There is no "the" problem. You identify one problem to exclusion of the very real, salient problem that the average taxpayer sees the wealthy as not paying their fair share.
The top 1% of people pay 45% of federal income taxes. The top 10% of people pay 75%.
Rates are already highly progressive.
https://taxfoundation.org/data/all/federal/latest-federal-in....
Also consider that payroll tax has become an increasing portion of what is collected, health insurance is now required to be paid by the individual regardless of health status, and auto insurance is now required for all drivers. These are effectively regressive taxes on the general population.
https://en.wikipedia.org/wiki/History_of_taxation_in_the_Uni...
combined State+ federal taxes look to be on par with 1950s levels. It also ignores the fact that the inflation controlled GDP has gone up 4.5X since then too. The government is rolling in 4X the cash as the 50's, but cant build a fraction of the infrastructure.
>Also consider that payroll tax has become an increasing portion of what is collected, health insurance is now required to be paid by the individual regardless of health status, and auto insurance is now required for all drivers. These are effectively regressive taxes on the general population.
Payroll, health, and auto insurance aren't regressive taxes, they are flat taxes and slightly progressive taxes. High earners still subsidize low earners for SSI. auto and health are flat.
My first point is to question if %GDP is the right framework to even think about this, rather than dollars.
>However, my point was that the origin of the income has shifted significantly.
I dont think it has. Income taxes seem to be within a percent or so of 1950 values, but payroll taxes have increased massively. This means income tax revenue is pretty similar as a % of GDP, and massively increased in real dollars.
>Parent says 45% progressive tax is high, it's not - it's half as progressive as it was in the 50s before including other societal changes that effectively serve as a regressive tax.
Thats not evident from the data. You would have to look at actual breakdown of federal revenues from income group, not just the tax brackets. It could be that taxes were far more flat/regressive in the 1950s (e.g. to 1,10% paid a much smaller share.
Table 5 of this link goes back to the 80s, and shows the fraction paid by the top 10% earners increase from 32% to 52% in the last 40 years. That is a huge progressive taxation swing.
https://taxfoundation.org/data/all/federal/latest-federal-in...
In the context of the previous 25 years its not. "following World War II tax increases, top marginal individual tax rates stayed near or above 90%, and the effective tax rate at 70% for the highest incomes (few paid the top rate), until 1964 when the top marginal tax rate was lowered to 70%..."- wikipedia
it would be interesting to have the full historical data set to play with
Founded by the Chairman and CFO of General Motors, and the President of Exxon to ostensibly "improve lives through tax policy research" but has in its 86 years of existence NOT ONCE supported:
- increasing individual taxes
- increasing business taxes (actively the opposite)
- the existence of excise taxes
- the existence of tax credits
and generally argues for "significantly smaller" government, "significantly smaller" budgets and such.
While it describes itself as non-partisan, it is generally rated:
- heavily business-friendly
- conservative
- center-right to right
I am shocked that such an organization, founded by "titans of industry" would claim that we need to tax the wealthy far less and tax the corporations they own and run far less. Entirely shocked.
But then if you learn that that 1%s earnings are dozens of times more than that next 9%, you realize “hey, it’s not that proportional or progressive as they’d have us believe”.
The Tax Foundation openly wants the rich to pay less tax.
Like Peter Thiel's tax-free $5B Roth IRA account.
If every person in Houston deposited the maximum they were allowed into their account, it wouldn't equal what self-dealing and obfuscation allowed Thiel to deposit (how many people have share portfolios that they control AND control the valuation thereof).
The Tax Foundation knows that the 1% doesn't have all their income captured under "Elon Musk, SSN XYZ" when he files his tax return. But they still like to paint it as such, because it advances their talking points. Like a sibling said, when you look at the wealth controlled and earned, pointing to just the total paid is garbage, because there's no proportion. "Oh, they paid 1.5 times more than [demographic]" means very little when they control 70x the wealth of that other demographic.
Source: https://www.propublica.org/article/lord-of-the-roths-how-tec...
If money isnt collected because of tax shelters, then it isnt represented. This is why looking at actual collection data is more useful than just looking at tax brackets.
75% of what? Income tax? Very misleading--there is more than one way to make money, and those in the top 10% are probably not making most of their money via income. Warren Buffet famously said his secretary has a higher tax rate than he does.
// I wonder how that perception problem can be tackled? //
The best way would be an even distribution of wealth. The top 1% own half.
The other 99% share the other half. You can quote any statistic you'd like, but when 1% own half, the other 99% are not going to think they have a perception problem.
Well they own more wealth than the entire bottom 90%, so it seems like they're still underpaying.
If the point is simply to tax people until you have a more egalitarian society, then obviously it is too low.
If the point is to pay for services that people use, the rich are far exceeding the cost of services they use, and subsidizing everyone else by a huge margin.
Simple examples are toll roads, gas taxes, permit fees, ect. SSI is closer to a use tax, but has some redistribution built in. Many cities fund infrastructure using parcel taxes, which approach per capita use taxes as well given that hey are paid by home owners, or often passed on to renters.
Not if their wealth is being subsidized by everyone else and not via their own labor, as in that case, they are using the services of others and underpaying for it. And this goes for anyone, regardless of their amount of wealth.
I think this just collapses into the first case where the purpose of taxes being equality. Unpaid labor/service value is just the rationale.
