To my Senator (Bill Nelson, D-FL):

[digitaldiscipline]

Senator Nelson:

I urge you to support Senator Sanders' sincere and honest effort to represent the will of the majority of the American People in standing up against the proposed tax break for the wealthiest segment of our population at the expense of not only the rest of us, but the nation's budget in this time of uncertainty. Senator Sanders is the living embodiment of "Mr. Smith Goes to Washington," where the plain truth is spoken, fearlessly and without a thought of the game of politics, at a time when such things are so rare that they have, sadly, become a spectacle to behold.

Please stand up and speak out against the egregious "compromise" tax break for those who least need it, and on behalf of the 98% of Americans who desperately want and need more financial responsibility from our government.

Comments

[mighty-man.livejournal.com]

Didn't we settle this last year?

http://www.taxfoundation.org/news/show/250.html

In 2004 the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes. During 2007, the top 1 percent had actually paid more in federal income tax than the bottom 95 percent.

The average tax rate of the bottom 50% in 2008 was 2.59%.

Fiscal responsibility would be to cut wasteful spending on those who are not pulling their own weight rather than penalizing those who are contributing far more than their fair share.

[etcet.livejournal.com]

The larger context of my complaint is that the GOP has been blocking any spending - for compensation of people who are suffering illnesses caused by 9/11 to extension of unemployment benefits to extending the lower tax rates for all earnings under $250,000 - because they claim that they're not deficit-neutral, but they're intransigent on the $750-some billion tax break on income north of 250k, despite not having any commensurate budget reduction to offset it.

But, if you want to go back to the numbers game from the article you cite, we can do that. :-)

In 2008, this top 0.1 percent filed 140,000 tax returns, reporting nearly 10 percent of all adjusted gross income earned and paying approximately 18.5 percent of the nation's federal individual income taxes. The average income for a tax return in the top 0.1 percent was $6.0 million in 2008, while the average amount of income tax paid was $1.36 million, indicating an average effective individual income tax rate of 22.7 percent.

I think my biggest problem with the article as a whole is that it always cites the AGI figure, not the UN-adjusted gross income; I think it's likely that the wealthy segment of the population is able to make a bigger portion of their earnings disappear down this particular rabbit hole, to avoid paying taxes on it, so this is presenting a slightly skewed perspective on income to tax load.

The other point I'm harping on is that the marginal utility of income, and its commensurate impact on the larger economy, is being ignored by those folks arguing in favor of tax breaks for the wealthy.

Hypothetically, let's say that the government grants every wage-earning citizen a one-time payment equal to 10% of their gross wages for the previous year. The $1,000 that someone making 10k gets will make a MUCH bigger impact, in terms of being put back into the economy quickly (because it will be spent on living necessities) than $1m given to someone who makes $10m already.

Trickle-down economics is, in a word, bunk.

[mighty-man.livejournal.com]

That's because the Republicans are willing to band together to get what they want. The democrats haven't been able to do so because their internal bickering has pushed a bunch of them to the right. Let's also put that tax break in perspective -- it may cost $750b to execute the tax break, but think about how much more it will cost everyone if the package doesn't get passed: EVERYONE's tax rates go up, regardless of income.

If you're that worried about the how $1k will affect the person making $10k, then you'd best pay attention to what's going on instead of worrying about someone who's making $10m.

Let's go back to the numbers game....
0.1% of the population (yes, the top), reported nearly 10% of AGI, yet paid 18.5% of all individual income taxes with an average effective tax rate of 22.7% percent. That's the top one-tenth of one percent, not even the top 1% that we discusses earlier. That means they have an effective tax rate of 9x what the bottom 50% do.

You want to discuss AGI versus non-AGI? You're better off looking at AGI than non-AGI. You think that the wealthy segment can make a bigger portion disappear? Might want to take a closer look: (from Wikipedia)
For the 2006 tax year,[update] some examples of the deductions from gross income allowable in computing AGI include:
Certain business expenses of reservists, performing artists, and fee-basis government officials;
Health savings account deductions;
Certain moving expenses;
401k-style deductions by employers for employee retirement ?
One-half of self-employment tax;
Penalties on early withdrawal of savings;
Alimony paid;
Deduction for contribution to an Individual Retirement Account (IRA); and
Student Loan interest deduction.

I'd say that having AGI definitely skews in favor of those who earn less. I think those making $30k or less a year would be upset of having to pay taxes on moving expenses, HSA's, 401k & IRA deductions, student loans and alimony. And don't forget that a large number of these are capped (HSA's, 401k, IRA contributions, etc) which prevent it from benefiting those with a higher income (mAGI).

Don't confuse AGI with below the line deductions (Schedule A) such as home mortgage interest expense, medical expenses, property taxes, charitable contributions, etc. where money can really disappear. (On that note, I personally think that medical expenses should be above the line and not subject to a 7.5% withholding phase, but god forbid people would complain that we don't have a budget reduction to offset it).

Let's also not forget the fact that those who have low AGI's are often still screwed by Alternative Minimum Tax (AMT). So even if I have a family fortune sitting in the bank earning interest and I don't work, I will still get royally screwed at a much higher tax rate.

