9 Things The Rich Don't Want You To Know About Taxes

[dbacks fan]

I guess what I'm saying is before you bash and beat me up as being a gov't employee, you have no idea of the things that I am involved with and the agencies that I work with.

[Red Arrow]

I have been following this, ...

What kind of retirement plan if any do you have?  I only have a 401K but my employer does match my contributions up to 4%.  I pay part of my health care, dental care (they are separate), some imputed income for company sponsored life insurance.  I'll have to get my paycheck stub to find them all.  Including some non-mandatory after tax savings that I consider mandatory to have a reasonable retirement, I take home less than half my gross salary.

Other than the obvious taxes, what are your mandatory deductions?

[Red Arrow]

RA, you might be interested in these graphs. Do note the differing time scales.

The first graph doesn't have a label.  (I had to go directly to the URL to see it, I don't know why.)  I don't remember the $/hr going down for the Federal Minimum Wage so there must be some adjustment.  Do you know what it is?  I expect inflation.

I agree that CEO pay is absurd but if a private sector business wants to pay that much I guess that's their business. Looks like CEOs took a huge hit between '00 and '02 kind of following the S&P 500 and a moderate hit between '04 and '05.  If that graph had started in '00, it would have painted a different picture.

The second graph tells me everyone's income is up or at least not declining.  Filtering out some short period fluctuations, the little guys' income in constant year 2007 $ is holding or getting slightly better.   If the rich are truly taking from the bottom, I would expect the 20th percentile to go negative as fast or faster than the 95th went positive.  Maybe you need a graph showing the 5th and 10th percentiles.

[nathanm]

RA, the first graph is (was, it don't work for me anymore, oddly) also adjusted for inflation. I pointed out the time scale because if you look at 1946-2008, you get a different picture than looking at 1990-2005. It could look misleading.

Note how the bottom 20% has basically been stagnant since the late 70s. There have been some minor ups and downs, but they're all a wash. The peak may have actually been in the late 90s, but I'd have to go look at the raw data to be able to see the tiny difference there.

The point is that the bottom 40% have gone basically nowhere since the late 70s and even the next 20% aren't doing a whole lot better. Clearly something about our society is not working for everyone. I guess it could just be that 40% of our population has gotten lazy and decided they don't want to work hard even though they seemed to have a work ethic prior to the late 60s, but somehow I doubt that is the case.

Edited to add: CEO pay wasn't really my point, but since you touched on it, I'll say this: In most cases, I agree that it's not our place to do anything more than "tsk tsk" at companies for their absurd CEO pay. However, when there's no real choice as to whether or not to buy a product it becomes our problem. There is no room for the market to operate and bring equilibrium. (Although apparently the market isn't working too well if CEO pay is getting that high..in a Friedmanite sense, corporate profit is an inefficiency that the market should stamp out over time)

[guido911]

To be fair to me, the 30% is predicated on present state/local taxes. Were state and local taxes what they were  30 years ago, that number could be higher and still be a reasonable overall tax burden.

That's one of my biggest complaints about Guido's attitude. His "class" has been seeing a steady reduction in its tax rate while those lower on the ladder have been seeing a steady increase at the state and local levels to pay for it, yet he continues to complain in a way that sounds completely ignorant of what the situation really is.

As I have repeatedly stated, I do not live in a world of percentages. I live in the real world where my real dollars (lots of them) are taken from my family. If you want to pay a higher percentage (whatever the hell that means in reality), have at it.

[heironymouspasparagus]

Wow!  Just shows how delusional it can be in there!
The world is all about percentages.  At least the real, real world.

 

[nathanm]

As I have repeatedly stated, I do not live in a world of percentages. I live in the real world where my real dollars (lots of them) are taken from my family. If you want to pay a higher percentage (whatever the hell that means in reality), have at it.

So what, there shouldn't be a tax rate? You're not making sense.

