The CalPundit has a post up outlining what a millionaire pays in taxes:
Well, on the generous assumption that that million dollars is pure salary, our millionaire probably pays about $300,000 in federal taxes. Out of that, he pays about $5,000 to Social Security, $15,000 to Medicare, and roughly $70,000 toward the social welfare programs that make up approximately a quarter of the rest of the federal budget.
That’s a total of $90,000 out of that million bucks. The rest of his taxes
Mason
10% flat tax, absolutely no deductions, exemptions, or credits, which starts somewhere around the “poverty” level (which is higher than most would believe).
Have I ever mentioned how much I hate the IRS?
Nick
The 30% figure just isn’t right. It should be around 38 or 39%.
Also, the “and so forth” leaves out plenty of spending that people DO, in fact, complain about. For instance, where exactly in our millionaire’s taxes are the funds earmarked for the 400K Peanuts Museum in Ted Kennedy’s district?
Ricky
I’m trying to contribute in the comments over there, but it’s akin to screaming at the clouds for making it rain.
It’s quite annoying to see folks portend that they’re the arbitors of the ultimate in fairness….you know, the kind of fairness where they decide what’s best for YOUR money.
Jay
Setting aside snide comments, a few words:
1. Regressive taxes (sales tax, tolls, and what not) that charge the same of evryone are seen as “unfair” because Libs talk about percentages of income.
2. Now that the Libs want to talk percentages, have they forgotten that the highest percentage of people who benefit from “public welfare” taxes pay the lowest of taxes in terms of personal, and total national percentage?
3. Let us assume that taxation in the minds of the Libs are for “redistribution of wealth” in the name of “social justice.” On the individual’s level, it is unfair. People are getting free lunches, and I’m not talking about the sick and the elderly.
4. Without trying to attack Liberals, this whole taxation issue with them ultimately rewards the lazy and irresponsible. Is it a person’s responsibility to ensure a secure old age? YES! Is it a person’s responsibility to ensure the security of his own health? YES! Is it a person’s responsibility to ensure the survival of his family? YES! Is the responsibility mentioned in these “absolute?” No. A little help goes a long way but not at the current situation.
5. Without bringing up principles of socialism, the “justice principle” in “redistributing wealth” may work well on a spiritual/moral level but there’s a limit to the help it can do for the economy. Also, though it pains me to see the promotion of mediocrity, I understand the need for mediocrity in the social strata. I may be seen as mediocre by someone above me, just as I see someone beneath me.
6. Finally, what will it take for the Libs to chut up? I have no idea. Mudslinging aside, I have rarely seen them to be easily satisfied. Heck, in the face of absolute facts, the reply would be “That isn’t exactly it.”
ruprecht
In his book Four Reforms William F. Buckley had the idea to create a flat tax of about 20% with no loopholes (similar to Mason’s idea at the top). He also had two caviots that I liked: (i) Have the Fed collect all the taxes (state and Fed) and send the states a check for their share, thus removing the need for the states to have the redundant tax-collection bureacracy (ii) set up a system that the feds give more money back to the poorest states, we are a union of states after all.
David Perron
I’m curious how Calpundit thinks that millionaire got himself down into a 21% bracket, having started upward of 35% (assuming no itemization and single taxpayer). Methinks CalPundit has figured a tax rate and they decided that SS and other taxes are part of the whole bundle. They aren’t.
The way my finances are arranged, I pay about 20% in taxes as FICA. If the Fed can simplify its tax code so that I pay within a few percent of that, they have my blessing. As long as it’s rational. Of course, I’d willingly pay less.
Jay
Ruprecht: it’s a good idea on paper, but with the way we aren’t s’posed to trust the federal gov’t (rightfully so, i must say) I doubt it’s gonna fly.
And besides, call me cold, I think taxes should pay for national defense and public works. Mmmm, that’s just about it. Libertarian economics, I say.
ruprecht
The idea, in theory, would generate more government revenue than the curernt system with all the loopholes and drag on the economy. The taxes would go to the same stuff it does now except poor states like Mississippi would get more money to fix up the roads and public works.
It would kill H&R Block and the industry built around taxes but it would also cut the need for the IRS down to almost nothing. Especially if you cancelled the two provisions.
Randolph Fritz
Question with a question–what percentage of the your working poor woman’s income is enough? Because, in fact, as Warren Buffet (of all people) points out in a recent Washington Post op-ed piece, the working poor and middle class actually pay about the same percentage as the millionaire.
A sensible way to set taxes is to decide what we needs to be paid for, look at what it will cost, figure out who is going to pay, and if we don’t like the results, go back and redo the process. This is called fiscally responsible budgeting, which libertarians and Republicans and Democrats all support in theory and was the practice until the Reagan administration that was how it was done. (See David Stockman, *The Triumph of Politics*) Polices which squeeze the poor and lower middle class, and taking advantage of the sick and elderly are necessarily oppresive and can only be enforced with bruatlity, which, again, pretty much everyone in theory opposes.
