Bump the top margin tax rate to 40%

And with a state tax rate of around 10% (at the top), the highest wage earners then surrender half of what they make to the group, and keep half. Half-and-half is fair to those whose nation and society has allowed them to make a million dollars or more per year.

Such a rate, constructed progressively so that earnings of $50,000 would be taxed at about 35%, seems reasonable to me. I'd gladly pay 35% if the wealthiest will pay 40.

equivalent of WWII, why aren't the top earners doing what they did back in the day?

became a superpower with good roads, good jobs, and the envy of the world. We HAD money.. If course the stock market was very small,and was just for the hotshot rich guys back then, but ordinary folks had good paying jobs with defined benefit pensions.. The Money men had not yet moved in on the "medical industry", so families could afford health care too..

Families thrived with only one breadwinner, and somehow people could afford homes, cars, vacations, health care, dentists....all on a blue collar dad's salary..

aaaah the good ole days.. (there were terrible social ills though, so it was not nirvana)

just one example is the male-dominated workforce. After women entered the workforce (definitely a good thing), the amount of people in the labor pool essentially doubled, making labor much, much cheaper. As a result real wages have been stagnating since the 1970s.

I'm not at all going to say that women shouldn't have entered the workforce. Just pointing out that those "social ills" were one reason that the blue-collar dad had it so good.

It's true that women being able to work was a god thing, but I bet more than a few working moms these days would love to try out the "old ways"..even for a little while..

I was lucky.. I was on the cusp.. I did have it both ways.. I was a stay-at-home Mom for almost 8 years with 3 boys(all within 5 years and moves to 5 houses in 4 states..I was too busy to have a job)..

and then i worked full time once they were in school, but I had a union job that paid almost $17 an hour, and my husband made good money too,..


Family life is so stressful for young families now..I feed very sorry for them :cry:

in 1935, FDR proposed the Wealth Tax Act, which would have imposed a 90% tax on corporate income, but it failed to make it out of Congress

... when Reagan and Congress decided to drop the top rate progressively over several years from 70% to 28%, beginning in 1983. Kennedy sought, and got, the top rate reduced from 91% to 70% in 1963.

But, the combination of that tax cut (along with severe cuts in taxes to business) and excessive defense spending have created the level of debt we have now. Bush has done exactly what Reagan did, and both the debt level and the economy suffered.

That, combined with a large number of additional tax breaks for the extremely wealthy only have created the situation we now must live with.

But, the rich (both corporate and individual) don't feel they should have to pay for the infrastructure that has enabled their wealth, nor the excessive defense spending which gives them the illusion that their wealth is secure. And, this Congress and President, in particular, are owned by the wealthy. One day, ordinary people will figure it out. Not now, perhaps, but later, when the cable is turned off and they can't watch Faux news any longer and their credit cards are maxed out and their cash card doesn't work in the ATM and their jobs just went to Malaysia....

is actually fairly regressive. Given 2001 numbers, that would mean only a 7% tax increase in the marginal tax rate for the wealthy, but a 20% tax increase for the middle class.

Numbers taken from the tax policy center: http://www.taxpolicycenter.org/TaxFacts/TFDB/TFTemplate.cfm?Docid=226


So, I guess my question is, why would you want to do that?

0 to <poverty-rate> 0% taxes
<poverty-rate> to 25K 5%
25K to 40K 10%
40K to 60K 20%
60K to 80K 30%
80K to 100K 35%
100K to 150K 40%
150K to 200K 50%


One key thing, is, these numbers (whatever they are) should be keyed to inflation. $50K/year used to be a posh salary. But that was years ago. These days, it's nothing to write home about. Someday in the future, due to inflation, the tax rate for 100K should be 20%.

The poverty rate for a family of four is about 20k, but varies upward to 32k, depending on dependents and other factors. Here's a list of poverty threshholds:
http://www.census.gov/hhes/www/poverty/threshld/thresh04.html

Given that, I think a 0% tax rate would apply for those making 25k or less.

0-100 couple = 0

There would be no need for all the pesky and complicated deductions if the beginning place was fair..

The first $50 for everyone should be ZERO due..That way people would not even HAVE to itemize..

Once past that it should slide pretty steeply so that the highest "burden" is on the ones who can more easily pay it and once paid, will not "suffer"..

The rates should be calibrated fairly so that all the loophole stuff would not even be necessary..

With all the fancy computers we have these days, it should not be all that hard to figure out what people should pay..

but let's honestly think it through.


Those with high incomes basicly earn it one of two ways. (simple examples here)

1. W2 - they can change how they are compensated, if you are earning
a couple mill per year why not accept stock options or stock instead.
Some years later you sell the stock and pay capitol gains tax of 10%.

