Reagan-Lovers: Stop the Bull

[After the smoke cleared from 5 years of tax policy changes ending in 1986, we saw that the tax burden on the middle class and upper middle class was substantially reduced, while that on the wealthy was increased.

Yes, you read that right: Taxes were reduced on the non-wealthy, while they were increased on the wealthy. That's the opposite of what most people think. I have found that hardly anyone seems to have any real understanding of the issue. Myths dies very slowly, if at all.]

Captain Midnight: I was going to ask what planet you're from. I'm middle class and Reagan's tax cuts did not help me one iota. However, my millionaire brother made out like a bandit. He loved Saint Ronald and well he should have. Ronnie also said, "Government isn't the solution, it's the problem." Under him, the military industrial complex that Eiserhower warned in his farewell grew astronomically. So much for his smaller government. True, Carter was not a strong leader, but he handed Reagan the status of creditor nation and in less than two years, we were a debtor nation and have been ever since. Hardly the doing of the O'Neill Democrats since Ronnie had a mandate (to the rich). George W. Bush continued his Reaganomics of big government, with the Department of Homeland Security, which is a big fat white elephant. And, no I'm not a liberal on the Pelosi-Reid style. I try to be middle of the road moderate. For what it's worth, I'm not especially an Obama follower either.

You sir are obviously a master of logic to paint Reagan in such a great picture. (Guess that makes this Republican a RINO, huh?)

Captain Midnight: I was going to ask what planet you're from. I'm middle class and Reagan's tax cuts did not help me one iota. However, my millionaire brother made out like a bandit.

You sir are obviously a master of logic to paint Reagan in such a great picture. (Guess that makes this Republican a RINO, huh?) Originally Posted by N2SEX46

went to the irs website

did a few quick calculations

a married guy making $60,000 claiming only the standard deduction and two exemptions (for him and his wife)

tax would have gone down in 1987 as compared to 1985 (law changed in 1986) by almost $2,000.

a rich guy's tax change is much harder to figure as investments, real estate losses, oil and gas IDC write-offs, depreciation, capital gain exclusion, dividend exclusion, interest deductions, etc and a whole myriad list of things changed, became non-deductible or were severely limited and became carryforwards instead of immediate write offs. many tax shelters without economic substance other than tax savings were hounded into oblivion with a vengeance. merely looking at the tax rate reductions does not tell the tale. suffice it to say the percentage of the total tax as paid by upper income taxpayers went up.

by AtlComedy
As for Boortz-he like "fair tax" the reason is will never happen is it too taxes older people on income they have already been taxed on...unless it includes all kinds of exclusions and deductions...in which case we start creeping back to where we are now

I don't understand "Boortz like fair tax" so won't comment directly but I don't know of any flat tax that would double tax anyone. I understand that there are "fair tax" proposals that run the gamut with deductions and rules to the point that we might as well keep what we have.
My thought as to why none of the tax simplifications will ever happen falls into two employment categories: CPA's and ATTY's. The CPA's would be almost out of biz w/o a complicated tax code and the Atty's would certainly take a substantial hit when you consider the litigation over disputes and the lobbying efforts to get special breaks for their clients.

The Reagan tax cuts were not "fictitious" -- but neither were they of the nature assumed by most people.

After the smoke cleared from 5 years of tax policy changes ending in 1986, we saw that the tax burden on the middle class and upper middle class was substantially reduced, while that on the wealthy was increased.

Yes, you read that right: Taxes were reduced on the non-wealthy, while they were increased on the wealthy. That's the opposite of what most people think. I have found that hardly anyone seems to have any real understanding of the issue. Myths dies very slowly, if at all.

Of course you can argue that that's fair, since income inequality has risen over the last few decades, but you cannot argue that tax bracket changes caused the inequality. (Yet that's exactly what a couple of people argued in another recent thread.) As the saying goes, you are entitled to your own opinion, but not your own facts.

Where Reagan failed was in allowing government growth and spending to continue unabated. Like every other modern president (except for Bill Clinton) he failed to halt this inexorable expansion. A precursor to Obama-nation!



