The Glade 4.0

More often than not, people who say that are just confused about the difference between marginal rate and effective rate. They think that because their last dollar of income is taxed in the 35% federal bracket, all of their income is taxed at that rate, which isn't the case. Anyway, it's not that no one ever pays over 50% of their gross income in taxes (e.g., my dad used to pay over 60% of his income to taxes); it's just that it's uncommon and usually the result of something out of the ordinary about the particular individual's circumstances. My dad, for instance, worked in Canada but lived in the US, and not all of the tax he paid in Canada on his Canadian-source income was credited to his tax bill here in the US.

Horseshit. That isn't how legislation and compromise works. Compromise happens when both sides put their cards on the table, and make a good faith effort, sans politicking, to reach an accord. The Democrats is congress refused to do so. They alluded to future promises of spending cuts, which were never documented, and future congress's were not beholden to. They essentially wanted another blank check, such that they might pass their legislation so we could find out what was in it later.

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Ezekiel 23:19-20 

So Obama advocated that framework in private negotiations (the Reps don't deny that); it was extensively discussed in those negotiations (the Reps don't deny that); and it was widely discussed in public for months (obviously no one denies that)...but because it wasn't "in writing", it was clearly not real? I just don't find that persuasive, particularly when you consider the political benefit to the Reps of being able to deny they shot down an approach that the public broadly supports.

No, it's not real unless it's in writing, because it is unenforceable unless it's in writing. Until it's in writing it's just posturing and politics.

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Ezekiel 23:19-20 

While I agree that "it wasn't in writing" was just a dodge, the Democrats have not put forth any plans to balance the budget. Obama's $3.7 trillion cut plan definitely doesn't balance it. The Republicans have put forth actual plans to balance the budget, like that $9 trillion cut one that came from them. Why haven't the Dems come up with a $6-7 trillion cut plan with some tax increases to balance the budget?

For the rich it depends on what the income stream is and what loopholes they are eligible for. Some can pay almost nothing by creatively manipulating the cash flow, others can pay nearly two-thirds by living in the wrong state and being bluntly honest about where their income comes from.

It is worth noting, that the second category usually survive their audits, sometimes with the auditors shaking their heads and going "we never would have found out if you had done xyz with the money, thanks for being honest?"

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The U. S. Constitution doesn't guarantee happiness, only the pursuit of it. You have to catch up with it yourself. B. Franklin

"A mind needs books like a sword needs a whetstone." -- Tyrion Lannister, A Game of Thrones

Putting it in writing wouldn't make it binding either. We're not talking about contracts here (not that those have to be in writing to be binding anyway). The only thing that constrains elected representatives from going back on their word is the fear of getting voted out of office.

So no politicians must ever go back on their word. Oh wait, they all do constantly.

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"...the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?" -Aleksandr Solzhenitsyn

Exactly why we shouldn't be trading more taxes/debt for cuts to be named later.

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I prefer to think of them as "Fighting evil in another dimension"

I am 100% in favor of a flat income tax and I've said it repeatedly. Generally when this topic comes up however people want to make major exceptions for wealthy people though, like making it a consumption tax instead, or not taxing capital gains. (which is how all the super-wealthy make their money)

http://money.cnn.com/2011/08/15/news/economy/buffett_tax_jobs/index.htm?iid=HP_LN

Warren Buffet paid $7 million in taxes on a taxable income of $40 million, or 17.4%. That's not all the money or wealth he made. That's his actual taxable income, you know what you get AFTER all deductions, and somehow he's managed to only pay 17.4% on it. I know people with six-figure salaries that pay double that tax rate if you count the payroll taxes. And people have the nerve to say the rich in the United States are the highest taxed people in the world.

All the evidence I can find indicates the rich pay a significantly lower percentage of their income to taxes than the middle class do. I could actually be wrong about this, and if I am I'm fine with that. I'd still be for the flat income tax. But I don't think your average conservative will like the flat tax idea anymore when they realize that it's actually a large tax hike on the rich.

