Most of the these articles never consider state/local level income taxes. For a person in California the total top capital gain tax rate is more than 33%. This is actually the second highest in the world.
If you consider the regular income tax its even much worse, currently the combined income tax rate in California is more than 50%
I live in California. I'm not "super rich" but we earn more than $1MM/year.
For every additional dollar I earn, I only get to keep 47 cents of it, just counting _income_ taxes. In reality, only high earners pay taxes. And high-salaried people are getting screwed under Obama's war against the most productive citizens.
I'm not a Trump fan, and despite likely tax hits, his proposal of simplifying the tax code (as many have done before him), getting rid of the IRS (yes jobs lost, but really, I got a certified letter owing $0.51 and they were "too busy with this category to answer. click") would be a positive thing.
I think a pure flat tax would actually be bad for the country implemented immediately, but maybe a gradual rescinding of tax breaks (mortgage, etc -- i use said benefit) might be worth considering.
Wall Street bankers running off pure capital gains is a big problem.
The flat tax is opposed to a progressive tax, that says that instead of having a tax rate of 15% for 100% of your income, you have a tax rate of 0% for the first $10000 of your income, 10% of the next 20000, and so on. This is something that can be calculated mentally, looked up using IRS published tables, or calculated with no effort in a 10 line script or some of the simplest Excel sheets possible.
The progressive nature of income tax is absolutely not a problem and recognizes the marginal value of money.
The problem is exemptions, etc., which a flat tax as opposed to a progressive tax does nothing to resolve.
The challenge of a "flat tax" is defining "income". It's not as easy as you think, and basic intuitive "fairness" will result in a lot of income being excluded. Given that today's graduated tax system results in top-earners paying lower percentages, a "flat" tax will surely be worse.
As for getting rid of the IRS, who will collect, administer, and audit the flat tax?
Obama also wanted to reduce income tax filing to a single-page affair. Almost all such proposals along these lines founder on the rocks of legislative buy-in. Given Trump's penchant for denouncing other people as idiots and worse, even if he were to be elected I'm skeptical about his ability to get anything substantial done. Sure, some in congress would be intimidated or enthused into working with him, but others would conclude that he would be in place for 8 years at most, whereas government projects and finances typically involve much longer time horizons. I seriously doubt anyone trusts Trump to supervise a rewrite of the Constitution.
A flat tax is a bad idea. A progressive tax without deductions might work, but a flat tax would just be a huge tax increase overnight for 90% of Americans.
The top marginal long-term capital gains rate in 1992 was 28%. From 2003-2012 it was 15%. In 2013 it went up to 20%. I bet the difference between 20% and 28% explains the rest of the gap noted in the NYT article.
What does this translate to in terms of dollars from the 400 so called high earners? And then what portion of US overall tax revenue is from that group vs other segments? Any such data broken out like that exist?
> But today's IRS report suggests the biggest reason the super-rich paid lower tax rates over the last decade was the fact that Congress lowered taxes on the super-rich, particularly taxes on capital income.
It would be interesting to compare these yearly figures with movement of capital between US and other international markets.
For example, how connected is this late raise in effective tax rate with the fact that US seemed (at least, from what I seen) increasingly interesting for investors compared to other markets in this period, especially with the slowing growth of China?
Could it be that when the capital flows in, US decides to get a bigger cut, but when investment is slowing down, US tries to slow the process by making capital taxes lower? The article mentions that Bush's tax cuts happenned in 2001, right in the recession and after dot-com burst, when growth stopped and investors started to pay more attention to China.
This is just a thought; I honestly don't know enough to understand if I'm right about it.
Some had argued that allowing taxes to rise would lead to an epidemic of capital flight, but this has failed to take place in the two years since tax rates went up. While I'm not hopeful, it would be nice if economic debates in the coming election year were firmly grounded in empirical evidence. With the increased computer power at our disposal it should be easier to model the impact of policy changes on wealth distribution, economic activity and so on.
Yes those arguments often turn out to be false. In California, we had an income tax increase on the "job creators" that many argued would cause the affluent to leave the state, and an "Amazon Tax" that many argued would reduce jobs in the state. Those predictions couldn't have been more at odds with the eventual reality.
