What should be the tax rate for income of $100,000 per year?

[kentuck]

What should be the tax rate for income of $250,000 per year?

And what should be the tax rate for income of $25,000 per year?

It seems that most of the Democrats in Washington want the tax rate to increase only for those making $250K or more per year and then only by 3%? Is that a fair rate and is that enough to pay for our government needs?

Shouldn't everyone have to pay something?

Can we accrue enough revenues to run government if the middle-class does not contribute more? Do you think $250K is "middle-class"? Or is it in the top 3% of American incomes? How can the top 3% be in the "middle class"?

I do not see us getting out of this hole we are in unless everyone pays more. What do you think the tax rate should be for those making $250,000 annually?

[angstlessk]

1. maybe we need more upper income brackets..like over 1 million

and over 1 billion?

[Lasher]

2. I think all tax rates should revert to what they were before GWB assumed the presidency.

All income, inheritance, dividend & capital gains for everybody. immediately.

[safeinOhio]

9. I'm with you Lasher,

100%. No one like to pay taxes and no one wants to live in a 3rd world county. I'm in the 15% group and would be willing to pay more if everyone else did too.

[Lasher]

42. I'm having a big problem forgiving Obama for having extended the Bush tax cuts in December.

It was such an enormous strategic blunder and moral transgression against core values of any New Deal Democrat like me, forgiveness is probably unjustified.

I would enthusiastically give up the crumbs that I got with the Bush tax cuts.

[JAnthony]

50. yes!

[Avant Guardian]

91. Doing so would balance the budget in a few years

[Lasher]

101. Thanks for the excellent graphics. Do you have a link to your source?

Good graphics are effective when communicating via email and message boards, where many people pass over long text messages.



http://www.cbpp.org/cms/index.cfm?fa=view&id=3036

[damntexdem]

3. Here are some thoughts:

1) $25k, 0%
2) $100k, 25%
3) $250k, 40%
4) $1 mil, 75%

[Zoeisright]

4. 25% of 100,000 is a lot of that income.

Especially when you factor in state taxes, property taxes, and sales tax.

[JuniperLea]

6. 30% of my less than $100,000 is a lot of money I have to do without too...

I think the problem is the GOP speaks of taxing people... when the reality is, we need to speak about taxing INCOME and WEALTH.

2% of the population control 95% of the wealth, but only pay 30% of the taxes. 98% of the people are left to fight over 2% of the wealth, but are asked to come up with 70% of the taxes from that puny amount. THAT is where the problem is.

[Spike89]

11. Not how tax rates work

if $25,000 = 0%, and the next rate is 25% up to $100,000...you'd pay 25% on the $75,000 "extra" you made. In other words, no one pays any tax on the first $25,000 they make. This issue has been purposefully mislabeled by media and the republicans (and it is admittedly difficult to understand in a short sound bite). Obviously, people earning $250,000 are NOT in the top 3% (or even the top 10%). But if we talk about raising tax rates on the top brackets (all above $250,000) from 30% to 40% (actually higher than anyone is proposing) the extra "bite" isn't that much to someone making say $300,000 (the 10% tax rate jump only really adds $5,000 to their taxes, a real tax increase of less than 2%!) A person earning $250,001 would pay exactly one extra dime. The only people coming anywhere close to paying the 40% tax would be people earning many many millions.
Notice I did not say millionaires--that is another huge lie--you pay no taxes on money you have. If I have $10 million "in the bank", exactly none of that is taxed. I do probably earn interest, and that is taxable, but at a much lower rate than income taxes! So, if I'm a millionaire and I "earn" $250,000 in interest, I'll almost certainly pay less than most people with jobs earning More than $100,000. That is assuming I don't use a tiny fraction of my wealth to hire a semi-competent accountant to make sure I pay no taxes!

[kentuck]

15. According to this graph, 98.3% make less than $250,000

???

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

[dems_rightnow]

33. Interest income is taxed EXACTLY as other income

From an income tax standpoint. It's not taxed at a lower rate.

[Spike89]

104. Yeah, I was wrong and oversimplified

First, I made the mistake of conflating income and wealth--the people making $250,000/year are among the top few % of earners--they do not however control the top 10% of wealth.
As for the "interest" error...true that interest is taxed the same as income, and I should have bewen much more clear. Obviously no one (ok, no one with a decent accountant) is going to simply put the $millions of dollars from my example into a bank savings account. Rather, they are most likely going to invest and most of their "income" will be from capital gains, which are taxed at lower rates.

[Obamaforthewin]

64. You are confused.

Interest on deposit accounts is taxed at the same rate as normal income. Capital gains on investments are taxed at a lower rate than normal income.

[Spike89]

105. yup, oversimplified and chose the wrong term

Shouldn't have said "interest" but investment returns.

[formernaderite]

35. it should depend on where you live

as well, as the cost of living is dramatically higher in certain parts of the country.

[JAnthony]

53. These are tax thresholds.......as it is with all taxation schedules...

when you earn $100,001.oo; 25 cents MORE goes to taxes!!!

Not a bad deal! IMO!

[cameozalaznick]

79. But you only pay the 25% on anything over $25,000

That's the way a progressive tax structure works. It's the difference between the statutory rate and the effective rate. So with the 25% example, you'd only pay the 25% (or whatever the rate is) on the last $75,000 of income.

