Threats to Wealth Creation

[muck]

I received a letter this week from a guy I do some business with. He had an interesting string of statistics that I thought I'd share with you (I'm assuming these are accurate).

 

TAXES:

In 1979, the top 1% of earners paid 18.3% of all income taxes.

In 2004, the top 1% of earners paid 37% of all income taxes.

In 2004, the top 10% of earners (those with income over $87,300) paid 71% of all income taxes.

 

LITIGATION:

Over 1 million lawsuits are filed in the US every year.

97% of attorneys world wide practice in the United States.

 

PUNCHLINE:

Taxes and litigation are the most serious drains on your ability to accumulate assets during your lifetime.

[dmarc117]

as i always say, taxes and lawyers are evil!!!

 

get a rope!!!!

 

[westvirginia]

Where's TimC's pitchfork?

[Randall]

Where'd those figures come from?

[muck]

Where'd those figures come from?

 

See my first sentence in the first post.

[Randall]

See my first sentence in the first post.

 

 

They were his statistics? OK. I just wanted to look them over and see how they were calculated.

[Ursa Majoris]

TAXES:

In 1979, the top 1% of earners paid 18.3% of all income taxes.

In 2004, the top 1% of earners paid 37% of all income taxes.

 

I'd really like to see the source for this but one interpretation of this is that the income of the top 1% has grown so exponentially over the time in question in comparison to everyone else that the fact they pay more of the tax percentage is actually a natural result of the concentration of wealth into fewer hands. It is an indictment of the failure of trickle down more than anything else.

PUNCHLINE:

Taxes and litigation are the most serious drains on your ability to accumulate assets during your lifetime.

And this is a bunch of BS.

[muck]

I'd really like to see the source for this but one interpretation of this is that the income of the top 1% has grown so exponentially over the time in question in comparison to everyone else that the fact they pay more of the tax percentage is actually a natural result of the concentration of wealth into fewer hands. It is an indictment of the failure of trickle down more than anything else.

 

I've asked him for his source, fyi.

 

And this is a bunch of BS.

 

How so?

[Chavez]

TAXES:

In 1979, the top 1% of earners paid 18.3% of all income taxes.

In 2004, the top 1% of earners paid 37% of all income taxes.

In 2004, the top 10% of earners (those with income over $87,300) paid 71% of all income taxes.

 

One question that I always think is germane to this discussion is "what % of income do the top 1% and 10% earn?"

[CaP'N GRuNGe]

Of course the top 1% (or 10%) pay most of the taxes. They also have the majority of wealth in this country. The middle class is becoming non-existant.

[CaP'N GRuNGe]

One question that I always think is germane to this discussion is "what % of income do the top 1% and 10% earn?"

 

I believe it is over 50% from the last I saw...

 

Edit: http://www.nytimes.com/2007/03/29/business/29tax.html

 

The analysis by the two professors showed that the top 10 percent of Americans collected 48.5 percent of all reported income in 2005.

 

That is an increase of more than 2 percentage points over the previous year and up from roughly 33 percent in the late 1970s. The peak for this group was 49.3 percent in 1928.

 

The top 1 percent received 21.8 percent of all reported income in 2005, up significantly from 19.8 percent the year before and more than double their share of income in 1980. The peak was in 1928, when the top 1 percent reported 23.9 percent of all income.

Edited April 13, 2008 by CaP'N GRuNGe

[Chavez]

One question that I always think is germane to this discussion is "what % of income do the top 1% and 10% earn?"

Ah, found the answer to my own question. I rule.

 

Anyway, the top 1% earns 21% of AGI and is responsible for 40% of taxes. The top 10% earns 46% of income and is resonsible for 70% of the taxes. Really, the people who should be complaining most, though, are the top 5% - the top 6-10% earn ~10% of the income and are responsible for ~10% of the taxes. Really, even the 2-5% aren't that skewed - earn 15% of AGI, pay 20% of taxes (the 2-5% group is making between 150k and 364k).

 

So only the >$364k AGI crowd is not able to create wealth due to an oppressive tax rate. Poor guys.

Edited April 13, 2008 by Chavez

[Randall]

Of course the top 1% (or 10%) pay most of the taxes. They also have the majority of wealth in this country. The middle class is becoming non-existant.

 

 

And how many republics(or democracies) can exist without a middle class?

[Ursa Majoris]

How so?

It's pure right wing chain email polemic. Let's look at the statement omitting the litigation as that's a separate issue, though total BS even more so than the taxes piece.

 

Taxes and litigation are the most serious drains on your ability to accumulate assets during your lifetime.

 

So.....the first thing to note is that the original complaint is about the taxes paid by the top 1% / 10%. Let's focus on the poor dears in the top 1%. Given that these are the people "earning" far more than $364k (according to Chavez's numbers that's the 2% threshold), are we to understand that the American system so far has been a "drain on their ability to accumulate assets"? Seriously? Seems like things are panning out pretty good for them so far, no?