Average republican maybe average conservative, not so much. I don't believe the two to be synonymous.

I'd like to handle capital gains as a tax when the money is actually withdrawn from CDs or from investment accounts, not while it's just sitting there collecting interest.

Also what's wrong with a flat consumption tax? Every dollar had to be spent before it does a person any good right?

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I prefer to think of them as "Fighting evil in another dimension"

Also maybe what you and I are squabbling over is the definition of Rich. Obama considers anyone who makes over 200k "rich"

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I prefer to think of them as "Fighting evil in another dimension"

Consumption taxes just seem to me like a spiteful idea from people who hate the government. They like it because not only does it hamstring the government from being able to reliably collect taxes, but with it in place they can also prevent the government from getting any of their money. I bet a lot of these people already have some kind of barter system or trade in precious metals planned so they can completely sidestep the entire tax system.

But seriously, in addition to being regressive on income, we already have a gigantic trade deficit. A consumption tax will just make people buy foreign stuff out the *** to avoid the consumption tax. Also, what prevents people from saving a huge portion of their income their entire life, then at retirement age they take all that money and move to a different country that has an income tax instead? End result all that money never gets taxed. You're actively encouraging people to ship as much of American wealth as possible out of the country to avoid being taxed on it.

As for capital gains, I don't like double taxation either but there's no reason for capital gains to be specially exempt from any form of taxation. Just let people deduct the capital gains tax they pay every year from their income tax owed.

Fair enough.

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I prefer to think of them as "Fighting evil in another dimension"

How do you view a consumption tax as being a "major exemption for wealthy people"? Wealthy people don't buy things? Why should capital gains be double taxed? http://www.theatlantic.com/business/arc ... do/243608/ edit: Just saw your idea about deducting cap gains from income tax owed, I'd tend to agree, but then you're already eroding a "flat tax".

What? What's the difference between "taxable income" and "all the money...he made"?


Why doesn't good old Warren give what he thinks he should, if he's so upset about this? Words are wind.

I'd be interested in seeing this evidence.

I'm not surprised that you think you're more aware of what a flat tax is than an average conservative. Why do you think you are?

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

With the exception of the double taxation line, I really don't understand how you come up with all of this.

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

Wealthy people spend a small smaller percentage of their total income on consumption than the poor and middle class do, for pretty obvious reasons.



Uh, I'm not sure if I'm talking past you here, but you do know that "taxable income" is the amount of income subject to income tax, right? It excludes capital gains and anything you can deduct.



The point is he can legally pay 17.4% on $40 million of taxable income. It's not capital gains. It's being recorded as actual income and he's paying half the rate of the middle class. Presumably, if he can do it so can a lot of other rich people.



Ok. The top marginal tax rate in the UK is 50%. Belgium is 54%, Finland is 46.6%, Germany is 45%, Italy is 43%, France is 50%. The US comes in at 35%. This comparison is not perfect as every country has different deductions and loopholes, but it's going to take quite a lot to make up for that gap.

Why the obsession over income and percentages?

They spend a much larger amount of money than poor people, too.

When you don't obsess over taking money from the rich, they can invest it. Invested money grows economies and businesses, providing jobs and income for the employed.

Taking money from the rich puts money into government, which grows government, and enriches the people who work for government. It's a terrible way to enrich the people.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

You're assuming they invest it in the United States.

Also, when you switch from an income tax to a consumption tax, since the rich now pay out a smaller percentage, that means the rest of the people now necessarily have to pay out a larger percentage in order to result in the same amount of revenue.

But when you don't have a huge body of government determined to "spread the wealth around" by employing bureacracies, substituting for private investment and business by employing government contractors, etc., you don't need the same amount of revenue.

As a for instance: the more jobs you create by growing businesses, the less welfare you need to pay out. The less you penalize investing, the less people will rely on social security. Etc.

