Note To Rich People — Stop Whining About Taxes

At many times and in many paces over the years, predatory taxes administered by cruel and grasping governments have caused enormous misery among huge segments of local populations. After the tax collectors came around impoverishment and not infrequently starvation followed. Hatred for the taxing authority invariably followed as well.

But hey, you rich people in today’s United States, that’s not the situation you face today. There isn’t a single thing proposed by President Obama or even the most progressive wing of his party that would lessen the wealth you already possess. And as to diminishing the amount of new income you would derive were Obama-Democratic Party tax proposals enacted, not one of these proposals would in any meaningful way lessen your personal comfort or alter your lifestyle.

So stop whining. Stop obstructing. Just pay the extra taxes that have to be assessed to meet real and necessary needs without employing the alternative — impoverishing a large number of your fellow Americans. And do this because you understand that to those whom much has been given much is expected — including a little more (and that’s what we’re talking about here) in the way of tax payments.

In passing…if any reader of these lines thinks I’m just writing as I do because I don’t myself happen to face higher rich person taxes, let me make this offer: Give me enough income so I net more than $200,000 a year, I will not only not whine if you raise my tax rate on income above this level, I will personally come by and clean your house and pool monthly.

Auf Stumbleupon zeigen
Auf tumblr zeigen

  • slamfu

    Seriously. The billionaires whine like a 3-4% increase, and only on their money in the top bracket mind you, the part they don’t have to pay SS and Medicare tax on, is something they’ve never had to deal with. I expect to be in that bracket by the end of next year and trust me, I have no problem with it going up. I really hope they want to trot out the “job creator” meme again too. Its time America took a good hard look at that line of reasoning and showed people how stupid it is.

  • zusa1

    The cycle I have noticed, is that in good times, when there are excess funds, new programs are created instead of money being saved, and then when the inevitable down cycle comes, not only are there not enough funds to cover the original obligations because there are no savings, but it has been made even worse with the new programs so taxes are raised and the cycle just keeps repeating. I don’t have a problem with higher taxes, but would like to stop the cycle of expansion of government. I think this may be what people are resisting.

  • slamfu

    Is that the cycle? Because the only time I saw we had projected excess funds was at the end of the Clinton admin, and Bush wasted no time in cutting taxes to make sure we never had a surplus. And it also preceeded a massive expansion of govt.

  • JeffP

    “Note To Rich People — Stop Whining About Taxes” –at least when the complaint is in the same sentence as “…and we have to reduce this deficit!”

    (And be sure and try to forget “Reagan proved that deficits don’t matter…” former Vice-president Cheney. And never mind “Obama will be a one-term president” Cheney, too.)

    Regarding cyclical expenditures:

    http://www.cbpp.org/cms/index.cfm?fa=view&id=1258

    Largest expenses of government, by far:
    US Dept of Defense
    Medicare/Medicaid
    Social Security

  • CStanley

    I almost wish the GOP had yielded on this and let all of the Bush tax cuts expire. The Dems would have then been faced with explaining why middle class taxes were going up as a result of that….or they would have separately passed a new cut for the middle class and then would have no scapegoat when the revenue was still far short of what is needed to make a dent in deficits.

  • ShannonLeee

    CS, i see taxes on everyone going up once…if…we get unemployment under 6. Dems would also need to cut spending along with the tax cuts to the middle class. I think they are willing…but we have already heard that Reps have no interest in raising taxes on the rich…so we will see.

    But your point is still valid. taxes on the rich alone will not bring down the deficit. We need to get the economy right before we can start working on the bringing down the debt.

  • CStanley

    Slamfu, i would say that the cycle that zusai speaks of is more true at the state level, with regard to public pensions and growth of the state bureaucracies. That in turn affects us all because many of the worst offending states (large cities too) end up needing bailouts, and also because this abuse of largess at the state level makes it impossible for states to fund their own safety net programs so all of that can’t possibly be handled without growing the federal govt.

  • SteveinCH

    Shannon,

    Dems have never indicated any willingness to raise taxes on the middle class, save maybe for allowing the “temporary” payroll tax cut to expire (which may yet be undone in the next few months).