. Originally Posted by CaptainMidnight

They were fictitious in that overall there was no tax cut....there was a tax shift. ( We can argue till the cows come on on who it benifited) The guy did not reduce taxes overall. As you stated, you can not argue facts. So can we fairly say that under Reagan, taxes shifted and government spending went up. Not much there to hang a conserative hat on.


http://www.huppi.com/kangaroo/4Inequality.htm
INCOME AND WEALTH INEQUALITY

According to the Federal Reserve, in 1990 the richest 1 percent of America owned 40 percent of its wealth -- the greatest level of inequality among all rich nations, and the worst in U.S. history since the Roaring Twenties. Furthermore, the richest 20 percent owned 80 percent of America -- meaning, of course, that the bottom four-fifths of all Americans owned only one fifth of its wealth.

Another revealing way of expressing this statistic is that the top 1 percent owned more than the bottom 90 percent combined.

What caused this growing inequality? The most underlying reason may be that it takes money to make money. This is why many call for a progressive tax system: to redistribute at least a percentage of the wealth back to the middle class, thereby avoiding modern serfdom. We will explore the tax cuts for the rich in detail in the next section. But tax cuts are not the only way to polarize wealth. There are several others, and they can all be lobbied through Congress. A complete list follows in More.

Tax progressivity was highest in the decades after World War II, when the rich were taxed a stratospheric 88 percent for nearly two decades. This was also an era in which the U.S. economy was a juggernaut, and the American Dream was indisputably alive and well. Because of this, most economists do not believe that high tax rates on the rich are bad for the economy.
Personal income tax rate for top bracket1Years Percent1945 91%1946-63 881964-81 701981-86 501988 281991 31The following chart shows the effectiveness of a progressive tax system. When the top rates were truly high from 1950 to 1978, American income at all levels grew at about the same pace. But when progressivity was lost in the 80s, the income of the poor began falling, while that of the rich continued growing.

Income Growth by Quintile2
Quintile 1950-1978 1979-1993Lowest 20% 138% -15%2nd 20% 98 -73rd 20% 106 -3 4th 20% 111 5Highest 20% 99 18Economists have a standard measure of income inequality, called the Gini Index. In this index, the higher the number, the greater the income disparity between the rich and the poor. (0 = perfect equality, 1 = only one person in the economy has all the income.)
Gini Index of Income Inequality3
Before After Taxes Taxes1979 0.403 0.3521980 0.401 0.3471981 0.404 0.3501982 0.409 0.3591983 0.412 0.3681984 0.413 0.3721985 0.418 0.3811986 0.423 0.404 1987 0.424 0.380 1988 0.425 0.3841989 0.429 0.387 1990 0.426 0.381 1991 0.425 0.3791992 0.430 0.381As mentioned earlier, the U.S. economy slowed in 1973 for reasons still not completely understood. The average weekly earnings of nonsupervisory workers -- about four-fifths of the civilian workforce -- peaked in 1973, and have been falling ever since:

Average weekly earnings of nonsupervisory workers, total private industry, 1982 dollars4
1965 $290 1970 297 1973 315 (Peak) 1975 292 1976 2971977 2991978 3011979 2911980 2741981 2711982 2671983 2721984 2741985 2711986 2711987 2691988 2661989 2631990 2591991 255 1992 255 (Nadir)The above chart is especially useful in rebutting supply-siders who use other measures to argue that everyone's incomes rose during the 80s. For detailed refutations of these other measures, see More.
Average hourly earnings also fell over the 80s:
Average hourly earnings, total private industry (1982 dollars)41973 $8.551980 7.781985 7.771990 7.521993 7.39Presidents Reagan and Bush froze the minimum wage for 9 years, essentially giving those workers a pay cut each year as inflation bit into their paychecks. In 1992 dollars, the 1963 minimum was $5.74 -- or 35 percent more than it is today.

Raises in the Federal Minimum Wage5
Percent of averageYear New rate production earnings1950* $0.75 54%1981 3.35 431990 3.80 351991 4.25 381994 -- 35*For brevity's sake, this chart omits the 15 minimum wage increases between 1950 and 1981. No newly introduced minimum wage has ever been lower than 35 percent of the average wage, although old minimum wages have certainly gone below this. For a fuller chart, see More.

