Warren Buffett - "stop coddling the super-rich"

[cardboardbox]

Well, one-third are already below the threshold. The other 14% drop below the threshold once they factor in the appropriate exemptions, credits, deductions, etc. How much money do you expect to get from those from $30-50K and two kids?

not much, but the numbers were just as an example, I dont know what the real ones should be. I just wanted to show that under this type of flat tax, the poor are not being burdened much different than today.

[OaklandA's]

not much, but the numbers were just as an example, I dont know what the real ones should be. I just wanted to show that under this type of flat tax, the poor are not being burdened much different than today.

If someone is not paying any federal income tax now, then an extra 3-5% would certainly be a burden. That's an extra couple of thousand for someone who can barely get by already.

It clearly would depend on the thresholds you set, the exemptions/deductions you allow, and the rates you specify for income, capital gains, etc. Unless all of those things are spelled out, it's impossible to determine the impact on individuals or the country as a whole.

[chancellor]

Please read my Post #33. How much share each group pays has NOTHING to do with anything. It is just a function of how many people, or technically how much income, falls into each bracket. If more people fall into the lower bracket, or more people move into the top bracket, how does that make the tax code more or less progressive?

And you're wrong. The concept of a progressive tax code is those who make more should carry a higher burden of the total taxes for the nation. Or, in simplistic terms, the rich and super rich carry a heavier burden, not merely in quantity of taxes paid but total percentage of tax burden, than the middle class, lower middle class and poor. Therefore, those who earn more should not merely a higher percentage than aligns with their higher income, but carry a higher percentage of taxes paid than income earned.

If we had a non-progressive tax code, each earning group would pay a share of taxes equivalent to their income and all average tax rates would be equal. Using my numbers above, the top 1% of earners would have earned 20% of all income, paid 20% of all taxes and had an average tax rate of "x". The bottom 50% of earners would have earned 12.75% of all income, paid 12.75% of all taxes, and had an average tax rate of "x".

Instead, our tax code results in the top 1% of earners making 20% of all income, paying 38% of all income taxes, and has an average tax rate of about 9x. The bottom 50% of all earners makes 12.75% of all income, paid 2.6% of all income taxes, and has an average tax rate of about x.

That's about as textbook of a definition of how a progressive tax code should work, no?

[DMT]

That's about as textbook of a definition of how a progressive tax code should work, no?

Not when billionaires have lower % tax rates than the middle-class.

[B-Fly]

And you're wrong. The concept of a progressive tax code is those who make more should carry a higher burden of the total taxes for the nation. Or, in simplistic terms, the rich and super rich carry a heavier burden, not merely in quantity of taxes paid but total percentage of tax burden, than the middle class, lower middle class and poor. Therefore, those who earn more should not merely a higher percentage than aligns with their higher income, but carry a higher percentage of taxes paid than income earned.

If we had a non-progressive tax code, each earning group would pay a share of taxes equivalent to their income and all average tax rates would be equal. Using my numbers above, the top 1% of earners would have earned 20% of all income, paid 20% of all taxes and had an average tax rate of "x". The bottom 50% of earners would have earned 12.75% of all income, paid 12.75% of all taxes, and had an average tax rate of "x".

Instead, our tax code results in the top 1% of earners making 20% of all income, paying 38% of all income taxes, and has an average tax rate of about 9x. The bottom 50% of all earners makes 12.75% of all income, paid 2.6% of all income taxes, and has an average tax rate of about x.

That's about as textbook of a definition of how a progressive tax code should work, no?

No, not even remotely. A textbook definition is that individuals with higher incomes face a higher tax burden, not "earning groups" as percentages of the total population versus percentages of total taxes paid. You're deliberately skewing the textbook definition of how a progressive tax code should work.

[OaklandA's]

That's about as textbook of a definition of how a progressive tax code should work, no?

I don't think you are following the math about the share that each group pays. The progressive nature of our tax code is that we have rates that vary from 15-35%. That hasn't changed for several years. The top 1% are paying a higher share of the tax burden because the distribution of people within the brackets has changed. Not because we have made the system more progressive.

[B-Fly]

A progressive tax is a tax by which the tax rate increases as the taxable base amount increases.

http://en.wikipedia.org/wiki/Progressive_tax

^ Webster (4b): increasing in rate as the base increases (a progressive tax)
^ American Heritage (6). Increasing in rate as the taxable amount increases.
^ Britannica Concise Encyclopedia: Tax levied at a rate that increases as the quantity subject to taxation increases.
^ Princeton University WordNet: (n) progressive tax (any tax in which the rate increases as the amount subject to taxation increases)
^ a b Sommerfeld, Ray M., Silvia A. Madeo, Kenneth E. Anderson, Betty R. Jackson (1992), Concepts of Taxation, Dryden Press: Fort Worth, TX

[chancellor]

Ummm....that is what we have been talking about in this thread.