    Here’s the thing though. Unless spending is cut in a dramatic fashion, large tax increases on everyone are going to be necessary. Try this as a simple thought experiment. Go back to fiscal 2001 (the last balanced budget). At that time, taxes were 19.5% of GDP. A bit of that was the .com bubble but not much so let’s call 19 the benchmark for “Clinton tax rates.”

    In 2015, according to the President’s budget, we are planning to spend about 23.5% of GDP. So we’d need to raise another 4.5% of GDP in taxes to balance the budget. But in that same year of 2001, individual income taxes were only 9.7% of GDP so to raise another 4.5%, we’d have to raise taxes nearly 50% above the Clinton levels for everyone.

    I don’t think either party is for tax increases at that type of level.

    As to waiting until the unemployment rate is below 6%, I’m not sure we can. I think higher unemployment (to a degree) is here to stay and when we’re running up deficits of $1 to $1.5 trillion a year, the math gets ugly fast.

  • casualobserver

    I believe this is the first time in US history this has happened, but I am willing to hear a rebuttal……

    “Bonds of Exxon Mobil (XOM) and Johnson & Johnson (JNJ) are trading with yields below those of comparable Treasurys”

  • SteveinCH

    CS,

    There was never an opportunity to “yield and let all the Bush tax cuts expire.” There was an opportunity to “yield and let 20% of the Bush tax cuts expire” but that wouldn’t have given the cover you’re describing.

    I find this whole thing fascinating…the emerging Democratic position seems to be to let the tax rates go up over $250K income but keep the payroll tax holiday in place. What’s fascinating of course is that this approach actually lowers the tax receipts of the federal government versus today as the increase in rates yields about $65 billion and keeping the payroll tax holiday reduces receipts (relative to letting it end) by about $100 billion. So, at the moment at least, the Republicans are for higher tax receipts than (many) Democrats.

  • EEllis

    The amount of tax increases on the rich will do very little to reducing the deficit. So why the big push? Sure other things are also being talked about but why make this minor difference such a big deal? To me it’s like an illusionist trick, “look over here so you don’t notice what’s going on over there”. It’s bad way to do business and not particularly honest. Also I’m not near the 1% Won’t be getting close anytime soon. I don’t have the drive or ambition for the effort it takes to get there. For the most part it takes a lot of work and ambition and quite often risk to get there. Why then should that be punished? Now sure there may be some loopholes or deductions that are unnecessary or just don’t serve their intended function, but on the whole I don’t see why someone who is rich should pay a significantly larger percentage than I do. I see nothing moral in taking from someone just because there is a belief they have more than they should.

  • ShannonLeee

    From a 2006 report… Trash the data if you wish :)
    http://www.americanprogress.org/wp-content/uploads/issues/2006/04/Hertz_MobilityAnalysis.pdf

    Child’s possibility of getting to top 5% of income earners (above $166k), based on parents income level:

    Bottom Quintile ($0-30k): 1.1%
    Second Quintile ($30-42k): 1.5%
    Third Quintile ($42-54k): 1.8%
    Fourth Quintile ($54-72k): 5.6%
    Fifth Quintile ($72k+): 14.2%

    Further, of kids born into the top 5%, 21.7% stay there as adults.

    Hard work and family wealth, not that I fault anyone for the advantage, but it is there.

  • http://www.americaincontext.com Barky

    It’s part of being a responsible citizen: you pay your taxes. It’s how you contribute to a free society. Part of the price. So suck it up and pay your share.

  • zusa1

    CS,You are right about my comment being more applicable to the states. That is actually what I had written and edited out to be more general. Slamfu..you really shouldn’t brag about Clinton’s economic policies….they were disastrous.

    Are we ignoring the effects on small business? Do the rep’shave a valid arguement?

  • dduck

    Yes, Z, ” Then the Grasshopper knew:
    “IT IS BEST TO PREPARE FOR THE DAYS OF NECESSITY.”

  • Carl

    Whoa Mr. Silverstein, these are JOB CREATORS!

