Republicans survive Recall effort in WI, what will happen in PA, PGH? (Clark: find a job, income)

[MathmanMathman]

Originally Posted by ML North

You're only considering federal withholding. In Buffett's article, he is considering all federal taxes. So, 17% is the percentage of his income that is paid in all federal taxes, including Social Security and Medicare. My rate for 2010 was 19.31%. I would assume that most people would be in a similar range.

There is a maximum taxable earnings amount for Social Security, $106,800 so that could skew Mr Buffet's effective tax rate downward. I guess they could treat SS taxes like any taxable income. There is no maximum taxable earnings on medicare.

[hnsq]

Originally Posted by h_curtis

Now that is amazing and something I didn't know. Sure seem fair though. I mean the super wealthy not paying the same rate as the middle class. Ouch! Nice that the fat cats can enjoy that perk.

Yeah...but you don't get benefits from SS over the 102k mark either....

Originally Posted by ML North

The Social Security portion of FICA tax is 6.2%. The Medicare portion is 1.45%. Combined that is 7.65%. If your claiming to pay 10% total, towards both income and FICA taxes, that would mean your effective federal income tax rate is 2.35%. You're either not including FICA taxes in your 10% figure, or you're being too vague with your figures for us to be able to follow your logic.

Regardless, the point is that most people pay more than 17% in total federal taxes (income and FICA). Buffett and many other members of the ultra-rich do not.



Long term capital gains and dividends are taxed at 15%. Neither are subject to FICA (SS & Medicare) taxes. Short term gains are treated as ordinary income and are subject to FICA taxes. (I would guess that short term gains account for the additional 2.4% in Buffett's 17.4% figure.)



Indeed. Perhaps that would behoove you, too.

You really need to look into tax deductions. Here is a hint: an LLC only costs abotu $1,500 to start, and you can easily save that amount in legal writeoffs.

[ML North]

Originally Posted by MathmanMathman

There is a maximum taxable earnings amount for Social Security, $106,800 so that could skew Mr Buffet's effective tax rate downward. I guess they could treat SS taxes like any taxable income. There is no maximum taxable earnings on medicare.

Buffett claims his effective federal tax rate, including medicare and social security taxes (Also referred to as FICA taxes), to be 17.4%. If all of his income came from long term capital gains and qualified dividends, it would be 15%. Knowing that he only takes a salary of about $150k, it is a reasonable assumption that the additional 2.4% is primarily due to short term capital gains. Assuming 5-10% of his income came from short term capital gains (because this is the ratio of short term gains that would result in an effective rate of 17.4%), his Medicare contribution would be 1.45%, but his social security contribution would only be 0.0159%.

Regardless, the point is that there's not really any "skewing" going on here. The effective tax rate that he's claiming looks low because it is low compared to most workers, which is the point he's arguing in his op-ed.

[UKyank]

A flat tax (without any deductions or so called loopholes) would require high income earners to pay taxes in such a way that no one could complain about preferential treatment for the rich, but would probably never fly as it would also require all the people paying no taxes to pay up as well.

[hnsq]

Originally Posted by UKyank

A flat tax (without any deductions or so called loopholes) would require high income earners to pay taxes in such a way that no one could complain about preferential treatment for the rich, but would probably never fly as it would also require all the people paying no taxes to pay up as well.

True. Who would we all blame for our lack of success if the wealthy no longer had loopholes?

[BrianTH]

There are many justifications for progressive taxation, but why bother learning anything about them, right?

[hnsq]

Originally Posted by BrianTH

There are many justifications for progressive taxation, but why bother learning anything about them, right?

Oh, personally I have researched the justifications for progressive taxation, but they all seemed like people with less money whining about not having as much as those with more.

I personally don't support policies that are in place for the sole reason of 'he makes more than me and that can't be fair!'. I prefer to study hard, work hard, and make more for myself.

[SammyKhalifa]

Originally Posted by hnsq

Oh, personally I have researched the justifications for progressive taxation, but they all seemed like people with less money whining about not having as much as those with more.

I personally don't support policies that are in place for the sole reason of 'he makes more than me and that can't be fair!'. I prefer to study hard, work hard, and make more for myself.

Adam Smith thought it was a good idea.

[hnsq]

Originally Posted by SammyKhalifa

Adam Smith thought it was a good idea.

I think the recent financial crises should have showed anyone that Friedman and co. got it wrong regarding economic theory...

[Clark Park]

I see the gradual decline of the middle class.

The rich are getting richer and the middle class, the working class, and the poor are getting poorer.

We are slowly inching our way back to the year 1890.

Not only do I see the decline in unions and collective bargaining, but I can see things like Social Security, Unemployment Compensation, Medicare, paid sick leave and vacations, etc. begin to disappear. It won't happen overnight, but it's happening.