Why Only 39.6%

[Protectionist]

The new bill passed to avoid the fiscal cliff raises taxes on the top 2% of Americans (incomes over $450,000/year). WHY ONLY 39.6% ?

Is there some weird mystique about the number 39.6 ? For starters, why not 40%. What's up with this .6% And why so small a tax hike ? We're talking about people with incomes in the multi-millions per year.

The average income of the top 1 percent of households rose nearly 12 percent from 2009 to 2010. For the richest households—the top 0.01 percent—the growth was even more dramatic. This super-wealthy mini-segment of the population saw its incomes rise by 21.5 percent.
While the vast majority of Americans continues to feel the impact of the recession—in the form of joblessness, wage cuts and deep attacks on living standards—the very wealthy are hauling in obscene amounts of income. The income spread within the top 1 percent is particularly significant.

An example I often refer to is the income of the movie stat Johnny Depp. in 2011, he hauled in $100 Million. So he should only pay $39.6 Million and keep $60.4 Million ? So we're saying it's more important that Depp (who doesn't risk his life like firefighters, military troops, & coal miners) pocket $60.4 Million/year than to have a lot of that money go to really needed causes ? Why would that be ? So Depp can buy more vascation homes around the world ? More important than helping babing with birth defects ?

So Depp can buy a fleet of private jets ? More important than fixing infrastructure currently threatening to kill thousands of people ?

Why not set the tax rate for the top rich at 92% (like it was during the Eisenhower years) and close up looholes ?

 

[chris7375]

The new bill passed to avoid the fiscal cliff raises taxes on the top 2% of Americans (incomes over $450,000/year). WHY ONLY 39.6% ?

Is there some weird mystique about the number 39.6 ? For starters, why not 40%. What's up with this .6% And why so small a tax hike ? We're talking about people with incomes in the multi-millions per year.

The average income of the top 1 percent of households rose nearly 12 percent from 2009 to 2010. For the richest households—the top 0.01 percent—the growth was even more dramatic. This super-wealthy mini-segment of the population saw its incomes rise by 21.5 percent.
While the vast majority of Americans continues to feel the impact of the recession—in the form of joblessness, wage cuts and deep attacks on living standards—the very wealthy are hauling in obscene amounts of income. The income spread within the top 1 percent is particularly significant.

An example I often refer to is the income of the movie stat Johnny Depp. in 2011, he hauled in $100 Million. So he should only pay $39.6 Million and keep $60.4 Million ? So we're saying it's more important that Depp (who doesn't risk his life like firefighters, military troops, & coal miners) pocket $60.4 Million/year than to have a lot of that money go to really needed causes ? Why would that be ? So Depp can buy more vascation homes around the world ? More important than helping babing with birth defects ?

So Depp can buy a fleet of private jets ? More important than fixing infrastructure currently threatening to kill thousands of people ?

Why not set the tax rate for the top rich at 92% (like it was during the Eisenhower years) and close up looholes ?

You really think they are going to pay that . They have ways around that so if you really think that 39.6% is actually what is going to be paid off lets use the 100 million. My money is on that 100 million will shrink to 50 million and taxes may be paid on 50 million rather then the 100 million.

 

[Protectionist]

You really think they are going to pay that . They have ways around that so if you really think that 39.6% is actually what is going to be paid off lets use the 100 million. My money is on that 100 million will shrink to 50 million and taxes may be paid on 50 million rather then the 100 million.

1. I did say "close the loopholes".

2.. Why would Depp's $100 Million shrink to $50 Million ? We'll soon know if it did. We're in January, and the results of his 2012 income can be compared to his 2011 income. I'll see if I can find it. I wouldn't be surprised if it's higher than $100 Million.

 

[chris7375]

1. I did say "close the loopholes".

2.. Why would Depp's $100 Million shrink to $50 Million ? We'll soon know if it did. We're in January, and the results of his 2012 income can be compared to his 2011 income. I'll see if I can find it. I wouldn't be surprised if it's higher than $100 Million.

I saw what you said it was spoken as in general sorry not aimed at you.

Though I am not saying his income will shrink though I doubt he will pay taxes on 100 million. Though I could be wrong but I doubt it.

 

[myp]

39.6% is just what they ended up with through negotiations. Someone always wants to pull it up or down at most margins, so sometimes (a lot of times actually) you end up with seemingly random numbers.

 

[Protectionist]

I propose that they set the individual tax at 92% as it was during the Eisenhower years.
This should be accompanied by a closing of every existing loophole.Sure, the super rich will pay lawyers and consultants to find them tax shelters (new loopholes).

And as these new loopholes arise, we should have "our" legislators ban them one by one. That's part of what were paying them for. If they don't comply - out they go, at the next election. When enough of them get tossed, they'll get the message.

As for the capital gains tax, it just did up up in the latest bill. How much I don't currently know.

 

[myp]

The income tax isn't going to be raised to 92% for any bracket. Not politically feasible. Won't generate much revenue anyway.