So the answer is, tax rates that pay for the policies we regard as needed in a non-oppressive way. If you want to cut taxes, tell me what spending you want to cut.
And while we arguing this theory, straight-line projections of current tax and spending policy show Latin-American levels of debt and inflation in a few years. Major economists across the spectrum regard them as unwise (and are locking-in fixed rate mortgates.)
Stop worrying about the chimera and pay attention to the damn bear!
JKC
John-
The obvious answer to your question of “how much is too much?” is this: taxes in the USA are too high when large numbers of put-upon wealthy Americans are moving to low-tax utopias like China, Sierra Leone, or the Congo.
John Cole
JKC-
You think we should tax people just until they move to China? I know Democrats sometimes behave like they think that, but are you serious?
Ricky
Wow…have you read the comments on that link? Gee, d’ya think folks over there HATE people who aren’t ultra-libs enough?
Nate
Ricky, your party has risen hate to an artform, ever listen to the radio?
here’s a couple a good ones.
David Stockman, it doesn’t get any more knowledgable on the subject of how supply side works. He’s honest too, unlike some pinochio’s on one side.
http://www.csulb.edu/~astevens/posc210/files/stockman2.htm
Here’s some zillionaires and what they think. Uninformed?
http://story.news.yahoo.com/news?tmpl=story&u=/nm/20030520/pl_nm/economy_taxes_rich_dc_2
JKC
John-
Of course we shouldn’t “tax people until they want to move to China.” (That was intended as sarcasm, my friend.) My point, though, is that many of those who whine loudest about high taxes and government intervention are rich *because* of government. (Take Dick Cheney, for example. Please.)
I’m not smart enought to know what the optimal level of taxation at any income bracket is. But when somebody as smart as Warren Buffet says the current proposals coming from the Bush League are “welfare for the rich” I tend to believe him. Unlike the current resident of the White House, Buffet made his money without help from Daddy (or, in the case of the Veep, from defense contracts.)
John Cole
Jkc- I understood it was sarcasm, but maybe my question was not clear.
I am asking, at what level of taxation will Democrats finally say is enough or too much?
60% of an individual’s income? 72.7% of a person’s income? That is what I want to know…
AT what level of taxation will Democrats drop the ‘rich are greedy’ comments…
Jay
John Cole: brain-dead dumbass snideness aside, I think they’ll stop when no more poverty exists, when all the sick are taken care of and when the differences between us are almost nothing… Sounds like a communist state to me.
Ricky
JKC,
Just so you know, I tend to listen to folks like Buffett as well (for the same reason as you, plus because I work for him), but I also take into account that he’s a diehard Democrat who has no qualms about injecting his personal politics into the discussion.
I’m *not* saying that’s a disqualifier, just noting that were there a tax cut proposal that could arise in, say, 4 years, I can tell you that if the person proposing it were a GOPer, Buffett would come out against it.
It’s not really *news* that he’s anti-Bushtaxcut. Hey, he & his father were against the death tax cuts.
JKC
John, I hope you really don’t expect a concrete answer to “how much is too much?” I dunno. My flip answer on taxes is this: taxes are high enough when the federal budget is more-or-less in balance, and society’s needs are taken care of. How do we know when “society’s needs are taken care of?” That’s what we have a democratic political process for. Personally, I’m tired of the Bush League’s Enron-style accounting. “Mr. Leadership” should have the stones to say “Look, you can have lower taxes. At this level of taxation, here’s what you’ll have to give up.” See how it flies. If he can sell it, great. Just can the smoke and mirrors. (And yes, I know both sides have been guilty of this. But right now the Republicans are in charge. Get over it.)
Jay, Ricky, if you really think that a tax system that punishes productive work (taxes on wages and consumption) to subsidise the investor class (elimination of dividend taxes, estate taxes which only affect very large estates) is politically viable, or would lead to a stable society, I’ve got a bridge in Brooklyn you might be interested in.
John Cole
JKc- I really am looking for a concrete answer.
I agree with you that a general rule would be when the budget is somewhat balanced and the needs of the country are met. The problem is, politicians have an ever expanding definition of the needs of the country. IF we just took everything that was currently on budget and stayed there, it would be one thing. But the moment the buget is balanced or we are running a surplus, the calls for universal child care, prescription drugs, universal heralth care, etc., will start coming out of the woodwork again.
So, I do expect a concrete answer. How much of an individual’s income is enough? and don’t tell me “It depends on how much you make.” That is not what I am looking for. At what level of taxation will even Democrats say “That is too much.”
