Time to Talk About the Buffett Rule

[herbgeek]

If we want to talk about fair share, how about we include those 49% of folks who don't pay income taxes AT ALL? The top 10% of earners pay 70% of all the taxes. How is that not fair?

Source: http://www.ntu.org/tax-basics/who-pa...ome-taxes.html

[ApatheticNoMore]

The only way to get them would be to eliminate the credits middle class people with kids take (mostly the child credit and mortgage interest probably). Like I found out from doing the math it is not possible to fall below the tax threshold if you work full time, no deductions, no kids (even if you earn minimum wage). So you have to ask if you really want to eliminate mortgage interest and kid deductions and find someone who will campaign on that? (good luck with the latter)

[loosechickens]

Well, since those extremely wealthy folks were doing just fine, even when their tax rates were well above 50%, and since societies really work best, especially democratic societies, when the middle class is healthy and prosperous, and since the extremely wealthy in our society have reaped a disproportionate amount of the gains in these past decades while the middle class has kind of taken it in the shorts, it's a start.

The folks with the huge amounts of money have the wherewithal to buy the politicians with their campaign donations to vote for policies that tilt the playing field firmly in the direction of those big money folks. It's time that some attention was paid to making things better for the 99%, rather than even more benefits for the 1%.

We are a part of that fortysome percentage of households that paid no Federal tax this year. So mixed in with the poor, who simply have too little income to owe tax, middle class working people who manage to fall in that group because of children or mortgage deductions, you can add a number of people, many millionaires, who pay no Federal taxes, too. If your income is derived from capital gains, dividends, tax exempt investments, limited partnerships that are taxed advantageously, etc., you can have quite a nice income, but the "wage slaves" in the middle class will be paying through the wazoo, while you sail through, courtesy of the very rich who managed to buy politicians who write the tax code, paying literally, nothing. The superrich didn't INTEND those tax laws for folks like us, but if your income comes from the same sources that the superrich get their income from, you ride on their coattails with those preferential tax laws.

We just finished doing our taxes this year. We are quite comfortable......enjoyed that nice Princess cruise down through the Panama Canal in January, living very nicely. Because of our tax code (which really wasn't designed for us, but since we ARE the investor class, however small), we, this year, paid no Federal income tax at all.

Capital gains shielded from even the lower rate by tax regulations intended to allow the very rich to harvest capital losses on stocks you have every intention of dying owning, and passing to your children whose cost basis will reset at the valuation at the time of your death, thereby having had the advantage of those "losses" without ever suffering the real loss, limited partnerships with their advantageous tax benefits, investments in tax-free municipal bonds, and the preferential way stock dividends are taxed (paying on only half your dividends), if we HAD a secretary with the same income, but derived from a paycheck, she or he would have paid quite a bit of Federal tax.

The tax playing field is tilted against income derived from work and toward income derived from dividends and capital gains. It isn't right that the very rich pay less percentage of their income than people making only a tiny fraction of their income, and SOME of the rich agree with that and are willing to see increased fairness. Others want to grasp hold of every cent they can, regardless of whether they have enough to live a thousand lifetimes already.

It is not fair that we had a comfortable income this year, yet owed no Federal taxes at all. It is not fair that the very wealthy pay a lesser rate than the people who work for them. It is not fair that access to politicians ensures that the tax laws are made in the favor of the very rich, or those whose income is derived from investments rather than from working.

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them, but simply sent our money out to work. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

[Alan]

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

How many times should the same dollar be taxed? If you, as a partial owner of a company, invest your money in the form of stocks or bonds, which then generates a 10% annual return, should it be subjected to the highest corporate tax rate in the world prior to you receiving it only to then have it taxed again at a 25 to 30% rate? Exactly how many slices of the pie should the government take before you are allowed to enjoy the crumbs?

[loosechickens]

That argument might hold some water, Alan, if hardly any corporations really PAID those corporate tax rates, but since something like 2/3 of corporations pay none at all, and even multinational corporations pay a tiny fraction of that marginal rate, it's more like a shell game, that argument.

Should our corporate marginal tax rate be lowered and the loopholes that make most corporations pay only a fraction of the marginal rate be done? Sure. Let's go.

Hey, the very, very rich have managed in many ways to gull people into believing that their pockets weren't being picked. But it may be that the "pickees" are getting fed up. Especially since the slice of the pie that those very, very rich people have has gained steadily in size. And that if anyone is getting "crumbs", it's NOT them, hahahaha.

gotta go......carry on.....back tonight to see how the discussion went.

[txgran]

Well, since those extremely wealthy folks were doing just fine, even when their tax rates were well above 50%, and since societies really work best, especially democratic societies, when the middle class is healthy and prosperous, and since the extremely wealthy in our society have reaped a disproportionate amount of the gains in these past decades while the middle class has kind of taken it in the shorts, it's a start.