Cap gains went up to 20% from 15%.

The best plan is to scrap all this (cap gains, income, and corporate) in favor of a progressive consumption tax in my opinion. That and Pigouvian taxes would be fantastic- we are taxing productive things way too much right now. Unfortunately the Overton window seems to be far from opening on that one.

 

[Protectionist]

The income tax isn't going to be raised to 92% for any bracket. Not politically feasible. Won't generate much revenue anyway.

Cap gains went up to 20% from 15%.

The best plan is to scrap all this (cap gains, income, and corporate) in favor of a progressive consumption tax in my opinion. That and Pigouvian taxes would be fantastic- we are taxing productive things way too much right now. Unfortunately the Overton window seems to be far from opening on that one.

"Wont generate much revenue..." Why not ? As I used to ask my students >> Upon what do you base that statement ? And secondly, how are you defining >> "much revenue" ?

 

[Protectionist]

The income tax isn't going to be raised to 92% for any bracket. Not politically feasible. Won't generate much revenue anyway.

Cap gains went up to 20% from 15%.

The best plan is to scrap all this (cap gains, income, and corporate) in favor of a progressive consumption tax in my opinion. That and Pigouvian taxes would be fantastic- we are taxing productive things way too much right now. Unfortunately the Overton window seems to be far from opening on that one.

By consumption tax, you mean sales taxes ?

 

[myp]

By consumption tax, you mean sales taxes ?

Yes, but a progressive consumption tax- more like a VAT.

 

[myp]

"Wont generate much revenue..." Why not ? As I used to ask my students >> Upon what do you base that statement ? And secondly, how are you defining >> "much revenue" ?

I base that on the amount of income above that threshold and simply taking 92% of it instead of whatever the rate is right now. There just aren't enough Romneys out there relative to the deficit

 

[Protectionist]

I base that on the amount of income above that threshold and simply taking 92% of it instead of whatever the rate is right now. There just aren't enough Romneys out there relative to the deficit

Want to give some CONCRETE statement on how much you think a 92% tax on the rich would bring in ?

ALso: consider this:

The wealthiest 20% of the US households are set to receive about $6.5 Trillion in personal income this year, half of all national personal income. Their average tax burden is around 26%, or about $1.7 Trillion. This leaves them with $4.8 Trillion of disposable income each year.

The current budget deficit is around $1.1 Trillion, or about one fourth of the disposable income of the wealthiest. They could be taxed enough to eliminate the budget deficit and still receive 3/4 of their income.

If you want stats they are at census.gov and bea.gov

 

[redwood]

The new bill passed to avoid the fiscal cliff raises taxes on the top 2% of Americans (incomes over $450,000/year). WHY ONLY 39.6% ?

Is there some weird mystique about the number 39.6 ? For starters, why not 40%. What's up with this .6% And why so small a tax hike ? We're talking about people with incomes in the multi-millions per year.

The average income of the top 1 percent of households rose nearly 12 percent from 2009 to 2010. For the richest households—the top 0.01 percent—the growth was even more dramatic. This super-wealthy mini-segment of the population saw its incomes rise by 21.5 percent.
While the vast majority of Americans continues to feel the impact of the recession—in the form of joblessness, wage cuts and deep attacks on living standards—the very wealthy are hauling in obscene amounts of income. The income spread within the top 1 percent is particularly significant.

An example I often refer to is the income of the movie stat Johnny Depp. in 2011, he hauled in $100 Million. So he should only pay $39.6 Million and keep $60.4 Million ? So we're saying it's more important that Depp (who doesn't risk his life like firefighters, military troops, & coal miners) pocket $60.4 Million/year than to have a lot of that money go to really needed causes ? Why would that be ? So Depp can buy more vascation homes around the world ? More important than helping babing with birth defects ?

So Depp can buy a fleet of private jets ? More important than fixing infrastructure currently threatening to kill thousands of people ?

Why not set the tax rate for the top rich at 92% (like it was during the Eisenhower years) and close up looholes ?

You're right (though the 92% won't happen...The USA was still dealing with big debt from WWII and Korea) The 39.6 was the rate before the expired Bush Cuts. The FUSS about the DEBT...was not sincere. It was the old right wing class warfare agenda...and they THOUGHT with all that secretive money,Mitt would win and they would slash Social Security,Medicare,Food Stamps,Veteran Benefits,etc etc and even cut the top tax rate down to about 25%. Now...the Sequester plan backfired so they need to threaten another "Hostage situation" with default.

 

[myp]

Want to give some CONCRETE statement on how much you think a 92% tax on the rich would bring in ?

ALso: consider this:

The wealthiest 20% of the US households are set to receive about $6.5 Trillion in personal income this year, half of all national personal income. Their average tax burden is around 26%, or about $1.7 Trillion. This leaves them with $4.8 Trillion of disposable income each year.

