So 1.55 million people make more than 250K, I wonder how many actually clear more than 400k? You'd be making what 6-700k to clear 400?

Anyways, 1.55 million out of nearly 300 million in the entire US gets you what barely over 0.5% of the population? Seems like a pretty small number in my book.

I'm in the 'burbs of Chicago so I don't live in a rural area.

I probably know one or two people who make around that 250k number (but no one who makes over 400k), and I know people who have a very high net worth, but their income isn't anywhere near that high. Just a lifetime of living frugally and having a good head for investing.

Only the rich pay taxes?!?!

I thought the rich hired accountants and lawyers to stick it to the middle class.

President Bush said so (from his stump speach):

"Well, the rich hire lawyers and accountants for a reason -- that's to stick you with the tab. "

So I did some more looking. In '03 the break point for the top 1% of AGI was $285,000, so to even get to $400k in AGI you're looking at much less than 1% of the tax filers. There was a total of 168,000 filers who had an AGI higher than a million bucks, of those the state with the highest was California (not surprisingly). So, if you paid more than a million in taxes then you obviously have an AGI higher than a million bucks (unless you're counting tons of other taxes that you haven't talked about).

Congrats, that puts you in the top 25,730 filers in the state of California. In '03 California had roughly 35 million people (from the census site). So that puts you in the top 0.0735% of filers. I can understand why you don't care if you lose a few percentage points of your income, but to say there is a "large number" of people making as much as you is not true. It's actually a relatively small number, one I wish I was a part of.

Good points & good statistics--my tax situation is a bit different from most as a biz owner + investor + have a wife who does well so I'm hit in 3-4 different areas, but thats besides the point.

Regardless of the stats, the point that I was trying to make is that at a certain point, tax "relief" for the higher income earners is just silly--the money isn't going back into circulation from my spending--it would be much better to give true tax relief to those making < $50k (for arguments sake) as they are feeling the pinch.

Interesting that your stat showed 168k filers nationwide w/AGI of over $1m, when there are estimated to be 8.2m millionaires in the US--1/2 of them retired. The majority made their money thru real estate investing, not high salaries.

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

"Regardless of the stats"

Nice...

"the point that I was trying to make is that at a certain point, tax "relief" for the higher income earners is just silly"

The point however is who decides "what's silly" Maybe to you 400K is that point. Maybe to someone else It's 1M$. The fact remains it woudl be far more equatibale and IMO, fair to keep things even across the board. Under the current tax law the rich pay a greater percentage than the poor. IMO that's just wrong.


"The majority made their money thru real estate investing, not high salaries. "

Are you sure about this? I coudl have sworn I saw somewhere that the #1 way to become a millionaire was to "start your own business". this may include realestate, not sure.

From 2002 teh top 10 millionaires.

Bill Gates $43 billion Microsoft
Warren Buffett $36 billion Berkshire Hathaway
Paul Allen $21 billion Microsoft
Alice Walton $19 billion Inheritance: Wal-Mart
Helen Walton $19 billion Inheritance: Wal-Mart
Jim Walton $19 billion Inheritance: Wal-Mart
John Walton $19 billion Inheritance: Wal-Mart
S. Robson Walton $19 billion Inheritance: Wal-Mart
Lawrence Ellison $15 billion Oracle Corp.
Steven Ballmer $12 billion Microsoft
Michael Dell $11 billion Dell Computer
John Werner Kluge $10 billion Metromedia
Forrest E. Mars $10 billion Inheritance: Mars Candy
Jacqueline Mars $10 billion Inheritance: Mars Candy
John Franklyn Mars $10 billion Inheritance: Mars Candy

Although I'm sure each of the above are/did make some money on realestate along the way I didn't see any of them that made it from realestate only.

~Matt

There's a big difference between being a millionaire and having an AGI (income after many of the deductions) of over one million dollars for a given year.

As I get older and continue to save/invest aggresively, I'll probably be a millionaire, but I don't have much hope of ever having an AGI of over a million dollars.

My question to you is if you got at $100k "tax break" what would happen to it? Would you invest it? Spend it? Grow your business? Give it away to charity? Take the cash and put it under your bed?

