Master of Ossus rants about American IncomeTax

[TheKwas]

But even in a persistent state, Obama's tax plan falls far short of the revenues required to maintain the US government at it's current levels of spending, much less the additional spending that he's proposed.

Wait, let me get this straight. You want Obama to wipe out the annual deficit in his first term, all at once? Even ignoring the fact that we're in a recession that orthodox economics prescribes a large fiscal stimulus for, you are aware that it's generally best to spread the belt-tightening (tax increases/spending decreases) over a long period in order to prevent major economic shocks, right? The only time any President should be considering eliminating the deficit in a short time-period would be durning a booming economy where the increase in revenue does the bulk of the work. I don't expect the American economy to reach that point for quite a few years, and that's being generous.

Am I missing something here?

[aerius]

In your example, the capital gains tax was largely irrelevant because your basis was so high in comparison with the revenues you earned from selling the stock. A day trader probably isn't too concerned about the capital gains rate because they don't usually hold assets long enough for them to appreciate substantially (and, moreover, because their losses are deductible against their gains), but someone who's held capital assets for any length of time (like, say, someone with a house or a retirement account or a long-term bond or capital equipment or a farm or any number of other assets that are frequently held for years and subject to the capital gains tax) will have a much harder time ignoring the tax.

I've made 5-10% gains in a single day, in fact I've done this quite a few times thanks to the insane market volatility in recent months. I still don't give a fuck about capital gains taxes since they're not taking a significant chunk out of my profits. My wife & I also hold a boatload of US & Canadian T-bills & bonds, again, I don't give a fuck about cap gains there either since I'm only losing a small percentage to taxes. Yeah, I'll lose ~5% of my profit to taxes (if they were my only investment), equal to about a 0.15% hit in the yield, whoop-de-do, even if I had a million bucks invested I'd lose a whopping $1500 out of my $30k profit. Oh god I'm being robbed blind by the man and I'm going to stop investing now!!

I'm in the highest capital gains tax bracket right now, I'm going give away 20% of my profits to the CRA this year and I'm laughing my ass off because this rate is still lower than the one for my regular income, and I'm in the second bracket from the bottom on that one. Capital gains tax is a fucking joke. If it's "tying up your investments" or "stopping you from investing", then frankly, you don't know what you're doing.

[K. A. Pital]

The market isn't perfect all the time, but it's very, very close to consensus of knowledgeable people's expectations of the future.

71 billion and 1,7 billion. The expectations were off by a factor of 42, and it caused the entire sector to go down like Titanic. "Knowledgeable people"? Maybe reducing market volatility is a price we have to pay for the protection from misjudgement.

It's based on the idea that capital mobility is superior to capital immobility. I have no idea why this is objectionable.

Capital flight, bankrupcies, volatility, joblessness, hunger, crime, brain drain. Yeah, no objections to absolute capital mobility should exist in Master of Ossus-world.

[TheKwas]

Also note how MoO only compares capital mobility to capital immobility. Obviously it's great if Capital can move around, but the issues is perfectly free capital mobility to regulated capital mobility. Finding the optimal amount of capital mobility. No one is arguing for capital immobility.

[The Duchess of Zeon]

Capital flight, bankrupcies, volatility, joblessness, hunger, crime, brain drain. Yeah, no objections to absolute capital mobility should exist in Master of Ossus-world.

Yeah, seriously. I for one am leaving America as rapidly as practicable, and who could blame anyone who wants a decent life for doing the same? Conditions in this country as things stand have become completely unlivable.

[K. A. Pital]

Also note how MoO only compares capital mobility to capital immobility.

That's especially ridiculous as people are talking about a relatively low tax which isn't going to be a major offset on capital operations. Paint yourself white, the opponent black and pretend nothing inbetween exists.

[Rogue 9]

Capital flight, bankrupcies, volatility, joblessness, hunger, crime, brain drain. Yeah, no objections to absolute capital mobility should exist in Master of Ossus-world.

Yeah, seriously. I for one am leaving America as rapidly as practicable, and who could blame anyone who wants a decent life for doing the same? Conditions in this country as things stand have become completely unlivable.

Such melodrama!

No, conditions in this country have not become completely unlivable. In fact, they're not even close. If you want a country that's deteriorated to the point where it's unlivable, take a good, long look at Zimbabwe. Or Somalia, for that matter, though trotting that out is almost too easy.

[ArmorPierce]

Let's be honest with ourselves, Broomstick:

How many destitute doctors are there in this country? Engineers? Scientists? Mathematicians? Operations Researchers? Lawyers? Success may not be GUARANTEED to such people, but you're lying to yourself if you think that there is no correlation.

You are assuming that anyone could become a doctor. You are assuming that everyone went through a good school system. You are assuming that people were around a supportive environment that encouraged the educational growth. You are assuming that everyone was able to pay for college. You are assuming that someone didn't have to drop out of school in order to support their families. You are assuming a lot of things.