Please, everyone learn this. The ignorance of this one fact alone allows repubs to scare everyone re taxes.

If you learn NOTHING else this year, learn the difference between statutory and effective tax rates. PLEASE!

[Carolina]

98. and life circumstances

e.g. family of 5 in a place like DC, 1 child is special needs and the live in in-law is on fixed income (SS, no COLA) and is starting to show signs of dementia!

[FLPanhandle]

13. Holy crap. 40% on $250K?

That's my bracket and 40% is insane. Maybe 25%.

[REP]

20. You're paying 35% now

At least I am.

[FLPanhandle]

21. We pay probably 30% after deductions and all.

Still, $250K isn't rich nowadays.

[boppers]

45. "$250K isn't rich nowadays."

Jesus.

Okay, then, what's "rich" to you, if you're already making more than 98% of the country, and don't think you're rich?

[FLPanhandle]

56. The truly rich have more than the rest of us combined nt

[snooper2]

83. ROFL

Sorry you can't buy a lear yet but you can get that new G37x you've been wanting :rofl:

[FLPanhandle]

95. *sigh*

It's not about me having more, my point was about the really rich who have more than 99% of us combined. We are left fighting each other over personal tax rates when the real tax revenue potential is sitting among the truly wealthy. If we went after that money, all our tax rates could decrease.

It's like the folks working minimum wage getting mad at higher paid union folks. We are all in the have-not category compared to uber rich.

[boppers]

118. I used to beg on the streets. To buy food.

My heart weeps for you not being "really rich", while you are upset that folks are richer than you.

It must be hard.

[kentuck]

119. It's all relative, isn't it?

In a family of 11, we grew up in Appalachia with an income of less than $1000 per year in some lean years.

[Codeine]

58. Baloney. 250k a year is plenty fucking rich. nt

[Marrah_G]

88. Yes, yes it is.

You have lost touch with how most of the country gets by.

[kick-ass-bob]

96. Wow. Infighting, that's what got us to where we are now.

250k is pittance against those who really aren't paying their share of the tax pie. Why fight the people making 250k - which, if they lose their jobs, they are going to end up in trouble just like everyone else, but maybe not so immediately - and instead concentrate on the multimillionaire salaries/earners who won't.

[Skink]

28. Why not?

in my 25 years of working I've managed to make about 250,000. If I could make that in one year and had the prospect of doing it again the next that tax rate seems reasonable.

[FLPanhandle]

30. 250K isn't rich

And doesn't need to be taxed at that rate if the truly rich paid their share and we didn't flush money down the toilet in wars.

Do that and it could be 25% with folks making much less paying nothing.

[Marrah_G]

89. Yes 250k is rich

You need to take a look around at how most of the country lives.

You are wealthy.

[kick-ass-bob]

97. no. this is not wealthy.

This means you make a good large amount of money. But that is not a "wealthy" level.

Just because it seems like a lot to you, doesn't make it so. Making 250k a year insulates you some from the potential loss of a job, but not for very long - not nearly as long as you would think.

Wealthy means you don't need the steady income to survive.

[bluestate10]

48. A net rate of 40% is insane. A net rate between 25% and 30% would

be in line with what lower paid people would pay if their annual earnings were extrapolated to $250,000.

[cameozalaznick]

80. Please see my reply to #4 upthread...

And get that you WOULD NOT be paying 40% of your income in taxes. Please take a few minutes to figure this out. I'm not giving up on this until every last one on this board gets it.

[Marrah_G]

87. even if you DID have to pay 40% you would be left with 150,000

That's 5 times what I make and supported 3 children with for many years. Fortunately I now have a living situation where 3 of us combined bring in half of that 150000.

Given the choice, I'd rather make the 250K taxed at 40%.

[bluestate10]

5. People that earn more should pay higher marginal tax rates so that

their net tax rate is higher than those that earn less. The issue is simply one of whether one contributes to society in proportion to what they receive from an organized society that runs by the rule of law.

[notesdev]

7. Zero

Income should not be taxed, only consumption and imports should be taxed. There are so many things wrong with income taxes - not the least of which is the compulsion to report yourself to the IRS - I wouldn't even know where to begin to list them.

Tax consumption, exempt food clothing and shelter, set the rate to whatever it needs to be to raise the needed amount of revenue, done. Instantly corrects the hundreds-of-billions-per-year total and complete waste that comes with figuring out a labyrinthine tax code.

[Astrad]

16. The problem with consumption taxes is they aren't progressive

They'll hit lower income people harder. You can compensate for this by some system of tax rebates but you still need income reporting to manage that.

[notesdev]

22. If you exempt necessities they are

If you don't tax the necessities for survival, this kind of tax system scales very nicely and precisely with disposable income - and there are no favorable tax rates then for the investor class or the kinds of people who today can buy themselves custom exemptions into law.

[Incitatus]

44. The rich would end up paying even less.

The wealthy accumulate a lot of money, much more than they spend. Taxing income over a million at 50% will bring in a lot more than a sales tax on what they buy. Some people make a billion+ year and spend far less than that, earning interest on all the stocks and bonds where they park their money.

[notesdev]

71. A lot of that ends up tax free due to exemptions

When you look at the actual rate we're getting from those wealthy investor types... a lot of these investments come with tax incentives, so that they don't pay tax, or much tax, on a great deal of it.