Of all of those questions the only one that doesn't help the economy/others is if you put that money under your bed. Invest it, you help those companies you invest in (make the market look better as there is more demand for securities); spend it, same thing; grow your business, probably hiring more people; charity, no brainer.

That's just one of the "thought processes to lowering taxes to grow the economy". You're taking it a different way, put more of the burden on the rich and less on the middle class, where any extra income will almost assuredly be spent and after a year of the lower taxes those same people would be no better off except they would have a better television or whatever they buy with their money. Different ways to hypothesize about solving the same situation. The lower class is typically already not paying anything in taxes and in fact they may be getting money back through the earned income credit.

"Under the current tax law the rich pay a greater percentage than the poor. IMO that's just wrong. "

Why? When you look at it on a cash basis, the rich are still rich & (usually) getting richer. The poor need the $$ much, much more than we do. And if you look at the taxes as a % of take-home (on a cash basis), the middle class & the poor get hit much worse.

My stats came directly from US Census figures & from this article: http://money.cnn.com/...lionaire_households/ (though it only touches/attributes the recent rise in # of millionaires due to real estate investments). And I do agree with you--best way to become wealthy is start your own business.

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

"My question to you is if you got at $100k "tax break" what would happen to it? Would you invest it? Spend it? Grow your business? Give it away to charity? Take the cash and put it under your bed? "

Invest it in a vacation home in either Provence or South Australia, or both.

"You're taking it a different way, put more of the burden on the rich and less on the middle class, where any extra income will almost assuredly be spent and after a year of the lower taxes those same people would be no better off except they would have a better television or whatever they buy with their money. Different ways to hypothesize about solving the same situation. The lower class is typically already not paying anything in taxes and in fact they may be getting money back through the earned income credit. "

Its not like tax breaks are a one-time stimulus--they go on & on, so theoretically the middle class & below families would have a re-curring stream of additional income to spend. As to the middle & lower classes not paying anything in taxes--as a contributing % to the US tax base ($$ wise) they very well may not be, but as a % of their income, yes, they are taking a much bigger hit to their personal bottom lines than the rich.

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

The problem comes with just how much do you cut the lower income tax rates? The bottom 50% of taxpayers in the 2002 fiscal year paid an average tax rate of just 3.21%. They're share of the total income tax was just 3.5%. That means that half of the country pays 96.5% of the income taxes and the other half pays just 3.5%. Then to take those numbers even farther, the top 25% paid 83.9% of the total taxes collected in 2002 and to get into the super rich people who "never pay taxes" the top 1% accounts for a whopping 33.7% of the taxes collected. The top 5% of taxpayers alone pay over half of the total taxes collected at 53.8%!

The income splits at 50% is $28,654, at 25% is $56,401, at 1% is $285,424.

The tax system that we have is already very heavily progressive.

Here's the link to the stats. Their source was the irs.

http://www.taxfoundation.org/prtopincometable.html

Correct me if I'm wrong, but this page.

http://www.taxfoundation.org/prtopincometable.html

Shows that the top 1% only accounts for 16.12% of total AGI and top 5% at only 30.55%. So in essence both of these groups are paying a much high percentage of tax than the lower groups. For example the lower 50% makes 14.23% of the total AGI but only pays 3.5% of the tax?

To put in a "ratio" the Lower 1/2 pays at a tax to income ratio of .245 While the upper 1% pays at a ratio of 2.09? Hmmmmm seems...well unfair.

The real problem I have here is that simply going to flat tax would send "Mr. lower 50%" into a tail spin. It would appear that teh lower 50% simply has gotten off easy for so long I wonder if they could actually survive while paying the same rate/ratio as the upper percentile?

~Matt

Which is why the flat tax will never be adopted, nor does it really make sense for the country as a whole. We need $X dollars collected in tax revenue and in order to get it on a flat tax basis you'd really have to sock it to the lower and middle class people.

Another way to think about it that will annoy you is that the top 1% pays an average rate that is more than 8 TIMES higher than the bottom 50%. However, if you upped the tax on those bottom 50%, then they wouldn't be able to live on a day to day basis without gov't assistance. So a progressive tax is really the only way to go.