As for the marginal utility of income - who do you think you are to determine someone's utility for income and with what criterion? And what impact does it have on the economy?

Let's take your hypothetical situation a bit further:
A pretty decent percentage of the population just got chopped right out because you said wage-earning (let's call that say 20% to cover those who are unemployed, disabled, etc). And yes, that person might get $1k more out of his $10k. But at $10k, they're definitely in the bottom 50% and had an effective tax rate of 2.59%. I will overlook the fact that at $10k they probably were one of those who didn't pay taxes at all (as we have discussed previously) and more likely than not, receives government benefits. Net gain: $1k?

The person who made $10m and got $1m got socked with an effective tax rate of 22.7%, meaning they paid $2.27m in taxes and got $1m back. Net loss: $1.27m.

I would also dispute the idea that the person making less would put the money back into the economy more quickly. I might agree with "more efficiently" because it would be spent on living necessities, but on the flip side -- a person with $10m is highly unlikely to have it sitting in cash in his house. More likely than not, it has been directly injected into the economy in the form of investments (for better or for worse) which allows the economy to fuction at all.

If it weren't for trickle-down economics -- you might likely not ever have held a job.

[hellsop.livejournal.com]

That's because the Republicans are willing to band together to get what they want. The democrats haven't been able to do so because their internal bickering has pushed a bunch of them to the right.

Kinda--sorta, but it's more clear from the standpoint that the Subjects used to have similar strategies. Now, Subject R's strategy is to makes sure that D never obtains a goal regardless of whether R gains a goal in the process or not. Since R may at some point be able to obtain a goal without D also gaining the goal, it boils down to the simple case of "Never let D have anything". D's strategy is still back in the Stone Age of "Achieve as many goals as possible regardless of whether they also gain for other subjects".

Essentially, one subject has redefined "winning" to mean an entirely different outcome than "gain goals". And that's great, that means they win a lot, and people on their side can jump up and down about how they're winners. What's the outcome? About the same as "winning" a high-school football game. You DON'T end up with a stable economy, or bridges that don't fall down, or people having any incentive to become firefighters instead of medical billing transcriptionists, or any other number of things that are the actual meat of the goals.

[mighty-man.livejournal.com]

The only thing I can say is: That totally reminds me of my class on Game Theory, especially the "Prisoner's Dilemma," with both perfect and imperfect knowledge in the situation.

[etcet.livejournal.com]

To go back to the table in there for a minute, looking at AGI, the top 1% earned 60% more than the bottom 50% combined, and almost exactly as much as the folks from the third quartile (50-75%). [Table 1]

Supporting my previous point that AGI skews this, look at Table 4 for 2008, and the disparity is even more dramatic - the top 0.1% earned approximately 7.5x as much as the bottom 50% (190 vs 28bn), but [table 5] they paid approximately 25% less in total taxes (9.96 vs 12.75%).

[mighty-man.livejournal.com]

Aside from the fact that you keep jumping from table to table.....

Table 1:
Top 1%:
AGI: $1.685t (yes, trillion)
Taxes: $392b
Group's Share of Total AGI: 20.0%
Group's Share of Total Income Tax: 38.02%
Effective Tax Rate: 23.27%

Bottom 50%:
AGI: $1.074t
Taxes: $27.87b (that's 1/14th!)
Group's Share of Total AGI: 12.75%
Group's Share of Total Income Tax: 2.7%
Effective Tax Rate: 2.59%

Please reread the title on Table 4: Total Income Tax (after credits)
Top 0.1%: $190b
Top 1%: $392b
Bottom 50%: $28b
That's basically a rehash of what was in table 1.

Now, if you're talking about Table 5: AGI Shares
Top 0.1%: 9.96%
Top 1%: 20%
Bottom 50%: 12.75%

The top 1% earned 60% more than the bottom 50% combined, as you pointed out. However, you misread the table (table one doesn't have a top 0.1%, but rather a 1%) and then proceeded to compare paid taxes, not earnings.
The top 1% earned $1.685t (AGI)
The bottom 50% earned $1.074t (AGI)
The top 1% paid $392b in income taxes
The bottom 50% paid $28b in income taxes
The top 1% paid 14x times as much in taxes as the bottom 50% ($392b vs $28)
The top 1% accounted for 20% of all AGI, and 38.02% of all taxes collected
The bottom 50% accounted for 12.75% of all AGI, but only 2.7% of all taxes collected.

So....two things come to mind.
1) Tax Evasion: if the rich people evading taxes were actually caught, they'd pay an even higher portion than they already do.
2) AGI skews things, but not as much in the favor of the wealthy as you might have thought. All the real magic comes from Schedule A! =8-)

Lastly -- is this a bad time to throw in the topic of estate taxes? I don't understand why estate taxes exist. The income taxes were already paid during the lifetime of the deceased, so doesn't this equate to double taxation? Geez, tax it when we make it. Tax it when we spend it. Tax it if we don't spend it. Tax us when we die.

[etcet.livejournal.com]

I can't say I'm a fan of the estate tax, for exactly the reason you cite.