    Never mind these tax cuts didn’t get anyone hired when the Republicans passed them a decade ago, you need to realize something:

    It’s not a matter of can’t, it’s a matter of won’t.

    The Job Creators WON’T hire anyone until they get paid for their efforts. They will graciously accept tax cuts in kind. Same same, but that’s the end of their graciousness less you got some more cash.

    Money talks and…..well you know the drill. BTW Who’s your banker?

  • jdledell

    I propose that the Bush individual tax cuts be made permanent. However, in return I would like Carried Interest, Dividends and Capital gains to be taxed as ordinary income. The SS temporary tax reduction should be allowed to expire but in return the child tax credit and standard deduction should be increased. Itemized deductions should be limited to $35,000/individual and $50,000/family. Corporate tax rate should be 15% of net income – with only one deduction – a tax credit of $2000/full-time employee.

    Federal taxes should be pegged at 22% of GDP and expenses at the same level. SS& Medicare have to be changed so that the Actuaries can certify that they are solvent 50 years from now.

    One thing I’d like to stop is the kind of games my old employer used for senior executives. We would cut our cash compensation by 50% with a stock option virtually guaranteed to expire in 12 months to make up the compensation difference but as capital gains our taxes were only 15%. How fair was that?

  • dduck

    J, just curious. Why do you think risking ones money by investing in a security and thus helping the country, should not be encouraged. If I had a bundle invested at, oh just for example the old GM, and it went belly up and I lost money, would I be less inclined to invest in the future if I had to pay OI rates?
    BTW, I am for a graduated tax rate on capital gains tied to taxable income and same for a cap on deductions. Yes, I would nail the hedge and other guys using OPM at a higher rate, but lower than OI rates.

  • zusa1

    dd,
    “but lower than OI rates.” Why? They aren’t risking their own capital, they just may not make as much if they don’t do well. How is that different from anyone else who works straight commission?

  • ShannonLeee

    It isn’t Z, but we don’t subsidize actual work in this country because people must work in order to eat. people that can make money with money will continue to do so, regardless of their tax rate. Dduck has a point on risk, but people are not going to just sit on their cash. they will just find low risk investments, better ways to balance their portfolios. They will not stop investing.

  • Dr. J

    There isn’t a single thing proposed by President Obama or even the most progressive wing of his party that would lessen the wealth you already possess.

    Except so-called quantitative easing, siphoning away the value of savings and other dollar-denominated assets of both the rich and middle class alike. And this has been rather more than proposed.

  • zephyr

    Silverstein is right. The whining needs to stop and the people who have benefited the most in life economically need to step up. We need to use ALL the tools in our toolbox. This means cuts AND taxes. Nothing complicated about it.

  • jdledell

    dduck – The reason I advocate taxing investment gains as ordinary income is that the majority of investment income is already taxed as Ordinary income but most people do not realize it. Trillions of dollars in 401(k)s and IRA’s supply investment capital to US business producing mountains of capital gains and dividends. Yet every penny of this income is taxed at OI when the individual starts taking money out. The same is true of Cash Balance, Keogh etc. Pension plans. The exception to the middle class getting a tax break on capital gains is when they sell their house. That tax advantage is real. Furthermore, the capital tax advantage captures gains due to inflation, whereas in an IRA or 401(k) inflation in assets is taxed as OI.

    There are relatively few individuals who invest strictly for the purpose of producing capital gains that are taxed at 15%. Why should they get a tax break when the huge majority of the capital gains in this country are taxed as OI?

  • JDave

    Of course the rich would notice a raise in taxes. Of course it would affect their lifestyle. The Howells will spend 2 weeks in Fiji this year instead of 3, and Lovey will have to settle for the 2 carat emerald instead of the 3.

    But it won’t make zero difference to them as Mr. Silverstein argues. I am so disappointed when a great argument is undermined with overstatement.

  • SteveinCH

    Jdl,

    The situation is a lot more complex than you let on. First, you ignore Roth IRAs where the tax situation is different. Second, you well know that the effective tax rate on the gain, due to the deferral is far less than the OI tax rate. Finally, you know that for most people, reported income in retirement is low.

