So what do you think will happen with taxes?

[Meadmaker]

The Earned Income Tax Credit^WP basically refunds payroll taxes for those below a certain income (and refunds substantially more than what they payed in payroll taxes for others). The EIC for someone with no dependents is 7.65% of their income up to ~$6,000. Both the percentage and the income threshold go up substantially as dependents are added. A person with 2 children gets 40% of their income up to ~$12,000 refunded as a tax credit. That is substantially more than all of the taxes they have payed, including state and local. Of course, someone trying to raise 2 kids on $12,000 of (taxable) income is probably hurting pretty badly.

That whole thing gets a bit weird. I don't have any problem subsidizing some poor people, but why call it a tax credit? Oh, well. I wouldn't trade places with anyone getting it, and I would gladly trade places with someone paying 40% of his income in taxes, so it's not like I think they are ripping me off.

 

[Cain]

The federal income taxes statistics that get cited are made from ********.

When we take into account all the taxes people pay, it comes out more or less flat (source: David Cay Johnston, former tax reporter for the NYT, author of PERFECTLY LEGAL).

Republicans studiously ignore payroll taxes, which is especially dishonest since we've had a unified budget for decades.

As for the EITC (a form of a negative income tax), it has won the highest acclaim from Ronald Reagan and is endorsed by Milton Friedman.

Extra points for the first person to find all the panels for this "Lucky Ducky" comic strip:

 

[Ziggurat]

I personally happen to think that 6000 tax units with cash income of over $1,000,000 that pay no taxes is an awful lot

It sure as hell isn't an awful lot when we're discussing how the total fraction reached as high as 47%. Or did you forget what was actually under discussion?

 

[Ziggurat]

The federal income taxes statistics that get cited are made from ********.

When we take into account all the taxes people pay, it comes out more or less flat (source: David Cay Johnston, former tax reporter for the NYT, author of PERFECTLY LEGAL).

Talk about a non-sequitor.

Yes, the income tax alone doesn't tell the whole tax picture. I never claimed it did, and my source never claimed it did. But that doesn't mean the statistic itself is not "made from ********". It's not.

Republicans studiously ignore payroll taxes, which is especially dishonest since we've had a unified budget for decades.

Who here is a republican? What does party affiliation have to do with the current discussion?

As for the EITC (a form of a negative income tax), it has won the highest acclaim from Ronald Reagan and is endorsed by Milton Friedman.

And? Your evaluation of the merits of the current income tax structure are separate from the facts of that structure. It may well be a good thing that 47% of tax units didn't owe income tax in 2009, but that doesn't change the numbers.

 

[Dan O.]

It sure as hell isn't an awful lot when we're discussing how the total fraction reached as high as 47%. Or did you forget what was actually under discussion?

What was under discussion was whether your 47% figure was valid. Given the problems with the terms, problems with the model in the high income brackets, large unexplained shift in the numbers from only a couple years back, lack of verification for the figures in the model; I'm not going to believe your figure.

 

[Cain]

Talk about a non-sequitor.

Yes, the income tax alone doesn't tell the whole tax picture. I never claimed it did, and my source never claimed it did. But that doesn't mean the statistic itself is not "made from ********". It's not.

I was not referring to your post; I don't think I read any of your posts as I generally think you're a worthless bore. This income tax canard is like the "Second Law of Thermodynamics" in discussions of evolution.

Who here is a republican? What does party affiliation have to do with the current discussion?

Because this is a factoid Republicans flag incessantly.

And? Your evaluation of the merits of the current income tax structure are separate from the facts of that structure. It may well be a good thing that 47% of tax units didn't owe income tax in 2009, but that doesn't change the numbers.

You're talking out of both sides of your mouth. Why not highlight the small percentage of Americans who pay inheritance taxes? It's just the same old ********: cherrypicking figures to deny a more complete picture. Working people pay regressive payroll taxes (and most Americans pay more in payroll taxes than income taxes).

So do Republicans -- err, I mean, um Americans for Fairness and Sensible Tax Reform -- favor abolish broadening the income tax base by abolishing payroll taxes? Of course not.