[Incitatus]

75. There needs to be a lot of changes to the tax code.

Many loopholes/exemptions need to go. If that can happen, a tax based on income and not consumption would insure the wealthy pay their share. Most of the people who make these laws are millionaires and/or supported by them, so changing the laws to make them pay more it going to be a very difficult battle.

Anything like the "fair tax" plan supported by many Republicans should be met with great suspicion.

[hfojvt]

51. no they would not be

and you would still need a whole bunch of forms and auditors. There are plenty of people who would take cash for a transaction and not collect the sales tax.

[kentuck]

17. Many people don't make enough to "consume"...

and the number is growing? If they buy nothing, they pay nothing, right?

[notesdev]

18. Yep

If a person can't afford anything more than food clothing and shelter, they don't have anything that can be effectively taxed, so they pay nothing.

[Army of Dawgness]

47. Word. Income taxes are designed to keep poor & lower income from obtaining wealth.

Even a "progressive" one. High middle & upper income can afford the people to dig through the labyrinth tax code & lower their effective rate.

I want everyone to move up the income scale and a consumption system like the Fair Tax would do it.

[kentuck]

57. The problem I see with consumption tax...

When times are good, tax revenues will be good. When times are bad and tax revenues are most needed, there will be less coming in. It's bass ackwards.

[Army of Dawgness]

61. The same could be said for an income tax also.

A ton of real taxable income is actually derived from small businesses in the $250,000 to $2,000,000 range. These are also the guys that are seriously hurting for the past several years. When times are tough everyone takes it in the ass unless you are a Federal employee or sucking off a fat government contract.

[kentuck]

74. However...

A "small business" making $250K per year is a little different from one making $2 million per year and should be taxed accordingly. I would agree that those on the low end of your scale might deserve some assistance. What is the purpose of business in a society? To create personal wealth or to create jobs and a better living for others? Or both?

[taught_me_patience]

113. Actually, consumption taxes are much more stable than income taxes

that swing wildly during recessions.

[kentuck]

69. "Income taxes are designed to keep poor & lower income from obtaining wealth."

Bull! Where did you hear that crap? Rush Limbaugh? The poor are not poor because they pay too much income taxes. That is not what keeps them poor. Most of them do not pay any income taxes at all. Where did that come from??

[Army of Dawgness]

76. Meh. Let me rephrase.

I admit that sounded a little bone headed.

I should have said the net effect of a progressive tax system bars people from moving up the socio-economic scale. People who already have wealth don't give a rat's ass what the income tax is. They already have theirs & can put that wealth into vehicles that will preform for them with little taxable effect.

People living paycheck to paycheck suffer regardless the size of the paycheck.

A consumption type system with a pre-bate type benefit to nullify the tax on basic living expenses would be much more equitable and aid lower incomes in the acquisition of wealth should they desire it.

[kentuck]

78. What would the rate have to be?

Would everyone pay the same rate on FICA taxes for Social Security - on all their income? How much would we need to continue paying for a trillion dollar a year defense budget? Would we continue to have Medicare and Medicaid? Would we still have corporations that would pay no tax? I wonder what the rate would have to be to pay for the sacred programs of both Parties. They both like to spend - just on different things. If a 25% consumption tax created a trillion dollar deficit, would we cut programs or raise the consumption tax? Naturally, people would spend less when the economy was down, bringing in less in taxes just when they need more in taxes? I have a lot of questions with the consumption tax.

[Army of Dawgness]

81. Well.......

"Would everyone pay the same rate on FICA taxes for Social Security - on all their income?"

Yup. Zero. Everyone would have their complete "take home pay".

"Would we still have corporations that would pay no tax?"

Zero corporate income tax. I know this is hard to swallow but in reality none pay any now. It's all passed on to individuals.

"How much would we need to continue paying for a trillion dollar a year defense budget?"

We don't have that now. It's around 669 Billion but I agree it should be much less than it is now with many over sea bases closed.

"Would we continue to have Medicare and Medicaid?"

Yes and fully funded which we don't have now.

"I wonder what the rate would have to be to pay for the sacred programs of both Parties. They both like to spend - just on different things."

Current research suggests 24% to 27% for it to be revenue neutral. And I agree completely about the both party's spending.

" If a 25% consumption tax created a trillion dollar deficit, would we cut programs or raise the consumption tax?"

Depends on if there is any waste or redundant programs. If there aren't, raise the rate.

"I have a lot of questions with the consumption tax."

I don't blame you in the least. It's a radical idea to say the least and to be honest I think it's so easy to demagogue it has little chance of passing given it will neuter a lot of lobbyist & special interests in Washington.

[taught_me_patience]

8. Here are my answers

What should be the tax rate for income of $250,000 per year?

-35%. $250k in major cities is NOT a lot of money and that level should be excessively taxed.


And what should be the tax rate for income of $25,000 per year?

-5% Everybody should pay income taxes because everybody benefits from the income taxes.


It seems that most of the Democrats in Washington want the tax rate to increase only for those making $250K or more per year and then only by 3%? Is that a fair rate and is that enough to pay for our government needs?

-Not even close. This is a complete and total pipe dream. Taxes need to rise for everybody.

Shouldn't everyone have to pay something?

YES

Can we accrue enough revenues to run government if the middle-class does not contribute more? Do you think $250K is "middle-class"? Or is it in the top 3% of American incomes? How can the top 3% be in the "middle class"?