Economists previously believed that raising the minimum wage would cost jobs, especially among teenagers. However, recent research suggests that the truth might be a bit more complicated than this, and that when the minimum wage falls too low (due to inflation), it can be raised safely. For more on the controversy stemming from the Card/Krueger study, see More.

On the other hand, the salaries of executives skyrocketed during the 80s:

Salaries and benefits of corporate CEOs as a multiple of the average factory worker's6
1980 30 times1991 130-140 timesAnd these super-salaries did not come primarily from greater profits, but from a larger slice of the profits: (More)

Executive Compensation as a Share of Corporate Profits7
1953 22%1987 61The following chart shows the growth in the number of millionaires and billionaires during the 80s. Notice that their numbers skyrocketed in the years 1985-87.

Approximate number of millionaires and billionaires in the U.S., 1978-19888
Year Millionaires Decamillionaires Centamillionaires Billionaires 1978 450,000 1 1979 519,000 1980 574,000 ? 1981 638,000 ? 1982 38,885 400 13 1983 500 15 1984 600 12 1985 832,000 700 13 1986 900 26 1987 1,239,000 81,816 1,200 49 1988 1,500,000 100,000 1,200 51Percent Increase of Combined Salaries by Income Bracket, unadjusted for inflation (1980s)9
Income Bracket Percent Increase$20,000 - 50,000 44%200,000 - 1 million 697Over $1 million 2,184Viewing the above chart more broadly, the total wages of all people who earned less than $50,000 a year -- about 85 percent of all Americans -- increased an average of 2 percent a year from 1980 to 1989, which did not even keep pace with inflation. By contrast, the total wages of all millionaires shot up 243 percent a year.
Defenders of the Reagan era claim that income mobility in the U.S. is great enough to overcome income inequality. That is, if people move up and down the income scale to a significant degree, then, over a lifetime, your average income is going to match my average income. However, there are a few flaws with this argument. First, income mobility in the U.S. is not even close to making this a reality. (More.) Second, one could hardly justify slavery on the basis that, for 1 percent of your life, you, too, will be the master.
So who gets ahead, and who gets left behind? The single most decisive factor is education:

Education, Experience and Wages10
Percent change in earningsNew Workers (1-5 years experience) from 1979 to 1987Less than 12 years of school -15.8%High school degree -19.816 or more years of school +10.8Old Workers (26-35 years of experience)Less than 12 years of school -1.9High school degree -2.816 or more years of school +1.8Some people claim that if the poor want to get ahead, they should just return to college. However, the job market can bear only a limited percentage of educated professionals, and there is already a glut of college grads in most fields. This makes competition the hallmark of today's meritocracy, which critics call destructive in its extreme form. (More)

Although the following chart is one of the largest, it is also one of the most important. This chart shows how the incomes of most American families stagnated or fell during the 80s, with gains posted only by the top 20 percent. It also reveals how supply-siders lie with statistics, but more on this in a moment. For those unfamiliar with the term "decile," the 1st decile is the poorest 10 percent of the population, the 2nd decile the 2nd poorest, and so on.

Average Income Level and Effective Federal Tax Rates in Each Family Decile by Year, in 1988 dollars (Corporate income tax allocated to capital income)11
Percent change: 1977- 1980- 1985-Decile 1977 1980 1985 1990 90 90 901st $4,277 3,852 3,568 3,805 -11.0% -1.2 6.72nd 8,663 7,982 7,717 8,251 -4.8 3.4 6.93rd 13,510 12,530 12,230 13,110 -3.7 4.6 7.24th 18,980 17,240 17,010 18,200 -4.1 5.6 7.05th 24,520 22,380 22,070 23,580 -3.8 5.4 6.96th 30,430 28,100 27,620 29,490 -3.1 5.0 6.87th 36,880 34,370 34,620 36,890 0.0 7.3 6.58th 44,820 42,050 43,370 46,280 3.3 10.1 6.79th 56,360 53,660 56,190 59,860 6.2 11.6 6.510th 111,100 107,900 123,200 133,200 19.9 23.4 8.2top 5% 149,500 146,000 172,100 187,400 25.4 28.3 8.9top 1% 319,100 321,400 415,700 463,800 45.4 44.3 11.6All 34,830 32,850 34,480 37,050 6.4 12.8 7.4As you can see, the majority of American families were worse off in 1990 than they were in 1977, at the beginning of Carter's presidency!

