Another problem with the Bush tax cuts is that they shift the tax burden from the wealthiest to the middle class. Let's take a look at the tax rates for the 2004 tax year.
Our Income Tax is a progressive tax system. Essentially, the more you make, the more you are taxed.
For a married couple filing jointly in the 2004 tax year, the first $9,700 was tax-free because of the "standard deduction." Everything above that was taxable income.
Here were the rates for taxable income in the 2004 tax year:
$0 to $14,300 was taxed at 10%
$14,300 to 58,100 was taxed at 15%
58,100 to 117,250 was taxed at 25%
117,250 to 178,650 was taxed at 28%
178,650 to 319,100 was taxed at 33%
319,100 and above was taxed at 35%
But these tax rates apply only to paychecks. What if you are making your money through investments?
The wealthiest taxpayers pay lower taxes on capital gains - the profits made off rents, royalties, dividends, stocks and bonds.
Here were the tax rates in the 2004 tax year for capital gains:
Capital Gains held less than one year - 28%
Capital Gains held longer than one year - 15%
As billionaire Warren Buffet noted, he pays a lower percentage on his earnings than his secretaries do on their wages. Buffet says that is not fair.
Less than five percent of taxpayers who earned less than $100,000 earned any capital gains. In fact, 75-percent of all stocks are owned by those earning more than $100,000 - the wealthiest ten-percent of American taxpayers.[i]
Yet, Republicans insist that capital gains be taxed at lower rates than wages.
Oddly, our economy was stronger and less volatile when the wealthy paid a higher percentage.
In 1954, all earnings above $200,000 per year (equal to $1.5 million in 2006 dollars) were taxed at 91 percent.[ii] By the way, when the 1954 tax law was passed, both houses of Congress had a Republican majority and we had a Republican President.
In 1964, following through on a JFK campaign promise, Congress eliminated many tax loopholes and the top tax bracket was lowered to 70 percent. It remained there until Ronald Reagan took office in January 1981 and Congress lowered it to 50 percent and, a few years later, to 28 percent.
Under President Clinton, the top bracket was raised to 39 percent. But under George W. Bush, the top bracket was lowered to 35 percent.
Any time the tax rates on the wealthiest Americans are lowered, taxes on all other Americans need to rise to make up the difference.[iii] The median family is spending 38 percent more on taxes than it did 30 years ago.
Tomorrow - Part 15: The Rich Get Richer
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[i] Paul Krugman, "The Great Wealth Transfer." Rolling Stone, November 30, 2006. http://www.rollingstone.com/politics/story/12699486/paul_krugman_on_the_great_wealth_transfer
[ii] See http://en.wikipedia.org/wiki/Internal_Revenue_Code_of_1954 . Then go to http://minneapolisfed.org/Research/data/us/calc/index.cfm to adjust the amount for inflation in 2006 dollars
[iii] Of course, this assumes that Congress won't raise taxes on corporations or raise tariffs or duties.
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Comments: 37
And capital gains tax rates apply equally to ALL investors...including retiree's IRA accounts. Sure rich people make more capital gains than anybody else, but they still get taxed plenty on everything else.
Personally, I think they should do a flat tax and let everyone pay 10%. If there were no deductions for anything, they'd get plenty of money. And people would actually have an incentive to earn and be successful...unlike under Obama's distribution of wealth (socialist) programs.
The first thing JFK did as president was cut the capital gains tax. When is this class warfare idiocy going to stop? Well, maybe soon, Obama and his band of high taxation socialist spread the wealth types are in charge today and they are full speed ahead in collectivism politics. Look at the markets since Chairman Obama took control of his new Central Government-Comrades at the rate Chairman Barack socialist economy is going, soon there will be no wealth to steal- oh i mean tax.
The wealthy prospered when Clinton was in office more than they did under Bush, even though they paid more in taxes.
Did you know that 90% of our economy is based on small business? those owners average 250K a year and Obama wants to tax THEM more money? they will just decrease the number of employees or go out of business. Taxing during a recession isnt a smart move either. At least he could have waited until things got better.
As i have said before... ever work for a poor person? No, of course not. I believe in a fair tax and shouldnt punish people for doing a great job and succeeding. that just promotes more people to sit back and be ok with average. Our nation was built on being the best not average. George Washington said it best, "the way to decrease the poor is to make it uncomfortable". We need to offer a hand UP and not a hand OUT.