No... everybody needs to contribute more. Like I said, 250k in expensive cities is middle class.

I do not see us getting out of this hole we are in unless everyone pays more. What do you think the tax rate should be for those making $250,000 annually?

[kentuck]

10. Here is a link comparing taxcuts and deficits - Dems and Repubs

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=439&topic_id=1230200#1230410

[Shagbark Hickory]

12. $100,001 & up, 100%

Time to level the playing field a little.

[Dreamer Tatum]

23. You mean, time to set fire to the playing field. nt

[Motown_Johnny]

26. Insanity! Pure, unadulterated Insanity!

If you do this you will end up with people who will earn their 100K for the year in an hour because the demand for their talents will be that high.



If they can't get more money they will simply work less, and less, and less until we are all completely fucked. If you can't pay 100K for an hours work then you don't get your surgery, sorry. Oh, wait. That is a 4 hour operation that will require a team of doctors to perform? Looks like more like $1.2 Million for that one. Fork it over or go off somewhere to die.



Something more like the 70% that was in place until Reagan got elected makes more sense to me. We might even want to start at about 45% and increase it incrementally.

[kentuck]

29. delete

not sure I read post correctly?

[Shagbark Hickory]

37. Happens to the best of us. nt

[Shagbark Hickory]

34. Got it covered.

It would require government run guaranteed health services for all.
Free medical school education for those who go to work for the government.

I think that someone who's talented won't remain talented if they only work an hour a year.
You know what else I think?
I think anything less than 100%, and they'll just pay themselves even more and more to make the same outrageous sums. On the backs of workers and consumers.

[Motown_Johnny]

40. impossible

You will simply never train that many doctors, and doctors are not the only problem


How will poor people get legal representation when a lawyer maxes out their yearly pay on one case?

What engineer will work an entire year when they max out their salary on one aspect of one project?


This is a ridiculous race to the bottom where we all lose.


Nader wanted to try something like this back in '96 but even bailed on the idea.

[Shagbark Hickory]

52. $100,000 should buy a lot more than it currently does.

And hey, if you've earned $100k, take some time off, you've earned it.
Or don't.
Just because your salary is capped doesn't mean you can't work anyway.

All the hard working salaried workers forced to work more and more hours for the same pay ought to know how that works.

[Motown_Johnny]

66. but people won't, there is no longer any compensation for it

Salaried workers have the hopes of earning a raise. This crazy salary cap eliminates that possibility.


Besides, people could go to other countries to work too. Pop into U.S. for a day to make your 100K and then go back to someplace that pays a decent wage.


Brain drain doesn't do this problem justice.

[Shagbark Hickory]

82. I don't think you're understanding.

$100k would be a cap. Most people would earn less than that. The higher paying jobs would be closer to the hundred k.

It isn't a guaranteed wage. Nobody is going to pay someone $100k to do a days work in a society were everyone makes less than 100k.

Someone can certainly decide they want to move to another country to work. There's not many that would offer such a competitive education and benefits package that could be offered in a communist america. They'd be crazy to give it all up so they can join the rat race somewhere else where they'd be saddled with debt and outrageous costs of living. There's only so many places they can all move to. We would have to keep educating our people and giving them the skills they need. People cross our border every day looking for jobs and opportunity and in my opinion, we should once again be known for jobs and opportunity and I'm not talking about just picking fruit and shingling roofs although those are professions that would be required to pay everyone a living wage.

[kick-ass-bob]

84. 100K "should buy"...

The actual amount is irrelevant. Whether you like it or not, prices rise. Just because you think they shouldn't doesn't mean that reality will agree with you. 100,000 now is 38,000 back in 1980. Would you set the cutoff at 38,000 back then, or 100,000?

A 100k limit is ridiculous outside of a vacuum.

[Shagbark Hickory]

93. Should the the directors of a university get paid $500k a year causing tuition to soar

resulting in fewer and fewer to be able to afford a college education?

Should oil executives keep giving themselves a raise by pimping out our oil while people all over the world go broke trying to fill their gas tanks?

How about wall street bankers? Should they be able to name their salary and bonuses?

The salary cap should raise with inflation.
Things like investments and retirement accounts wouldn't count towards the cap.
I don't have time to figure it all out but the basic idea is that people that have the ability to pay themselves outrageous sums are no longer able to do that.

[kick-ass-bob]

94. OK - since we go anecdotal here...

What about scientists? Doctors? Engineers?

All make more than 100k. I'd rather have the good docs make more money than sit at home for 9 months out of the year. Ditto for scientists and engineers. And are you going to pay off their school loans for them? Because they have a lot of them.

100k is setting a bar VERY low. All you do is remove a major incentive to work.

[Shagbark Hickory]

102. You must be out west or in the north.

Entry level salaries are not over $100 for those salaries where I am but if I'm wrong and they are then perhaps the cap should be a little higher.

Or perhaps a better approach are very steep luxury taxes.
Let people make all the money in the world but charge them high taxes on houses, cars and other durable goods over a certain amount. Then again that could have the same effect as making someone with a lot of income pay 60-70% in taxes. They'll just pay themselves more.

[kick-ass-bob]

103. who said anything about entry level? And no, I'm in NC.

