[www.cnn.com]

"Atlanta (CNN) -- Last week we learned that Barack and Michelle Obama's effective tax rate for 2011 was 20.5%. They had adjusted gross income of $789,674. We also learned that their tax rate was slightly lower than President Obama's secretary, who had about $95,000 of income.

Ours is supposed to be a progressive rate system, which means as income gets higher, so do tax rates. In a true progressive rate system, Obama would never pay a lower tax rate than his secretary."

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What follows is an informed discussion of various flat tax proposals. I enjoyed it.

Edited to remind me to read before i speak.

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rj
AKA
Vreemac, Moth of the Future




Edited 1 time(s). Last edit at 04/18/2012 07:09AM by rjmacs.

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Most flat tax proponents, however, want a flat tax, but they want to exempt income from stock completely.

Here's my counter-proposal: Institute a 50% flat tax on all investment income and zero tax on regular income.

Oh, that's not fair? Well, let's start over then.

My guess is she didn't have the deductions to pull off a lower tax rate. Without dependents or mortgage interest you really get nailed. My rate raised to 18% this year after losing my daughter as a dependent and having to move from head of household to single. All because she made more than $3700 last year. Never mind she lives at home, works part time, and could not afford to be independent.

Totally ignoring that the "secretary" is making enough to be in the top 20%.

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in tha 510.

I'm calling BS on the claim that this secretary earning 95K has a higher effective rate than 20.5%. I think what somebody did is look at the tax table for a single income of $95K and saw that the tax is a little over $20K. But that is not what you're taxed on, you are taxed on adjusted income, the amount after your deductions. Even if she uses only the standard deduction, she would be taxed less than that.
Something isn't right here.


Our system IS progressive where federal tax is concerned, if you allow that investment income is taxed at a lower rate, creating the Romney situation. And there are some loopholes for the wealthy that could be closed. I think a higher rate at the top end would be more fair, but not a flat tax.
Remember how conservatives are always complaining that half of American workers don't pay any federal income tax? It's true. I don't want a situation like the flat tax that creates a bunch of new small dollar tax payers. It will cost more to collect than the revenue generated.

I'm pleased that at least one of you actually read some of the article. The opening squib in the posting was designed to get you into the article.. and of course it's the opening 'hook' in the article.

And to our tart dissolvable candy substance poster , I say this:

[seattletimes.nwsource.com]

Yes. The tax rate data noted for the President and for his Secretary were confirmed by the White House. In fact, they were provided by the White House as part of an argument that our Tax Code is badly written and no longer 'progressive' as intended.

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cbelt3
I'm pleased that at least one of you actually read some of the article. The opening squib in the posting was designed to get you into the article.. and of course it's the opening 'hook' in the article.

And to our tart dissolvable candy substance poster , I say this:

[seattletimes.nwsource.com]

Yes. The tax rate data noted for the President and for his Secretary were confirmed by the White House. In fact, they were provided by the White House as part of an argument that our Tax Code is badly written and no longer 'progressive' as intended.

I'm aware of that Oh Belted One. You'll note that the article does not provide the lady's tax return nor the amount of taxes that she paid. Without that verification I consider the comparison rather meaningless. Based on the rate the Obama's paid and what that would mean she paid on her $95K salary, I'm saying that it doesn't make any sense, unless she has more undisclosed income.
It also says that the rate the Obamas pay is FAR higher than the effective rate paid by most middle income Americans, in the $60-100K income range, which is around 8%.

It's a bit of a specious argument to say that the current system, which is progressive in its conception, ought best be fixed by offering a system wholly different in its conception. That's a bit like saying that because lobbyists have infiltrated Congress, we ought to switch to direct democracy and ask every citizen to vote on every bill.

There's no positive argument for a flat tax in her article, nor any answer to its many critics. The 'progressive' elements of our income tax system have been effectively countered by the wealthy and their proxies to reduce the tax burden on the rich. If the principle behind progressive taxation is valid (she seems to accept this tacitly at the outset, by making no argument against it), then the appropriate remedy is to restore progressive taxation, not eliminate and replace it.

She also jumps from the Simpson-Bowles recommendation that all income earned by a single person ought to be taxed at the same rate to the notion that all income earned by everyone everywhere ought to be taxed at the same rate. That's not what Simpson-Bowles said at all. I'm with the author insofar as she demonstrated that the progressive tax system we have in place has been crippled to the point of failing in its purpose. But she's ready to shoot the dog that i'd prefer to take the vet.

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rj
AKA
Vreemac, Moth of the Future

rjmacs...

I like the allegory. Unfortunately the 'vet' (Congress) is badly infested with various parasites (Lobbyists). So the dog always comes back sicker each visit.

Sadly, each attempt to 'fix the problems' ends up making more or making hiding places for them... McCain/Feingold is a classic example.

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cbelt3
rjmacs...

I like the allegory. Unfortunately the 'vet' (Congress) is badly infested with various parasites (Lobbyists). So the dog always comes back sicker each visit.

Sadly, each attempt to 'fix the problems' ends up making more or making hiding places for them... McCain/Feingold is a classic example.

Well, i'm not sure how the author of the article expects to solve the 'bad vet' problem. Using your analogy, the vet qua Congress will yield to parasites (Lobbyists) when creating legislation. Let's follow (what i think is) your logical argument to its conclusion:

1. We're supposed to have a progressive income tax system, but special interests have gradually created legal loopholes (deductions, low rates for investment income, etc.) to protect the wealth of the wealthy from higher taxes.
2. When we try to reform the system, Congress just makes it worse because lobbyists protecting special interests control the system.
3. We should capitulate to the wealthy by imposing a flat tax, which is by definition regressive, since that has a chance of passing Congress unmolested by lobbyists (since the wealthy like the idea).
4. This will magically generate more tax revenue from the wealth of the wealthy, whom we have established in #2 will do whatever is needed to protect their money from taxes.

My question is: where does the magic in #4 come from? If the flat tax rate legislation is not written in such a way that is CANNOT be amended without reversion to a progressive tax system, then lobbyists will simply go back to work at introducing loopholes and exceptions for the wealthy.

As for McCain-Feingold, the law was never fully implemented and has been steadily eroded and disqualified by a very conservative Supreme Court. It was far from a perfect bill, but even the real reforms it contained have been largely voided on constitutional grounds.

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rj
AKA
Vreemac, Moth of the Future

Nothing is going to happen while there is still a significant number of congress critters in office that label themselves as the tea party, or have signed the pledge to Norquist. "Not raising taxes" locks in the current system and all the outrageous loopholes, along with a big chunk of forced government spending.

Did you get that? Norquist's pledge keeps some wasteful spending from being cut.

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in tha 510.