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Old 10-17-2008, 05:47 PM
 
19,183 posts, read 27,737,865 times
Reputation: 4000

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Quote:
Originally Posted by McGowdog View Post
Wow! Nice post. I'll drop in a chart I did last night to visually express what another poster presented in what the current tax burden is for the top 1%, 10%, 25%, and bottom 50%, and keep in mind, this isn't a very good chart as I'm not used to this kind of data in my field but I think it gets the point across:
It's also not a very good chart in that it doesn't represent tax burden. It represents tax share. There is a signficant difference, just as there is between the IRS withholding tables and actual taxes. But apparently there are some "real world" people who aren't familiar with that difference either.

Average Total Federal Tax Burden by Quintile, 2005...

Lowest quintile --
Pre-tax income=15,900 Post-tax income=15,300 Effective rate=4.3%
Second quintile --
Pre-tax income=37,400 Post-tax income=33,700 Effective rate=9.9%
Middle quintile --
Pre-tax income=58,500 Post-tax income=50,200 Effective rate=14.2%
Fourth quintile --
Pre-tax income=85,200 Post-tax income=70,300 Effective rate=17.4%
Highest quintile --
Pre-tax income=231,300 Post-tax income=172,200 Effective rate=25.5%

Top 10% --
Pre-tax income=339,100 Post-tax income=246,300 Effective rate=27.4%
Top 5% --
Pre-tax income=520,200 Post-tax income=369,800 Effective rate=28.9%
Top 1% --
Pre-tax income=1,558,500 Post-tax income=1,071,500 Effective rate=31.2%

Source: Congressional Budget Office
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Old 10-17-2008, 06:03 PM
 
2,180 posts, read 3,187,061 times
Reputation: 838
Quote:
Originally Posted by BigJon3475 View Post
Look at it this way (things reversed for a minute).....If you taxed the poor even more would that give you the incentive to become poor? Or more incentive to not become poor?
Given that I am pretty sure that most people who are not poor already have all the incentive they need to not become poor, I suspect that increased taxation of the poor would have little or no impact on their incentives.

The folks I've known who have become poor sure seemed to exhibit a great antipathy towards losing their homes, for example.

For those who are already poor, somehow it doesn't seem likely to me that increasing their tax burden is going to increase their incentive to change their situations. 'I couldn't feed my children, before, but now, with this higher tax rate, I really can't feed my children, so I am going to create some software, sell it, and get rich - before, there was no reason to do something like that!'
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Old 10-17-2008, 06:08 PM
 
27,903 posts, read 33,419,281 times
Reputation: 4016
Quote:
Originally Posted by jps-teacher View Post
Given that I am pretty sure that most people who are not poor already have all the incentive they need to not become poor, I suspect that increased taxation of the poor would have little or no impact on their incentives.

The folks I've known who have become poor sure seemed to exhibit a great antipathy towards losing their homes, for example.

For those who are already poor, somehow it doesn't seem likely to me that increasing their tax burden is going to increase their incentive to change their situations. 'I couldn't feed my children, before, but now, with this higher tax rate, I really can't feed my children, so I am going to create some software, sell it, and get rich - before, there was no reason to do something like that!'
It would be silly but it's a hypothetical. Maybe a poor one but only a different way to look at the same thing. Any more taxation from the status quo and it's considered an increase even if it was at the same levels all through the 90's.

It's pretty much and either or in most people minds. You increase taxes you take away the incentive's (however little you feel it is or is not)....If you lower taxes if forces you to take advantage of it who would turn it down? Filling in the vacuum sort of thing....no middle ground.


Taxes get confusing to most they just want to know what they owe and if it get's more complicated they hire someone and hope they understand better than they do and can explain it to them in layman's terms.
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Old 10-17-2008, 06:38 PM
 
Location: Somewhere out there
9,616 posts, read 11,062,995 times
Reputation: 3717
Quote:
Originally Posted by BigJon3475 View Post
Look at it this way (things reversed for a minute).....If you taxed the poor even more would that give you the incentive to become poor? Or more incentive to not become poor?
This idea has been floated before and truthfully, I think it has great incentivizing power! Imagine; you'll lose it all if'n you don't rise above some low income level. The more you make, the less, percentage-wise, you pay. Genius! No-one would want to be at or below the pov-level!

Like it, PT? it's very social!

Come-on!!! Smile!
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Old 10-17-2008, 09:08 PM
 
2,180 posts, read 3,187,061 times
Reputation: 838
Quote:
Originally Posted by MikeJaquish View Post
1. You don't know me. For sure. Among other things.
Oh dear. I seem to have offended you. Please allow me to amend my wording, dear sir:
you are the only person I know of

Quote:
Originally Posted by MikeJaquish View Post
I wouldn't be that condescending and dismissive to people who work very hard daily to count every dollar to make their way through life and worry daily about how to provide for their families. I recognize that level of insensitivity is amusing to some. Not to me.

Self-improvement references within a financially-oriented thread may reasonably be construed to consider that a person has improved their living situation with additional income.
Your sensitivity is duly noted.