Now the thing to really remember is this is just federal income taxes. It doesn't include social security, etc, etc.

What really cracks me up is that here you are explaining rationally and without reservation that you don't care about the taxes you pay since your earnings render your tax burden a moot point, and there are STILL people in this forum who make WAY less than you that feel like telling you that you are wrong.

L O freaking L

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No sidewindin bushwackin, hornswaglin, cracker croaker is gonna rouin me bishen cutter!

What I'm getting from your post is that you think taxes should be on a normalized bell curve distrobution? That makes absolute no sense to me.

What is confusing me is I'm not sure what tax rate you think someone making $1m/year should be paying.

What tax to income ration would be fare? .5 to 1.5? It makes me wonder what the actual total $ amount paid by the bottom 50% pays and the top 1% pay. Cause I'm not seeing how the bottom 50% could ever equal the top 1% without paying a 50% tax rate or something.

Here we go again--enough with the percentages. Lets take a look at real $$ & how the tax rates affect people:

Lets make some broad assumptions for purpose of argument (percentages may be off a point or two, but they are pretty close (at least out here in CA)):

Family A AIG is $30k. They pay $5k in state & federal taxes. They live on $25k. Roughly $2k per month.

Family B AIG is $60k. They pay $15k in state & federal taxes. They live on $45k. Roughly $3750 per month

Family C AIG is $100k. They pay $30k in state & federal taxes. They live on $70k. Roughly $5900 per month.

Family D AIG is $400k. They pay $160k in state & federal taxes. They live on $240k. Roughly $20k per month.

So you truly believe that families/individuals A-C should be paying more taxes, or paying at the same percentage as family/individual D? Quit worrying about the % & look at the actual dollars and how it is going to affect the individuals/society. Who is going to feel it more? I guarantee that Family A is counting every last dollar, and Family B & C feel some squeeze, depending on their lifestlye/location. But trust me on this, Family D could pay an additional 10-25% more in taxes & it really won't matter. Sure, may mean one less trip abroad every year, or that they lease instead of buy a Range Rover, but their day-to-day standard of living does not change, unless they have overbought on a house, and then they've got other issues, but you have to really work at it to spend $15k per month, month-after-month--even with a $1m mortgage, much less $20k.

You keep using percentages in your argument as a justification for keeping taxes down. What services do you think we should cut? Education? Head Start? Environmental protections? Because those are what are on the current chopping block. How about we cut out corporate welfare & farm subsidies instead? How about we quit wasting billions on a "missle defense system" that can't hit water if it was thrown out of a boat.

There is a price for success here in the US & that is that we pay more actual $$ out to the gov't: so what--it is a percentage of earnings, and the more that you are paying directly equate to the more you are earning (actually it is, worst case, more like 45/55)--you are still getting far ahead. For argument's sake lets look at the top 20k filers in CA--all earning over $2m (and that 20k are filing on $2m means that there are probably another 20k that make near to that but are ducking & dodging their way out of it)--theoretically if I make, between corp earnings, investments & my wife's income $2.5m this year, than I'm going to pay approx $1.2-1.4m in taxes. Guess what--that leaves me $1.1-1.3m in net income. Unless I decide to become either a rock star with a heroin habit or move to Vegas to pursue my professional poker career, there is no way that I could spend all that money (well I could this year but not year after year after year). I don't mind paying more taxes/giving to charity/etc if it is helping the greater good--and I've always felt that way about the system. When my wife moved here (LA) from Ohio, she bitched for the first two years about the sales tax, COL, and state tax rates. Guess what--she no longer complains as the opportunities that have opened up for both of us due to California's economy (and housing market) means she certainly isn't making the $75k she was grateful for in Hudson OH. You have to pay to play--and the sooner the Right quits worrying about the percentages & the pennies & focuses on the big picture (such as moving more people out of poverty & into the middle class (thru education & worker's protections) so they have more $$ to spend, the better the long term health of this country will be. Except for the Right it is always about ME-ME-ME. Very short-term thinking.