If you make all your money on investments (which is what the super-rich do) then you are in the 15% tax bracket. Not the 38% tax bracket.

Ummm...and that's what I've been refuting in this thread. It's pretty simple: the rich and super rich pay a lot more than 15% as their mean tax rate. In 2008, the mean tax rate for the rich and super rich was in roughly the 23.5% area. I haven't researched the standard deviation to that mean, so we don't know how far of an outlier Buffett really is. But he's certainly off the norm.

Meanwhile, the average tax rate for the top 50% of income earners is about 13.5%. I haven't broken it down by quartile or quintile, but I'm going to feel pretty safe in saying the 3rd of 4th quartile - 50-75% - are paying an average tax rate significantly lower than those in the top quartile. It's possible I'm wrong and there could be some sort of kinky tax curve that shows the earners in the top 75-90% are paying virtually nothing, but I doubt it.

So, the top quartile pays a higher average tax rate than the second quartile; the second quartile pays in at a higher average tax rate than the third quartile, and the third quartile likely pays in slightly more than the last quartile. So the tax code is functioning as designed; the average tax rates progressively increase, and the average tax rate for the lowest 50% is very low.

Are there individual outliers? Absolutely. However, the key here isn't that there are individual outliers - it's whether the individual outliers change the overall goal of a progressive tax code, which they don't.

[B-Fly]

Are there individual outliers? Absolutely. However, the key here isn't that there are individual outliers - it's whether the individual outliers change the overall goal of a progressive tax code, which they don't.

The key here to whom, precisely? Let's reframe the question. Are you ideologically opposed to reforming the tax code to minimize the number of individual outliers, e.g., by eliminating the distinction between investment income and earned income, so that the rate of tax increases as the taxable amount increases at an individual level?

[chancellor]

The key here to whom, precisely? Let's reframe the question. Are you ideologically opposed to reforming the tax code to minimize the number of individual outliers, e.g., by eliminating the distinction between investment income and earned income, so that the rate of tax increases as the taxable amount increases at an individual level?

Right after you give me your proposal for $1 trillion in spending cuts per year, I'm wide open to moving back to the Clinton era tax percentages Oakland As loves so much. How they're structured, I don't much care. Want to go after capital gains? Hey, go for it. Want to raise the top tax bracket? Sure.

But until our government can show us a scintilla of repsonsible spending behavior - which I'm defining as cutting 60% of our deficit with real spending cuts - they don't deserve another dollar to misspend.

[B-Fly]

Right after you give me your proposal for $1 trillion in spending cuts per year, I'm wide open to moving back to the Clinton era tax percentages Oakland As loves so much. How they're structured, I don't much care. Want to go after capital gains? Hey, go for it. Want to raise the top tax bracket? Sure.

But until our government can show us a scintilla of repsonsible spending behavior - which I'm defining as cutting 60% of our deficit with real spending cuts - they don't deserve another dollar to misspend.

So you're not ideologically opposed, then. Good. Close the thread.

[chancellor]

So you're not ideologically opposed, then. Good. Close the thread.

Never was, and I haven't been in other threads. My main issue is the myth that Buffett's trying to spread for political gain - that the US tax code does not function in a progressive manner, despite the progressive tax brackets, with an end game of simply trying to jack up taxes without necessary spending cuts.

[senorsheep]

Right after you give me your proposal for $1 trillion in spending cuts per year, I'm wide open to moving back to the Clinton era tax percentages Oakland As loves so much. How they're structured, I don't much care. Want to go after capital gains? Hey, go for it. Want to raise the top tax bracket? Sure.

But until our government can show us a scintilla of repsonsible spending behavior - which I'm defining as cutting 60% of our deficit with real spending cuts - they don't deserve another dollar to misspend.

Exactly how I feel about it.

[chancellor]

Exactly how I feel about it.

Well, you just MUST be a Christian Fundamentalist Tea Bagger, then.

[GwynnInTheHall]

Right after you give me your proposal for $1 trillion in spending cuts per year, I'm wide open to moving back to the Clinton era tax percentages Oakland As loves so much. How they're structured, I don't much care. Want to go after capital gains? Hey, go for it. Want to raise the top tax bracket? Sure.

But until our government can show us a scintilla of responsible spending behavior - which I'm defining as cutting 60% of our deficit with real spending cuts - they don't deserve another dollar to misspend.

That's fine with me, but is everything on the table including defense? Are you open to reducing the military, ending the 2 wars and our presence overseas along with the obvious reductions/re-tooling of the entitlement systems?