Is 39% tax rate for wealthy really fair?

[Anonymous]

Anonymous wrote:I think everyone should have to at be the same percentage across the board. No deductions. No tax returns. Flat rate like sales tax. I am not in that bracket and i still don't believe that people who work their butt off should have to pay more taxes. It is the Robin Hood effect.

Thank God you're not in charge of anything.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think everyone should have to at be the same percentage across the board. No deductions. No tax returns. Flat rate like sales tax. I am not in that bracket and i still don't believe that people who work their butt off should have to pay more taxes. It is the Robin Hood effect.

Thank God you're not in charge of anything.

That plan would draw capital from around the world and eliminate our debt. Envy and jealousy rules.

[takoma]

Anonymous wrote:I think everyone should have to at be the same percentage across the board. No deductions. No tax returns. Flat rate like sales tax. I am not in that bracket and i still don't believe that people who work their butt off should have to pay more taxes. It is the Robin Hood effect.

So you favor a higher rate for capital gains and a lower rate for salaries?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think everyone should have to at be the same percentage across the board. No deductions. No tax returns. Flat rate like sales tax. I am not in that bracket and i still don't believe that people who work their butt off should have to pay more taxes. It is the Robin Hood effect.

Thank God you're not in charge of anything.

That plan would draw capital from around the world and eliminate our debt. Envy and jealousy rules.

No, it's an extremely stupid plan and that's why no one takes it seriously or enacts it anywhere in the world. This is something you'd want if you had no idea what you are talking about.

[Anonymous]

Anonymous wrote:

jsteele wrote:

Anonymous wrote:I am a democrat, but I'm not sure I understand the justification of the wealthy paying such a high tax rate. Can someone explain this to me? We are middle class and pay about 12%. It seems like 39% is quite high, even for the wealthy. This seems like more than their fair share. What am I missing?

The only way that you can be middle class and paying 12% income tax is by having significant deductions. If you do the same kind of math for the rich, they are not paying 39% either.

Also, for the "they aren't paying anything" crowd, the poor are paying payroll taxes which are a higher proportion of their income than it is for high earners. A lot of us didn't notice when the payroll tax holiday ended. You can believe the working poor noticed.

I actually don't buy the "but the poor pay payroll taxes" line. And the reason is it's directly tied to benefits they receive later in life. Sure, some die, but the tax you pay is eventually returned to you. At least that's how it is set up.

Eventually? A lot of people get back more than they paid in due to credits, etc.

[Anonymous]

Anonymous wrote:I think everyone should have to at be the same percentage across the board. No deductions. No tax returns. Flat rate like sales tax. I am not in that bracket and i still don't believe that people who work their butt off should have to pay more taxes. It is the Robin Hood effect.

Some of us like fairness in the tax code. In fact, most of us do. The scenario you describe is not fair.

[Anonymous]

I'm a bit surprised by the anger at the possibility of criticism of the wealthy by people who pay no income tax. Seems to me there's a lot of criticism by people who do pay income tax. Me for one. So the pp is not pissed at us?

[Anonymous]

Anonymous wrote:I am a democrat, but I'm not sure I understand the justification of the wealthy paying such a high tax rate. Can someone explain this to me? We are middle class and pay about 12%. It seems like 39% is quite high, even for the wealthy. This seems like more than their fair share. What am I missing?

Middle class in this area is about $75K-$125K. If you make $100K, then your normal tax rate is about 21%. For you to pay only 12% on taxes, you have about $20K worth of deductions. Likewise, most high income citizens pay much lower than the high marginal rate. The marginal tax rates for 2013 will now be:
Rate Single Filers Married Joint Filers Head of Household Filers 10% $0 to $8,925 $0 to $17,850 $0 to $12,750 15% $8,925 to $36,250 $17,850 to $72,500 $12,750 to $48,600 25% $36,250 to $87,850 $72,500 to $146,400 $48,600 to $125,450 28% $87,850 to $183,250 $146,400 to $223,050 $125,450 to $203,150 33% $183,250 to $398,350 $223,050 to $398,350 $203,150 to $398,350 35% $398,350 to $400,000 $398,350 to $450,000 $398,350 to $425,000 39.6% $400,000 and up $450,000 and up $425,000 and up

