Nearly half of US households escape fed income tax

Exactly. Not to mention wages have been stagnant over the last decade while inflation especially for health insurance, education, energy, etc. has been skyrocketing.

All of that eats into middle class incomes while not making a dent in the top 1%.

 

Yeah, but even Rich people don't have to pay that much tax on the first $50K.

A progressive tax doesn't mean the rich get taxed at a higher rate.

It only means that the first $40k is taxed at a rate, and incremental income gets taxed at a higher rate. In other words, millionaires pay the exact same tax on their first $50k as anyone else making $50K (deductions and credits not withstanding).

The question is this...what is the impact on taxing someone making $50k a the same rate as someone making $500k?

Some would argue that taxing the rich guy will hurt investment since they will have less wealth to invest. Instead, you pass "fairer" taxes like sales tax or such and make the guys making $50K pay more burden.

There's two immediate effects of this.

1. Investment would increase. The guys with $500k would have a lot more money. A flat income tax is obvious why...but a sales tax also. Because this guy is less likely to spend the last few hundred K on things like food, clothes, staples, etc...and more likely to invest.

2. Spending would decline. That's because the family with $50k isn't really saving or investing...everything is getting spent. So an increase of $1000 means a decrease in $1000 in spending. Considering our economy is driven by consumer spending - regressive taxes would seriously be a bad thing for the economy.

Do you know there was a time that incremental tax had reached 90%? Reagan lowered that to what? 50's or 40's? And that did indeed create a boom in investment. That was his revolution. But to think that to continuing to cut it will have the same impact doesn't work. It's called the Laffer curve. There's diminishing returns...and we're seeing that. Cutting taxes added to our deficit and didn't really result in any kind of sustained economic growth.

I think the tax rates under Clinton were fine. No one seemed to complain too much about taxes then.

 

I don't feel like reading the whole thread and seeing servile wingnuts defend their corporate masters... if you want more people to pay taxes then pursue policies that create more people capable of paying taxes.

Instead, we've had more or less 3 decades of sucking up to the wealthy and pushing the burden down to those who can't afford it while creating a society that makes it more difficult for them to advance... all the while glorifying those that are sticking it to us.

 

SS is a tax but you receive a direct benefit from it when you retire.

 

True, but the benefit one receives is limited also.

 

The way I would do it...

We would have a consumption tax in the form of a VAT (looks like a sales tax but marginally more complicated for businesses to implement) on brand new goods and services. Used goods would be exempt from the tax, refurbished goods would be taxed only on the parts and labor needed to refurbish it, each adult in the household would get a $5000 tax credit and each child would get a $2500 tax credit for their parents.

This gives people who don't want to pay tax a way to avoid it, by purchasing used or recycled goods. The exemptions would reduce the regressive nature of a sales tax and would be implemented with a swipe card that would use the existing credit card infrastructure as food stamps do these days. If you wanted to use your exemption for that purchase, you would simply swipe your card. Everyone gets the same exemption so the system is completely fair and all medicines and food would also be exempt.

This kind of system would reward companies that make products with good resale value as many people would be in the market for used goods. Since we would not be taxing income, just consumption, it would encourage people to save money and I believe it would eventually reduce the need for Social Security. In addition, it would be easy and transparent to set up "sin" taxes or low tax rates to encourage purchases.

I would set the tax rate every year based on expenditures from the previous year. The tax rate would be set high enough to cover all spending plus a little more (5%) to reduce the debt principal. After the debt is paid, that 5% would go to a tax holiday at back to school time, just like we have here in Texas. This would make increased spending painful for the taxpayer, which would encourage politicians to reduce the budget as increased taxes would automatically result from increased spending.

Something like that...

 

yes but you receive direct benefits for your income tax too.

you get to have a nice SEC, which generally, protects and helps your investments by mandating filings which you can easily read on edgar before you invest.

there's the FAA which is useful for when you go on a business trip.

there's the NTSB which is nice to ensure that your foreign luxury car is safe.

there's the DoD which ensures your security.

the fact is, that rich people, get a lot of government services. their wealth is directly a result of the government and systems we have and thus should pay a fair share of their income.

regressive payroll taxes combined with regressive sales tax and state income taxes are really painful to the poor. these articles that simply cite federal income tax are arbitrary and frankly lying. the total taxation of different income brackets isn't that different. we have a basically flat tax.

 

Got a better idea!

900 Billion in revenue from the income tax(which is unconstitutional btw)?

how much much is the U.S. Military budget? ~700 Billion.

we cut both and reduce the size of our government and bam!

 

I am with you about progressive income tax since, among other things, the income one makes is a result of the government and systems we have.

That argument does not hold for SS tax though because you can not make the same argument and demand that another tax is made on the same income. You can make an argument to raise the income tax if you want but that can only be categorized as income tax. If you want to take a tax so the government can pay out social security benefit, you have to make a different case.

My case is: SS benefit is capped, hence the tax is capped.

 

The problem isn't the lower wage class not paying enough....it's big corporations not paying enough.

 

and outsourcing middle class jobs...

 

If 50% of households escape income tax and the wealthy find ways not to pay much of their income tax, who is paying the income tax?

The primary problem is the government spends too much.

 

The corporate income tax is a farce - so many loopholes and so many problems with it - it also leads to distortions in corporate behavior because the tax policies can drive decisions (i.e, leaving capital out of the U.S.).

What they really should do is just tax the dividends to shareholders at a higher rate. Tax at the ownership level, not the company level. Could tie in a higher capital gains tax rate on shares too (but wouldn't raise the rate on sale of assets/etc).

This high corporate tax rate argument is really a strawman - all it does is drive companies to figure out ways to avoid that tax - hence the low effective tax. The irony is of course that when we say tax corporations more, we are effectively just saying tax shareholders (which is really us and our pension funds, retirement accounts, etc) more - so just go to the bottom line and tax us directly instead.

 

america, f*** yeah!

 

No no no you're missing the point, less taxes means more hiring. I know this is true because voodoo I mean trickle down economics is infallible. Our most educated actor I mean President ever Ronald Reagan told me so. Seriously didn't you see how much hiring was done after those Bush tax cuts?

President George W. Bush entered office in 2001 just as a recession was starting, and is preparing to leave in the middle of a long one. That’s almost 22 months of recession during his 96 months in office.

His job-creation record won’t look much better. The Bush administration created about three million jobs (net) over its eight years, a fraction of the 23 million jobs created under President Bill Clinton’s administration and only slightly better than President George H.W. Bush did in his four years in office.

Here’s a look at job creation under each president since the Labor Department started keeping payroll records in 1939. The counts are based on total payrolls between the start of the month the president took office (using the final payroll count for the end of the prior December) and his final December in office.

Because the size of the economy and labor force varies, we also calculate in percentage terms how much the total payroll count expanded under each president. The current President Bush, once taking account how long he’s been in office, shows the worst track record for job creation since the government began keeping records. –Sudeep Reddy

http://blogs.wsj.com/economics/2009/01/09/bush-on-jobs-the-worst-track-record-on-record/tab/article/