~M
Carla, once again you blame America-Carla it is not America that abandoned these kids, Carla it's the selfish men and woman{individuals} who have caused these kids to grow up in poverty. As all do-good-er liberals you are incapable of seeing the truth, these poor kids are in the shape their in not because of AMERICA. but because of these morons and cowards who just think like you that they are some how "entitled" to have others raise their kids.
Carla do you ever stop for a minute and look around at other countries. If you did you may actually discover that in other nations kids that are deserted and left by parents are seen eating out of garbage cans- wear ragged clothes, are shoeless, and these poor kids live lives of horror. Give it up, America-America-America-Shameful!
Carla, show me pictures of kids in America forced to eat out of garbage cans. America and Americans give more to charity than any nation in the world. The American people are the most caring, giving people in the world.
When a child is found eating out of a garbage can I ask where are the parents and if the parents are selfish druggies, drunks, lazy louts I want them punished and that child should be taken a placed in a charitable loving environment. What is needed in the immoral America we face now are some loving orphanages to care for these kids who are for the most part victims not of America, Carla, they are the victims of hideous parents.
Carla, you are such the classic liberal, you and your fellow liberals are the only caring people in America. I will match my compassion and love for anyone who needs my help- people like you continually insult people like me with your standard liberal response to anyone who dares tell you the truth or disagrees with your failed welfare policies.
Carla, do you ever stop and think about why poverty is still so prevalent in America. Since 1965, America has spent over 11 trillion dollars on The Great Society- remember that social experiment that was to end poverty in America- 11 trillion gone wasted and what did this liberal social program do?? I t destroyed the inner-city minority communities, made these people wards of the state, stole their self-respect, forced them to survive on a check from the government. Carla, the welfare state liberal plan has failed, the evidence is all around you, stop and see the damage that it has caused.
The greatest irony is that liberals like you who started this dependency on government "50" years and counting, trillions spent, lives and generations of people permanently mired in poverty and no hope for the future, people who have been lied to for 50 years by democrat politicians just for a vote-insidious- liberals.
The irony is that Conservatives like me who want to change this welfare state dependency and allow these people to escape your do-gooder liberal plantation of government dependency are the, RACIST.
Carla, Shameful you bet! look in the mirror and you will see a person who should be ashamed. Let these people go!--School vouchers would be a great way to start.
Regarding “double taxation,” virtually every time money changes hands in this country, there is a tax or fee levied. So, the argument that is taxed more than once is ridiculous. Plus, if you buy a stock at $10 dollars a share, and then sell it years later at $500 dollars a share, that increase has never been taxed.
AND retirement accounts are not subject to capital gains tax. That is why they are called TAX free! (except for Roth IRAs). Neo-conservatives have been scaring people with this lie for years.
Regarding a 91 percent MARGINAL tax rate, please understand that it applied only to the amount above $1.5 million a year. All the lower income was taxed in the lower brackets. But I know. It must have been terribly hard to survive on $1.5 million dollars a year in 1960. Poor babies.
Please understand that a reasonable and compassionate society understands that it takes money to pay for all the basic living expenses. That is why anybody earning less than $9,700 was exempt from income tax, and the amount between 9,700 and 24,000 was taxed at 10 percent.
Monday’s Post (Part 16) will address fair tax rates.
By the way. We ARE NOT BROKE. We simply have $10 trillion in debt. And $7.5 trillion of that debt is due to Reagan, Bush and Bush. And suddenly neo-conservatives are screaming about a lack of money?!!!
If you still don’t understand, Please, Please, Please, paste these URLs into your browser and read the three articles:
1. http://www.alternet.org/story/106410/
2. http://www.alternet.org/story/106979/
3. http://www.alternet.org/workplace/119048/why_you_should_be_screaming_for_higher_taxes/
"More than 99 percent of companies in the US have fewer than 500 employees, yet they’re at a disadvantage compared to larger companies when it comes to finding relevant compensation data,"
According to the survey, the national average salary for the CEO/Partner/Owner job function is $258,400;
The average small business owner or chief executive brings home an annual salary of $233,600, according to Salary.com.
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So carla, it is between 233K and 258K.... I was REALLY close.