    And lastly, this entire debate is framed incorrectly. If you want to “equalize” the treatment of capital gains, you should be concerned with equalizing the effective tax rate. If you compare the capital gains tax to the federal income tax, you can use the following table from the TPC. If you look at the table, you’ll see that the effective income tax rate (first column) doesn’t go above the current capital gains rate of 15% until one reaches the 95th to 99th percentile of the income distribution.

    Unless of course, you are arguing that capital gains should be subject to FICA taxes. But I haven’t heard that argument yet.

    So I ask you, what is the tax break that capital gains received if, in fact, it is taxed at a higher rate than ordinary income for 95+% of Americans

  • dduck

    JD, I’m not going to get side tracked discussing tax deferral which is the case for many investment plans and was designed to encourage funding for retirement- perhaps another day.
    No, the dividends capital gains from investments deserve a lower rate, because of the risk of partial or total loss, especially for persons with lower taxable income.
    Point is you put money at risk, you deserve a tax break. Yes investments in higher risks would not dry up but be shifted to the lower risk securities, that is not good.

  • MICHAEL SILVERSTEIN, Wall Street Columnist

    Hi All,

    As the above comments clearly illustrate, the Big Tax Issue is extremely complex. At this juncture, however, if I were advising President Obama, I would ignore the complexity and do a laser focus on just one aspect of this larger issue — extending the Bush-era tax cuts for the 98 percent of taxpayers making less than $200,000 ($250,000 for married couples) and letting higher rates take hold for the top 2 percent of earners. Just that. Only that.

    This one is an easy to understand. Ninety-eight percent pay the same, the rich pay more. Most Americans already agree with the President on this so no additional convincing is necessary. And the Republicans, if this is the only focus, can’t do what they desperately seek to do — mix this one idea in with a thousand others that can be debated and fudged in ways that ultimately serve the interests of the rich.

    If this remains the laser focus of the President and the Democrats, than future negotiations on the many other aspects of the Big Tax Issue will work to the benefit of progressives. Otherwise, well, the rich slickers will end up winning again…

  • SteveinCH

    Michael,

    In my view, that focus is just perpetuating the big lie but I’m sure there’s something that compels you to spend time on something that won’t matter.

  • MICHAEL SILVERSTEIN, Wall Street Columnist

    Hi Steve,

    It’s true that I’m subject to strange compulsions from time to time. But I’m not sure what “big lie” you’re referring to in my note above.

    Every poll I’ve read shows that most Americans want the Bush-era tax breaks for the 98 percent of low and middle income earners to be extended, and that the lower rates for the top two percent not to be extended. Do I have that wrong? And if not, why should focusing on this fact not be sensible and effective politics?

  • SteveinCH

    Michael,

    The big lie is that this change makes any material difference in the long-term fiscal situation, it does not. The entire debate is nothing more than a distraction, a distraction that Washington will spend lots of sound and fury on, reach a silly conclusion, declare the problem solved and go back to SNAFU.

    And the fact that 65% of Americans favor raising taxes on 2% (that probably isn’t them) isn’t much of an argument to my ears. Can you imagine a world where “Don’t tax you, don’t tax me, tax the man behind the tree” isn’t true?

  • MICHAEL SILVERSTEIN, Wall Street Columnist

    Hi Steve,

    The fact that allowing lower rates for the top 2 percent to expire doesn’t solve all this country’s fiscal problems — that’s the distraction.

    We’re at the beginning of a long and complex and difficult process with regard to taxes. Just the beginning. But where it ends up will in large measure be determined by the direction in which we start.

    If we start in the direction I propose, we will end up with what I deem not only a fairer tax system, but one that benefits more people and that leads to a stronger overall economy. If we go instead in the “let’s work on all the pieces from the start” direction, the political sausage that comes out the back end will leave a bad taste for a very long time…

  • SteveinCH

    Yes Michael I think I understand. Your concern is “fairness” as you perceive it. The fact that the US tax system is already one of the most redistributive in the OECD is not important. It should always become more so.

    Take care.