> It showed that the effective tax rate paid by those Americans jumped in 2013 to nearly 23 percent.
As a data point, my family paid 28% average federal tax, on AGI of $355k. We are California residents. Taxes are regressive on the higher incomes, and that doesn't seem right.
The top 10% pay over 80% of the federal taxes in the US. This, combined with one of the highest corporate tax rates in the world means they are already paying more than their "fair share".
[+] [-] gopi|10 years ago|reply
If you consider the regular income tax its even much worse, currently the combined income tax rate in California is more than 50%
[+] [-] SlowComputer|10 years ago|reply
For every additional dollar I earn, I only get to keep 47 cents of it, just counting _income_ taxes. In reality, only high earners pay taxes. And high-salaried people are getting screwed under Obama's war against the most productive citizens.
[+] [-] jmspring|10 years ago|reply
One short summary of his proposal -- http://www.thepoliticalinsider.com/donald-trump-unveils-his-...
I think a pure flat tax would actually be bad for the country implemented immediately, but maybe a gradual rescinding of tax breaks (mortgage, etc -- i use said benefit) might be worth considering.
Wall Street bankers running off pure capital gains is a big problem.
[+] [-] addicted|10 years ago|reply
The flat tax is opposed to a progressive tax, that says that instead of having a tax rate of 15% for 100% of your income, you have a tax rate of 0% for the first $10000 of your income, 10% of the next 20000, and so on. This is something that can be calculated mentally, looked up using IRS published tables, or calculated with no effort in a 10 line script or some of the simplest Excel sheets possible.
The progressive nature of income tax is absolutely not a problem and recognizes the marginal value of money.
The problem is exemptions, etc., which a flat tax as opposed to a progressive tax does nothing to resolve.
[+] [-] skywhopper|10 years ago|reply
As for getting rid of the IRS, who will collect, administer, and audit the flat tax?
[+] [-] anigbrowl|10 years ago|reply
[+] [-] gnaritas|10 years ago|reply
It would be bad in any form, it's regressive; marginal utility and all that, taxes should be progressive or they're not a fair burden.
[+] [-] seanmcdirmid|10 years ago|reply
[+] [-] eru|10 years ago|reply
[+] [-] waybull|10 years ago|reply
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[+] [-] rayiner|10 years ago|reply
[+] [-] rubyfan|10 years ago|reply
[+] [-] jgalt212|10 years ago|reply
> But today's IRS report suggests the biggest reason the super-rich paid lower tax rates over the last decade was the fact that Congress lowered taxes on the super-rich, particularly taxes on capital income.
[+] [-] golergka|10 years ago|reply
For example, how connected is this late raise in effective tax rate with the fact that US seemed (at least, from what I seen) increasingly interesting for investors compared to other markets in this period, especially with the slowing growth of China?
Could it be that when the capital flows in, US decides to get a bigger cut, but when investment is slowing down, US tries to slow the process by making capital taxes lower? The article mentions that Bush's tax cuts happenned in 2001, right in the recession and after dot-com burst, when growth stopped and investors started to pay more attention to China.
This is just a thought; I honestly don't know enough to understand if I'm right about it.
[+] [-] madlynormal|10 years ago|reply
[+] [-] horsecaptin|10 years ago|reply
[+] [-] anigbrowl|10 years ago|reply
[+] [-] muzz|10 years ago|reply
[+] [-] OneMoreGoogler|10 years ago|reply
As a data point, my family paid 28% average federal tax, on AGI of $355k. We are California residents. Taxes are regressive on the higher incomes, and that doesn't seem right.
[+] [-] maratd|10 years ago|reply
You made the mistake of earning that money by working. I am making the same mistake.
If you factor in sales taxes, property taxes, state income taxes, etc. I'm pretty sure you're giving half of what you earn to the government.
[+] [-] programmarchy|10 years ago|reply
[+] [-] wonderlust|10 years ago|reply
[+] [-] tmaly|10 years ago|reply
[+] [-] gnaritas|10 years ago|reply
[+] [-] anu_gupta|10 years ago|reply
[+] [-] bobby_9x|10 years ago|reply