The folks with the huge amounts of money have the wherewithal to buy the politicians with their campaign donations to vote for policies that tilt the playing field firmly in the direction of those big money folks. It's time that some attention was paid to making things better for the 99%, rather than even more benefits for the 1%.

We are a part of that fortysome percentage of households that paid no Federal tax this year. So mixed in with the poor, who simply have too little income to owe tax, middle class working people who manage to fall in that group because of children or mortgage deductions, you can add a number of people, many millionaires, who pay no Federal taxes, too. If your income is derived from capital gains, dividends, tax exempt investments, limited partnerships that are taxed advantageously, etc., you can have quite a nice income, but the "wage slaves" in the middle class will be paying through the wazoo, while you sail through, courtesy of the very rich who managed to buy politicians who write the tax code, paying literally, nothing. The superrich didn't INTEND those tax laws for folks like us, but if your income comes from the same sources that the superrich get their income from, you ride on their coattails with those preferential tax laws.

We just finished doing our taxes this year. We are quite comfortable......enjoyed that nice Princess cruise down through the Panama Canal in January, living very nicely. Because of our tax code (which really wasn't designed for us, but since we ARE the investor class, however small), we, this year, paid no Federal income tax at all.

Capital gains shielded from even the lower rate by tax regulations intended to allow the very rich to harvest capital losses on stocks you have every intention of dying owning, and passing to your children whose cost basis will reset at the valuation at the time of your death, thereby having had the advantage of those "losses" without ever suffering the real loss, limited partnerships with their advantageous tax benefits, investments in tax-free municipal bonds, and the preferential way stock dividends are taxed (paying on only half your dividends), if we HAD a secretary with the same income, but derived from a paycheck, she or he would have paid quite a bit of Federal tax.

The tax playing field is tilted against income derived from work and toward income derived from dividends and capital gains. It isn't right that the very rich pay less percentage of their income than people making only a tiny fraction of their income, and SOME of the rich agree with that and are willing to see increased fairness. Others want to grasp hold of every cent they can, regardless of whether they have enough to live a thousand lifetimes already.

It is not fair that we had a comfortable income this year, yet owed no Federal taxes at all. It is not fair that the very wealthy pay a lesser rate than the people who work for them. It is not fair that access to politicians ensures that the tax laws are made in the favor of the very rich, or those whose income is derived from investments rather than from working.

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them, but simply sent our money out to work. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

Very well stated......

[Gregg]

By the time my dollars arrive at the bank I've already been taxed on them at a few different levels. I then use those dollars to pay my property taxes. Or fill my tank and pay fuel/wheel tax as I do. Or I stop at the store for shampoo and pay sales tax along with the product. Or I pay my cell phone bill which has more silly little nickle and dime taxes than I can even fathom... Under our current system it is nearly impossible to transfer money from one entity or person to another without additional taxation at every step and I believe the few transactions so far immune are part of proposed revisions (services, interstate transactions, etc.). My pie has diminished significantly before I ever get to take a bite.

[HKPassey]

I think the first thing that needs to be done is closing a lot of the loopholes and maybe even doing away with a lot of deductions.

One deduction I wonder about is the charitable one. I never take it, because for me to itemize as a single with no dependents doesn't make financial sense. For you average income folks, does the charitable deduction make much of a difference for you tax-wise, or is this something that only really benefits higher income people?

If you have enough deductions to make itemizing worthwhile, yes, it can make a difference even for lower-income folks, especially if you tithe. This year was an ugly tax year for me: I lost my home to a fraudulent loan, so goodbye mortgage tax deduction. Lost my health insurance, so goodbye to self-employed premium deduction. Had to liquidate IRA funds to pay basic bills. "Income" from settling a debt I couldn't afford to pay in full (and two more to go - even if I could find the money to settle, I couldn't afford the taxes). Taxes on unemployment income... the list goes on. I made less this year than any year in the last decade, yet more in taxes. Ouch.

[HKPassey]

An interesting angle to this debate can be found in The Spirit Level, a book examining the societal costs of income/wealth inequality. It's hard to fully consider the "fairness" question without looking at that aspect.

[Yossarian]

That argument might hold some water, Alan, if hardly any corporations really PAID those corporate tax rates, but since something like 2/3 of corporations pay none at all, and even multinational corporations pay a tiny fraction of that marginal rate, it's more like a shell game, that argument.

You can cherry pick some years where there are timing differences between book and tax income or skew the stats with a large number of small companies that really have no income or pay it all to the owners in salary, or whine about the deferral on taxation of foreign earnings when most of the rest of the world doesn't tax foreign earnings at all. But for the most part corporate income is taxed.

Here is an open invitation to anyone who thinks dividends are taxed too low- run all your income through a corporation, have the corp pay tax at 35% corporate rates, and then pay yourself a dividend that is then taxed at 15%. Then you too can have a 15% tax rate. See how great that would be? - hint, if you think it would be you need help with math.

You can change the system, but you have to change the system, you can't just change parts or you end up with the Frankenstein system we have now.