When supply-siders talk about family income in the 80s, they are always careful to use 1980 as a benchmark for their comparisons, and never 1977. This is because the recession of 1980-82 was the worst since World War II -- perfect for comparing the later Reagan years in their best light. But comparing the Reagan recovery to the non-recession year of 1977 puts everything in perspective: most Americans lost ground, even at the end of the recovery.

Which leads to the question: are presidents responsible for creating recessions and recoveries? If yes, then Reagan deserves credit for rescuing the economy from Carter's mismanagement. But if not -- which is what almost all mainstream economists believe -- then the supply-sider's praise of the 80s rings hollow. In that case, it is natural for recessions to be followed by recoveries, and supply-siders might as well take credit for the incoming of the tide. In reality, the Chairman of the Federal Reserve Board is far more responsible for influencing recessions and recoveries. (More)

Supply-siders have a partial rebuttal to the above chart. They point out that family size decreased during the 70s and 80s, which means that less family income would cover fewer people, and therefore not lower their standard of living. The following chart shows the long-term decline in average family size:

Average Family Size12
1970 3.58 persons1975 3.42 1980 3.291985 3.231990 3.17But this counter-argument runs into a few others. First, falling individual income is responsible for declining family size, so to say that families are maintaining their standard of living despite everything is missing the point. (More) Second, the rather small decline in family size does not explain or justify the massive income gains seen by the top 1 percent, while 80 percent of all families are treading water.

The following chart shows how large a slice of the economic pie everyone is getting. More specifically, it shows how much of the total national income that each 20 percent of American families are making. As you can see, everyone's slice of the pie grew smaller in the 80s except the top 20 percent, which grew. And the top 1 percent was responsible for most of that quintile's growth, as the last chart reveals.

Percent of National Aggregate Income Received by Each Quintile (by Family, in 1992 dollars)13
Quintile 1980 1992Lowest 20% 5.2% 4.42nd 20% 11.5 10.53rd 20% 17.5 16.54th 20% 24.3 24.0Top 20% 41.5 44.6Top 5% 15.3 17.6Shares of Pretax Adjusted Family Income14
Quintile 1977 1980 1985 1988 1989Lowest 20% 4.7% 4.3 3.7 3.5 3.52nd 20% 10.8 10.5 9.5 9.1 9.23rd 20% 16.3 16.0 15.1 14.6 14.74th 20% 22.9 22.9 22.2 21.7 21.7Top 20% 45.6 46.7 50.1 51.4 51.4*Top 1% 8.3 9.2 11.6 13.4 13.0*Table reads that 51.4 percent of all adjusted pretax family income in 1989 belonged to families in fifth or highest quintile. Quintiles are weighted by persons.

A common defense of these charts runs something like this: "How equally the pie is sliced is not as important as the fact that the pie itself is growing. Our GDP grows almost every year, so everyone benefits." But this argument becomes incoherent when paired with the claim that America should be an unrestricted meritocracy. If competition is the primary basis of American society, then how equally the pie is sliced becomes significantly more important than the size of the pie itself. (More)

An even stronger refutation is that, over the 80s, as the pie has grown, 70 percent of the extra growth has gone to the top one percent, with the rest going to the next 5 percent or so. The middle class share has simply stayed the same size.15 This means that the average American worker is working harder, producing more, and creating overall growth, but is not seeing any of the rewards. And this largely explains why middle class anxiety, voter anger and economic uncertainty are gripping the nation today. (More)


Reagan couldn't get elected dog catcher in the Tea Party Revolution

What caused this growing inequality? The most underlying reason may be that it takes money to make money. This is why many call for a progressive tax system: to redistribute at least a percentage of the wealth back to the middle class, thereby avoiding modern serfdom.

