This is from a new MoveOn.org email urging followers to pressure their representatives to push to close the tax loop hole for high earners. While I’m all for Hedge Fund Managers paying at least as much as fire fighters, I’m sure there must be something missing from this argument…right?
Filed under: Poponomics |
The Unqualified Economist 
Well, for starters everyone knows Fire Fighters are taller than Teachers. 🙂
Right-wingers and hedge fund managers would jump to tell you that even at 15%, they’re still paying the lion’s share of tax income for local and federal governments. Then they’d probably mumble something about how raising taxes for the highest brackets disincentivizes the rich.
Though I’ve only ever been to the left of the fireman on that chart (my left, not his), years of playing SimCity in its various iterations tells me there might be SOME truth to the disincentive argument. In the game, the best strategy for maximizing tax income is to keep tax rates for the wealthy very low and to keep tax rates for the poor very high. As a result of the tax loophole, the poor leave my city and the rich flock to it. Of course, in playing a video game I’m not dealing with real people, and so I don’t have to worry about any of the ethical dilemmas that arise from these choices. But at least it gives me some insight into why it’s done that way.
All that being said, I’m not engineering a city government and I place a high value on equitable social conditions for everyone, so I’m all for a flat tax.
The questionable/ironic (read:sad) part of this is that a recent poll showed the majority of Americans thought their taxes went up under the the first yearof the Obama administration. RE: @xero since they all think that he might as well get his money’s worth!
Regarding when the last dollar earned no longer being “worth” itunder higher taxes and being a disincentive for the rich: in theory this may be true–I would argue it raises their savings rates/limits consumption more than anything–but most top earners got their because they have incredible work habits and are driven to the top not entirely by money but also by an inner drive. I’d also be hard pressed to think of a job where top earners can simply punch out when they’ve crossed that line of last dollar earned no longer being as valuable.
Why would you save the person making $31,000 say %5 ($1550) to stimulate the economy when you could save the person making $155,000 5% ($7750)?
I mean a flat tax makes a lot of sense, too…
Can I just point out that income tax was actually illegial in the constitution until the 20th century (1913 16th amendment altered the constitution to allow it). Lets just abolish it. No? Isn’t that working out well for Greece?
What do we want? More entitlements!
When do we want them? Now!
When do we want to pay for them? Never!
VERY misleading %. 15% is long-term capital gains rate, which everyone has the opportunity to utilize. So, SOME of taxable income of hedge funders ( long-term capital gains and 1st 34,000 or so of taxable income for a single filer ) IS taxed at 15%. Then, regular rates apply, and their top rate is 35%. Their “effective” (average) tax rate is probably around 30 to 33%. The others in the graph effective tax rates are between 10 and 15%. SO, VERY misleading graph. The key phrase was MAY pay as little as 15%.
Thank you Bill, resident certified public accountant!
Bill FTW!
I taught for 6 years and I never even came remotely close ot paying 25% of my income in Federal Taxes. The loopholes are not just available for the wealthy, they are available for anybody who has a brain and or an accountant. If you make 50 K a year as a Firman or Cop and are paying 25% Federal income tax then not only are you at the low end of the pay scale for your chosen profession, but you are probably filing a 1040 EZ. In other words you’d be spending too much time complaining about the ‘rich’ not paying as large a percentage as you do and not enough time trying to figure out how to pay less. Is this adjusted gross income BTW? I mean these numbers are moronic, everybody gets a number of deductions for simply being able to properly fill out the simplest form. The far left is just as bad as the far right in the information they put out. Neither group is interested in the truth, they are both interested in spreading propaganda and creating an even larger chasm between the ends of the political spectrum. I believe one of the founding fathers (at least one of them) I want to say TJeff or AHam posited that political parties were inherently evil and should be avoided. At least the idea of having two distinct ones was viewed as a disaster waiting to happen. The guys who founded this country tend to be spot on philosophically regardless of your leanings, and it is always worth trying to learn from their wisdom. And it is kinda of cool to give them nicknames that make them sound like Hispanic baseball players.