[Red Arrow]

Percentage vs. real dollars.  Reminds me of inches vs. millimeters or RPM on a piston engine vs. % of Maximum RPM on a turbine.  One is primary, the other is a conversion.

Income Taxes are typically determined by a percentage.  A percentage based income tax is somewhat easily converted to real dollars.  We all do it on one of the variants of Form 1040.  In the end we pay real dollars.  The check you send or refund you receive from over withholding is in dollars, not percent.

Sales tax is a percent of the purchase price.  This is quickly converted to dollars before you pay the cashier.  Added up at the end of the year, a percentage of ones income confiscated by sales tax can be determined and frequently is to express how oppressive it is to low income earners.

Most things we buy have a dollar price, not a percentage of some unknown or variable quantity.  Perhaps the unknown or variable quantity vs. a known quantity is the key to choosing a dollar amount vs. a percentage.   A gallon of gasoline does not have a price on the pump of xx.x% (of your income or anything else). Today regular gas was $3.68/gal for regular at QT.  (Down a penny. I expect it will go up a $.11/gal tomorrow like the last time there was a penny drop.)  At the end of the year, your purchases can be converted to a percentage of pretty much anything.  A percentage of your income, the price of your home, the price of your neighbor's home, the amount you spent for your college education (assuming you have one) can be calculated.  These percentages are good for statistical purposes but if Bill Gates and I walk into the same McDonald's, we will both pay the same amount of dollars for a burger.  The price on the menu is in dollars, not percent.

[dbacks fan]

As I have repeatedly stated, I do not live in a world of percentages. I live in the real world where my real dollars (lots of them) are taken from my family. If you want to pay a higher percentage (whatever the hell that means in reality), have at it.

Do you ever think that since you are a lawyer you work on a contractional basis, and you are responsible for your own taxes? Or do you sit in "your world" and complain about taxes between yourself, and those of us poor bastard working stiffs on the payroll of an employer? You bark about how lots of your money is taken from your family, and you don't live in a world of percentages. So what effing world do you live in? Appereantly it's not the rest of us.

[guido911]

Do you ever think that since you are a lawyer you work on a contractional basis, and you are responsible for your own taxes? Or do you sit in "your world" and complain about taxes between yourself, and those of us poor bastard working stiffs on the payroll of an employer? You bark about how lots of your money is taken from your family, and you don't live in a world of percentages. So what effing world do you live in? Appereantly it's not the rest of us.

The "effing" world is the check one writes to the treasury each year. Do you really ask yourself at tax time, assuming you are among the 49% that does pay federal income tax, gee, what percentage is that? Well, I don't. If you do, you really are a "poor bastard working stiff[]". All I know is that a crap ton of my money gets sent to the feds while more than half pay 0. That's my effing world.

[guido911]

Percentage vs. real dollars.  Reminds me of inches vs. millimeters or RPM on a piston engine vs. % of Maximum RPM on a turbine.  One is primary, the other is a conversion.

Income Taxes are typically determined by a percentage.  A percentage based income tax is somewhat easily converted to real dollars.  We all do it on one of the variants of Form 1040.  In the end we pay real dollars.  The check you send or refund you receive from over withholding is in dollars, not percent.

Sales tax is a percent of the purchase price.  This is quickly converted to dollars before you pay the cashier.  Added up at the end of the year, a percentage of ones income confiscated by sales tax can be determined and frequently is to express how oppressive it is to low income earners.

Most things we buy have a dollar price, not a percentage of some unknown or variable quantity.  Perhaps the unknown or variable quantity vs. a known quantity is the key to choosing a dollar amount vs. a percentage.   A gallon of gasoline does not have a price on the pump of xx.x% (of your income or anything else). Today regular gas was $3.68/gal for regular at QT.  (Down a penny. I expect it will go up a $.11/gal tomorrow like the last time there was a penny drop.)  At the end of the year, your purchases can be converted to a percentage of pretty much anything.  A percentage of your income, the price of your home, the price of your neighbor's home, the amount you spent for your college education (assuming you have one) can be calculated.  These percentages are good for statistical purposes but if Bill Gates and I walk into the same McDonald's, we will both pay the same amount of dollars for a burger.  The price on the menu is in dollars, not percent.