Reagan couldn't get elected dog catcher in the Tea Party Revolution Originally Posted by WTF

have you ever noticed progressives throw around words rather loosely and they constantly re-define them for obfuscatory (and confiscatory) purposes....words dont have the same common meaning to them they do the average listener...

the serfdom of the middle class is in being a bondservant to the progressive tax structure.

the progressive tax structure inhibits the accumulation of wealth by the non-wealthy more than just about any thing else...its keeps you working..forever

work over time and go into another tax bracket...get bonuses and try to save and go into another tax bracket...

why should a guy working two jobs be taxed on one more than the other?

start a business and try to get ahead and see who's serf you are....

tax the rich? ..well ok but theres no money in that..we have to go for the middle class to raise our money!

stay on your butt and vote for taxes and spending ..cuz hey..we arent paying it, we get money back..and yeah ok so what i didnt pay any in

They were fictitious in that overall there was no tax cut....there was a tax shift. Originally Posted by WTF

Absolutely right! There was a reduction in tax rates, not taxes. Lower tax rates helped lift the economy and make it grow faster. Little understood is that the Reagan tax rate cut bills also closed many income exclusions, unproductive tax shelters and generally broadened the amount of taxable income reported, which resulted in increased taxes. The effect, as shown in the graph below (don't get all excited Camille), was a pronounced shift in the tax burden to the upper quintile of income earners. This graph, based on CBO data shows the relative share of individual income taxes that are paid by each layer of income earners. Thus the width of the slice in any year is the share. You can see that the share paid by the bottom four groups (the lowest quintile doesn't show because it is 0 or negative in all years) declines since 1981, with a slight bump up in 1991 (the Clinton tax and tax rate increase).

Captain Midnight: I was going to ask what planet you're from. Originally Posted by N2SEX46

Just a suggestion, if I may: Before casting aspersions, it's a good idea to be sure you have some understanding of what the hell you're talking about!

First of all, it was not my intention to "paint Reagan" in a flattering light, as you suggested. He absolutely failed in a number of key ways, especially in terms of controlling the growth of government functions, government agencies, and government spending. I stated that quite clearly in my earlier post and merely intended to point out some of the misunderstandings of 1980s tax law changes. These myths certainly do seem to be widely held.

The fact that the tax burden on the middle class and the upper middle class was lightened is easy enough to confirm if you actually take a moment to learn something rather than just accept the left's talking points. I'll make it easy for you:

http://www.taxfoundation.org/publications/show/151.html

You can scroll down and view the tax tables for any year. It's easy enough to calculate what the tax liability would have been for a family with any level of income for any year. Be sure to adjust for inflation. You can go to:

http://data.bls.gov/cgi-bin/cpicalc.pl

You will find that a poor working guy in the late 1970s with a rather modest income already faced 24% and 28% tax brackets, and people with incomes (expressed in 2010 dollars) just barely into six figures were hit with 37% marginal rates. That is obviously not the case today.

Concerning taxes on the wealthy, just consider this excerpt from the piece posted by the thread-starter:

"The tax reform of 1986, meanwhile, wasn't designed to increase federal tax revenue. But that didn't mean that no one's taxes went up. Because the reform bill eliminated or reduced many tax breaks and shelters, high-income tax filers who previously paid little ended up with bigger tax bills.

Some of these taxpayers were substantial contributors to the Republican Party and to the president's re-election campaign, and had direct access to the White House. Reagan rebuffed their pleas," wrote J. Roger Mentz, the Treasury assistant secretary for tax policy in 1986, in a Tax Notes commentary last year."

[End of excerpt]

Does that look like a description of policy involving big "tax giveaways" to the wealthy?

What people often fail to understand is that there's little relationship between the top bracket rate and the amount of total tax paid by the wealthy. I'm not talking about someone who is moderately affluent and whose income is based on salary, fees, or commissions. I'm talking about someone who is actually wealthy -- in other words, someone who does not have to work or who can choose to take income from investments, partnerships, or businesses in various tax-advantaged ways.

People who do not understand the issue think that since the top bracket rate was cut from 70% to 50%, and finally down to 28%, the wealthy must necessarily have received a large tax cut. Do you seriously think that very many people just lined up to get fleeced? In those days, it was incredibly easy to wipe out most of your tax liability with various types of tax shelter partnerships. These vehicles were structured so that even affluent professionals without significant net worth could participate by means of capital calls stretched out over a period of several years. Many of them involved reasonable, productive investments, but as you might imagine scam artists peddled all kinds of crap. There were bird-breeding schemes (ostriches, emus, etc.), frauds involving the marketing of all kinds of zany schemes, and even "investments" in horse semen and bull semen (I am not kidding).