The phrase "self-improvement" may be construed that way, perhaps, but in my experience the folks to whom it is most commonly applied tend not to hear it as you intend it, whereas the folks most likely to apply it don't seem to understand that. Hence my reaction to the term.

Quote:
Originally Posted by MikeJaquish View Post
And, while I may reluctantly agree that only having 50% of your income seized instead of 75% seizure is a marginally better circumstance, I HAVE met people who will not willingly work overtime on hourly jobs for time-and-a-half wages partially because of the immediate punitive tax bite that diminishes the reward for hard work.
Real world.
I hear you.

My experiences are real world, as well.

I'll confess that it's hard for me to understand why, for example, a person who normally gets $15/hour (after taxes) out of the $20/hour pay rate would balk at getting $20/hour out of the time and a half $30/hour payrate (assuming the tax rate climbed that steeply at that level, which it doesn't, I believe). Deciding that there are other things to do with one's time is a different issue, but inadequate increase in pay doesn't make sense to me as a rationale.

Yes, I see you said partially, though I wonder how they would handle it if that factor were removed entirely. Impossible to know, I suppose.

Quote:
Originally Posted by MikeJaquish View Post
I didn't think the course or content of the thread was confusing or at all challenging, but despite my surprise, I'm willing to offer some clarification

I have answered the OP multiple times, and am comfortable with my answers to him. No one has answered more clearly, the "Yes or No" question than I have.

Glad to help.
I found neither to be confusing, either, except the reasoning of some of the posters from time to time, or their unwillingness to grant another person's point.

And I was certain that you were comfortable with your answers. That came across quite clearly! So, too, your conviction about the quality of your own replies. Certainty is a precious commodity of which you seem to have plenty.

In turn, I will note that I continue to examine my answers, in light of the opinions of others, such as you, as well as the data provided for consideration.
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Old 10-17-2008, 09:47 PM
 
Location: Cary, NC
31,592 posts, read 55,307,520 times
Reputation: 30150
Quote:
Originally Posted by jps-teacher View Post


I hear you.


I'll confess that it's hard for me to understand why, for example, a person who normally gets $15/hour (after taxes) out of the $20/hour pay rate would balk at getting $20/hour out of the time and a half $30/hour payrate (assuming the tax rate climbed that steeply at that level, which it doesn't, I believe). Deciding that there are other things to do with one's time is a different issue, but inadequate increase in pay doesn't make sense to me as a rationale.

Yes, I see you said partially, though I wonder how they would handle it if that factor were removed entirely. Impossible to know, I suppose.
You know very little of me.

Your typical $20/hr full-time guy has 25% of his income seized, to get to the $15.00 level, but also has the burden of seizure for Social Security, which lowers his net further. Payroll tax seizure continues through overtime, too.

A worker making $15.00/hr+ change, which is near the transition to the next higher bracket of seizure, would see himself move from 15% income seizure + payroll tax seizure to 25%+ income seizure + payroll tax seizure as soon as he earned enough to place himself into the theoretical $32,000+ annualized earnings bracket for that pay period.

He is looking at about $9+/hr net per hour thanks to the extra overtime effort.
Regular wages in a 40 hour week pay him more than $11.00 net per hour, at 15% and payroll tax.

With per capita income in the $33,000 range, this is likely applicable to a lot of people, I would think.
And I have worked hourly and with hourly people, and have handed out those paychecks and seen the disappointment in the earnings punishment for working extra hours.

Yes, the guy can likely get some of that overpayment refunded next year, oh, in 8 or 10 months, especially if he pays someone to help with the ridiculous paperwork involved, but that is little consolation on payday when they have a car payment and need to go grocery shopping and have a diminished hourly pay rate due to "progressive" taxation.

Damn shame to be called "sensitive" because I don't worship at the alter of abusive and corrupt taxation.
Real people actually DO try to live on those paychecks.
I say, turn them loose to improve themselves , rather than to hold them down and offer handouts to buy their votes...

Last edited by MikeJaquish; 10-17-2008 at 09:57 PM..
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Old 10-18-2008, 01:22 AM
 
2,180 posts, read 3,187,061 times
Reputation: 838
Quote:
Originally Posted by MikeJaquish View Post
You know very little of me.

Your typical $20/hr full-time guy has 25% of his income seized, to get to the $15.00 level, but also has the burden of seizure for Social Security, which lowers his net further. Payroll tax seizure continues through overtime, too.
Who said otherwise? I know of you, and what I know of you - little though it is - is based on the assumption that you are telling the truth in your posts. So, the only bone of contention I can see your having with my saying that is if you are insisting that you have misrepresented yourself - which I don't read your having said.

Your assumptions in the first paragraph are in error. The typical $20/hr full-time guy has ~20% of his pay withheld in taxes. The $15 figure I gave was including the FICA/MEDI deductions. It was an overstatement of the amount of total tax withholdings. The correct figure should have been ~$16 (including FICA/MEDI deductions.