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And on your other comment, I completely agree with you that the issue of poverty is caused from a lack of responsibility partly and the idea that they can not succeed in the workplace. I have worked with the poor and I have been poor. Single mothers with 4 kids, each from different fathers doesnt help and add that with a lack of education, lack of morals, lack of responsibility, and add a heaping tablespoon of entitlement... you have a very large problem. Regardless of all this, you can not make it easy for anyone who is poor. They have to figure out that a hand UP is better than a hand OUT. The ones that believe in themselves will pull themselves up. those that dont, feed off the system because we have made it easy to do so.
~M
Bob, if you pay no income tax you have no skin in the game, brother. Everybody should pay some income tax that's fair no Mr. NEO-Liberal.
Bob, liberals like you are like the kid who got caught with his finger in the cookie jar-mommy-mommy it was not me it was Reagan, Bush, Bush, Nixon and all those evil hard working rich people .
Bob U. Remember NEO LIBERAL LBJ, who lied this country into a war-NAM- 60,000 dead and billions spent- do you remember the same man with the help of his neo-liberal congress passed a bill named The Great Society, well Bob, that disastrous failure of typical brain dead neo-liberal spread the wealth around, to date, Bob U. has cost 11 trillion dollars-11 TRILLION BOB.
neo-bob, if liberals like you and obama and tax cheaters like democrat Rangel-Geithner and fellow class wafare comrades like obama-Barney Frank-- Chris get me a illegal mortgage -Dodd, confiscated all the wealth of the rich in America, you neo-libs could give about 250.00 a month to the poor?***WOW!
Bob, do you realize that older Americans who worked their whole lives to pay off their home and live off their savings are being forced out of their home because of high taxation-school tax's. These people are the new forgotten man-Bob! These are the innocent victims of the neo-liberal war on poverty. Bob, only a country that is desperate and broke could be willing to make victims of these innocent Americans who had the bad judgement it seems to have played by the rules all their lives--Shameful.
I have no problem with raising taxes on anyone earning more than $250,000 a year.
As I have written before:
If you still don’t understand, Please, Please, Please, paste these URLs into your browser and read the three articles:
1. http://www.alternet.org/story/106410/
2. http://www.alternet.org/story/106979/
3. http://www.alternet.org/workplace/119048/why_you_should_be_screaming_for_higher_taxes/
The problem at the state level is that Reaganomics fervor led many states to pass amendments requiring balanced budgets. This came at the same time that the federal government under Ronald Reagan severely cut federal funding to states.
A state government Balanced Budget is a problem in a recession/depression because it restricts the states from borrowing. As private businesses contract, government must step in to revitalize an economy. Then the private sector can release its fear and expand again.
Regarding retirement accounts: When you retire, you will be taxed on whatever money you withdraw in a given year. The problem is that Republicans have been trying to convince people that their accounts are being taxed BEFORE retirement.
Regarding neo-liberalism: Neo-liberalism is the term used throughout the word to describe the philosophy of Reaganomics/Thatchernomics – what we call neo-conservatism in the United States. So I agree completely with you. Neo-liberalism is brain dead
And as I pointed out above: $8.5 trillion of our “$11 trillion debt is due to Reagan, Bush and Bush. The national public debt was $0.9 trillion when Reagan took office. It is the failure of Reaganomics that put us in debt.
Reagan claimed that Democrats like to “Tax and Spend.” Our current problem is that Republicans like to “Borrow and Spend” because they cut taxes to the wealthy and let them hoard wealth. The richest one-percent holds 38 percent of the wealth. That is the worst disparity since the Republican Great Depression started in 1929.
Regarding your assertion that hard working Americans are being victimized by our current situation, I agree. That is why we should shift the tax burden from the lower and middle classes back to the wealthy. Let’s eliminate property taxes and raise income taxes and capital gains taxes so that everyone is paying their fair share.
Be sure to check out PART 16 on Monday.
If you honestly believe that Republicans have your best interest at heart, then cut and paste this URL into your browser and read this article:
http://www.commondreams.org/view/2009/01/26-0
You continually name Ronald Reagan as the cause of our economic woes. You never mention the economic disaster that Reagan inherited from your typical neo- liberal socialist democrat, Jimmy Carter. Mr. Carter left this nation in a economic near depression state. Ronald Reagan and his policies set this country on a 17 year economic boom. Not to mention defeat of the "evil empire" and the falling of the Berlin Wall. The greatest thing Reagan gave to America besides the ninety-six months of uninterrupted economic growth without inflation----was to restore the confidence of the American people, the sense that this is indeed a great country. Bob there is a lesson in that, that you and the rest of the liberal talking heads do not understand.