Actually, our income tax right now is quite high in historical terms. The highest marginal rate is not as high as it was in the 1960's, but high-income individuals now bear a greater share of the income tax burden than they have since the 1920's (see, for example, the chart posted earlier). Moreover, in 1986 the highest marginal tax rate was cut to 28% and effective for a few of those years. It rose steadily until 2002, when the Bush tax cuts temporarily reduced it "down" to 35% (I haven't followed it closely enough to know whether that cut was extended or not).

Okay... For 75 out of the 98 years, the tax rate has been higher than it is now. 75 out 95 if you don't count the first three years when they first implemented the system and after a few years rose it to above what it is now. The average tax rate is incredibly larger than what it is now.

Another thing not being taken into account. If the real income of the rich is getting richer and the poor is getting poorer, then you would expect that the amount of people that pays no income tax at all would increase.

[Bilbo]

It is called vote buying.

[The Grim Squeaker]

Am I the only one who sees the fallacy in pointing out far higher tax rates without noting that those higher tax rates also applies to far higher tax brackets?
90% for over 5 million dollars a year (in 50s dollars no less) is a rather big difference from 35% on less than a tenth of that (and that's ignoring inflation).

I'm not arguing against a higher income tax, I am arguing against the lack of higher brackets, and against the slanted way the numbers are thrown around.

[Surlethe]

By my count, MoO is (or was) debating Broomstick, Mike, aerius, and variously Graeme Dice, MoC, and Marina. Would it be possible to get a Coliseum match out of this thread?

[Samuel]

I can't believe no one noticed this- MoO is suggesting that we have a tax of 5 dollars on millions of people. Wouldn't the cost of enforcement make it pointless?

[starfury]

I can't believe no one noticed this- MoO is suggesting that we have a tax of 5 dollars on millions of people. Wouldn't the cost of enforcement make it pointless?

True, but it he keeps on harping on it because he somehow feels it is so morally wrong to heavily tax those who own most the wealth and whose lifestyle would be far less affected versus creating this monster apparatus to collect the pittance from the poor and lower middle class in the interest of "equality". That putting very heavy taxes on those most able to bear it is still the most wrong, and it must be spread to those who already have diffculty bearing it.

[The Duchess of Zeon]

Such melodrama!

No, conditions in this country have not become completely unlivable. In fact, they're not even close. If you want a country that's deteriorated to the point where it's unlivable, take a good, long look at Zimbabwe. Or Somalia, for that matter, though trotting that out is almost too easy.

I was talking about myself, so, personally unlivable, Rogue.

I cannot handle the high-stress American workplace.

Therefore, America is an unlivable country for me.

[Samuel]

I can't believe no one noticed this- MoO is suggesting that we have a tax of 5 dollars on millions of people. Wouldn't the cost of enforcement make it pointless?

True, but it he keeps on harping on it because he somehow feels it is so morally wrong to heavily tax those who own most the wealth and whose lifestyle would be far less affected versus creating this monster apparatus to collect the pittance from the poor and lower middle class in the interest of "equality". That putting very heavy taxes on those most able to bear it is still the most wrong, and it must be spread to those who already have diffculty bearing it.

Wait- MoO, a free market capitalist, wants to make the IRS more powerful than it has ever been in its previous history, by making it efficient enough to track every single tax payment? Won't that cost more than you get from the poor (although maybe not canceled out what you get from the rich).

Such melodrama!

No, conditions in this country have not become completely unlivable. In fact, they're not even close. If you want a country that's deteriorated to the point where it's unlivable, take a good, long look at Zimbabwe. Or Somalia, for that matter, though trotting that out is almost too easy.

I was talking about myself, so, personally unlivable, Rogue.

I cannot handle the high-stress American workplace.

Therefore, America is an unlivable country for me.

Most of us thought you meant dangerous and a literal threat to your life, not insanely stressful.

[ArmorPierce]

Am I the only one who sees the fallacy in pointing out far higher tax rates without noting that those higher tax rates also applies to far higher tax brackets?
90% for over 5 million dollars a year (in 50s dollars no less) is a rather big difference from 35% on less than a tenth of that (and that's ignoring inflation).

In the 1950s the highest tax bracket was 400,000 not 5,000,000. The current highest tax bracket is 357,700 this is before inflation. The nominal numbers are less, but by signficantly less than what you are making them out to be. The only time that the tax bracket was 5,000,000 was for a brief period between 1936-1941 and i'm betting that has something to do with the great depression.

With the lower capital gains tax rate, the wealthy are actually paying less percentage wise in income tax than the less wealthy!

[starfury]

Wait- MoO, a free market capitalist, wants to make the IRS more powerful than it has ever been in its previous history, by making it efficient enough to track every single tax payment? Won't that cost more than you get from the poor (although maybe not canceled out what you get from the rich).

Yes, But it is in his own words a moral duty based on "Fairness and Equality", that cutting taxes for the poor and middle class while raising that for the rich is evil and the burden most be spread around, no matter the practical diffculty etc., this pittance of $5 must be collected in the name of moral equality.

[Rogue 9]

Such melodrama!

