Re: Obama Tax INcrease proposal

But that's a result of other factors in the code than the base rate by bracket which is being discussed at present.

The marginal rates go up even under the present; the question is whether they should go up even more at some level than they presently do.

If your concern is ways for income to be shifted from other than ordinary income as wages, etc., that's a different issue than the one being debated.

Very difficult in general; there are always ways to smoodge around whatever is the current set of rules for those who have the means of earning other than by wages alone.

It is still so that while not universal, the wealth-generators aren't the working stiffs but the entrepreneurs and business owners whose incomes aren't likely to be small if they're creating additional work for others as well as simply their own employment. So, the argument that what stifles small business is counter-productive seems to me to have merit even if there are some who are able to "evade" paying at the full marginal rate on their entire income.

Again, given the revenue generated by the federal government, it's clear that expectations and spending are far outpacing the realities of the feasible and sustainable.

Well, not quite "most". But certainly "many", and almost "most".

"WASHINGTON (AP) -- Tax Day is a dreaded deadline for millions, but for nearly half of U.S. households it's simply somebody else's problem. About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. That's according to projections by the Tax Policy Center, a Washington research organization."

Well, still not all that many. And certainly not with a $100k cutoff.

If we look at the income tax return statistics from 2008 we see that roughly 90% of all tax returns report less than $100,000 in AGI. And the median AGI is about $33k, which means that 50% of the returns reported less than $33,000 in income. So if one assumes (fairly reasonably) that the no income tax returns are heavily weighted into the lower income brackets, you really have to get well below $100k before most pay no income tax.

Top 1-percent Adjusted Gross Income (AGI) break (TY 2008) [3,4] $380,354 Top 10-percent AGI break (TY 2008) [3,4] $113,799 Bottom 10-percent AGI break (TY 2008) [3,4] $5,942 Median AGI (TY 2008) [3,4] $33,048

Source:

In times of deficit, there is no such thing as a tax decrease! Someone is ALWAYS paying in one way or another. It can be insidious in the form of inflation or by other methods of redistribution of wealth. Much of the current economic crisis arose from redistribution of wealth. With Congress bought by big money interests, it was allowed to remove wealth from people who thought they were buying homes. If I get any encouragement, I will point out some more ways that wealth has been redistributed unfairly. The big protest about taxes is because most of them are obvious redistribution while the worst redistributions are disguised.

I will offer one tax policy that is unfair. The tax preferences assigned to capital gains merely encourages manipulation. Wheeler dealing instead of productive activity is encouraged by that. I would propose that capital gains be highly taxed. If you do want to provide a tax preference it should go to income generated by productive effort. Corporate dividends should get the preference. The incentive would be toward investing in things that generate items and services that can be sold for their value, If capital gains are more highly taxed, much speculation and similar nonproductive effort would not be as highly rewarded as it is now.

On Tue, 7 Dec 2010 16:32:19 EST, dpb wrote Re Re: Obama Tax INcrease proposal:

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Line 22 on Form 1040. With a flat tax system, Line 23 would be y% of Line 22. Line 23 would be the end of the tax calculation.

The wealth obtained by entrepreneurs was generated by working stiffs as well as the foresight of entrepreneurs. The entrepreneurs get the bulk of this wealth because, except for a few labor unions, the entrepreneurs are the ones with the clout to dictate how the wealth produced gets distributed.

Bill