Class warfare and envy are not what made America the greatest economic nation in the history of the world. Economic growth and opportunity are what made America. Tax cuts are not responsible for the exploding federal debt, Bob{ spending is}. 300 million for the nancy pelosi mouse in san fran-200 million for a convention center in Carolina, 300,000 for condoms, , 1 million for a museum to celebrate the drug-fest aka Woodstock.
Obama has just taken trillions of money we do not have. Obama is giving us trillion dollar deficits that will cripple our kids and grand kids. Obama is a rank amateur who is willing to burden the American people with a debt they may never recover from for what goal?? To defeat the notion that capitalism failed, capitalism is the reason for economic crisis.
And of course to promote socialism- when someone wins{ achieves} something in capitalist america, someone loses. Bob in the mind of the socialist liberal you are blind to certain economic truths. Are economy is not a zero- sum game, that burdensome taxes have a deterrent effect on production of income and wealth and jobs. Bob, basic fifth grade economics.
Bob, the U.S. Constitution, does not guarantee equality of outcomes rather than equality of opportunity. This concept is what the liberals refer to as "Economic Justice".
Obama has total control now, Bob. He has all his liberal socialist in charge of all three branches of government, Obama is now the owner of our economy and so far this amateur rookie is a disaster.
Obama may be the most effective practitioner of class- warfare since Lenin. Just keep this in mind, Bob. Today it's the evil wealthy, insurance companies, greedy doctors, chief executives, evil people who want to buy a SUV, or want to smoke a cig, or drink a soda with evil sugar in it. Tomorrow liberal Bob, it could be you.
Soon Chairman Obama is going to hear from all of us selfish Americans who are sick and tired of having their piece of the pie taken from them and given to others by a bunch of elitist politicians.
One man works 50 hrs. a week---one man works 25 hrs. a week by choice at the same company, Bob, how much of the man who worked more in order to earn more for his family owe or have to share with the man who decided not to work more and ended up with less.
What is his "FAIR SHARE" OWED TO HIM BY THE HARDER WORKING MAN???
I read your articles and they are misguided. Those ideas are based upon Keynesian economics which is a macroeconomic theory based on the ideas of 20th-century British economist John Maynard Keynes. It emphasizes the role of demand-side factors, as opposed to supply-side factors, in the determination of aggregate output. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes, and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government, to stabilize output over the business cycle.[1] (Wiki)
Keynesian ideas were criticized by Austrian economist and philosopher Friedrich Hayek. Hayek's most famous work The Road to Serfdom, was written in 1944. Hayek taught at the London School of Economics from 1931 to 1950. Hayek criticized Keynesian economic policies for what he called their fundamentally collectivist approach, arguing that such theories, no matter their presumptively utilitarian intentions, require centralized planning, which Hayek argued leads to totalitarian abuses. Keynes seems to have noted this concern, since, in the foreword to the German version of the 'The General Theory of Employment Interest and Money', he declared that "the theory of aggregated production, which is the point of ['The General Theory of Employment Interest and Money'], nevertheless can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of production and distribution of a given production put forth under conditions of free competition and a large degree of laissez-faire." [7]
Excessive spending and tampering with the economy to formulate a "bubble" only results in catastrophy. The economy has a natural cycle.
http://recession.org/history
~M
Like I said earlier, you are well versed in the republican talking points, which mean that you are severely misinformed.
If you would extract your head from the right-wing advocacy media, we might be able to have an intelligent conversation.
(Fox News, NewsMax, Matt Drudge Report, American Spectator, National Review, New York Post, Pittsburgh Tribune-Review, Wall Street Journal, Washington Times, and Weekly Standard. Washington Times. Rush Limbaugh and his hundreds of copycats, etc.)
I am very happy that America gave Democrats power in two branches of government in Washington (although Senate Republicans can still obstruct Congress by using the filibuster)
As billionaire Warren Buffet said, “Reagan started our current round of class warfare. And the rich are winning!”
Taxes are not punishment. Oliver Wendell Holmes put it best when he wrote, “Taxes are the price we pay for civilization.”
Be sure to check our Part 16
Hayek has been proved wrong. I will show you in part 18 on Wednesday.