  • dduck

    I agree somewhat with Steve about the distraction factor, but I also agree that the tax on the below 250K should expire. It will be largely symbolic and maybe stop some people from burning “fat cat” dummies out in the street. This should be a first step ONLY and Simpson Bowles should be enacted simultaneously or shortly after.
    BTW: I don’t like that O has already thrown down the gauntlet and declared that the country voted for him because they think fat cats should pay more: Front page of the NYT, today:”And on Tuesday night, we found out that the majority of Americans agree with my approach.”
    Really, that’s the reason they voted for you. I was hoping some might have felt that you would work with congress to find solutions. Apparently, you are not the best negotiator on the block since you spit in their face before they even got to the table.

    I was worried that if O won big, it would go to his head and ego. Evidently he feels the EC results (61.7% VS 38.3, big) were so overwhelming compared to the popular vote (51.7 VS 47.87, pretty good).
    Way to go, buy bigger hat sizes.

  • SteveinCH

    And we’re back to the discussion in T-Steel’s thread. There is zero probability that Simpson Bowles will ever be proposed by the President. S-B had a hard spending cap of 21% of GDP. Every Democrat opposes any cap of any type…well maybe not a cap of say 60%…

    So S-B or anything like it will not happen because neither Rs nor Ds are serious about this. That’s pretty much the whole of it. The choices are clear but the politicians not only don’t want to make them, they want to pretend they don’t exist.

    You see, if the President came forward and said he was going to pass a bill that extended the rates below $250K for one year only and that he would veto any extension beyond that, I’d believe he was serious. I’d disagree with him but I’d believe he was serious. At the moment, he’s not serious at all because he’s not willing to make a serious proposal. Lest I come across as partisan, the Rs aren’t making a serious proposal either.

  • dduck

    Steve, Perhaps gloomy, but maybe true.

  • Dr. J

    It should always become more so.

    That’s going a bit far, Steve. The liberals’ claim is that on this occasion, it should become more so. And maybe it should. The facts seem to be: (a) that liberals cannot define “fairness” any more than conservatives can, (b) they nevertheless constantly invoke the word to argue for specific tax rates, (c) I have no idea why they think this is helpful, and (d) correcting them has no effect on their behavior. Of course, none of that proves tax rates are fine where they are.

  • dduck

    Fair, that’s a great weasel word that politicians love along with values and caring.

  • SteveinCH

    Not so sure Dr J. I have never heard a liberal argue that taxes should not become more progressive or that they were progressive enough. I’m sure there’s a notional upper bound but I’m equally sure I have no idea what it is and that no liberal can ever explain it.

    My personal point of view of what constitutes fairness is

    1. All income should be treated equally.

    2. Subsistence income should be untaxed (for an purpose)

    3. All income above subsistence should be taxed at the same rate.

    4. The rate should be high enough to fund the government we choose to have.

    That’s about it. You can disagree with that definition of fair but, in my own mind at least, I can define it (and defend it though I won’t do it here).

  • zephyr

    As we can see, “fairness” is a relative concept. So is “greed”. So is “enough”. So is “patriotism”, so is “unity”. We ALL need to work together on this as one people. A good start would be for the the most fortunate Americans to man up (or woman up). It’s only one piece of the puzzle, but it’s an important one in the eyes of working class americans who are being ridden hard and put away wet.

  • SteveinCH

    Z

    Define “man up” for us. If the median American pays x% in federal taxes, what multiple of X should an American making $250K pay, how about $1 million, or $10 million?

    Working class Americans pay very little (on average) in Federal taxes. I know it’s an inconvenient fact but a fact nevertheless.

    Why is it that so many only speak of the “good start.” Do tell us what comes next and when it comes…or is it the case that the next step will look like the current step (and the last one). There have already been hundreds of billions of tax increases (over the next 10 years). Do those not count in your judgment?

    Just one more question…if we ALL need to work together on this as one people, why is the entirety of your solution confined to 2% of ALL?

  • Dr. J

    Good questions, Steve, and not the first time they’ve been asked. I doubt you’re going to get an answer.

