Lion of the Blogosphere

Republicans, once again, trying to cut taxes on the top 1%

http://thehill.com/policy/finance/340912-conservatives-revolt-over-talk-of-keeping-obamacare-tax

Some commenters repeating conservative talking points insist that it’s impossible to tax the rich without also taxing the middle class.

But here’s a tax that can’t possibly impact the middle-class, because it only kicks in when an individual makes at least $200,000/year, or a married couple makes $250,000, and that’s not a middle-class income.

On top of that, exit polls show that only a minority of voters making more than $200,000/year admitted to voting for Trump, so obviously most voters impacted by the tax don’t feel that strongly about being taxed that they would vote for Trump to avoid it.

Written by Lion of the Blogosphere

July 7, 2017 at 9:43 am

Posted in Uncategorized

47 Responses

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  1. “Middle class” is a description of a lifestyle, not a measure of income.

    The income required to buy that lifestyle varies wildly depending on geography. In many places 250k household income is what it takes.

    27 year old from sailers

    July 7, 2017 at 9:57 am

    • Yes, yes, what can you get with $50K in Indiana, let alone $250K, that is worthwhile? Not much!

      JS

      July 7, 2017 at 1:33 pm

      • Of the things you’ll actually use, what can you get in NYC that you can’t get in Indianapolis?

        J1

        July 7, 2017 at 3:32 pm

      • It’s access to food, I’d tell you. Indiana lacks good quality food.

        Lion talks about baked goods. Places with subpar cakes and pastries tells a lot about the foodie scene.

        Then there’s access to intellectual culture, and Indiana would have none of it. NYC doesn’t have much of it either, but imagine Indiana.

        JS

        July 7, 2017 at 6:02 pm

      • it’s much easier to get sex in indianapolis for the average guy

        GM

        July 7, 2017 at 10:50 pm

      • First, the remark about food is nonsense. NYC has some fantastic restaurants, but it’s also jammed with crappy mom n’ pop operations that make Golden Corral look five star. Takeout Chinese food is just as good in Indianapolis as it is in NYC. We may not have some of the high end places NYC has, but let’s be honest – you’re not going to $200+/person restaurants any more frequently than I do. But forget the issue of culture in flyover country itself; let’s talk about access. Somebody in Indianapolis making 250K lives in a large house in a good suburb with great schools, a couple of jet skis, a four wheeler for hunting/fishing, and can still afford to take the family to Europe or Japan on vacation every other year. They can probably go to museums and plays in NYC more frequently than the average New Yorker does if they want to.

        J1

        July 8, 2017 at 12:30 pm

      • I think it’s safe to assume Chinese food in America is not good anywhere. SWPLs avoid it like the plague. And eating Chinese food is considered low status among the various ethnic cuisines, due in part of its failure to adapt to a modern or artisanal trend.

        JS

        July 8, 2017 at 6:03 pm

  2. You think a wage earning couple making 300k a year, including the sale of one time capital gains, in NYC is rich? it’s ridiculous that the top tax brackets kick in at 250k or 400k, surely the tax rates of people making 30 million (not to mention hedge funders making a billion) should be higher than those making 500000 or 2 million

    Biff

    July 7, 2017 at 10:01 am

    • Except that republicans also want to reduce the number of tax brackets, so you’ve proven lion’s point.

      Magnavox

      July 7, 2017 at 1:33 pm

      • I’m in favor of progressive taxation, but disagree with lion’s threshold for ‘rich’

        Biff

        July 7, 2017 at 2:43 pm

      • But you should be advocating tieing income tax to regional cost of living. Saying that $300k isn’t much in NYC therefore people making $300k should be taxed less across the country is absurd.

        I think that’s a terrible idea because it subsidizes concentrations of wealth but it’s still way way way smarter than taxing some guy in Iowa less because someone making the same amount in NYC is of a lower socio economic status.

        Magnavox

        July 7, 2017 at 4:54 pm

      • 90% of people in Manhattan voted for Hillary, if there was ever a case of people wanting to pay higher taxes, it’s the elite in Manhattan.

      • New Yorkers have to a pay a state tax, which is quite high. It’s a total about ~10% for city residents. Certain states have no state tax. If you make $300K in Seattle, then you’re off the hook for state tax. I know of a person who made this kind of money in Washington State.

        JS

        July 7, 2017 at 7:59 pm

    • That’s a typical cop and nurse family in a place like New York.

      Renault

      July 9, 2017 at 2:26 am

  3. This post is misleading because the tax being discussed is not an earned income tax, it’s an investment income tax. It’s a tax on capital gains, interest, and dividends; it’s just that you have to pay it only if your earned income is over $200,000 a year. But actually, that’s what’s needed if you think the rich aren’t paying their “fair share,” because for the truly rich most of their income is capital gains, not earned income, so people who want to focus on that should be trying to raise the capital gains rate, or make it progressive, or make it target people more when they are actually living off capital gains as opposed to just investing for retirement or whatever, rather than talking about raising income taxes.