Payroll withholding (don't have a seizure over my using the word that the government uses for them, please) does continue with overtime, as you say. I'm going to move from a theoretical construct to actual paychecks, as it is easier.

Gross pay: $730.00 (40 hours at $18.25)
Federal W/H: $91.31 = 12.5%
+FICA/MEDI: $52.51 = 7.2%
Total Taxes W/H: $143.82 = 19.7%

Gross pay: $791.61 (40 hours at $18.25, 2.25 hours at $27.38)
Federal W/H: $106.71
+FICA/MEDI: $ 57.23
Total Taxes W/H: $163.94 = 20.7%

Overtime Pay: $61.61 (2.25 hours at $27.38)
Federal W/H: $15.40 = 25.00%
+FICA/MEDI: $ 4.72 = 7.66%
Total Taxes W/H: $ 20.12 = 32.7%

$18.44/hr net for the overtime.

Quote:
Originally Posted by MikeJaquish View Post
He is looking at about $9+/hr net per hour thanks to the extra overtime effort.
Regular wages in a 40 hour week pay him more than $11.00 net per hour, at 15% and payroll tax.
Your $15/hr guy is actually making $11.97+/hour net, and if I apply the same 32.7% withholding rate to his time and a half figure of $22.50, the net income for your guy is $15.12/hr - a far cry from that $9/hour figure you presented.

One of the math errors I think you make in your figures is that you applied the next tax bracket's rate to the entire income, when it only applies to the amount above the lower bracket. The person making $24,001 does not have a lower take home pay than the person making $24,000, nor does that happen at any rate change.
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Old 10-18-2008, 03:42 AM
 
Location: Bradenton, Florida
27,236 posts, read 40,266,772 times
Reputation: 10915
Quote:
Originally Posted by MikeJaquish View Post
You know very little of me.

Your typical $20/hr full-time guy has 25% of his income seized, to get to the $15.00 level, but also has the burden of seizure for Social Security, which lowers his net further. Payroll tax seizure continues through overtime, too.

A worker making $15.00/hr+ change, which is near the transition to the next higher bracket of seizure, would see himself move from 15% income seizure + payroll tax seizure to 25%+ income seizure + payroll tax seizure as soon as he earned enough to place himself into the theoretical $32,000+ annualized earnings bracket for that pay period.

He is looking at about $9+/hr net per hour thanks to the extra overtime effort.
Regular wages in a 40 hour week pay him more than $11.00 net per hour, at 15% and payroll tax.

With per capita income in the $33,000 range, this is likely applicable to a lot of people, I would think.
And I have worked hourly and with hourly people, and have handed out those paychecks and seen the disappointment in the earnings punishment for working extra hours.

Yes, the guy can likely get some of that overpayment refunded next year, oh, in 8 or 10 months, especially if he pays someone to help with the ridiculous paperwork involved, but that is little consolation on payday when they have a car payment and need to go grocery shopping and have a diminished hourly pay rate due to "progressive" taxation.

Damn shame to be called "sensitive" because I don't worship at the alter of abusive and corrupt taxation.
Real people actually DO try to live on those paychecks.
I say, turn them loose to improve themselves , rather than to hold them down and offer handouts to buy their votes...
Take more exemptions. Pay less into the tax system. You know that if you're getting a refund EVERY year, then you're paying too much in federal tax. Pay less tax. That's money they're holding that could be making you interest...or just for paying week to week bills.

I'd rather OWE taxes than get a refund at the end of the year. A refund means money I could have had to spend.
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Old 10-18-2008, 04:22 AM
 
Location: Texas
42,203 posts, read 49,753,916 times
Reputation: 66975
Taxing someone at increasingly higher rates "because they can afford it" is like shoplifting and saying, "It's ok, the store can afford it."

The other this is that while the cost of living/inflation has gone up and $100,000 salary is not nearly what it used to be, they left the tax rates the same, and Obama actually wants to change them in the wrong direction.
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Old 10-18-2008, 09:18 AM
 
2,180 posts, read 3,187,061 times
Reputation: 838
Quote:
Originally Posted by stan4 View Post
Taxing someone at increasingly higher rates "because they can afford it" is like shoplifting and saying, "It's ok, the store can afford it."

The other this is that while the cost of living/inflation has gone up and $100,000 salary is not nearly what it used to be, they left the tax rates the same, and Obama actually wants to change them in the wrong direction.
The shoplifting analogy fails at least because the cost to the store of shoplifted merchandise is already built into the price of the goods that are sold - whether or not the goods are shoplifted.

As for the tax rates, they've gone down, not up, since 2000, for everybody but the folks between roughly $6000 and $28400 (in net income, depending on the year). There were drops in the tax rates for the top 4 tax brackets in 2001, 2002, and 2003. The top group dropped from 39.6% down to 35%, a savings of $460 per $1000 in income. At the same time, the income level at which that rate kicks in climbed 8% in that same 3 year period, and 24% from 2000 to 2008 (which is the same rate increase at all of the other levels, save the newest level which did not exist in 2000).
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