Another Cabinet Appointee With Tax Problems

[Just thinking]

Thank you.

(But please keep in mind my original question.)

 

[BPSCG]

...carries the civilian rank of GS 12 (she's gone up to 13-14 in her life, but the work was too much for her

As a DC-area fed myself, let me assure you that being a GS-12 is not at all remarkable around these parts, nor evidence of great expertise. I could walk down the Federal Triangle neighborhood of DC with my arms stretched out and catch a a couple of dozen GS-12s in about ten seconds.

 

[Lonewulf]

As a DC-area fed myself, let me assure you that being a GS-12 is not at all remarkable around these parts, nor evidence of great expertise. I could walk down the Federal Triangle neighborhood of DC with my arms stretched out and catch a a couple of dozen GS-12s in about ten seconds.

Since when did I say that GS-12 means great expertise?

She did get an award from a 4-star general, though. Several awards over her lifetime. Does that account for something?

 

[BPSCG]

She did get an award from a 4-star general, though. Several awards over her lifetime. Does that account for something?

Meh. I got two awards in one week when I worked for the Social Security Administration. The letters accompanying those awards came with "best wishes for continued success in your career."

Those awards came the same week I left SSA in disgust with the way my office was run and the way my career had stagnated there.

Uncle Sam hands out awards like they're Halloween candy. As well it should, considering the excellent way the government is run. In the government, the women are strong, the men are good-looking, and all the employees are above average (pace, Garrison Keillor, you Obama idolater).

 

[BPSCG]

Duplicate post.

 

[Lonewulf]

Meh. I got two awards in one week when I worked for the Social Security Administration. The letters accompanying those awards came with "best wishes for continued success in your career."

Those awards came the same week I left SSA in disgust with the way my office was run and the way my career had stagnated there.

Uncle Sam hands out awards like they're Halloween candy. As well it should, considering the excellent way the government is run. In the government, the women are strong, the men are good-looking, and all the employees are above average (pace, Garrison Keillor, you Obama idolater).

Well, the person in question here did a lot to earn her awards, no matter how much you may dislike the system. She worked, and still works, overtime on a regular basis, without being paid. She's done more work than I ever will in my life, I think.

She's not responding to my e-mails, though.

I think I'm just going to drop it for now. If anyone here considers themselves an expert, though, can you run by me a percentage-based analysis of how many tax breaks the rich and poor can qualify for? From what I've read, even conservative websites I find on google admit that the wealthier pay a lower-percentage tax rate, but that this is somehow much better 'cause they're rich.

I do have a friend that pays no taxes at all and is on welfare, although I don't know if I would call her situation all that enviable... not being able to get around and having all sorts of mental disorders isn't my idea of fun.

 

[Ziggurat]

From what I've read, even conservative websites I find on google admit that the wealthier pay a lower-percentage tax rate

What are you talking about? What sources did you find, and what did they claim? Because the evidence I've seen says exactly the opposite. Granted, that's not a "conservative website", it's the Congressional Budget Office, but I think they've got some credibility on the issue.

 

[SteveGrenard]

Of course the super rich don't pay any taxes. They have so much capital they can invest it in low yield tax free investments such as municipal bonds. And in many states there is no tax on such investments so they don't pay state income tax either. The question is did Bush tax policies also raise the threshold for the super rich to pay as well, giving tax free status to some who did pay some taxes before?

They make a good living and never pay a penny in Federal (U.S.) income tax.

The IRS recently released figures to Congress that show the number of wealthy people who pay absolutely no taxes has grown significantly since George W. Bush seized the White House.

The portion of the study that showed full income (from all sources) shows that 5,650 rich individuals and couples paid no federal income tax in 2002.The number of wealthy people living the tax-free life was 4,910 in 2001 and 2,766 in 2000.
http://bobgeiger.blogspot.com/2005/07/more-wealthy-folks-pay-no-taxes-under.html

The same is true in the UK:

The dispute over the exploitation of tax loopholes by the super-rich deepened yesterday with the release of figures which suggest that only a fraction of those earning £10m or more in Britain pay income tax.

HM Revenue and Customs figures released under the Freedom of Information Act reveal that only 65 people declared an taxable income of £10m or more in tax returns filed for 2003-04.This compares with at least 400 individuals based in Britain whose wealth or direct income would allow them to make £10m a year or more. The discrepancy means that those who do not pay directly into Treasury coffers are using the highly developed - and legal - methods of tax avoidance to minimise their tax bill. Quite how much money is being lost to the tax man is unknown but the loss to the Treasury could be between £700m and £1bn a year.

http://www.independent.co.uk/money/tax/majority-of-superrich-pay-no-income-tax-454178.html

 

[Ziggurat]

Of course the super rich don't pay any taxes.