  • ShannonLeee

    Well, taxing (or letting breaks expire) the top 2% is by no means then entirety of the solution, simply an easy start. This may also be a distraction, but, the current system is setup so they rich can stay rich and it is considerable more difficult for the poor to become rich. The mechanisms involved are deeply intrenched and it may be a while until we can bring fairness back into the system. The system is rigged and wealthy donors pay politicians a lot of money to keep it that way.

    Not only are taxes complex, but so are our economic and societal structures. When you look at the issue within the framework of our entire country, I think increasing taxes on the top 2% is fair, given their advantages over the middle class and especially the poor.

    and on top that… we need a VAT… and budget cuts.

  • zephyr

    Don’t be aburd, it’s been answered often. You can’t force people to listen though, and you certainly can’t force them to think. We’re talking about more than just numbers here, we’re talking about deep philosophical differences. Should one view this country as more than just a place to draw wealth from? What does it mean to be an American? What IS love of country? What IS patriotism? How does a small increase in taxes compare to the sacrifices made by people who join the service – people who are disproportionately from middle and lower economic classes by the way. Do whey whine when asked to do something for the greater good of the country? Think about what this all means in the greater scheme of things. Go read the preamble to the USC and think about what it might mean. Do I still need to explain what I mean by “man up”?

  • SteveinCH

    Yes you do.

    Yes, one should view the country as more than a place to draw wealth from.

    It means many things to be an American

    Love of country is a concept that says you place value on your country beyond its intrinsics.

    Taxes don’t compare to service though I’m not sure that’s relevant

    Most of the service is volunteer and most don’t whine.

    I’ve read the preamble many times. However, the preamble is the preamble for a reason.

    As to you answering questions, maybe you can’t which is why you choose to divert.

  • dduck

    SL, “but, the current system is setup so they rich can stay rich and it is considerable more difficult for the poor to become rich.”

    OK you have the power, how would you change this so the poor can become rich? And, if they did, then they will become the bad guys, cause rich guys are the bad guys.

  • ShannonLeee

    Education dd, education. Sadly, “throwing money at the problem” is only what we do for Exxon and Chevron. Education is where it has to start…protecting kids in schools and protecting good teachers. College must become cheaper. that is where I would start.

    as for rich people being bad guys… who said that!?!?!? the system is the problem. the loopholes. the drug war that puts minorities in jail for holding an ounce of weed… the prison industry complex to boot..

    good on anyone that makes money…legally makes money…even Mitt Romney. :)

  • SteveinCH

    Education????? Did you say education?

    http://nces.ed.gov/fastfacts/display.asp?id=66

    I was in school in the 1970s and 1980s. At that time, in inflation adjusted terms, we spent around $6000 per pupil.

    In 2009-10 (latest data from the National Center for Education Statistics), we spent nearly $11,000 per pupil.

    So you’d call doubling per pupil inflation adjusted spending over the last 30 years as something other than “throwing money at the problem.”

    Defense spending, in inflation adjusted terms and including the wars, is up about 50 percent over the same period.

    Whatever issues we may have with eduction, it’s pretty hard to argue (at least based on the facts) that lack of money is one of them. But people repeat that so often that it’s become dogma.

  • dduck

    The dogma ate my point. SL, education won’t make you rich alone, it takes more than that although it is a good start and also see what Steve said. I agree the ed. system needs renovation and not just lower cost loans. What has been done except politicians pontificating about it. I have not heard much, have you.
    P.S the higher schools call students units, they are businesses like any other (at least many of them).

  • Dr. J

    An interesting table, Steve. So where has the money gone?

  • SteveinCH

    Dr. J,

    That’s a great question. Best I can come up with is special ed, curriculum enhancement (e.g., classes beyond the 3Rs), administration, buildings, sports, smaller class sizes.

    Some worthy, others less so. Hard to defend them all when you go to the pot for more money.

  • Dr. J

    Schools are plusher than they used to be, with better buildings, more teachers, and a wider variety of classes? That sounds counterintuitive to me, my impression was they were going the other way.

  • SteveinCH

    Let me put it to you this way. I have 3 kids in school right now. In all cases, the above is true. It’s only my experience so I don’t know. But the only other possibility is compensation and I don’t think that’s right.