I guess my point is that I am a bottom line person. Listening to people who claim, "Sure, I wouldn't mind paying a higher percentage in taxes to match the identical increase on the 'rich'" means nothing if it resulted in a $50.00 increase in their tax and untold thousands increase on a rich person. Yeah, that sounds like a great idea.

[nathanm]

The "effing" world is the check one writes to the treasury each year. Do you really ask yourself at tax time, assuming you are among the 49% that does pay federal income tax, gee, what percentage is that? Well, I don't. If you do, you really are a "poor bastard working stiff[]". All I know is that a crap ton of my money gets sent to the feds while more than half pay 0. That's my effing world.

The world of delusion, folks. (once again, your statistic is incorrect)

Funny how your complaint earlier in the thread was that us deadbeats who make less than you didn't want to see our taxes increase. Then when a bunch of us point out that we could stand to have that happen you launch into a rage about the people who don't pay income tax and complain about how you still pay more in absolute dollars.

Let's put it this way: I'd happily trade you, even with a tax increase. You remind me of the fellow last year who was trying to claim that his family was "middle class" when they make over half a million a year and have substantial assets other than their home.

[Red Arrow]

Note how the bottom 20% has basically been stagnant since the late 70s. There have been some minor ups and downs, but they're all a wash. The peak may have actually been in the late 90s, but I'd have to go look at the raw data to be able to see the tiny difference there.

The point is that the bottom 40% have gone basically nowhere since the late 70s and even the next 20% aren't doing a whole lot better. Clearly something about our society is not working for everyone. I guess it could just be that 40% of our population has gotten lazy and decided they don't want to work hard even though they seemed to have a work ethic prior to the late 60s, but somehow I doubt that is the case.

Ultimately, a real raise in the value of an employee must be tied to an increase in productivity. (CEO and top executives have a good deal going.)  Folks in the middle have probably seen some increase in productivity due to computers since the late 70s.  I believe I am more productive with a computer and CAD system than with only a calculator and some drafting triangles.  They guys pushing brooms are mostly at the same productivity level as always.

As a coincidence, we quit allowing foreign entities to exchange paper dollars for real metalic gold about 1971 according to wikipedia.  Seems the French/DeGaul were trading all their paper $ for actual gold.

[guido911]

The world of delusion, folks. (once again, your statistic is incorrect)

Funny how your complaint earlier in the thread was that us deadbeats who make less than you didn't want to see our taxes increase. Then when a bunch of us point out that we could stand to have that happen you launch into a rage about the people who don't pay income tax and complain about how you still pay more in absolute dollars.

Let's put it this way: I'd happily trade you, even with a tax increase. You remind me of the fellow last year who was trying to claim that his family was "middle class" when they make over half a million a year and have substantial assets other than their home.

BFD if you want to pay a "higher percentage". Chip in $50.00 more so others can chip in $5,000.00. WOW. Thanks for the big help there Mr. Charitable.

And stop with interpreting what my positions are. Bottom line. If you don't pay, or pay little, federal income tax, don't b!tch about raising taxes on anyone. Man, your jealousy is bordering on embarrassing.

[guido911]

Note how the bottom 20% has basically been stagnant since the late 70s. There have been some minor ups and downs, but they're all a wash. The peak may have actually been in the late 90s, but I'd have to go look at the raw data to be able to see the tiny difference there.

The point is that the bottom 40% have gone basically nowhere since the late 70s and even the next 20% aren't doing a whole lot better. Clearly something about our society is not working for everyone. I guess it could just be that 40% of our population has gotten lazy and decided they don't want to work hard even though they seemed to have a work ethic prior to the late 60s, but somehow I doubt that is the case.

What does any of this have to do with tax policy?