2. Wealth, meaning they have investments producing income. The purchase tax-free bonds. This is how Theresa Heinz Kerry kept her
taxable income down.

So they then have a HIGH income and pay taxes on a small percentage
of that income because of how the income is structured.

where i live, 50k is on the better end of total crap.

i wonder if tax rates should be related in some way to cost of living in one's region? i don't know how this would be done, but seems to me that $50k in montana is a lot different than $50k in the new york metro area, where i live and work.

just a thought, and not a carefully considered one.

The Repiglickers are pushing for the elimination of income tax on dividends and a further lowering of the tax rate on capital gains. This is abominable! Both these forms of income are profiting on the labor of others. It's plantation servitude.

www.fairtax.org

Increasing taxes will kill our economy, our current tax system
is TERRIBLE and needs to be completely replaced.

Implementing the fairtax system will increase revenues to the federal
government while putting the US on a competetive footing with other
countries.

If you don't know the fairtax READ up on it and you'll see why
it's such a huge deal.

Reasons....

the wealthy have incomes that are mostly NOT taxable, by
use of muni bunds, etc. BUT they spend that money, the fairtax makes
all of their income susceptible to tax because sooner or later they
have to spend it. Curious, google and find out Theresa Heinz Kerry's
marginal tax rate. Now compare that to the taxes she would have paid
on a consumption tax.


Blackmarket money such as drug money isn't currently taxed. The fairtax plan would make the proceeds of the money taxable because you
know it's gonna get spent sooner or later.


The poor of this country will be at a financial advantage with the fairtax plan. Currently they receive tax credits etc. With the fairtax plan they would receive prebates AND pay NO tax on the income
they earn.


Currently the embedded taxes in the products manufactured in this
country are high in comparison to the products made in europe. That's why Daimler-Chrysler is based out of Europe and not the US. The fairtax plan will finally provide our manufacturers a competetive
advantage.


Businesses don't pay taxes, they simply collect taxes from the consumer. By removing the embedded federal taxes that are currently
in the system we put businesses in a position to quit worrying about
taxes (tax law changes each year) and just work on running the business.

Same exemptions. Same deductions. Same rates.

don't actually pay ANY taxes.

Yes there are corporate taxes, but who pays them? We do!
Ex: Tax paid by Coca cola corp, well where does the revenue
come from? The sale of Coca Cola products. So if we raised
taxes on Coca Cola what would they do, raise the price on
the product they sold.

We've seen that with Gas prices, as gas prices went up the products
and services we pay for that needed gas went up. I just had my
carpet cleaned and there was a $5.95 fuel charge.

As you can see we may levy a tax on companies, but it's the consumer
that really pays the taxes.

Corporations can be accurately regarded as "wealth redistribution" systems. Workers, who CREATE the products and services, are compensated for about 1/3rd of the value of their labor. At the same time, senior executives are compensated at rates more than FOUR-HUNDRED times greater than the average worker in that same company. "Owners" are taxed on their cut of the wealth created at rates that are less than half of what workers are taxed.

Consumers have a CHOICE. The 'fairtax' offers no such CHOICE. The reason the plutocratic right rejects any taxation of corporations that's congruent with individual taxation is that such treatment would depriive the very wealthy of the huge benefits they currently wallow in.

Are you refering to the fact that isn't income derived from
labor but by investment?

I'm confused and want to understand your view....


Tx

But about revenue.....

If you want a "national sales tax" then I suggest you start with a sales tax on equities (i.e. stock). Let's start with a 1% sales tax on each and every trade of corporate stock. After all, without the heavy hand of federal regulation and laws there'd be no stock market. A corporation is PROPERTY and the sale of that property should be taxed. Go for it.

That's way too high. I accept the 40% as the top rate. During Clinton we were at 39.6% at lots of people got very rich and lots of very rich people got much richer, so it didn't kill the economy, incentive, or the ability to become fabulously wealthy. Anyone who says it does is wrong, because the facts don't square with that sentiment.

However, your number for the low end of the middle class is too high. The only way that would wash is if the first $15k or $20k was tax exempt. Otherwise, after cost of living, people at $50k would have no discretionary income and the consumption side of the economy and savings would both tank.

So, i concur with the first proposal, but no way on the 2nd.
The Professor

the Clinton years is the "tech economy" aka "artificial economy"
created overinflated prices on stocks. The inflated stock prices
created revenue for the federal government higher than ever before.

As we have seen since then, there were companies playing shell games
creating the belief that they were profitable, as well as an almost
unfathomable number of companies that never made a dime, in fact they
had "burn rates" for how fast they went through money.


Too high of tax rates will just kill the economy, I advocate
implementing the fairtax plan, if you don't know it please read it.
The only people that lose in the fairtax plan is the lobbyists who
will no longer be able to lobby for their special interest groups.