And please read the three alternet articles I referenced in an above comment
Yes, those who invested in the Market, whether they're those who own stock outright, or those who have watched their retirement funds diminish drastically, are concerned for their finances. They see even the value of their homes reduced drastically, and those who have variable rates and are now owing more, and much more, than their home's actual value are the most concerned.
Why then, are we asking about what the tax rates are going to return to? Personally, I think we should quit arguing over the marginal tax rates and determine how the taxes are going to be spent and why. Those who I'm truly concerned about are those in the business office that have mismanaged and still had their salaries go up.
How many investors are pulling their money back out and not investing in companies they believe in? Do you make your investments count? Or are they not worth the paper they're printed on, literally?
Explain to me why you feel I should be taxed more than someone else? Why am I being penalized for doing well? Why do you think that reallocating my wealth is good for me? I would like to know how much you make. Please be honest.
Everyone wants things. You work hard to get them or you dont get them. It makes people more capable, educated, and self sufficient. Teach a man to fish... thing goes here.
~M
Bob, Buffet is a supporter of Obama and I read his words ---so Bob I guess Buffet is now a member of the vast right wing conspiracy. Reading Rush, Thomas Sowell, a brilliant conservative economist or Professor Walter Williams, or the brilliant Milton Friedman.
Bob if you had the courage to admit who is running the economic philosophy of the socialist liberal agenda you would say George Soros, the anti American billionaire who is a firm believer in your socialism and Obama socialism for America.
Bob, taxes are not punishment, that's what you colonist pay for civilization. That's what the thieves in England kept telling the future Americans. Until the people had enough of the high taxation , and hence the revolution was born.
Bob, get your head out of the Soros, Obama ,Pelosi, Barney Frank, Big union, and ACORN the Obama street thug Marxist groups Manifesto. The American people are ready to revolt and you will be hearing from these patriots soon.Bob, if anyone should stop reading there sources for economic ideas you should stop reading Castro-Chavez- Bill Ayers-Stalin-Soros-Lennin-Putin, and most of all stop listening to- P- MSNBC. Olbermann- and especially the man who gets that felling down his leg whenever he hears the voice of Chairman Obama.
You liberals are really a laugh riot, everybody is wrong, discredited, if you disagree with socialism policy. We conservatives like Thomas Sowell, Walter Williams, Milton Friedman, Micky d., Michael A. on this post, are all wrong. Bob, stop for a moment and think how childish you sound. Mommy-Mommy everybody is wrong but me, Yes honey that's right.
The reason we bring up tax rates is because RAISING taxes was one of the first steps in getting us out of the Republican Great Depression of the 1930s. In this series, I'm presenting information to stir-up discussion.
I will address your questions in the upcoming parts of this series
Like I said before, you are sadly misinformed.
Let me suggest that you read the book, "Republican Noise Machine" by David Brock, a reformed neo-conservative pundit. This book (and his first book "Blinded by the Right") will explain to open your eyes.
~M
We are punishing people who actually have to work to earn their wages.
Bob, i list a number of conservative economic intelligent people as some form of reference to economic problems and you give me David Brock. Bob if you really want to know who I and most conservatives read for guidance about what is best for America, we read the writings from the foundling fathers and the constitution.
David Brock-Al Franken-Bill Ayers-Teddy K.-Nancy Pelosi. Bob I fear you are blinded by the socialist left and their inspirational leader Saul Alinsky, who wrote Obama's plan for socialist America. Al Franken is penning another lefty book, Bob!
The fact that Obama is trying to correct the problems he inherited from the Bush administration doesn't seem to have gotten through to you. The man has been in office less than a 100 days and he was left with the worst economy since the Great Depression. It is amazing how little patience you have with him when you gave us Democrats so much grief for getting impatient with Bush after 8 years of his poor leadership and bad policies.
And for someone who says he reads the writings of the founding fathers and the Constitution, you don't seem to get that Bush/Cheney constantly disregarded and chipped away at our constitutional and civil rights at every turn.
What I love is the fact that when everything hits the fan, it becomes partisan politics as usual. When the Republicans are in charge, it's all the fault of the Democrats, and when the shoe is on the other foot.....
Be careful. I have heard so many Democrats demonize Republicans for their tactics, for screaming without listening. For a group of "open-minded Liberals" the Democrats are slowly turning into what they hate the most....conservative, mud-slinging hate mongers.