 

Anyway, there is a simple remedy at hand for all those who would biatch about taxes, especially the rich. It is this - f*ck off then. See if there's anywhere else you can accumulate wealth like you can here. Try Europe. Or Africa. Better yet, Antarctica and don't forget your Speedo.

 

Bah. This is whining of the first magnitude.

Edited April 13, 2008 by Ursa Majoris

[muck]

Bah. This is whining of the first magnitude.

 

I thought this topic would have this sort of effect on the crowd around here...

 

[muck]

PS -- A very large portion of the wealth that is created in the US is created via investments (whether in real estate, stocks, bonds, etc), and that can be done from anywhere in the world. So, your suggestion for these people to piss off and move to Europe or Africa or Antarctica is being taken seriously by more and more people. Why? Because, for some, it's more important to create the wealth absent high tax rates than it is to remain an American citizen. Heck, some people can continue to be both an American citizen and avoid some of the biggest taxes they'd be subject to if they stayed (i.e., move to the USVI and your federal tax rate goes to 1/10th of what it'd be if you lived in, say, Florida).

[Chavez]

PS -- A very large portion of the wealth that is created in the US is created via investments (whether in real estate, stocks, bonds, etc), and that can be done from anywhere in the world. So, your suggestion for these people to piss off and move to Europe or Africa or Antarctica is being taken seriously by more and more people. Why? Because, for some, it's more important to create the wealth absent high tax rates than it is to remain an American citizen. Heck, some people can continue to be both an American citizen and avoid some of the biggest taxes they'd be subject to if they stayed (i.e., move to the USVI and your federal tax rate goes to 1/10th of what it'd be if you lived in, say, Florida).

I'm of the opinion that any place with the same amenities, security, and standard of living with the US tends to have HIGHER tax rates. And those that have lower tax rates aren't places you'd like to live - I'm sure the bulk of Africa has negligible tax rates if you know the right people; of course, when those people get killed in a coup and people who AREN'T friends of yours get into office, well, that probably doesn't add years to your life span.

[Ursa Majoris]

PS -- A very large portion of the wealth that is created in the US is created via investments (whether in real estate, stocks, bonds, etc), and that can be done from anywhere in the world. So, your suggestion for these people to piss off and move to Europe or Africa or Antarctica is being taken seriously by more and more people. Why? Because, for some, it's more important to create the wealth absent high tax rates than it is to remain an American citizen. Heck, some people can continue to be both an American citizen and avoid some of the biggest taxes they'd be subject to if they stayed (i.e., move to the USVI and your federal tax rate goes to 1/10th of what it'd be if you lived in, say, Florida).

I'm not suggesting they piss off anywhere, though I don''t personally give a f*ck if they do. What I am suggesting is that it's really difficult to listen to millionaires / billionaires piss and moan about how little of their wealth the nasty government lets them keep. If you don't mind, I'll save the tiny reserves of sympathy that I still have for actual deserving causes.

 

Income tax rates at the higher levels are at all-time lows. No longer is there a ridiculous 91% bracket - that's all gone forever and so it should be. While the rate of tax is at ~35% on actual money coming through the door, much of the compensation of the wealthy flows in through other means. Those means are taxed entirely differently - 15% on both dividends and capital gains, IIRC. If you factor in the free stock that is not counted as income and gets taxed at less than half the rate of actual income, things look different.

[rocknrobn26]

After reading above and some other articles on my own, am I correct in saying that an income of $120,000/year puts you into the upper 8%-10% wage earner? If so, what income increase would move that person up by 1%? I know each percent is a logarithmic comparison, but how much?

BTW if I'm wrong in my assumption give me the numbers please. That is:

 

$120,000/ year puts a person in the top 8% wager earners.

$150,000/ year puts a person in the top 7% wager earners.

etc.

 

I really want to know.

[Ursa Majoris]

One more thing:

 

When was the last time a pay raise that would extend total income into the next higher tax bracket was refused? Just because the rate is ~35% on the last few dollars of income, do people decide those dollars aren't worth having?

[AtomicCEO]

I personally am appalled that the people who accumulate by far the most wealth in this country are somehow unable to accumulate wealth adequately.

 

Wait.

 

[muck]

On a personal note, for reasons that I cannot adequately articulate, I feel that an employee (stock options, health insurance, paid time off, etc) should pay a different kind of tax rate than should an entrepreneur who earns the same amount of money because, generally, the entrepreneur is giving more to the economy than the middle manager.