Personally I like Australia's system--there are very few people actually living in poverty--the gov't has the dole & it is pretty sweet + subsidized housing & pretty much free medical benefits. There isn't alot of suffering--even the lower income/poor enjoy a very high standard of living. However there aren't that many super-rich either--the taxes are progressively worse as you climb the food chain and there are numerous protections for employees & the environment that we simply don't have. So you have a very broad middle class that probably comprimises 80% of society, with 10/10 above/below. Then again they only have 25m people or so, but the concept is pretty sound. Its just that those whose only focus is grabbing the brass ring, at any cost to their fellow man/society, is what seems to drive our country. I just don't understand how you can sit there & make the argument that the poor & middle class should bear a greater burden of the taxes than the wealthiest 5%, when IT DOESN'T EVEN MATTER TO THEIR SOL. Rant over.

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"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." John Rogers

Hey Ty and Matt

Just another stat for the discussion. While income rates have been discussed, one thing that should be considered is that the top 1% hold nearly 40% of total wealth in this country. That's up from around 20% in 1980.

Yes, the ultra wealthy do pay a higher percentage of their income to taxes, but they are still rapidly increasing their holdings. In other words, the idea that higher tax rates is a disincentive to making more money doesn't appear to hold water.

You guys visit TNO anymore?

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You're not stuck in traffic. You ARE traffic.

"How greedy does one need to be?"

How condescending and self serving do your posts like yours need to be?

There is the theory of 'living an abundant life' which says is is good to have more, it is good to desire and achieve wealth and there is nothing at all wrong with wanting to have as much as you can get. The more you have the more you can give.....the more positive things you put out in the universe, the more you will come back to you. Cause and effect.

There's also something called gracefulness, as in; 'grace in giving' something you do without the selfish need to draw attention to yourself. Most libs, like you, cheapen your generosity by having to broadcast it; Why are you trying so hard?

Makes it look like it's done for nothing more than your vanity.

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**All of these words finding themselves together were greatly astonished and delighted for assuredly, they had never met before**

I think your "living an abundant life" is the same as the "if you were rich, got an extra $20k/year back, how much would you actually put into helping the economy" question. And from what I have read, most wealthy people put the majority of tax reductions into savings or buying real estate.

"normalized bell curve distrobution"

Where did you get that?

I believe a fair tax rate is one where everyone pays the same percentage rate despite income level.

Actually I'd even go with saying that after some point, let's say poverty level, everyone pays the same tax rate.

I can understand and somewhat agree with the idea that someone who's making 10K a year makes no sense to be paying taxes as what is "taxed away" will likely have to be replaced with some other support or service in order for the individual to survive. Better he/she keep it to start with and save the loose thru ineffecient redistribution.

I don't however understand why someone making 50K should be taxed at a lower level than someone at 300K.

"What tax to income ration would be fare..."

As I see it the one that woudl be "fair" is likely not possible at this point as Tyriius pointed out.

The problem is there would be a small revolt if the lower half had to actually pay their fair share. I;m certain I would have to make some real lifestyle changes if I were forced to pay my share.

What this does point out is truely how high our national spending is. The true answer is lower overall federal spending and then give everyone a reasonable flat rate tax....IMO.

~Matt

Actually I saw some note in my "research" about this thread that said Bill Gates by himslef has as much wealth as the lower 40% of the country or something like that.

Another graph showed that the realized income for the various groups, by quintilla, had gone up almost equally from 1947 thru 1979. However it was massively skewed toward the upper 20% from 1980-2000. I'd agree a disturbing trend.

I would like to see a study on that and find out what the contributing factors for the recent trend is compared to the older trend.

"You guys visit TNO anymore?"

Nope, Like I said in my "farewell letter". I don't appreciate being treated like a child and won't support someone who feels they have to treat others that way.

~Matt

The last part makes sense, but as far as I can tell anytime the Federal government shrus off spending it just gets thrown to the States (ie Medicaid). So we'd end up with lower federal taxes and crazy state taxes.

Although maybe one could argue that States would spend it more effectively, I don't think you'd see any benefits to large contract purchases or services. I'd imagine that licensing for software and office supplies alone would cost millions upon millions a year in additional overhead due to the lack of the GSA.