This is simply false. You refer to a class of people who pay no income tax. At the high end, that number has gone up. Guess what: it's also gone up on the low end too.
http://www.taxfoundation.org/news/show/206.html

They have so much capital they can invest it in low yield tax free investments such as municipal bonds.

Almost anyone can invest in such bonds. The reason poorer people do not is because the yields are too low. When someone buys a low-yield municipal bond, they're providing capital to local governments at low expense to those governments (because such bonds are below market rates). That has monetary value to local governments (namely, the difference between their rates and the market rate), which means that whoever bought the bond is, in effect, paying that money to the issuing government. Let's quantify that a bit by looking at two long-term bond funds, one taxable and the other tax-free:
https://personal.vanguard.com/us/funds/snapshot?FundId=0522&FundIntExt=INT#hist::tab=0
https://personal.vanguard.com/us/funds/snapshot?FundId=0075&FundIntExt=INT#hist::tab=0

The yield on the taxable fund is 5.34%, the yield on the tax-free is 4.16%. So if you had a million dollars in the former fund, you'd earn about 53.4k, versus 41.6k. That's an 11.8k difference, or about 22% of the taxable amount. In effect, by buying tax-free low-yield bonds, you're surrendering that much of your potential income to the issuing government (which would have to offer market rates if it wasn't tax-free). Now, that may indeed be a tax break for those in a high-income bracket (where the top rate is 35%), but in effect it is NOT tax-free - the tax is basically hidden in the below-market rate.

 

[Just thinking]

Almost anyone can invest in such bonds.

Good point. There is no bias towards rich people to take advantage of tax-free investments. And let's not forget what we may have here ... investments. That means you can lose money; it's a risk. Not everyone can afford to take risks ... but that's an advantage of being rich, which after all is only one of many reasons to become rich. It's not a government bias towards the rich. And no one twists your arm to invest.

 

[Just thinking]

... They have so much capital they can invest it in low yield tax free investments such as municipal bonds.

Again, this is an advantage of being rich, not a bias from the government to any particular group. Anyone can buy these bonds (make such investments), and no one is forced to do so. There is also the risk side of any investment (even local bonds) ... you can lose money.

 

[rwguinn]

It's a strategy:
http://blogs.rockymountainnews.com/stein/

 

[Skeptic Ginger]

What are you talking about? What sources did you find, and what did they claim? Because the evidence I've seen says exactly the opposite. Granted, that's not a "conservative website", it's the Congressional Budget Office, but I think they've got some credibility on the issue.

It's all in how you paint the picture. The actual tax rate paid by rich vs poor is extremely hard to find as I look under various search terms on Google. But it is doubtful the "effective tax rate" reported by the CBO is an accurate estimate given the apparent belief among our legislators that hiding one's income as "gifts" is perfectly acceptable.

I'll keep looking and let you know what I find.

 

[Skeptic Ginger]

Again, this is an advantage of being rich, not a bias from the government to any particular group. Anyone can buy these bonds (make such investments), and no one is forced to do so. There is also the risk side of any investment (even local bonds) ... you can lose money.

Oh pluuuueeeeaaase. Who are you kidding? Anyone with spare capital can buy bonds. Are you seriously claiming the bottom 3 quartile earners in the US have disposable income they are able to invest in bonds? That's right, 3/5ths of the people in the US do not make enough to save enough to buy these bonds.

If you want to take a good look at income and taxation by income or wealth brackets, this site has the data broken down into more useful figures. It is important to look at the data from both earned income as wages and income earned from capital, not just wages.

Take a look at the bottom of the page, last graph, which compares the top 400 in "average pretax income by group" in 2001. Hint, you will need to scroll 4.5 page lengths to go from the top of the top 400 column to the next level column top, the top 1%.

 

[Texas]

I have to laugh at people complaining about rich people buying the tax free bonds that pay for everything from schools to roads.

 

[Ziggurat]

Oh pluuuueeeeaaase. Who are you kidding? Anyone with spare capital can buy bonds. Are you seriously claiming the bottom 3 quartile earners in the US have disposable income they are able to invest in bonds? That's right, 3/5ths of the people in the US do not make enough to save enough to buy these bonds.

That is simply false. If you've got enough money to pay for a cell phone, you've got enough to invest in tax-free bonds. If you've got enough money for cable TV, you've got enough to invest in tax-free bonds. These are not luxuries available to only a minority of the population. If you can't meet the minimum purchase requirements to buy such bonds directly, you just buy them through a mutual fund. If you're on the low-income side, the lower yields (which serve as an effective tax rate, as I already demonstrated earlier) make such bonds not worth buying compared to taxable bonds (because your marginal tax rate is lower than for rich people), but it most certainly CAN be done by the majority of Americans.

If you want to take a good look at income and taxation by income or wealth brackets, this site has the data broken down into more useful figures. It is important to look at the data from both earned income as wages and income earned from capital, not just wages.