Hell, I've worked for roughly 10 years and could be making over 100k if I went private sector. Why would you cut out people who have worked a while and gained experience? I live well, but hardly high on the hog. Plus it cost me money to be able to get as good as I am at my job, and I'm still paying that back. Is there an entry level University Chancellor? You are jumping all over the place in your argument that it is impossible to keep up.

100% tax at any level is counterproductive, because no one would pay it. Either by stopping working or by hiding the money some how.

You can progressively tax income without discouraging the benefit of making more money.

[Shagbark Hickory]

114. Is money the only reason you do what you do?

It seems like you assume that people are only in their professions for high salaries.
Then again you're still "paying that back."

What would it take for someone like you to make less money? If you never had expenses of training, continuing education and business expenses were written off, and if housing and healthcare were guaranteed and you owned your own home outright, do you think you could then work for $100k or less?

I grant you that implementing my plan will definitely be a tough pill to swallow for those that already have excessively high salaries.

[Motown_Johnny]

14. we want to start with a 4.6% increase, from 35% to 39.6% (the Clinton rate)

but then most of us also want to add higher tax brackets for higher incomes.



The middle class needs to recover before it can contribute more. It's tax burden is already disproportionately high.

[backwoodsbob]

19. up to 30k

up to 30k pay zero

at 30k start paying 12%

Let it raise 1% every 10k and top it at 38%

[taught_me_patience]

24. Why should up to 30k pay zero?

Doesn't everybody benefit from income taxes? Why not a small, nominal amount like 5%?

[Xithras]

99. That's the fundamental problem with American taxes.

They're national, and there is no consistent national wage or cost of living. Someone living in Oklahoma on $30k a year can have a nice house with a big yard and a full fridge. Someone living in New York on $30k a year is probably surviving in a shelter or a box in an alley. People in New York would argue that $30k is poverty and shouldn't be taxed. People in Oklahoma would have no problem with taxing a "middle class" wage like that.

Remember, the median individual income across the ENTIRE country is only $25k per year.

[Shagbark Hickory]

38. 10-12k maybe. But 30k is a full fledged salary in these parts. nt

[JVS]

25. People who are well off need to quit playing poor.

[kentuck]

27. We are trying to sell our boat...

We hardly go up to our cabin so we are going to get rid of it as soon as the market improves. Also, we are going to get rid of our Lincoln SUV and maybe get a new Volvo or something more economical. We want to do our part to save energy. And, believe you me, two children in college are not cheap. They have to have transportation and spending money. We are broke almost all the time and we make almost $300K per year. Don't ask us to contribute. We don't have anything. We are poor. :sarcasm:

[Shagbark Hickory]

54. +! That's the same old song, innit?

:nopity:

[JHB]

31. It's not the $100K to $250K that are ctitical...

...it's tax rates on incomes above that, way above that.

Take the wind out of the sails of the guys who make big money wheeling and dealing.

We didn't exactly get rid of rich people back when the top rates were 90% and more, it just pressured them to find slower and steadier ways of getting richer. And to do that they got more out of employing people in the real economy than they could by wheeling and dealing in the financial markets.

[Name removed]

32. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Commie Pinko Dirtbag]

36. Because the $5k bite hurts the $50k person a LOT more than the $25k bite hurts the $250k person.

That's what makes it unfair.

[JHB]

39. I suggest income taxes on "55 minus 10"...

The tax rates of 1955 (brakets adjusted for inflation) minus 10%: the 20% bracket becomes 10%, the 22% becomes 12%, etc., all they way up to 91% becomes 81%.

Using the 1955 bracket levels multiplied by 10 for inflation (that's actually a little high for inflation, which would be closer to 8, but 10 is simpler, and it's more in line with the shift in median income (and thus where the tax burden falls).

Individual deduction was $600, so use $6000 per person.

The individual brackets are a bit much to post here, historical rates can be found at:
http://www.taxfoundation.org/files/federalindividualratehistory-20080107.pdf
The 1955 rates are on page 29 of the PDF.

An individual with $30K taxable income would have a top tate of 12% (with part only taxed at 10%)
The proverbial married-joint filers with $250K taxable income would have a 33% top tax rate (over about 7 brackets takeing less at each rung)
On the other hand, a couple making over 4 million a year have a top tax rate of 81% (over some 24 brackets, each taking a lesser bite)


It's not as attractive to fire people when you can't just pocket their incomes.

[boppers]

41. "Shouldn't everyone have to pay something?"

No. That's not fair to those scrambling hard just to eat.

[B-Stupid]

43. Revert back to the brackets under Clinton

and permanently get rid of the AMT

[Incitatus]

46. 0 percent to 50K a year, 20% income over 50k

30% on income over 100K, 50% on income over 1,000,000 70% on income over 10,000,000. 90% on income over 100,000,000

Inheritance should be taxed same as income tax.


35% on corporate profits and the loopholes need to go.


IMHO

[George Wythe]

49. $0.00

For the past 30 years, we have allowed politicians to nearly eliminate tariff's, which had previously alllowed for a strong economy.

The Federal Government used to be completely funded through tariffs and NO income taxes.

[Shagbark Hickory]

55. Another idea worthy of exploration. nt

[kick-ass-bob]

85. But what are these tariffs, and where does that money come from?

If a tariffed good comes in, who pays this price? The person buying it.

This is just a consumption tax levied at a different point in time.