    Also, you might object to $200,000 to $250,000 a year being called middle-class, but at best it’s upper-middle-class and not “rich.” And it’s definitely not 1%. Remember inflation and the bias of thinking about money in terms of your youth. According to the CPI inflation calculator, $200,000 today is the equivalent of $88,000 in 1985. And according to this Investopedia article, the floor for the top 1% of income earners in 2014 was an adjusted gross income of $465,626:

    http://www.investopedia.com/news/how-much-income-puts-you-top-1-5-10/

    Hermes

    July 7, 2017 at 10:24 am

    • I’m not sure we’ll get a truly rational system of taxation that benefits the nation until the dollar monopoly, which forces us into trade and fiscal deficit, is ended. The best that we can hope for in the tax reform effort later this year is that we eliminate the foreign savings loophole and put domestic and foreign financial investments on equal footing. It’s possible that could be the straw that breaks the dollar monopoly since the monopoly is something that is granted to us by a confluence of foreign interests, not something we force on the world. I enjoy walking around Manhattan and seeing all the nonsense that the city government is able to afford (ie. diversity) and then imagining it all go away after the monopoly ends and the financial sector downsizes 50-80% and NYC’s tax base with it.

      Andrew E.

      July 7, 2017 at 11:57 am

      • There is an official US strong dollar policy. Some people claim that the reason Hussein and Gaddafi were overthrown is that they were selling oil in euros rather than dollars, and that threatened the dollar as world reserve currency. I think you’re right that this is a very important issue. Are there any books on the subject that you recommend?

        Magnavox

        July 7, 2017 at 5:04 pm

      • There are no books on this that get it right. It’s not understood well enough. The books will be written after the current system goes away and it can be seen more objectively. Start here with the archives and comments:

        http://fofoa.blogspot.com/2010/08/credibility-inflation.html

        Andrew E.

        July 7, 2017 at 6:49 pm

  4. “Some commenters repeating conservative talking points insist that it’s impossible to tax the rich without also taxing the middle class.”

    Will those tax dollars be going to the middle and working classes? No. They’ll be going to support bums. Which will actually make life harder for the middle and working classes. Why would they want to increase taxes that will be used to buy more hud housing in their neighborhood?

    destructure

    July 7, 2017 at 11:15 am

    • All tax dollars are used to prevent the government debt from growing faster than it would without the tax. Yes that benefits the middle class.

      • How does it? The debt is irrelevant.

        jimbo

        July 7, 2017 at 3:17 pm

      • The US government needs to control its currency directly instead of relying on central banking and Treasury Bonds.

        map

        July 8, 2017 at 12:48 am

    • Welcome to America’s crony class that makes sure you don’t reap the benefits of a normal life. The ruling elites want more slaves not citizens.

      JS

      July 7, 2017 at 1:47 pm

    • That’s one of the ironies of the whole situation: that there are trillions of dollars of potential yearly savings in the federal, state, and local budgets budget but conservatives like destructure are too stupid to realize it because they’re convinced that all the money is going to HUD.

      This has a breakdown of federal means tested (“wefare”) spending: https://object.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf

      Magnavox

      July 7, 2017 at 5:34 pm

      • America is a country for the rich, anyone else is either a loafer or a striver.

        JS

        July 7, 2017 at 6:11 pm

      • Both proles and NAMs are responsible for America’s low quality of life, especially proles who have the “wisdom” to uplift themselves, and shall take a hit for the sh!tfest in America.

        JS

        July 7, 2017 at 6:13 pm

  5. A problem I have with this tax is that it targets a particular type of income crudely and I think unfairly. If Warren Buffet sells some stock, his tax rate will go from 20% to 23.8%. Big deal. If a real estate investor sells real estate at a profit, he will probably pay no tax if he reinvests in more real estate. If a 2 income well to do couple sell some stock short term, they will pay an effective rate of 43.4% with this tax.

    I’d much rather see the long term capital gains tax rate raised on wealthy people or have more tax breaks eliminated, instead of having the near rich pay 43.4% while the super rich pay half this rate or less.

    stilicho

    July 7, 2017 at 12:30 pm

  6. raising taxes is simply a non starter in the Republican party. The Republican party is a coalition of wealthy, business Republicans, SoCons and anti immigration people. We can’t attack part of our base.

    Let it go.

    Otis the Sweaty

    July 7, 2017 at 12:33 pm

  7. ” so obviously most voters impacted by the tax don’t feel that strongly about being taxed that they would vote for Trump to avoid it.”

    How dare legislators have principles!

    Befitting people without the intention of getting their vote…. humpf

    Lion o' the Turambar

    July 7, 2017 at 12:59 pm

  8. In 2000 when I was working at a nationwide employment defense firm, law firms were losing associates to tech start-ups. So a memo went out reminding associates that, “you can make $300K here without having any of your own clients.” Keep that in mind when you think of $200K as the threshold for taxing “the rich.”

    mort

    July 7, 2017 at 1:14 pm

  9. 200K in income is not rich. More importantly, taxing income is not taxing the rich. To tax the rich, you have to tax wealth, that is assets, not income.