 

[wastepanel]

Social Security and Medicare taxes on payroll are the only taxes that everybody has to pay. Social Security does have a ceiling ($106,800 in 2010) which means that the poor and the rich pay the exact same amount up until $106,800. Medicare does not have a ceiling. The reason for this is that everybody gets the same amount from Social Security. And if you have income over $23,000, you're paying taxes on that Social Security.

That federal withholding number is decieving. I can fill out a W-4 and have my entire paycheck go to federal withholding if I wanted to and claim I'm being taxed to death. What most people don't understand is that if they get back $1500-$3000 back when they file their taxes, they could have had that money during the course of the year. I am an accountant, and get into these arguments all the time with people that get back $400-$600 more than what they put into federal withholding.

Lefty...in regards to capital gains on interest:

Interest is included in regular income and taxed at the taxpayer's bracket.

A short term capital gain is taxed at that person's income level. A person in the 10% bracket pays 10%. A person in the 35% bracket pays 35%. Short term capital gains are (currently) 0% on the 10% and 15% bracket. They are 15% on all higher brackets.

Of course, this is all Bush tax cuts that stick it to the little guy...Oh yeah.

If let expire, the 10% bracket would 15%. The 15% would be 28%. The 25% would be 31%. The 28% would be 36%. 33% would be no more and (combined with 35%) taxed at 39.1%. Long term capital gains would be 10% for the 15% bracket, while everybody else pays 20%.

A person in the 10% bracket can make up to $16,750 if married. A person in the 15% bracket can make up to $68,000. A person in the 25% bracket can make up to $137,300 if married.

The way the tax system works is that (using the examples above) the first $16,750 of everybody's taxable income is taxed at 10%. Once a person makes $16,750, any additional income is now taxed at 15% until that person makes $68,000. At $68,001, the tax rate jumps to 25%. The highest tax bracket starts at $373,650. Any income over that amount is taxed at 35%.

All those fat-cat athletes, business owners, etc. that are making millions of dollars a year are currently paying 35% of every dollar once they hit $373,650. If you want people to pay more taxes based upon interest, tell the US government to make its bonds taxable (which they currently aren't and people are flocking to). Itemized deductions are usually a sore point to opponents of the current structure because a wealthy person generally has more. Guess what? These are limited and so is your standard deduction once you get to a certain point. Guess who doesn't understand that concept?



http://taxprof.typepad.com/taxprof_blog/2010/03/lawsky.html

And Alternative Minimum Tax pops in to figure out any other issues.

The tax system is very complicated, and it will never be 100% fair. If a person spends money that another person should get to deduct, then that is unfair. If a person gets money that another person should have to claim, that is unfair. I've had this argument with waitresses (notorious for not claiming all their tips) and big business owners (sheltering money). They both have the same thing in common, yet only one is demonized. I say fair is fair.

 

[Meadmaker]

Some of this bickering gets a little silly. There are a few facts that are clear, and not subject to dispute.

There are a fairly large number of people who pay zero dollars in federal income tax. Does it really matter, for purposes of this discussion, if there are 30% or 47%?

Among people who pay no income tax, most pay payroll taxes.

Among people who pay no income tax, but pay payroll taxes, some of them get some of their money back via the Earned Income Tax Credit, paying negative income tax.

A very, very, small number of people actually pay less than zero net taxes, because their earned income tax credit is actually greater than what they paid.

If you have a higher income, you pay a higher percentage of taxes.

Most people would prefer to have a higher income, despite the higher taxes.

The federal government is currently spending more than a trillion dollars per year above what it takes in in tax revenue.

If the President does not sign a new tax bill soon, all but the people with the very lowest income will pay more in taxes for 2011 than they will pay for 2010.

None of those statements can possibly be disputed.

Some of the disputes start when people infer something from the fact that someone brings these undisputable facts up. If I say that 45.3% of people pay no income tax, someone might leap to a conclusion that I must think it is unfair that those loafers get away without paying. It's not a reasonable inference about what I believe, but some people will make that conclusion.

 

[Ziggurat]

You're talking out of both sides of your mouth. Why not highlight the small percentage of Americans who pay inheritance taxes?