[IndyPragmatist]

92. Yep, tariffs are not a good idea, especially in poor economic times

Costs are rising as it is, adding tariffs will only increase costs further. This will end up hurting the poor the most because they are the ones that tend to buy the cheaper foreign goods that would be targeted by the tariffs.

[George Wythe]

109. In theory, I support the concept of free-trade. Free trade would be fine

if other countries participated; however, since they do not, the United States cannot afford to either. You see, it puts our manufacturing sector on an uneven playing field, which is not fair to American workers.

[George Wythe]

110. It is really no different than the taxes that localities implement on tourists.

Essentially, the out-of-towners, or in the case of tariffs, the other countries pay the tax.

[Obamanaut]

59. "Shouldn't everyone have to pay something?" Yes, but some don't - if you

are speaking of federal income taxes, there are those who don't pay anything.

But general sales taxes, fees for licenses, etc. (actually a tzx), property tax if such is owned, everyone pays some of those.

[JackRiddler]

63. No, actually.

People who don't make enough to eat or especially to feed their dependents should receive. That would be a civilization, believe it or not.

[elleng]

60. $1milliion - 45%, $1billion-49%

(per Lawrence)

[JackRiddler]

62. Just about zero. That should be the full, lone exemption, no other loopholes.

It's just about the last income level where one could semi-credibly argue it was earned by the sweat of the brow and not reaped from the advanced organization of the society (whatever one's wonderful talents).

From there about 25 or 30 percent until 250k, 50 percent above that, then 60 starting at a million, and probably higher at some point in the stratosphere.

Keeping in mind that everyone pays 15 percent in payroll taxes anyway.

But you have to do the math to see how well it covers ongoing spending levels.

[JVS]

65. First, everybody should file as single.

Ok, now that we have one baseline for calculation of rates.

10% $0 – $8,350
15% $8,351 – $33,950
25% $33,951 – $82,250
28% $82,251 – $171,550
33% $171,551 – $372,950
35% $372,951+

This is the current situation.


People who make less than $8,350 are poor. Taxing them seems counter-productive as it merely places more stress on safety net services. Ideally I'd change their rate to zero. The problem is that in order to take the boot off of these people's neck, one would in effect have to write a check to everyone richer than them for $835. There's no reason a well off person needs the $835 just so that the poor person isn't having the squeeze put on them. What is necessary is a system that allows lower incomes to get a break without always giving higher incomes a bigger break. So I'm keeping the brackets like this, but with a caveat. Low income earners will be phased into it in a way explained later. Also, I don't like the 10% jump at 34k and the smaller jumps at high numbers, these flatten things. So I created a new 20% bracket and bumped up the later jumps.

10% $0 – $8,350
15% $8,351 – $33,950
20% $33,951-$51,450
25% $51,451 – $82,250
35% $82,251 – $171,550
45% $171,551 – $372,950
55% $372,951- $572,950
75% $572,951+

Now, what do we do about the fact that the bottom group and well into the 15% group can't afford these taxes. We phase it in. Between $16,000 and $24,000 we can set up a system of phasing in the tax payments at a linear rate of 25% of the tax obligation per $2000 over the $16,000
So someone earning $16,000 would be the richest person to pay nothing,
$17,000 would be 12.5% of $835 and $1297.50, so the tax bill at that income would be $266.56
$18,000 would be 25% of $835 and $1447.50, so the tax bill would be $570.63
$20,000 would be 50% of $835 and $1747.50, so tax bill of $1291.25
$22,000 ............. 75% of $835 and $2047.50, so tax bill of $2161.88
And at $24,000 they are paying all the tax according to the chart.

[jtuck004]

68. What would be the tax for this guy?

He made $4 Billion in 2009, and $5 Billion in 2010.
His personal net worth is $16 Billion.

http://www.huffingtonpost.com/2011/01/28/paulsons-5-billion-payout_n_815621.html

49% too much?

[JVS]

72. Use the lower chart that I provided to figure it out.

It will come out to approximately $3 billion

[JackRiddler]

115. That guy? We should be talking imprisonment & full clawback of everything he's worth.

All of it. Give his family a generous pension of $60,000 a year.

[Vinee]

67. I think it's fair to say that an individual who earns $100,000/yr already pays close to a 50% tax

If you add up the FICA, SS, medicare, state taxes, local taxes, property taxes, sales taxes, fuel taxes, annual license fees and taxes, capital gains taxes, etc. The person making $100,000 isn't the person I want to go after, it's the person making $400,000 plus.

[Carolina]

100. Exactly

100,000K sounds like a lot of money and it is BUT after all the taxes you've cited, it is considerably less. Plus there are also circumstantial factors such as the cost of living based on geography (DC, NYC, etc), the size and health condition of family members that that gross 100K supports.

I hear ya and agree; it's the person making upwards of $400,000K

I also think inheritance needs to be viewed differently. What's left of small family farms in the US shouldn't be taxed like multimillion dollar, multiple dwelling/location legacy estates. There has to be some individualization, e.g. 4 sibs inheriting the family farm in western PA is far different from 3 kids inheriting the penthouse in Manhattan, the beach house in the Hamptons, the apartment in Paris and the villa in Tuscany!

[JackRiddler]

117. Agreed.

Although most of those taxes do ultimately serve most of the interests of that person and his/her dependents.

With most people making well under $50k it's hard for us not to look at $100K and imagine riches, but it's still only on the threshold to life being less hard. Most people making a sum like that are on a treadmill hoping to keep it up.