As for investing outside the United States.. Perhaps we should pay more attention to why people find investing outside the US attractive, rather than penalize people for doing it.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

No, you don't, but this doesn't address anything about the fact that the consumption tax is still regressive, it hits the poor and middle class much harder than it does the rich. You can also cut down an income tax if you eliminate government programs. If you want X amount of revenue, the poor and middle class will always have to pay out a bigger share of their money in order for X to be reached under a flat consumption tax than under a flat income tax.

I don't see why it's a problem if the poor and middle class are paying out a larger portion of their income. The rich are still paying more in absolute dollars, and a larger percentage of the total revenue. Simply pointing out that a tax is "regressive" says nothing; so what?

Ultimately, the rich are still footing the bill. In fact, it's actually a good thing if the poor and middle class are hit harder on a percentage basis by taxes, because then they'll be less inclined to demand services from the government. The tax won't be nearly as much of a hit when people are forced to think "do I REALLY want to put my name on this petition asking Congress to spend money to establish a prgram to make sure that there is an Office of Special Omsbudsman For Sexual Harrassment Complaints By Hispanic Jewish Lesbians, just because someone managed to find a Hispanic Jewish Lesbian that was sexually harrassed in 1995, or so she claims?"

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"Hysterical children shrieking about right-wing anything need to go sit in the corner and be quiet while the adults are talking."

Woah, let's not get carried away. 17.4% is not half of what the middle class pays.

For example, let's assume my taxable income is $100,000. That puts me solidly middle class in this area.

For 2011, I will pay:

10% of $8500
15% of ($34500-$8500)
25% of ($83600-$34500)
and 28% of the rest ($16400).

That's $21,617, or 22%. The only people who pay twice your 17.4% are people earning more than $379,150, and that is not middle class. Furthermore, they only pay that on their portion of income over that amount, not on all their income.

You also pay 6.2% SS tax and 1.45% Medicare tax, which Buffett doesn't, due to the caps. I did say including payroll taxes.

Responding to multiple comments in one post for the sake of space.


I believe most economists are of the view that consumption taxes offer meaningful advantages over income taxes - e.g. more efficient, more transparent, encourage savings and investment, less of a drag on employment, etc. The fact that they're regressive is the most frequent criticism I hear, but there are ways of dealing with that. I'm not sure where I come down on this issue (don't know enough to say), but my impression is that there is an honest and theoretically sound argument in favor of a system based more on consumption taxes.


This argument always bothers me, because it confuses means and ends. When someone advocates for a policy as a means to achieving a large-scale end, rather than because they believe in the inherent moral importance of the means itself, then there's no reason for them to take personal action in the absence of that policy, because doing so doesn't help them achieve their desired end and has little or no inherent value of its own. For instance, if someone were to advocate for a policy banning the consumption of beef because they want to prevent the environmental damage caused by large-scale industrial beef farming, there's not really any compelling reason for them to personally stop eating beef until that policy is enacted, whereas if they're advocating for that policy because they think it's morally wrong to eat a cow, then they absolutely should stop eating beef no matter what the larger policy is. Or to flip the political narrative around, if someone advocates for increasing the number of troops because they think a larger standing force is strategically important, there's no reason for them to personally enlist, but if their position is instead based on the belief that military service is the moral duty of any good citizen, then they should personally enlist.


If money flows down in a largely frictionless manner, why wouldn't it flow up in the same way? "Invested money grows economies and businesses, providing jobs and income for the employed" vs. "Money spent on consumption grows economies and creates profits for businesses, providing capital and income for the owners". If it's good for the goose, shouldn't it be good for the gander? Of course, I don't believe money flows in a frictionless manner in either direction, which is why tax incidence matters. I'm just pointing out that the over-simplified trickle-down narrative we often hear from the right is no more persuasive than the over-simplified trickle-up narrative we often hear from the left.