 

Specifically, if a guy starts a printing company (for example) and is fortunate enough to get some good clients and he clears (say) $80,000 in his first year ... that should be taxed at a lower rate than (say) a middle manager at IBM making $80,000 (plus stock options, health insurance, and a whole host of other benefits the self employed guy/gal has to pay for out of their own pocket).

 

Also, the sustainability of the self-employed is more important to the economy than the sustainability of yet another middle manager. Besides, if the tax code incentivized the entrepreneur more, we'd see more growth and more nimbleness within the economy ... a lower chance the wheels fall off the economy since the economy would be even more diverse than it already is.

Edited April 14, 2008 by muck

[millerx]

The most fair and balanced answer to ALL questions of tax is the "FAIR TAX". A simple consumption tax would help to stop the bickering. Politicians keep American citizens fighting amongst each other (about taxes) to draw your eyes away from their deficiencies!!!

 

Bring the power back to the people (the individuals that use to have a say in how this country was run) and take it away from corrupt politicians and lobbyists that use the tax system for their own power and concerns!!

 

Not to mention the American businesses that would stop the outsourcing caused by an oppressive tax structure that is in place now, and the companies that would move their businesses (and create jobs here) because of the simplified process it would offer!!

 

Research it yourself! Don't listen to people with alterior motives sway you.

 

FairTax

 

P.S.

Oh! and let's not forget the money America would receive from those that don't currently pay into the tax system at all right now!! i.e. Illegal Aliens, the Mob/Gangsters, etc.

Edited April 14, 2008 by millerx

[detlef]

On a personal note, for reasons that I cannot adequately articulate, I feel that an employee (stock options, health insurance, paid time off, etc) should pay a different kind of tax rate than should an entrepreneur who earns the same amount of money because, generally, the entrepreneur is giving more to the economy than the middle manager.

 

Specifically, if a guy starts a printing company (for example) and is fortunate enough to get some good clients and he clears (say) $80,000 in his first year ... that should be taxed at a lower rate than (say) a middle manager at IBM making $80,000 (plus stock options, health insurance, and a whole host of other benefits the self employed guy/gal has to pay for out of their own pocket).

 

Also, the sustainability of the self-employed is more important to the economy than the sustainability of yet another middle manager. Besides, if the tax code incentivized the entrepreneur more, we'd see more growth and more nimbleness within the economy ... a lower chance the wheels fall off the economy since the economy would be even more diverse than it already is.

 

Something that bears mention in regards to pitying those in the highest brackets and what they pay. First off, you get what you pay for. As some of you know, I used to be a private chef for a couple in CA that were insanely wealthy. During the period of time I worked there, they entertained Bill Bradley, Dick Gephardt, and a ton of CA politicians for dinner. In other words, when they had questions about what was going on, they had an audience with they guys who were doing it. The rest of us? We get to "write a letter to your congressman". Not saying it's unfair that they get to talk to these guys and we don't. Rather that they put in more money, and they get more say in what happens to it. Which brings up...

 

When the gov't spends our tax dollars on infrastructure or wars, who do they spend it on? Companies owned by people with a ton of jack. Should I really shed a tear for the top brass at Halliburton for all the money they pay in taxes when a crap load of it is actually being spent $100 loads of laundry or equipment leases in Iraq from them? Should I shed a tear for how much the top shareholders of Granite Construction pay in taxes considering how often I see their trucks on public works jobsites?

 

Joe Blow pays his taxes and gets community services. Joe Rich pays his taxes and then gets paid to provide community services.

 

And yes, I understand that doesn't account for things like education and welfare. None the less, at least now, the money to made on this war is massive and they guys making the most on it reside in the top 1%.

[detlef]

The most fair and balanced answer to ALL questions of tax is the "FAIR TAX". A simple consumption tax would help to stop the bickering. Politicians keep American citizens fighting amongst each other (about taxes) to draw your eyes away from their deficiencies!!!

 

Bring the power back to the people (the individuals that use to have a say in how this country was run) and tka eit away from corrupt politicians and lobbyists that use the tax system for their own power and concerns!!

 

Not to mention the American businesses that would stop the outsourcing because of the loss of an oppressive tax structure that is in place now, and the companies that would move their businesses (and create jobs here) because the simplified process it would offer!!

 

Research it yourself! Don't listen to people with alterior motives sway you.

 

FairTax

 

P.S.

Oh! and let's not forget the money America would receive from those that don't currently pay into the tax system at all right now!! i.e. Illegal Aliens, the Mob/Gangsters, etc.

I got into a discussion with my neighbor about this yesterday and really think it could be great. The biggest argument about it is the fact that the lowest incomes would be hit the hardest by it since they, by nature, have no choice but to spend all their income on stuff. Of course, you could just offer rebates to those below a certain income level and presto. Problem solved.

 

Like you said, money gained illegally gets taxed.

 

I suppose it would trigger an increase in black market trade however.