Someone--married filing jointly--making over $450K is paying $125,846 or 27.9% on the first $450K [b][u]WITH NO DEDUCTIONS AT ALL[u][b]. If you only take the standard deduction of $12,200 for married filing jointly, that goes down to $121576 or 27%. I cannot imagine someone making $450K that does not have various deductions whether dependents, mortgage, charitable contributions, personal business exemptions and hoards or others. The tax code is immense and it's hard to believe that someone that high can't find any deductions. Additionally, this is only for actual income. Capital gains taxes (which most higher income citizens have) is only taxed at a 15% tax rate which will lower the effective tax rate as well for the upper class. Increasing that to $500,000 and even at 39.6% on that last $50K, the marginal rate is still only 29%. Make it $1M and the marginal rate on the last $550K still has that tax payer paying a 34% effective rate WITH NO DEDUCTIONS. In truth, most high income tax payers pay less than 20% effective rate. According to an article in the NYT, in 2007, the highest quartile, 10%, 5% and 1% all paid effective tax rates of between 20-21% on income. They had larger and larger percentages of their income in investments that paid capital gains instead of income tax. http://www.nytimes.com/interactive/2012/01/18/us/effective-income-tax-rates.html?_r=0

The 39.5% marginal rate for income over the first $450K is actually quite low. The historical rate is shown below. With only a few exceptions, we STILL have the lowest marginal tax rate for the highest income earners ever. It was lower from 1924-1932 (period leading into the Great Depression), 1988-1992 (Bush 41) and then during 2002-2012 (Bush 43, not shown on the graph, but the same rate as 1992-2000). It was actually 93% in 1945, post-WWII.

In addition, look at the capital gains tax rate. We are at the lowest rate since 1933. That is where the real money is and a huge reason why the wealth disparity between the rich/upper class and the upper class/middle class and lower have increased steadily over time.

[Anonymous]

90% tax rate is the reason loopholes were developed.

[Anonymous]

Anonymous wrote:90% tax rate is the reason loopholes were developed.

This point is too seldom appreciated. Comparing marginal tax rates pre- and post- the 1986 reforms is not apples-to-apples as loopholes and tax shelters were substantially reduced at the same time as the marginal rates were dropped.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I am a democrat, but I'm not sure I understand the justification of the wealthy paying such a high tax rate. Can someone explain this to me? We are middle class and pay about 12%. It seems like 39% is quite high, even for the wealthy. This seems like more than their fair share. What am I missing?

I'm in that bracket...and a Republican. However you may be surprised by my answer:

You're not missing anything. Instead of using "unfair" I'll just say that is is not proportionate.

I don't mind paying more taxes - I can afford to do it, and we ought to do it b/c the country needs help.

However - what I bristle at is that people who pay nothing, get to criticize me for "not paying my fair share". In that regard it probably is just semantics, but if you're paying zero and I'm paying more than zero, how do you get to criticize? I think Mr. Obama should have made everyone pay something even if it means "$100" as a token below a certain income level. While it may not cure the debt problem we have, the "token" amount will make people like me more willing to pay a disproportionate amount of taxes.

Taxes aren't even the problem - it's a spending problem. Even if we all pay what we're supposed to pay - it's less than a ladle-full of water in a bucket. We need to reduce spending in order to close the gap.

Just so long as we are clear about something: It was Republican tax policy (specifically Mr. Bush's) that took tens of millions of lower income people off the rolls. At the time, that was looked upon as virtuous.

I'm not trying to blame anyone for the situation we're in.

I'm objecting to being blamed by those that don't pay anything at all...and also pointing out that you could raise the tax rate to 50% on the rich - and it still won't make a difference.

As for the 10s of millions of lower income people - so what? You don't have to pay taxes. No problem. It doesn't give you a right to criticize the rich who ARE paying imo. If you feel strongly about it - send in $1 to the IRS as a donation. They'll take it. Otherwise I think that those that don't pay anything ought not criticize any of those who do.

You'll probably be happy to know that lower income people are probably not criticizing you tax rate. Most of them probably don't even know much about tax tables. They're too busy, you know, trying to scrape by on very little.

+1

[Anonymous]

we should tax the rich at 200%

[Anonymous]

Anonymous wrote:Why should people pay taxes if people are allowed to break the immigration laws. It's just as moral to improve your life by welching on taxes as it it to sneak into a country and use free education for your kids and use the emergency room for free get food stamps etc.

Yep, that's why they need a path to citizenship because we need their tax money.

[Anonymous]

Anonymous wrote:

jsteele wrote:

Anonymous wrote:I am a democrat, but I'm not sure I understand the justification of the wealthy paying such a high tax rate. Can someone explain this to me? We are middle class and pay about 12%. It seems like 39% is quite high, even for the wealthy. This seems like more than their fair share. What am I missing?

The only way that you can be middle class and paying 12% income tax is by having significant deductions. If you do the same kind of math for the rich, they are not paying 39% either.

Also, for the "they aren't paying anything" crowd, the poor are paying payroll taxes which are a higher proportion of their income than it is for high earners. A lot of us didn't notice when the payroll tax holiday ended. You can believe the working poor noticed.

Well, that is a very good point. I didn't think about that. thanks.

But untrue. Most every deduction is phased out for high income earners.

[Anonymous]

23:01 Your approach is woefully naive. A flat tax would have to be extraordinarily high to pay our national bills. You would suffer, while the rich get richer.