Obama's economic plan - Soak The Rich

kallsop

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Payroll tax on incomes above $250,000

"The payroll tax is now applied to all income up to $102,000 a year, which covers the entire amount for most Americans. Under Obama's plan, the tax would not apply to incomes between that amount and $250,000. But all annual income above the quarter-million-dollar amount would be taxed under his plan."

If I understand this:

Income $0 -> $102K taxed at 12.4%
Portion of income in range >= $102K and < $250K 0%
Portion of income >= $250K taxed at 12.4%

It would be at least consistent if Obama proposed taxing all income at 12.4%. I don't know why there is a gap from $102K to $250K? This proposal plays into the stereotype that the democrats are the party of wealth envy. I'm shocked I tell ya, shocked!

Change that's like the same old stuff from the Carter era, only it's now.
 
I support Obama's plan 100%. The donut hole is a decent idea if you ask me. Class envy? Sure. But it amounts ot one year's raise for someone in the >$250k income bracket. No big deal IMO.

Social Security does not some help and no solution will be painless. I don't consider this to be the sole solution and we may need other changes as well. But at least it is a start (and far better than private accounts which was a ridiculous solution).

Lurker
 
I'm not entirely opposed to flattening the Social Security tax as part of a broader effort to flatten all taxes But the gap between $100,000 and $250,000 is silly and inevitably leads to distortions. Suppose you have a company with a few executives making $150,000 a year, and a bunch of low-level workers making $40,000 a year. The company had a banner year and it's time for Christmas bonuses. Whom do you dole out the money to? Ironically, it's more efficient for the company to give bonuses to the executives than the workers, because the bonuses to the workers cost an additional 6.2% in payroll tax. Granted, most companies give more bonuses to the executives anyway, but it shouldn't be reinforced by tax incentives.
 
kallsop said:
This proposal plays into the stereotype that the democrats are the party of wealth envy.
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Just like Republican behavior reeks of disproportionate protectionism for corporate interests and the obscenely rich, who didn't need tax breaks to begin with.

I want to be fair, but on a fundamental level I have a very hard time feeling sympathetic for someone making over $250,000 a year (nearly 10 times what I make) and says they have trouble making ends meet.
 
When did 250k become rich? Edited to add, get ready for 250k salary caps at companies with new "bonus compensation" to outsmart the communists like they did when congress gave out the 1 million magic number.
 
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McCain's economic plan: Give even more tax breaks to the rich and drive up the debt even faster than Bush has.

So, who ya voting for, kallsop?
 
Brainster said:
I'm not entirely opposed to flattening the Social Security tax as part of a broader effort to flatten all taxes But the gap between $100,000 and $250,000 is silly and inevitably leads to distortions. Suppose you have a company with a few executives making $150,000 a year, and a bunch of low-level workers making $40,000 a year. The company had a banner year and it's time for Christmas bonuses. Whom do you dole out the money to? Ironically, it's more efficient for the company to give bonuses to the executives than the workers, because the bonuses to the workers cost an additional 6.2% in payroll tax. Granted, most companies give more bonuses to the executives anyway, but it shouldn't be reinforced by tax incentives.
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That's how it is anyway under the current system. Those executives making $150,000 a year would be affected the same under the status quo. So this is also a crituque of the status quo.

I just found a recently released analysis of the candidates tax plans by the Tax Policy Center.

Although both candidates have at times stressed fiscal responsibility, their specific non-health tax proposals would reduce tax revenues by $3.7 trillion (McCain) and $2.7 trillion (Obama) over the next 10 years, or approximately 10 and 7 percent of the revenues scheduled for collection under current law, respectively. Furthermore, as in the case of President Bush's tax cuts, the true cost of McCain's policies may be masked by phase-ins and sunsets (scheduled expiration dates) that reduce the estimated revenue costs. If his policies were fully phased in and permanent, the ten-year cost would rise to $4.1 trillion, or about 11 percent of total revenues. Both candidates argue that their proposals should be scored against a "current policy" baseline instead of current law. Such a baseline assumes that the 2001 and 2003 tax cuts would be extended and the AMT patch made permanent. Against current policy, Senator Obama's proposals would raise $700 billion, an increase of 2 percent, and Senator McCain's proposals lose $600 billion, a decrease of roughly 2 percent. Senator McCain has stressed that deficits should be closed by spending cuts, but policies he identifies, such as limiting earmarks, would offset only part of the revenue losses attributable to his tax plan. As noted, both candidates may be overoptimistic in their revenue targets for closing tax loopholes-Obama probably more than McCain.

The two candidates' plans would have sharply different distributional effects. Senator McCain's tax cuts would primarily benefit those with very high incomes, almost all of whom would receive large tax cuts that would, on average, raise their after-tax incomes by more than twice the average for all households. Many fewer households at the bottom of the income distribution would get tax cuts and those whose taxes fall would, on average, see their after-tax income rise much less. In marked contrast, Senator Obama offers much larger tax breaks to low- and middle-income taxpayers and would increase taxes on high-income taxpayers. The largest tax cuts, as a share of income, would go to those at the bottom of the income distribution, while taxpayers with the highest income would see their taxes rise.
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corplinx said:
When did 250k become rich? Edited to add, get ready for 250k salary caps at companies with new "bonus compensation" to outsmart the communists like they did when congress gave out the 1 million magic number.
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250k sure sounds like a lot of money to me. The highest salary my dad ever earned in his life was 24k. Mine is currently in the neighborhood of 60k. I guess everything is relative.
 
corplinx said:
When did 250k become rich?
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I made about 1/4 of that before I was married, and I considered myself, if not rich, darned well off. If my family had a 250 salary, I think I would consider us rich.


