over the so called 3rd world and have to get health care where I can. The rest of the world for run of the mill services, Dentist, colds, stitches, minor operations does a really good job (still recommend the US for anything really complicated) but the cost is 1/4 to a 1/10 of the price in the US.

    So why does it cost so much to get routine care for common ailments?? To me there is no justifiable reason and the Heath Care Industry is ripe for some of Schumpeter‎’s “creative destruction”.

  48. Joe Friday says:

    Conan,

    spending has to be controlled.

    You’re barking up the wrong tree.

    You could eliminate ALL non-defense discretionary spending –

    Eliminate all the air traffic controllers and shut down all the airports, shut down the entire federal prison system (and release all the prisoners), shut down the federal court system and send all the judges and bailiffs and court reporters home, eliminate the federal marshals, shut down the Justice Department along with the FBI and the ATF, shut down the Customs Service and eliminate the Border Patrol and Coast Guard, and shut down the CIA/NSA/DIA/Homeland Security

    – and STILL not even come close to balancing the federal budget.

    Even further I have ZERO faith that even if taxes were raised, they wouldn’t just spend more money.

    1998 – $069 billion SURPLUS
    1999 – $126 billion SURPLUS
    2000 – $236 billion SURPLUS
    2001 – $128 billion SURPLUS

    [Independent non-partisan CBO]

    Does a drunk drink less just because you give him more beer? Does anyone ever remember when there was any sibilance of control in spending??

    Prior to twelve years ago.

    There are two sides to this equation…We need complete tax reform…just cut through all the BS & loop holes and put in a FLAT Tax…

    Very bad idea.

    Even the originators of the misleadingly termed “Flat Tax”, Professors Robert Hall and Alvin Rabushka, freely admitted in the 1983 edition of their book, that a ‘Flat Tax’ will be “a tremendous boon to the economic elite from the start“. In an appendix to their book, Hall and Rabushka estimated that their flat tax proposal would increase the tax bill for the lowest income families by 78 percent, and decrease the tax bill for the very richest families by 41 percent.

    Throwing money at the Rich & Corporate has never worked economically.

  49. Bridget says:

    “Give me a comparison of how someone making $100M/yr benefits from the defense department compared to someone making $10K/yr.”

    Apples and oranges.  There is no valid comparison.

    “Second, Social Security is a ponzi scheme…” 

    You’ll get no argument from me on that score.

    “and FICA is a tax.”

    The payment of which entitles the taxpayer to benefits.

    ” If the benefits were actually directly proportional to what you paid in and it gave you some set return then maybe we could call them benefits or a forced investment system or something.”

    They are calculated based on how much you paid in, how many years of covered employment you have accumulated, and your age at retirement.  http://assets.aarp.org/rgcenter/econ/fs59r_ssbenefit.pdf
    And, incidentally, the ratio favors lower to middle income workers over higher income earners….so much for regressiveness.

    “Right now Social Security is basically a welfare system..”

    Not yet but we’re getting there fast.

    “….funded almost totally by the middle class…”

    And benefitting almost totally the middle class.

  50. Frilton Miedman says:

    formerlawyer Says:
    August 7th, 2012 at 5:37 pm
    “Cognitive dissonance personified?”

    “Get BIG GOVERNMENT away from medicare & social security!!!”

  51. Conan says:

    Mr Friday, here is your reply.

    1)“spending has to be controlled.”You’re barking up the wrong tree.

    First who can logically argue not to control spending? Are you saying to hell with that PRINT all the money you want and SPEND BABY SPEND? Next I already detailed in an earlier post 80% of the budget is in 3 things. Defence (20%), Social Programs (54%) and interest on the Debt (6%). So you are right the only place to really cut is the first two items.

    2) “Even further I have ZERO faith that even if taxes were raised, they wouldn’t just spend more money.”
    “Does a drunk drink less just because you give him more beer? Does anyone ever remember when there was any sibilance of control in spending??”

    I will admit that the 4 years you quote are EXTRA ORDINARY, however not normal or a trend. Bill deserves credit for getting Congress to do their job and not wasting the TECH BOOM DOLLARS that came his way. Obama complains that the Republicans make life hard, but for 1/2 his term he held total power. Under Bill the Republicans shutdown government and tried to impeach him. So yes Bill was exceptional and yes for the last 12 yeas as you say our Presidents have been less than average.

    3) “There are two sides to this equation…We need complete tax reform…just cut through all the BS & loop holes and put in a FLAT Tax…” Very bad idea.

    Now you are talking out of both sides of your mouth. First you decry that the rich pay 15% or less in Income Taxes, by working or beating the system. Here I propose a FLAT TAX with NO Exemptions at 30%. Get your calculator out and do the math, they will pay at least double.

  52. Joe Friday says:

    Conan,

    First who can logically argue not to control spending?

    Anyone who:

    A) Comprehends that “spending”, per se. is NOT the problem. Lack of revenue is the problem. Federal income tax revenues, as well as the total tax bite, are at the lowest levels in more than six decades.

    B) Comprehends that any reduction in “spending” during an economic downturn is counterproductive. (SEE Britain. After a stimulus that got them out of recession, they reduced “spending” and they are now back in recession, a double-dip.)

    Next I already detailed in an earlier post 80% of the budget is in 3 things. Defence (20%), Social Programs (54%) and interest on the Debt (6%)

    But that’s nonsense.

    Bill deserves credit for getting Congress to do their job and not wasting the TECH BOOM DOLLARS that came his way.

    I’m afraid your chronology is WAY off.

    The federal budget was in NET surplus by the Summer of 1994, as a direct result of RAISING TAXES on the Rich & Corporate, and the (non-net) federal budget deficits declined precipitously every year thereafter:

    1995 – $164 billion
    1996 – $107 billion
    1997 – $022 billion

    followed by federal budget surpluses.

    The first web browser (Mosaic) wasn’t invented until 1993, and wide-spread commercial dial-up didn’t even exist until 1995. So your so-called “TECH BOOM” was still years away.

    Obama complains that the Republicans make life hard, but for 1/2 his term he held total power.

    Yet another person that doesn’t comprehend the Senate filibuster.

    Here I propose a FLAT TAX with NO Exemptions at 30%. Get your calculator out and do the math, they will pay at least double.

    You’re in desperate need of a new calculator.

    Once again, the ORIGINATORS of the “Flat Tax”, Professors Robert Hall and Alvin Rabushka, stated in their book, that their flat tax proposal would increase the tax bill for the lowest income families by 78 percent, and DECREASE THE TAX BILL FOR THE VERY RICHEST FAMILIES BY 41 PERCENT.

    You obviously do not comprehend how taxes work.

  53. The Pale Scot says:

    Forgot #6;

    Ratio of private to corp. income tax payments in the 50′s – 35% to 65%

    Current ratio of private to corp. income tax payments – 75% to 25%

    Numbers are from memory so they might be off.