The economy didn’t crash because the rich used capital gains instead on wages to increase wealth. No matter what tax system is in place the rich will adjust or leave. The idea that the the left has of taking money instead of making money is pathetic and counter productive. The only socialist countries that do well are already rich and in Scandinavia. Class warfare and socialist policies only reduce and redistribute money. How about a tax system that encourages wealth production?
England was socialist and poor from WW2 until Thatcher. Now London is the most expensive city in the world. Conservatives create wealth, socialists take it away.
In Russia after 1992 the government gave everyone equal shares. In 1998 the system collapsed everyone lost everything. In five years the rich got theirs and everyone else was still poor. Redistribution doesn’t work. And killing all the rich, taking their money and giving it away doesn’t work for very long.
Ok. My mistake. Didn’t see that payroll tax is included in your chart. Still didn’t capture sales tax, gas tax and all the government fees like cell phones, vehicles etc. Also the richer you are the less income tax you pay, because most of your income will be capital gain, which is taxed at close to the lowest rung of tax brackets.
I never said American tax system is regressive. What I am saying is that there is a lot of political support to make it even more progressive. My points are that one, I think it’s fair and two, we don’t need to worry too much about it. Even if we just roll back the trump tax cut US economy is not gonna crash. We need more aggregate demand in the economy so the right policy may actually make the economy grow faster.
What are the problems we want to solve or prevent?
Priority of goals to be achieved?
Booming economy (as measured in GDP, per capita, NI,…?)
Booming stock market
Stable price of …
Low unemployment
Each family (who are these guys?) own a house (what type/config?)?
Low, ideally zero, crime rate
Quality of jobs
Minimum, ideally no homeless
Freedom of expression
…
Ok, so the chart shows the higher the income the higher the income tax percent. You argue the opposite is true. Even with payroll tax included it’s not true.
You talk about capital gains rate. It’s 15%. The graph clearly shows only the top 1% pay a higher effective income tax rate than 15%. So while the middle class have a 25% marginal rate, the middle quintile actually pay less than 5% effective income tax rate. That’s much lower than the 15% capital gains rate. Yet, you think the issue is 15% capital gains and not a majority of people paying less than 5% effective income tax rate.
I didn’t say the US is regressive. I said Scandinavian countries are regressive due to 25% VAT. Their middle class are also paying 40% income tax rates not 5%.
So the higher your income the higher your effective income tax rate + higher absolute tax dollar?
The chart says “average” not effective. How is average computed? Add total income tax rate divided by number of tax payers for each group? Or total absolute dollar paid divided by number of tax payers and see where it is?
Average is the average effective rate for people in that income bracket. It’d be total taxes paid by income group divided by total income of the group.
Does it say that the top 0.1% income tax payers pay an effective tax rate of ~27% ?
Or
Does it say that the top 0.1% of income earners pay an effective tax rate of ~27%?
Because the implications are different. Someone that makes his money only on investment income (e.g a trust fund baby or Romney) is not going to have an effective tax rate of ~27%.
Income earners. People need to stop crying about the 15%, since a vast majority are paying less than that anyway. They compare 15% to 25% and think it’s unfair. The 25% isn’t even remotely close to the effective tax rate for the middle class.
Average tax rate is always less than the marginal tax rate for each tax payer.
Wondering how different is those numbers from a chart showing the average tax rate for a person at the highest end of a tax scale. Too lazy to construct one Of particular interest is top 0.1% and 1.0% tax payers, their average tax rate of those guys should be higher than indicated in my new chart.
Does your chart include capital gain tax? How come it only shows two components: income and payroll tax. Or do you think income includes capital gain as well?
Nowhere in your chart do I see the word “effective”.
Why worry? Warren will solve all your problems. She is already cooking up a plan to save the homeless. All her supporters have to adopt a homeless person and bring them home. Hope you have room on your couch.
A new book-length study on the tax burden of the ultrarich begins with a startling finding: In 2018, for the first time in history, America’s richest billionaires paid a lower effective tax rate than the working class.
“The Triumph of Injustice,” by economists Emmanuel Saez and Gabriel Zucman of the University of California at Berkeley, presents a first-of-its kind analysis of Americans’ effective tax rates since the 1960s. It finds that in 2018, the average effective tax rate paid by the richest 400 families in the country was 23 percent, a full percentage point lower than the 24.2 percent rate paid by the bottom half of American households.
In 1980, by contrast, the 400 richest had an effective tax rate of 47 percent. In 1960, that rate was as high as 56 percent. The effective tax rate paid by the bottom 50 percent, by contrast, has changed little over time.
The analysis differs from many other published estimates of tax burdens by encompassing the totality of taxes Americans pay: not just federal income taxes but also corporate taxes, as well as taxes paid at the state and local levels. It also includes the burden of about $250 billion of what Saez and Zucman call “indirect taxes,” such as licenses for motor vehicles and businesses.
That’s mixing federal and state/local taxes. They are collected differently and for different things. States without income tax are definitely regressive. You’re arguing about wealth/inheritance tax which are federal tax policy.
Taxes should be looked at as a whole. Even after including state and local taxes, and all those hidden government fees, we still need to include welfare programs. It is a holistic whole. I am arguing, if you look at everything altogether, we have a progressive system but not enough so. We can do more.
Why? What goal is not achieved in current tax system? Why is it necessary to achieve that goal? Other than getting $ for government to spend, what other goals should the tax system have?
Inequality doesn’t measure progressiveness if the tax system. It’s total measure of a way more complex system. They tax anyone median income or higher at 40% income tax. They have a 25% VAT. Everyone calls sales tax regressive.
Census money income estimates explicitly exclude the following:4
The Earned Income Tax Credit (EITC)
The monetary value of benefits from the Supplemental Nutrition Assistance Program (SNAP), more commonly known as food stamps
Free or subsidized medical care such as Medicaid and the Children’s Health Insurance Program (CHIP)
Free, subsidized, or controlled rent or other “affordable housing” schemes
Heating subsidies
Free or reduced-fee social services such as daycare, tax preparation, or meal services
In other words, they are grossly overstating the US Gini coefficient by excluding a bunch of programs that benefit low income people but aren’t considered income.
Of particular interest is top 0.1% and 1.0% tax payers, their average tax rate of those guys should be higher than indicated in my new chart.