    Tom

    July 7, 2017 at 1:59 pm

    • The tax WAS a tax on wealth: passive income.

      • Income isn’t the same thing as wealth. You can have high income and still be poor, and you can have low income and still be rich. Wealth is net worth, which is assets minus debts. So in the case of passive income like dividend income from stocks, taxing wealth would be taxing the stocks, not the dividends from the stocks. Someone with $1 billion in stock would pay a percentage of that under a wealth tax, even if there is no dividend income from it or a change in price and capital gains income.

        Tom

        July 7, 2017 at 3:52 pm

      • You should lobby the Republicans to institute a wealth tax like you describe (even though I disagree that a tax on passive income is not a type of wealth tax). Good luck.

      • No, the passive income is equivalent to interest on the bond. The interest is taxed; the bond is not.

        map

        July 8, 2017 at 12:51 am

    • We should lower taxes on rich people because we don’t have even higher taxes on rich people. What a great argument!

      Magnavox

      July 7, 2017 at 5:26 pm

    • $200K USD makes you a king in Canada, especially in the French Speaking Province. You can buy a lot of quality products, and a lot of it is also imported from France.

      Having disposable income in Indiana…what does it get you?

      JS

      July 7, 2017 at 6:05 pm

      • Incidentally, what are those high quality products?

        Yakov

        July 7, 2017 at 7:02 pm

      • A French Canadian who was visiting NYC, complained about the pizza and burger joints on every street block, as if these were the definitive eats of the city.

        It seems like most New Yorkers do not even know how to spend their money, despite earning so much of it. Still, NYC has better food than let’s say Indiana, when it comes to prole fare.

        Montréal is #1 for gastronomy variety and creativity in North America. There’s French, French fusion with Canadian French, Middle Eastern French, etc…Manhattan is like #3 below California, maybe even lower, because there are so many burger and pizza places on every street corner.

        JS

        July 8, 2017 at 6:09 pm

      • So food is that high quality product that you don’t have in NYC? I think you are nuts.

        Yakov

        July 8, 2017 at 10:03 pm

      • Yes, expensive Manhattan has boring stuff. I cannot even find wine imported from Algeria or Tunisia in Manhattan’s largest wine store.

        Don’t even get started with the bookstores. Some commenter here made a ridiculous remark that Manhattan is on the same level with Paris. You gotta be kiddin, right? It’s not even close!

        NYC is only good for making money. Once you fatten up, you should leave the country and go somewhere else to enjoy your riches.

        JS

        July 9, 2017 at 9:25 am

  10. Having read all your informative comments, I wonder why some of you, mates, chose to excoriate me for not contributing to the Molech? What sense would it make to do so while having an option not to? Anyway, none of you, except for JS, said that you would voluntarily hand over your cash. The system is totally and completely messed up. It a mad, mad, mad world when it comes to taxes.

    Yakov

    July 7, 2017 at 8:24 pm

  11. > exit polls show that only a minority of voters making more than $200,000/year admitted to voting for Trump

    Not so. Trump beat Clinton among $200k+ voters. In fact, Trump won all of the 4 HIGHEST income categories by slim margins while Clinton won only the two LOWEST income categories:

    The notion that Trump voters were bitter unemployed factory workers losing out in the new global economy is just wrong. Clinton cleaned up on the bitter loser vote. The anger is that Trump DID manage to flip about 100k blue collar Dems in three key states.

    Trump actually did MUCH better than McCain in the $200k+ category despite losing ground in the $100-$200k category.

  12. $250,000 for a married couple is not rich, it’s a computer programmer married to a nurse anesthetist.

    Actual rich (routine travel by private jet) starts at income $1,100,000 (bottom of top 0.1%), though of course many filthy rich (private jet) people report and pay tax on much less “income” than that because they simply own huge amounts of capital assets and rely on tax free bond coupons or perpetually-rolled-over loans* for pocket money.

    The effective income-tax rate on those of the top rich who actually report income is about 27%, which seems at first glance like about 6% (points) more than on the upper middle class who start paying 21% on $133,000 and pay rapidly growing rates rates on more income until taxes top out at 27%. But that comparison is bogus, because the middle class, all the way up to the 99+ percentile of income, pay over 14% Social Security and Medicare tax as well as income tax, so their real rate runs from about 35% up to 38% on the upper middle class and then diminishes quickly above the “top 0.8%” level. That means even those of the actually-rich who report high taxable income pay a lower marginal rate than the much less affluent salaried upper middle class (37-27=10).

    *If you own valuable assets, you can simply use them as collateral for a low-interest-rate secured balloon-payment loan to get cash to spend. Borrowed money is not income, so no income tax. Every time the loan comes due, you refinance, until you die. Then your estate sells some assets to pay off the loan. Thanks to the step-up in basis upon death, there is no capital-gains tax. So you never pay any tax on your passive income at all. The singer Michael Jackson famously used a version of this scheme.

    Hideous

    July 8, 2017 at 2:11 am


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