Strange: it seems to be showing the exact same thing I did: tax rates are indeed higher for higher income earners. So your own source seems to contradict your own earlier claim. They seem primarily interested in the idea that the tax rates at the high end are not as progressive as they used to be, but contrary to your claim, it still indicates that they're progressive rates.

Take a look at the bottom of the page, last graph, which compares the top 400 in "average pretax income by group" in 2001.

Yeah, um... that graph says nothing about tax rates.

 

[Skeptic Ginger]

I have to laugh at people complaining about rich people buying the tax free bonds that pay for everything from schools to roads.

My comments were not about the municipal bonds, my comments were directed at the false statement everyone is equally free to purchase the bonds.

 

[Ziggurat]

My comments were not about the municipal bonds, my comments were directed at the false statement everyone is equally free to purchase the bonds.

And what exactly do you think is required to purchase tax-free bonds? You've said that I'm wrong, but you've provided no evidence to that effect.

 

[Skeptic Ginger]

That is simply false. If you've got enough money to pay for a cell phone, you've got enough to invest in tax-free bonds.

Your perception of the lives of the low income and poor in this country is very telling.

Strange: it seems to be showing the exact same thing I did: tax rates are indeed higher for higher income earners.

So you missed the part about looking at total income not just earned income when calculating the actual rate? Your source only showed the earned income rates. And you did not calculate in the not so progressive sales tax which takes a disproportionate effective tax from the poor.

In addition, neither of the two sources calculate hidden income, whether it be the poor guy who has a lawn mowing service and under reports his income or the rich guy who claims a full time chauffeur and luxury auto are "gifts" and not income.

I was pointing out that your claiming to know actual effective tax rates and using a figure which shows only a fraction of the story is dishonest. I specifically said I couldn't find good clean easy to confirm data that shows the actual effective tax rates.

Yeah, um... that graph says nothing about tax rates.

No but it says a lot about concentration of wealth at the top.

The pro-Bush economy, right wing, Libertarian, and other like minded forum members here continually refer to the rich getting richer because they "create" wealth, not because they consume wealth. But the evidence is clear they are currently consuming wealth at the expense of the rest of society. History tells us trends such as we are currently experiencing lead to wars and revolution, while economies that encourage the growth of the middle class lead to peace and prosperity.

Like it or not, the government affects redistribution of wealth both UP and down by means of regulations, enforcement, taxes and spending. Pretending all redistribution up is due to created wealth & free market forces and all income redistributed down is due to socialism and communism is not a claim supported by the evidence. It is a claim supported by tunnel vision examples such as dishonestly looking at tax rates on earned income without respect to what else gets taxed or not taxed. It is a claim supported by calling government spending on schools and health care redistributing the wealth while billions of dollars given in corporate subsidies and certain tax loopholes are referred to as stimulating the economy.

I'm willing to look at honest data. I'm not willing to let your dishonest presentation go without comment.

 

[Ziggurat]

Your perception of the lives of the low income and poor in this country is very telling.

You weren't just talking about the poor, you claimed this was not possible for 3/5ths of Americans. Let me quote you again: "3/5ths of the people in the US do not make enough to save enough to buy these bonds". The poverty rate in America is not 60%, so my perception of the lives of the poor is rather irrelevant to my criticism of your claim.

So you missed the part about looking at total income not just earned income when calculating the actual rate?

No, I didn't. I did miss any indication that the income used to calculate those effective rates did NOT include such non-sallary income. Want to point that out to me? Or is it not there?

Your source only showed the earned income rates.

Really? It says, "Comprehensive household income equals pretax cash income plus income from other sources." Doesn't sound like only earned income to me.

And you did not calculate in the not so progressive sales tax which takes a disproportionate effective tax from the poor.

First off, I didn't calculate anything, I linked to the calculations of the CBO. And second, your own source linked to a calculation which included state sales tax, and guess what? It's still progressive.

In addition, neither of the two sources calculate hidden income

Quite true. So either you have to go with the data which is available (which indicates that the rich pay higher tax rates), or you refrain from making claims. But what is not justified is just making **** up, which apparently is exactly what you did. Not only did you make a claim about tax rates which you can't support, but you attributed it to sources which you apparently can no longer find.

No but it says a lot about concentration of wealth at the top.

Nice goalpost moving there.

Pretending all redistribution up is due to created wealth & free market forces and all income redistributed down is due to socialism and communism is not a claim supported by the evidence.

Yeah. Funny thing: it's not a claim I've made, and I don't recall anyone else making it either.

I'm willing to look at honest data. I'm not willing to let your dishonest presentation go without comment.

You're in no position to talk. You haven't presented ANY data to indicate that the rich pay a lower tax rate. YOU made that claim first, not me. And you have backed it up with exactly nothing.