Someone else here said it's got to be wealth that pays -- I'd add corporations with the aim of creating a true pricing system that incorporates all costs to ecology and society -- but not income below a certain point that's definitely a lot higher than $100k.

[OnlinePoker]

70. Nobody earning less than the poverty line should pay income tax

That being said, 2009 poverty guidelines had a single person poverty line at a pitiful $10,830.

http://aspe.hhs.gov/poverty/09poverty.shtml

My scale for an individual starts at 5% for everything from $15k to $50k, 10% for everything in the next $50k, 15% for everything in the next $50k, etc, to a cap of 60%. No income would be exempt and all would be treated the same with no deductions (this is for personal taxes...I don't know about corporate). As can be seen, even up to $600k a person would pay a total tax of only 32% of their income, but the progressively higher income would approach a level nearing an even 60% (these figures are before state taxes)

Income Lvl % TAX PAID Real Tax %
$15,000 0 $0 0
$50,000 5 $1,750 5
$100,000 10 $6,750 6.75
$150,000 15 $14,250 9.5
$200,000 20 $24,250 12.125
$250,000 25 $36,750 14.7
$300,000 30 $51,750 17.25
$350,000 35 $69,250 19.79
$400,000 40 $89,250 22.3
$450,000 45 $111,750 24.8
$500,000 50 $136,750 27.35
$550,000 55 $164,250 29.9
$600,000 60 $194,250 32.3
$700,000 60 $254,250 36.3
$800,000 60 $314,250 39.3
$900,000 60 $374,250 41.6
$1,000,000 60 $434,250 43.4
$10,000,000 60 $5,834,250 58.34

(Tried twice and can't get it to format into columns...sorry)

The only inheritance I would tax are financial instruments that generate capital gains when sold after death. Material wealth (homes, art works, vehicles, etc) transferred within the family should not be taxed as no financial transfer takes place.

[JVS]

73. See my post above.

I agree that people in poverty shouldn't pay taxes, but your system gives people who are well off way too many breaks and will not yield much revenue.

[OnlinePoker]

77. What breaks?

No deduction on 100% of their income. 60% federal for anyone earning over $600k plus an average of around 7% in state income taxes. I think a 67% tax rate is very fair for high income earners. Based on IRS figures from 2008 found here:

http://www.irs.gov/pub/irs-soi/08in11si.xls

I did a quick calculation based on adjusted gross income after deficit for different income levels (federal income tax only) and compared the rates under my scale with no deductions to actual income tax collected for those levels and rates in 2008. People earning under $200k would pay the same or less in total taxes. Meanwhile, those earning $200k and up would have a total tax increase of almost $730 Billion a year with those earning over $10 mill paying $250 Billion a year more. A few cuts here and there and the deficit would be eliminated.

[Marrah_G]

86. The difference between tax on 250, 000 and 25000 is this....

The person who makes 25000 spends every cent of that money just to get buy. The one making 250000 is not going to take the same hit if their taxes go up.

I would ask two questions:

If you make 250,000 would you give it up to make 25k and pay less taxes?

If you make 25k, would you gladly pay more taxes and have an income of 250000?

[IndyPragmatist]

90. I really don't think it's smart to go above 60%

Think about it from the perspective of that person, the motivation for a business owner to hire more workers and increase production is the hope that their personal income will increase from these decisions. If you put to high of a tax rate on someone line this, you are reducing the likelihood that they will hire new workers and increase production. Adding workers is always a risk. The market may change and that employee may not be very useful, you may hire a bad employee, or your personal situation may change and it may be more beneficial to not have that employee on payroll. Since we cannot predict the future, we need to have a tax rate that provides enough incentive to counter the risk incurred by increasing production and employment.

A 95% rate would kill business. While most large businesses are public and owned by thousands of individuals, many mid-sized businesses are owned by a single or small amount of individuals. Many of these people would fall into the $1,000,000 range. If someone is only going to receive 5% of everything earned beyond that, they probably won't care about increasing production and employment unless they are confident that this will equal a massive return (to where 5 cents on the dollar still adds to a lucrative amount).


This is where Economics and Psychology overlap. So much of economics is based on individual decisions and the desire to make money. We want business owners to produce as much and employ as many people as possible. So at what tax rate does that person begin to think that it isn't worth the effort and risk to make more money? I think 95% is well beyond that level. If I made $1mil and I only got 5% of everything beyond that, I wouldn't have a whole lot of motivation to work more to make that. Because of this, I really don't think that you can go beyond 60 or 65%. That seems to me as the point where I would begin to lose motivation to work more.

I also think that everyone should pay some taxes. I know it sounds cold-hearted to want to make someone only making $20k/year to pay taxes, but I think they need to pay something (about 10-15%) just to ensure that they are not distanced from government spending. For many people, if they don't have to pay for something, they are all for it, but if they have to foot part of the bill, they may reconsider. I think this will make people think more about the value of programs and spending, instead of just voting to increase the number of programs that will impact them personally. I think that the fact that they are paying SOME income tax will ensure they vote logically and not out of greed.

So my thought? I would like to see the sales tax increased (placing the tax burden on consumption and not production allows money to "work" and grow at a higher level) to maybe 10%. There is a huge amount of wealth in America that is "old money". These people aren't making any income, but living off of savings and trusts. I know Paris Hilton makes some income (apparently some people are dumb enough to pay her), but she spends much more than she makes because she is living off of the Hilton family fortune. Maybe you could increase the sales tax to 20% on purchases (not including homes and autos) over $10k. This would make people that fall into this group pay some of the tax burden.