No, conditions in this country have not become completely unlivable. In fact, they're not even close. If you want a country that's deteriorated to the point where it's unlivable, take a good, long look at Zimbabwe. Or Somalia, for that matter, though trotting that out is almost too easy.

I was talking about myself, so, personally unlivable, Rogue.

I cannot handle the high-stress American workplace.

Therefore, America is an unlivable country for me.

Ah. That's different. My apologies for the misunderstanding.

Most of us thought you meant dangerous and a literal threat to your life, not insanely stressful.

Actually, I thought she meant economically, hence Zimbabwe being my first example rather than Somalia.

[The Duchess of Zeon]

Most of us thought you meant dangerous and a literal threat to your life, not insanely stressful.

Sorry. I know I can be a bit obtuse.

No, it's just that I'm really, really not able to even envision working day-in and day-out for an entire year without respite.... I could do it for four or five years, perhaps, but in the long run I need my two months of paid vacation or else I'll be utterly worthless. I am by nature a burst worker and tend to operate under pretty high stress levels as it is, without the pressures the American corporate culture puts on its workers.

[KrauserKrauser]

Am I the only one who sees the fallacy in pointing out far higher tax rates without noting that those higher tax rates also applies to far higher tax brackets?
90% for over 5 million dollars a year (in 50s dollars no less) is a rather big difference from 35% on less than a tenth of that (and that's ignoring inflation).

In the 1950s the highest tax bracket was 400,000 not 5,000,000. The current highest tax bracket is 357,700 this is before inflation. The nominal numbers are less, but by signficantly less than what you are making them out to be. The only time that the tax bracket was 5,000,000 was for a brief period between 1936-1941 and i'm betting that has something to do with the great depression.

With the lower capital gains tax rate, the wealthy are actually paying less percentage wise in income tax than the less wealthy!

I believe what he is questioning, which is allows something I would like to know, is what tax bracket would someone earning $350k in 1950's taxes. If the 400k in 1950 = 5 million in Now Dollars, what does 350k in 1950 dollars equal? 22k? What was the tax on people that earned 22k in 1950's dollars?

[ArmorPierce]

I believe what he is questioning, which is allows something I would like to know, is what tax bracket would someone earning $350k in 1950's taxes. If the 400k in 1950 = 5 million in Now Dollars, what does 350k in 1950 dollars equal? 22k? What was the tax on people that earned 22k in 1950's dollars?

He is not questioning that he is stating that $5,000,000 was the top bracket in the 1950s without taking into account inflation.

As for your question, $400,000 assuming an average of 4% inflation over 50 years is 2,842,673.34, not $5,000,000. With 4% interest 350,000 taken back 50 years is 49,249.42. average income in 1950 was just shy of $3,000 and increased to $5,000 by 1958.

Inflation rate isn't the only factor to be taken ito account however and is a simplification of things.

[Surlethe]

I can't believe no one noticed this- MoO is suggesting that we have a tax of 5 dollars on millions of people. Wouldn't the cost of enforcement make it pointless?

As I read it, he was making the point simply that there exists a tax level those people are able to afford without significant damage to their well-being, not that we should actually levy a $5 tax on most people making under whatever amount of dollars. Now, that's obviously true; the real question is whether there exists a significant tax that can be raised on lower-income without damaging wellbeing. If the only taxes that can be raised without significantly damaging individual welfare are trivial -- as charging one cent per year for a homeless man -- then it becomes difficult for him to argue that they should be taxed.

[Illuminatus Primus]

For those whining about the extremeness of Marina's claims of worker culture and stress in the U.S., the French worker is significantly more productive hour-by-hour than the American worker. Its socially and even industrially more favorable to pool the wealth and labor sufficiently to grant livable standards to the workers, as they will actually improve in productivity.

[KrauserKrauser]

He is not questioning that he is stating that $5,000,000 was the top bracket in the 1950s without taking into account inflation.

As for your question, $400,000 assuming an average of 4% inflation over 50 years is 2,842,673.34, not $5,000,000. With 4% interest 350,000 taken back 50 years is 49,249.42. average income in 1950 was just shy of $3,000 and increased to $5,000 by 1958.

Inflation rate isn't the only factor to be taken ito account however and is a simplification of things.

Thanks for the info, now what was the tax rate for a person making 49k in the 50's?

[ArmorPierce]

He is not questioning that he is stating that $5,000,000 was the top bracket in the 1950s without taking into account inflation.

As for your question, $400,000 assuming an average of 4% inflation over 50 years is 2,842,673.34, not $5,000,000. With 4% interest 350,000 taken back 50 years is 49,249.42. average income in 1950 was just shy of $3,000 and increased to $5,000 by 1958.

Inflation rate isn't the only factor to be taken ito account however and is a simplification of things.

Thanks for the info, now what was the tax rate for a person making 49k in the 50's?

in 1950 it was 53.69% In 1960 it was 59% for married filing jointly
http://www.stanford.edu/class/polisci12 ... ackets.pdf