Economists RAVE about the fair tax plan


I encourage all here to read about the plan at www.fairtax.org so you
can be informed about what the plan is and isn't.

I don't know which economists you think are raving about it, but i don't know one in the Chicago area, even the liberterian ones, who think the rate is anywhere near high enough.

The way i figure that plan, the gov't would have to cut spending by nearly $350 billion dollars to maintain current deficit levels.

Since they don't consider defense spending "cut-able", there would be over $750 billion to cover with that plan.

Also, the "artificial" economy is a canard. The overall productivity numbers for that period were higher than at any point in U.S. history, including the mobilization for World War II. Consumption was up, and most people did NOT recover the gains of the tech bubble at the peak. Many ultimately lost money, especially on the Ponzi scheme companies like Enron and Global Crossing. While some people got fabulously wealthy as a result, that money was not transferred into direct consumption, and therefore could not have contributed to any statistically significant degree to the real GDP growth.

Sorry to rain on your parade.
The Professor

I'm not in love with a high tax on the "middle class" (or whatever we might call the 50K bracket), but those making upwards of 200K ought to be looking at a VERY progressive curve.

I think the key for middle earners is to KNOW that those in the very highest ranges are paying the maximum. Somehow there's always this niggling feeling that the rich are getting richer.

Keeping the low end where it is, it's very easy to develop a 12 point curve up to 40% that would generate exactly the amount of revenue to balance the budget. It's a quadratic curve that steepens as income goes up.

One of the canards is that when there are too many rates, the taxes are "too complicated". This is preposterous and cowardly. Four more pages in the 1040 booklet would cover incomes too the maximum, above which the tax rate is the same. So, if y is the taxable income and x is the highest value on the tax table, (y - x) * the highest tax rate is added to the amount on the highest line in the table. Big deal! That's sure isn't complicated, even if you didn't have a calculator, and who doesn't have one these days. Geez, they're $3.

The need to "decomplicate" the tax system somehow only seems to include fewer marginal rates, but seldom fewer spurious deductions, especially as income rises. I understand the need to provide large numbers of exemptions and deductions for small business, otherwise they would never have the incentive to modernize and expand. But, a thousand different deductions for personal income is ridiculous.

And, since 90% of all taxpayers don't benefit from 95% of those deductions, the most complicated portion of the tax code is available for the very people who complain about it being too complicated.

More rates; higher rates; & limit deductions on personal income to a fixed percentage of total income. That will balance the books. We published a paper on this 5 years ago. Trust me. It will work.

The Professor

The deceits of the current apologists for tax-preferred wealth make me nauseous.

I followed you exactly. And, I agree.

0. All AGI (Adjusted Gross Income) data used to set rates will be taken from the previous year's returns, adjusted for inflation.

1. Income tax on below-median AGI earners (i.e., the lower 50%) accounted for about 5% of the total revenue intake in 1999-2000, IIRC. However, it's still a burden on the people who pay it. Drop it. Make the entire amount of income from median on down a standard deduction.

2. The total claimed by anyone for all other deductions will be capped at this same amount. That is, the total potential tax-free amount shall be no more than twice median AGI.

3. The top marginal rate will apply only to the top 1% of AGI, minimizing the "flat tax effect".

4. The intermediate rates will be generated by linear interpolation from 0% (at median income) to TMR%.

5. TMR will be set such that the total intake will be sufficient, when combined with all other revenue sources, to pay the previous year's budget outlay IN FULL.

For those confused by #4, remember that all one actually sees on a tax table is the "effective tax" anyway. The calculation itself is fairly simple, once one knows the TMR and the AGI where it kicks in.

Tax Rate
    +                 
    |                     ______   TMR
    |                    /
    |                   / 
    |                  /  
    |                 /   
    |                /    
    |               /     
    |              /      
    |             /       
    |            /              
    |           /               
    |          /              
    |         /                
    |        /                 
    |       /                   
    |      /                    
    |     /                    
-0%-+----*----------------*----+ Adjusted Gross Income
         |                |
       median            top 1%

Slope of the marginal rate is TMR/((top 1% AGI) - (median AGI)).
Payers in the middle 49% get their effective rate by deducting the median income, and multiplying the difference by the slope, then dividing by 2. Payers in the top 1% first pay TMR/2 on everything between median and 99%, then TMR for everything above that.

Unlike some tax adjustment proposers I've read at DU, I do like to keep some (limited) deductions available. They can be used to subtly encourage specific types of investments and savings behavior, and not-so-subtly encourage spending on education and charities. The danger is that the ultra-rich can buy political influence to get protection for their preferred investments. We want to get rid of some bathwater but keep the baby, so let's cap it at the median income. If the big cap investors want to raise their deductibles, they can always try to raise the median income -- a noble goal, IMHO.