Right now people are taxed at 50-70% depending on income, and I want to know precisely what level is too much.
RW
JKC,
I’m for reduced taxes everywhere, but to say that taxes on wages/consumption subsidize the “investor class” is simply a falsehood, word redefinition and class warfare rhetoric which renders subsequent ideals put forth as questionable.
You guys seriously need a new rap.
JKC
RW-
Taxes on wages and consuption do not “subsidise the investor class” per se, but a tax proposal or philosophy that says wage earners should pay taxes while those few lucky (or smart) enough to make the majority of their money on investments coast along may sound good in a conservative think tank board room, but it won’t work in the real world.
John- I honestly don’t know the answer to your question. My gut says that a tax rate of more than 50% is a bad idea. Having said that, I wish some conservatives would look at the grand totality of taxes paid: income (progressive), payroll (regressive), federal, state, local, property vs sales vs income etc. instead of harping on what a horrendous burden someone in an upper income bracket bears ’cause they pay more federal income tax than the cashier at Wal-Mart.
JKC
For everyone posting here:
What are YOU willing to give up for lower taxes? I don’t want to hear from well-off young, healthy twenty- or thirty-something members of the Federalist Society spouting off about doing away with Medicaid or Social Security. What ox of YOURS are you willing to see gored?
I suspect your answers will be enlightening…
Alex
The appropriate level would vary. I’d put it at about 40% in general, but there are other factors.
One important one is that it should be progressive; that is people with an income of $1m should generally pay a higher percentage of their income into taxes than those with an income of $30k. That is often untrue in the current tax setup, and would be far less true if Bush’s proposals were adopted.
Also, taxes should represent the level of government services that citizens choose. I wouldn’t be that upset if the elctorate chose to scale down government services in order to get lower taxes; that’s not what I personally want but it’s an honest approach. I’m more offended by bogus tax cuts coupled with spending increases that simply pile up huge deficits; these really aren’t cuts at all but just a transfer of taxes from current payers to future payers. Lots of fun politically, but a catastrophe for the country.
Steve
Oh John it is even more pernicious than you think.
Lets look at his example of the woman with the sick grandmother.
He argues it is a good thing that Medicare is around because this woman can then start a business. The problem is that Kevin is ignoring completely the problem of perverse incentives.
What is the incentive to save for a loved one getting sick? None. Spend that money now, and then if it happens let the rest of us pick up the tab through taxes.
Kevin has a very poor understanding of economics and economic policy. He does not understand the Lucas Critique, time inconsistency and other serious issues for the kinds of policies he likes.
Randolph Fritz
“What is the incentive to save for a loved one getting sick?”
You clearly don’t have any elderly family members who are chronically ill. I do. So I can tell you that, for all but the upper middle class and the truly wealthy, there is no way to save for the expenses; the expenses can easily outstrip the savings of all but the most diligent. Illness can also strike at any time–one cannot count that one’s savings will be enough, nor count on the liquid funds being available when needed.
Given modern medical expensies, making self-insurance is a necessity, leads to, well, Confucian China, basically, where all of society is organized around the care and support of elders.
Well, it definitely is conservative…
Steve Malynn
Randolph, catastrophic care insurance could be universal at a fraction of the cost of the current medicare burocracy. Taxing all for the very purpose of skewing the market for medical services will lead to the medical shortages experienced in Canada and Europe.
Steve
Randolph,
So let me get this straight…you can’t save for all of the costs therefore you have the right to
1. force everybody else to pay a share of the costs
2. while you contribute nothing.
Have I got your position correct? You see, that is the problem with these policies. Even trying to set up a policy where the family pays part of it wont work. What if the family can’t pay part of it? Let the person die? I doubt it. In the end, the program will be structured basically to cover all costs if necessary. Thus, it creates a strong incentive not to save at all for such emergencies.
Further, Steve Malynn has a very good point. Not every elderly person gets sick. You could purchas catastrophic health coverage (well prior to getting sick obviously). This would be far less costly. However, Medicare discourages this sort of individual responsibility as well. Why pay out of my pocket what I can get everybody else to pay for.
As for your Confucian China comment that is just stupid. There are plenty of forward looking investment mechanisms that can be used to allieviate this problem. They are called 401ks, Keogh plans, IRAs, etc. It may not work for everybody, but it is not as you make it out to be.
Has anybody else even stopped to consider that one reason medical expenses are going up so rapidly is precisely because of Medicare?
When you have a disconnect between the cost (price) of something there is a tendency towards overconsumption. Medicare basically takes the costs of the elderly’s consumption of medical care and spreads it amongst people who have no ability to reduce that consumption. It seems pretty clear to me that such a situation could result in alot more consumption than might actually be necessary.