I got the bell curve thing because it sounded like you wanted the top 1% and the bottom 1% to pay the same rate. But now I see you want everyone to start off with the same rate. The challenge is the given system ends up in the rich just taking advantage of tax laws to an extent that the poor never could.

"So you truly believe that families/individuals A-C should be paying more taxes or paying at the same percentage as family/individual D?"

Yes

As stated in another post the problem lies in the idea that in order to make it equatable at this time, without running numbers, I suspect that the lower 50% would have to pay 100%+ tax rate.

(Added: After thinking about this for a while it woud seem that if we simply raised the tax rate all to the same as the highest level we would all be paying the same amount and would have more money coming into the treasury. I'd be for exempting everyones first "X" amount of income from any tax except SS which would be put into a PA. By raising everyon's rate we would all be paying equal percentage and we could use the excess to pay off some debt. I'd actually go for this is it was legislated in conjunction with some serious "meaningful" spending reforms.)

Again as I stated in a prior post the entire budget needs to be shrunk t the point that it can be a fair tax and reasonable tax rate.

The plain and simple fact is that all of us, me included, that aren't paying a higher rater are freeloaders plain and simple. I don't like being put in a situation were I'm dependant on others for what I'm getting. It's wrong.

~Matt

" The last part makes sense, but as far as I can tell anytime the Federal government shrus off spending it just gets thrown to the States (ie Medicaid). So we'd end up with lower federal taxes and crazy state taxes. "

I'd agree based on the idea that all servies provided by teh federal government are services we actually need and aren't services we are simply giving for votes.

"The challenge is the given system ends up in the rich just taking advantage of tax laws to an extent that the poor never could."

Agreed again. Part of a flat tax rate system woudl have to be a more simplified system with MANY less loopholes deductions etc etc.

The only problem I see here is making a clear distinction between business and personal income. I'm all for no deductions on a personal level as as individuals we don't spend money to mkae money we simply spend money. At the business level you're spending alot, most of your money to make a little money.

~Matt

I noticed that too. I think a lot of people believe they are part of the "rich" if they have an AGI over 100K.

I don't remember arguing for a flat tax or increasing the rate of the lower brackets. In fact, the only reason I got in this discussion was to talk about the numbers of people who were making more than 400k a year, I continued in it because I find it interesting to see who is actually paying what. As I was posting I was sharing what I found.

To state my opinion, we need a progressive tax, a flat tax would kill the lower class; same as a national sales tax. In fact, I think we should maybe collapse one of the brackets we have now and add another one at say 750K of AGI and make that one around 40%. There wouldn't be too many people paying that, but some would and it would bring in a good amount of revenue.

And before you generalize my political viewpoints too much, I think our defense budget is way too high. I find it sad that the really "successful" farmers make more money filling out government paperwork then they do actually farming. I'm no Right Wing conservative Bush worshipper. In fact, I find it difficult to even call Bush a conservative as he spends more than any conservative should ever even think about.

And as to the person who thought that me making over 100k in AGI makes me think I'm rich is so far from the truth that I can't even describe it. That much money doesn't go too far in the suburbs where housing costs are high, property taxes are enormous (over 2% of the purchase price of your home), and you have a baby on the way. I'm distinctly middle class.

Maybe I need to be more clear in each of my posts, but also maybe people shouldn't try to "read between the lines" and assume that people believe something when they never said it.

You also need to be wary of those stats. Take Bill Gates again, his stock in Microsoft would be included in his wealth, but could you imagine what would happen if he tried to turn that stock into cash? The value of those shares would plummet, along with his net worth. Same with the Waltons, Dell, Buffett, all the big businessmen whose "wealth" is tied up in the stock market. They own so much that it would cause a huge supply and demand upheavel if they tried to "cash in" their securities.

So while Bill Gates may be worth XX billion on paper, that doesn't mean he has access to that much liquidity.

Also, say the price of Microsofts shares just doubled and instead of say Bill being worth 30 billion he's now worth 40 billion, well that's just a "paper" gain, if he tried to capitalize on it those shares would fall and he'd probably be back to nearly 30 billion again (not small potatoes though)

"You guys visit TNO anymore?"

TNO has rapidly become very boring. I think I've posted once or twice since the whole debacle.