Still, it seems like a bad plan, but his motives are transparent. I live in a moderately wealthy, lily white, but about 1/3 Jewish, suburb. I would guess the median family income in this place would be about 120-150. (I wish I was at the median, but alas, I am not.) We voted 80% for Kerry. I'm guessing this town is Obama's base, in a big way. He doesn't want to anger the base. I can't see any reason for the hole in his payroll tax proposal, other than political.
 
Brainster said:
I'm not entirely opposed to flattening the Social Security tax as part of a broader effort to flatten all taxes But the gap between $100,000 and $250,000 is silly and inevitably leads to distortions. Suppose you have a company with a few executives making $150,000 a year, and a bunch of low-level workers making $40,000 a year. The company had a banner year and it's time for Christmas bonuses. Whom do you dole out the money to? Ironically, it's more efficient for the company to give bonuses to the executives than the workers, because the bonuses to the workers cost an additional 6.2% in payroll tax. Granted, most companies give more bonuses to the executives anyway, but it shouldn't be reinforced by tax incentives.
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This is idiotic. It "reinforces" nothing. Since when do corporations take into account the tax rates of their employees when deciding how to dole out bonuses?
 
corplinx said:
When did 250k become rich?
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Are you joking? That income puts you among the top 2% richest people in the USA, and in the top .0001% on Earth.

In what part of the world is 250k NOT considered rich? Dubai?

What kind of warped, out-of-touch, disconnected view of reality do you have to have to think of 250k a year an average working man's income?
 
Meadmaker said:
I made about 1/4 of that before I was married, and I considered myself, if not rich, darned well off. If my family had a 250 salary, I think I would consider us rich.


Still, it seems like a bad plan, but his motives are transparent. I live in a moderately wealthy, lily white, but about 1/3 Jewish, suburb. I would guess the median family income in this place would be about 120-150. (I wish I was at the median, but alas, I am not.) We voted 80% for Kerry. I'm guessing this town is Obama's base, in a big way. He doesn't want to anger the base. I can't see any reason for the hole in his payroll tax proposal, other than political.
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:confused: If the plan is bad then surely the staus quo is even worse, isn't it?

The current payroll tax doesn't apply to income in excess of 102,000. So a person making exactly 102K pays as much payroll tax as a person making 102 million.
 
gdnp said:
This is idiotic. It "reinforces" nothing. Since when do corporations take into account the tax rates of their employees when deciding how to dole out bonuses?
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When they need an excuse? It can also impact how they are paid out say a more liberal expense acount rather than a bonus.
 
David Wong said:
Are you joking? That income puts you among the top 2% richest people in the USA, and in the top .0001% on Earth.
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I think your math is a bit off. Even ignoring the distinction between income and wealth.

With 6.8 billion people in the world, .0001% of the earth's population would be 6,800 people. Since Wikipedia claims there are over 9 million millionaires in the world, there are clearly more than 6,800 people who earn more than 250K per year.

As to whether 250K per year makes you rich, that depends on your definition. I make more than 250K per year and drive a 2000 Ford Focus. This is my choice--I could drive a fancier car if I chose, but it's not like I can just go out and buy a Mercedes out of petty cash. I have never flown first class. In fact, I have never flown business class. We eat out once or twice a month.

I'm not complaining, but I don't feel rich. More like upper middle class.
 
geni said:
When they need an excuse? It can also impact how they are paid out say a more liberal expense acount rather than a bonus.
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Show me an example when a company has paid bonuses to its senior executives and not the lower paid employees and explained that they did so because the senior executives have maxed out their payroll taxes. :boggled:

You forget, there are also income taxes. I can imagine a company stating that senior executives need larger bonuses because they have to pay so much of their income in income taxes. But I doubt many would have much sympathy.

Paying out money in expense accounts does make sense, for two reasons. First, the money goes to business-related functions. Second, it comes in pre-tax dollars, thus gives more "bang for the buck."
 
corplinx said:
When did 250k become rich? Edited to add, get ready for 250k salary caps at companies with new "bonus compensation" to outsmart the communists like they did when congress gave out the 1 million magic number.
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What world are you living in? $250,000 per year is very rich. It's probably in the top one or two percent of income brackets in the US. Worldwide, it's well into the less-than-one percent.

Typically, though, people never think of themselves as rich, as long as they can see someone more rich. Though I make well less than $100k a year, I think of myself as quite rich, and it doesn't bother me in the least that I get taxed at a higher percentage than those who earn $30k or less. I don't want to be like so many rich people who cannot seem to appreciate how much they have for worrying about how much they are taxed.

Ask some of those $250k people if they would swap positions with a person who is earning at poverty level just so they could have the tax breaks. If you find a significant portion that would do that, then there may be a case that the tax burden is unfair to the wealthy.

But you won't. Our system of government is incredibly slanted toward helping the wealthy. Even the minor problems of paying higher tax rates don't bring them out of the stratosphere. But that doesn't seem to be enough for them. No amount of money is enough. One house isn't enough. Excuse me if I don't shed too many tears over the plight of the second homeless.
 
gdnp said:
I think your math is a bit off. Even ignoring the distinction between income and wealth.

With 6.8 billion people in the world, .0001% of the earth's population would be 6,800 people. Since Wikipedia claims there are over 9 million millionaires in the world, there are clearly more than 6,800 people who earn more than 250K per year.
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A millionaire need not earn over $250k per year. They only need to have more than a million dollars. That may be inherited or earned over a lifetime of work. Check your math.

Oh, and according to Wikpedia, you are in the upper 1.5%. Upper middle class? Where the heck do you think the middle is?
 
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