A statistic was raised, lefty challenged it based on nothing more than incredulity, and I provided evidence for it. Instead of accepting that fact and proceeding to interpret its significance, this was met with further challenges to the fact itself (and not just from lefty), challenges which were mostly baseless. There's no "talking out of both sides of your mouth" involved on my part: I'm defending the facts. If someone denies the percentage of Americans who pay inheritance taxes, I'll defend that fact too, but I don't recall that happening yet. If it has and I missed it, just point it out and I'll jump in.

It's just the same old ********: cherrypicking figures to deny a more complete picture. Working people pay regressive payroll taxes (and most Americans pay more in payroll taxes than income taxes).

Surprise, surprise. You're late to the party.

 

[Cain]

A statistic was raised, lefty challenged it based on nothing more than incredulity, and I provided evidence for it. Instead of accepting that fact and proceeding to interpret its significance, this was met with further challenges to the fact itself (and not just from lefty), challenges which were mostly baseless. There's no "talking out of both sides of your mouth" involved on my part: I'm defending the facts. If someone denies the percentage of Americans who pay inheritance taxes, I'll defend that fact too, but I don't recall that happening yet. If it has and I missed it, just point it out and I'll jump in.

It's a misleading, meaningless statistic intended to outrage the stupid rather than enlighten them.

Surprise, surprise. You're late to the party.

I think we need the line from Inigo Montoya. This is almost as bad as mistaking my general comments as a reply to you.

 

[Ziggurat]

It's a misleading, meaningless statistic

It's not misleading. It's just a number. There's nothing misleading about a number, unless it's not true, and in this case it is. One can use a statistic in a misleading manner, but that's a different issue. If it has been used misleadingly, then it's the use of the statistic, not the statistic itself, which you need to confront.

intended to outrage the stupid rather than enlighten them.

Facts don't have intent.

 

[Cain]

It's not misleading. It's just a number. There's nothing misleading about a number, unless it's not true, and in this case it is. One can use a statistic in a misleading manner, but that's a different issue. If it has been used misleadingly, then it's the use of the statistic, not the statistic itself, which you need to confront.

Facts don't have intent.

Spoken like a true sophist. These statistics are generated -- manufactured -- which reminds me of the old analogy that warns, "Statistics are like a bikini -- what they reveal is suggestive, what they conceal is vital!"

I like how you again attempt to talk out of both sides of your mouth: "one can use a statistic in a misleading manner," which is what I said -- that this propaganda is intended to mislead rather than enlighten -- so you gamely bifurcated my post. This is b.s. stacked on b.s., and instead of turtles, it's b.s. all the way down.

 

[Ziggurat]

Spoken like a true sophist.

So it's sophistry to be interested in getting facts correct, and not letting denials of facts stand? Then call me a sophist, but I think you will find that is a non-standard definition.

I like how you again attempt to talk out of both sides of your mouth: "one can use a statistic in a misleading manner," which is what I said -- that this propaganda is intended to mislead rather than enlighten

Intended by whom? Mislead people about what, and to what purpose? I haven't intended to mislead anyone, and the purpose of the actual source doesn't match with the criticism that has been offered. If you want traditional sophistry, here it is: your villains are unnamed, your evil plots unspecified.

This is b.s. stacked on b.s., and instead of turtles, it's b.s. all the way down.

Strange that you should be so scared of a fact. Usually, when one's position is robust, facts of all sorts can be incorporated into or at least accomodated by that position. Perhaps you think your position is fragile, subject to damage by non-approved facts?

 

[Meadmaker]

Cain,

It really is true that somewhere around 47% of Americans pay no income tax. I don't know the exact number, but that isn't a wild exaggeration. It's also true that the number is much higher than it was a few years ago. This is true for two reasons. One is that more people are unemployed or underemployed. The other is that President Obama passed a pretty sizable tax cut.

And? What's the big deal about that statistic? I just don't see what the fuss is about. It means next to nothing.

My personal read on that statistic is that it shows a huge gap between rich and poor in America. You don't have to make a lot of money before you start paying income tax, and yet somewhere between a third and one half of Americans don't reach that threshold.