The current budget deficit is around $1.1 Trillion, or about one fourth of the disposable income of the wealthiest. They could be taxed enough to eliminate the budget deficit and still receive 3/4 of their income.

If you want stats they are at census.gov and bea.gov

Why are you looking at the top 20%? That is hardly the highest bracket.

And right now isn't a good time for such tax hikes anyway given the weak recovery and the Treasury's ultra-low borrowing rates.

 

[Protectionist]

You're right (though the 92% won't happen...The USA was still dealing with big debt from WWII and Korea) The 39.6 was the rate before the expired Bush Cuts. The FUSS about the DEBT...was not sincere. It was the old right wing class warfare agenda...and they THOUGHT with all that secretive money,Mitt would win and they would slash Social Security,Medicare,Food Stamps,Veteran Benefits,etc etc and even cut the top tax rate down to about 25%. Now...the Sequester plan backfired so they need to threaten another "Hostage situation" with default.

The (Bill) Clinton tax rate (39.6%) is irrelevant. There is no reason why 39.6% should be chosen as a tax rate, just because that's the rate that a former president's administration had.

The country needs money, and there's no reason why we should not get away from these abnormally low tax rates we've had since Reagan's tax cutting, 30 years ago. At the lowest, the top tax should be 70%, as it was before Reagan took over, and even better would be the 75-80% tax at which we had our best job growth and GDP growth years. A return to the Eisenhower rates would be OK also. So the USA was dealing with big debt from 2 wars in the 50's. So what ? We're dealing with even bigger debt right now.

 

[Protectionist]

Why are you looking at the top 20%? That is hardly the highest bracket.

And right now isn't a good time for such tax hikes anyway given the weak recovery and the Treasury's ultra-low borrowing rates.

1. The highest bracket does not necessarily have to be the only point of reference for tax hikes.

2. Right now is the perfect time for tax hikes, to create govt jobs, which increase consumer spending is the stores >> PERCOLATE UP ECONOMICS.
Some of the newly created govt jobs could also go to issues that increase revenue (or decrease the loss of it) , most notably the illegal immigration issue. >> Hiring ICE agents, CBP officers, creating immigration courts & jails, and building the Mexican border double fence.

 

[myp]

You understand that we are in a recovery right now, right? How can you take such a hard-lined position for tax hikes right now given the disaster of austerity we have seen in Greece thus far? Also, what is your goal with such a tax in the short run? Is it to cut the deficit as you suggested before or for the government to spend the money to hire more people? It can't be both, at least not absolutely.

There are a couple other points you made that I don't agree with in that post, but I won't go into them here as to try to remain on the primary topic.

 

[andrew320]

I have a better question: why can't corporations just be taxed 100 percent so the United States government can pay for more wars, higher salaries and more waste in federal spending? Better yet, why don't we tax all millionaires and billionaires 100 percent of their incomes?

The problem with corporate taxes is that they hurt the workers and the consumers. Also, it wouldn't matter if you tax them all 100 percent because it still wouldn't fix the debt/deficit problem.

 

[Protectionist]

You understand that we are in a recovery right now, right? How can you take such a hard-lined position for tax hikes right now given the disaster of austerity we have seen in Greece thus far? Also, what is your goal with such a tax in the short run? Is it to cut the deficit as you suggested before or for the government to spend the money to hire more people? It can't be both, at least not absolutely.

There are a couple other points you made that I don't agree with in that post, but I won't go into them here as to try to remain on the primary topic.

I can easily do it because all your concept of not raising taxes during a recovery is part & parcel of trickle down economics, which I consider to be utter nonsense. My goal is to create jobs FOR AMERICANS, increase the tax $$ being paid into the government from those jobs, reduce the losses$$ from immigration welfare and remittances$$$, and attend to the problems that need attending (immigration, infrastructure, the military, building prisons, etc) By increasing taxes on the rich, BOTH cutting (if not eliminating) the deficit, AND creating jobs (FOR AMERICANS) is accomplished. The economy will improve both by the increase in consumer spending in the stores (AKA the economy) and the stoppage of remittances$$.

 

[Protectionist]

I have a better question: why can't corporations just be taxed 100 percent so the United States government can pay for more wars, higher salaries and more waste in federal spending? Better yet, why don't we tax all millionaires and billionaires 100 percent of their incomes?

The problem with corporate taxes is that they hurt the workers and the consumers. Also, it wouldn't matter if you tax them all 100 percent because it still wouldn't fix the debt/deficit problem.

Of course it would fix it. See Post # 12.

Also, what do you say about raising the individual tax (where by far most revenue comes from) ? Want to have Johnny Depp pocket $65 Million/year ? (as he did in 2011) ........OR......would you rather some more of that $65 Million go to fixing the Wolf Creek Dam in southern Kentucky (now serioulsy threatening the lives of hundreds of thousands of people in the Nashville, Tennessee area (as well as the whole state, since Nashville is the state capital).