I know that this opinion is disregarded as a conspiracy by some, but I see the very real effect of it where I live (in Germany). We have a large part of the populace who do not see value in Work because we accidentally created equality of outcome by not raising the wage limit needed to hit the highest tax bracket for decades.
I'm not kidding. There exist multiple showcases that show there to be just a tiny difference in net income anywhere between 3k and 5k Eur before tax, if you're a single earner with a family of two in any large city.
Two points here, I guess:
1) The nice thing about compounding growth is that it just doesn't care about individual or personal anything. People who start with more get more, and they get it faster without them even doing anything.
2) Executives are standing on the backs of the people doing the actual labor. Children of rich families are born on top of mountains of money. Let's not pretend like their success is entirely personal. Unless maybe you want to eliminate inheritance and trusts? If we can entirely eliminate inheritance and trusts, that would probably go a very long way.
> raising the wage limit needed to hit the highest tax bracket
Feel free to put another bracket to differentiate 10% and 1% if you want. That's entirely orthogonal.
2) Not all success has to be personal. You can and should profit from the wealth that your parents accumulated. I am fine with taxing the obscenely rich and with eliminating their insane schemes to circumvent the tax code. They should pay their fair share.
The entire reason I originally answered you is that it's not entirely orthogonal, and keeping the distinction here is incredibly important.
Being within the top 10% currently puts you into the 160K a year range. That is not rich. This is your ordinary handyman and his wive, doctors, lawyers, engineers, air traffic controllers, etc.
These people are hardworking and in the process of accumulating wealth, for them and hopefully their children. Grouping them with the ultra rich and demanding their taxes to be raised any further is unfair.
Remind me how we got from "individual responsibility" and "personal success" to "inheriting wealth from parents by luck of birth" again?
Generational wealth transfer can only ever increase the divide between upper and lower classes over time. There's no way around it.
Talk of "individual responsibility" and "personal success" is diametrically opposed to inheritance. You cannot have both. The person inheriting has done absolutely nothing to deserve it.
"Individual responsibility" is the easy part and can mean paying your debts.
"Personal success" can simply mean advancing from your starting position, whatever that may be.
I tend to agree with the parent post that building generational wealth and benefit is desirable. It makes sense for perspectives and systems that aren't zero sum.
increasing individual and national prosperity is not zero sum activity. however, Income inequality is inherently a zero sum metric. Optimizing for income equality means it is better for each of us to have $1 to spend than one of us to have $3 and the other $2.
This is extremely out of touch.
Even if you taxed "rich people" harder, say tax all billionaires at 90%, there isn't enough to cover what is being spent and it's not even close.
For instance, there is approximately 5 trillion currently held by billionaires in the US. That, coincidentally, is approximately 1 year of current federal spending.
Then the following year you have no more billionaires to harvest as it took them many decades to get the money.
On the other hand you have people who say "well, the federal government needs to stop spending so much" (and this does make sense at the same level "tax the rich more does "). But the problem with removing, or even substantially reducing, federal deficit spending is the resulting giant black hole would economically collapse many things in the short term at least.
I don't know that there are easy answers for the problems the US finds itself in at the moment. Probably some sort of financial reset at some point, which is unlikely to be either clean or painless.
Personally, I was shocked. I thought for sure the increase in taxes would push an already wobbly economy into deep depression. What happened instead is that---after the Government stopped hovering up all the money available to lend--interest rates decreased, and people both had to and could lend their money to actually productive businesses. It was boom city after that.
There is no unsolvable debt problem. If we couldn't repay our debt, people would stop buying our bonds. And the solution is so simple. Raise the taxes until interest rates are low enough to trigger an investment boom.
It didn't last very long and soon we were to Bush 2 spending and massive deficits again. Every subsequent administration has dug the hole deeper to the point we spent 140 billion in June alone on federal debt interest payments.
Who will you raise taxes on? The "Rich"? (see my other comment, it's not enough money), the "middle class" who are being squeezed silly by inflation at the moment? I don't know that they can shoulder much increase without big upheaval.
I agree no problem is unsolvable, but that doesn't mean the problem will be solved gracefully. I suspect a new order of things economically is how it works out in the end, and what that looks like and when it occurs I do not know.
Fast forward 45 years and his party is telling you that in orders to save the country, you have to accept a lesser benefit because they spent all the money from a fund that was supposed to be a social safety net.
You can also stop defending people who are tax cheats with “the rich really do pay”. Apparently not, because that is the premise of the entire article that the IRS collected tax due.
I find this claim to be intellectually dishonest.
It's pretty well-known that deficits drop during Democrat presidencies and then skyrocket again during Republican presidencies. But because democrats haven't been able to bring the deficit to zero since Clinton, somehow they still get blamed for the debt continuing to rise, even when they still manage to reduce deficit while Republicans increase it.
It drove me absolutely bonkers that people blamed Obama for skyrocketing debt when he inherited a huge deficit because of Bush's tax cuts.
Fun Fact: Ronald Reagan raised my taxes. Graduate student stipends did not used to be subject to federal taxation---and then they were. Just a bit more than $100 was taken out of my pay check. $100 is a lot of money, when you are only making $800 a month.
So yeah, Reagan gave tax cuts to one class of people, and paid for them by raising taxes on another class of people (as I recall, he started taxing me to 'fix social security.' I hear that fix is about to run out, and they'll need another one if it is to last through my retirement.). Forgive me if I don't look back on the Reagan years with a golden, warm, fuzzy glow of nostalgia.