Meanwhile, the Bush tax cuts make that number jump dramatically, and if they expire a lot of people who pay zero taxes will start paying some taxes.

 

[Dan O.]

Cain,

It really is true that somewhere around 47% of Americans pay no income tax.

That is really a mischaracterization of what the statistic says. The model was measuring for a single year the number of tax returns that would show more tax credits than tax liabilities. One of the biggest kickers to that number in the last couple of years is the recovery credits which were a one time deal. On average, many of those tax payers that were in the negative tax range for that one year pay a positive tax in most other years.

The model also includes non-filers which includes those that legitimately don't have enough income to create a tax liability (and are foolish enough not to file for the credits they are entitled to) and also includes the estimated numbers of tax frauds that are running cash only businesses and trying to stay off the radar of the IRS.

The model would have every detail. Why the report doesn't break the number down and show all the components is a mystery to me. It's like they intended to present a misleading number to rial tax payers.

 

[Meadmaker]

and also includes the estimated numbers of tax frauds that are running cash only businesses and trying to stay off the radar of the IRS.

Hmmm...maybe I'll have to read it. The above does seem rather deceptive.

But still, what's the big deal. OK, so they exagerate the number. The real number is still pretty big. Lots of people in America don't make enough money to pay taxes. Does anyone disagree?

Now, if someone here wants to draw some sort of inference from that, especially concerning how tax codes ought to be changed, let him speak up.

 

[Cain]

So it's sophistry to be interested in getting facts correct, and not letting denials of facts stand? Then call me a sophist, but I think you will find that is a non-standard definition.

Intended by whom? Mislead people about what, and to what purpose? I haven't intended to mislead anyone, and the purpose of the actual source doesn't match with the criticism that has been offered. If you want traditional sophistry, here it is: your villains are unnamed, your evil plots unspecified.

Strange that you should be so scared of a fact. Usually, when one's position is robust, facts of all sorts can be incorporated into or at least accomodated by that position. Perhaps you think your position is fragile, subject to damage by non-approved facts?

It's a bastardization for reasons discussed earlier which you dare not discuss again. An incomplete picture. It's like your buddy asking what you did last night then raisin' your eyebrows and mouthing that you slept with TWO girls (but all you really did was come home late and fall asleep next to your pregnant fiance).

I must confess mild enjoyment to your hot air opinion of yourself. "Scared" of this fact"; "Not allowing denials of fact stand." No, a sophist is not a compliment, but leave it to a sophist to try to turn it into a one. You're a joke.

As for this propaganda, it figures into the Republican meme that taxes are paid by a minority of people and gets "redistributed" in a Robin Hood way to a non-productive citizenry (wink, nudge, Democrats, wink, nudge).

Meadmaker,

I have never denied, contrary to what Ziggurat might wish people to believe, that this 47% stat is just made up out of thin air. Nor is the Second Law of Thermodynamics a lie. What's ******** is the application of the Second Law of Thermodynamics to evolution, just as this is ******** when talking about taxes. It comes up on message boards all the time along with another stat announcing that something like 5% of people pay ~half of all income taxes.

 

[Bob Blaylock]

to trhe [sic] walton larvae…

The dreaded Walton Larva goes after its prey…

 

[eeyore1954]

That is really a mischaracterization of what the statistic says. The model was measuring for a single year the number of tax returns that would show more tax credits than tax liabilities. One of the biggest kickers to that number in the last couple of years is the recovery credits which were a one time deal. On average, many of those tax payers that were in the negative tax range for that one year pay a positive tax in most other years.

Where did you get that information? Are you sure you know what you are talking about?

 

[eeyore1954]

In response to the thread title I think only the Bush tax cuts for the highest levels will expire.

http://online.wsj.com/article/SB100...3131306753688.html?mod=WSJ_hpp_LEFTTopStories

The Obama administration will allow tax cuts for the wealthiest Americans to expire on schedule, Treasury Secretary Timothy Geithner said Thursday, setting up a clash with Republicans and a small but vocal group of Democrats who want to delay the looming tax increases.