Below $30k - 10-15%
Up to $50k - 20%
Up to $75k - 25%
100k - 30%
250k - 40%
500k - 50%
1 mil- 60%
5 mil and beyond -65%

I would also like to see more money shifting from the federal government to state governments. While we may elect Congressmen and the president nationally, federal employees in DC tend to be from DC or the area. By shifting the power a little more to states, you will have elected officials and employees that are more representative of the population that they serve. Instead of having a group of employees from DC providing services for people nationwide.

[Spike89]

106. Your example is actually backward!

We can both agree that business owners, particularly small business owners will do what puts more money in their pocket, so...

If their business Grosses $10 million (with ~$4 million in non-payroll and $5 million payroll costs). This business makes $1 million in profit and pays 25% in taxes, the owner brings home $750,000 AND has a business with a value determined by its profitability, market share, stability, etc.

Now, the taxes go to 50%.

If the owner invests and adds 20% more workers (+ $1 million in payroll) to get another 20% business, the business grosses $12 million, nets $1.1 million and the owner brings home about $550,000.

If he does not invest, he only brings home $500,000.

If he cuts payroll/production 20%, he brings home even less!

Higher taxes on business revenues actually favor established business and spur reinvestment--the higher taxes do make it tougher/riskier to start a business.

[kentuck]

107. Why do have so many billion dollar businesses?

that start from scratch? They all started small but ended up huge, like Facebook and Microsoft. How do they do that with the taxrates that you mention? Most businesses do not start out big. And they do it quickly. Although your theory may sound solid, I don't think it applies that much to today's business world. Just my opinion.

[Spike89]

108. Are you responding to my post?

I did not mention billions and the tax rates I mentioned were totally hypothetical. In fact, current tax rates are very low historically for businesses, the opposite of what I was describing above, so you would expect to see things like Facebook and Microsoft. Low tax rates favor startups because the payoff for risk ratio is good for investors. High tax rates favor established businesses because all payoffs are somewhat constrained, there is less incentive to assume big risk.

Aside from that, the reality is that some business models are always going to be high-risk, fast growth. In reality, for every Facebook, there are 1000s of startups that failed in the same year. Additionally, the Facebook/Microsoft type businesses are only a tiny fraction of the businesses in this country. The vast majority (maybe 99%+) are small "Mom and Pop" operations--a plumbing business that may take 5 years just to turn its first real profit, a bakery that may never make money, a used car lot, my neighbor who fixes outboard motors and hired his first employee after 20 years in business.

There will always be exceptions, the country is huge enough that there will always be tons of exceptions. However, it will always be true that high taxes on business revenue is an incentive for business to invest in itself. Low business taxes help spur startup investment because potential payout makes the risk worthwhile. The opposite is also true, high business taxes hurt startups, low business taxes put established businesses at risk (there isn't incentive to reinvest AND entrapeneurs are encouraged to come after them).

If you want to lower unemployment among established businesses, raise corporate taxes. If you want to increase the number of businesses and spur innovation, lower corporate taxes. The first option gets more jobs quicker, the 2nd option can make for a vibrant economy, more jobs down the road. The reality is that you need to fuel an economy with not just a balance between the stability of high taxes and the innovation of low taxes, but ideally you move slightly in one direction then the other to pump the positives of each scenario while avoiding the hazards of a stagnant economy.

[kentuck]

112. Thanks for your comments.

I do think the Administration is attempting to help small businesses. Although I am not so sure that the tax rates have as much to do with their difficulties as does our trade policies and cheap imports. You make some good points, however.

[JoePhilly]

111. You miss something critical. And the GOP is THRILLED that you do.

You focus on taxing INCOME, not WEALTH.

The GOP LOVES this.

Let me give you an example. A poor kid takes gets great grades, but their parents can;t afford to pay for college, so they take loans. Lots of them.

Finally, they start to make some money. And they have to pay interest on the loans AND more on any income above that at about 33%.

Meanwhile ... a rich kid goes to college, and mommoy and daddy pay for it, no loans. No interest. And that kid gets income from investment dividends from mom and dad, taxed at 15% ....

The GOP wants you to focus on INCOME tax, when what they want to really protect is WEALTH.

Executives who make over 1 million a year are also given a ton of tax deferred perks ... the LAST thing they want is regular income.

The GOP uses income tax as their wedge because at the end of the day, it means NOTHING to the very wealthy. It is icing on the cake. But the average American understand a tax on their income, and are more likely to be against it going up.

[ProfessorGAC]

116. Why Are You Punishing Me?

The tax rate on what i make is fair. I pay nearly $30k a year in fed taxes. Me paying my fair share is hardly the problem.

It's people making 25 times what i make paying only 16 times as much.

See, this is what makes people libertarian or conservative. You are trying to find a way to make someone like me the "idle rich" who don't pay a fair share.

I don't even take deductions! I'm NOT the problem.
GAC

[Kip Humphrey]

120. $50,000/yr = 0% per individual, +1% per each add'l $25,000 capped at 50% - w/ NO exemptions

A simple progressive tax on all income (wages+interest+dividends+stock profits)