One key point is that bad policy can produce unfortunate and unintended consequences. Hundreds of billions of dollars of malinvestment was one of these consequences. No one benefits when capital does not flow to its highest and best uses.

Another curious thing happened in the late 1960s, even though the 70% top tax bracket existed then. Several newspapers and magazines reported that a number of the country's wealthiest individuals and families, all centimillionaires (there were virtually no billionaires at the time) were paying zero or close to zero tax. Embarrassed politicians were pressured to "do something", so the result was the AMT, enacted about 40 years ago. The purpose was to get at least some revenue from the wealthy. Of course this law produced adverse consequences, too, since it was not indexed for inflation and the AMT now hits some people who are not very affluent. Congress wrestles with this issue just about every year.

And speaking of unintended consequences, there was a particularly nasty one associated with the 1986 tax reform act. The elimination of the ability to shelter ordinary income (active, not "passive" income) by means of such things as accelerated depreciation on real estate and other assets knocked hundreds of billions of dollars off the valuations of commercial real estate of almost all types, and therefore the value of lenders' portfolios. This didn't cause the bank and S&L crisis of the 1980s, but it certainly exacerbated it.

So can we fairly say that under Reagan, taxes shifted and government spending went up. Not much there to hang a conserative hat on. Originally Posted by WTF

I agree.

But I certainly don't agree with much of what was stated in that huppi.com blog you posted. It's full of misleading information and non sequiturs. In any event, it is concerned primarily with rising income inequlity, not tax policy. That's an altogether different issue, and as you well know (or at least should know, after that discussion we had in another thread), inequality has increased in spite of tax policy, not because of it. Given the almost complete removal of the income tax burden on lower and middle income workers, one would look pretty stupid arguing otherwise.

But just take at look at this excerpt from the blog:

"What caused this growing inequality? The most underlying reason may be that it takes money to make money. This is why many call for a progressive tax system: to redistribute at least a percentage of the wealth back to the middle class, thereby avoiding modern serfdom."

[End of excerpt]

Unbelievable. This guy has no understanding of the issue at all. He suffers either from ideological bias or a stupefying level of ignorance. (Or, most likely, both!)

Here's another excerpt showing his cluelessness:


Tax progressivity was highest in the decades after World War II, when the rich were taxed a stratospheric 88 percent for nearly two decades.

[End of excerpt]

Come on, WTF. Get in the game. Do you really think anyone who makes a statement like that should be taken seriously?

As we discussed in that other thread, inequality arises from a number of factors -- rising global competitiveness, free-trade globalism, a poorer educational system vis-a-vis the rest of the world, the de-industrialization of the American economy over the last 40 years, etc. -- not tax law changes.

The American tax system is actually far less regressive than that of a typical European-style social democracy. Given today's out-of-control government spending, though, that status may soon change.

A revenue-hungry congress is going to have to go after the middle class, likely with a VAT, and probably within the next two or three years. You cannot get much more revenue from the rich.

Concerning taxes on the wealthy, just consider this excerpt from the piece posted by the thread-starter:

"The tax reform of 1986, meanwhile, wasn't designed to increase federal tax revenue. But that didn't mean that no one's taxes went up. Because the reform bill eliminated or reduced many tax breaks and shelters, high-income tax filers who previously paid little ended up with bigger tax bills.

Some of these taxpayers were substantial contributors to the Republican Party and to the president's re-election campaign, and had direct access to the White House. Reagan rebuffed their pleas," wrote J. Roger Mentz, the Treasury assistant secretary for tax policy in 1986, in a Tax Notes commentary last year."

[End of excerpt]

Does that look like a description of policy involving big "tax giveaways" to the wealthy?
Originally Posted by CaptainMidnight

No, it looks like Reagan taxed where the money was. Just like Obama is trying to do. Second, Reagan was not running for re-election in 1986 or better stated 1988.

You cannot get much more revenue from the rich. Originally Posted by CaptainMidnight

This is just such a BS statement. I will not go into the details of how the super wealthy can shift their income into the much lower tax bracket of capital gains also inheritance tax has been going lower and lower ( the welfare transfer to family members that haven't earned a penny for that the GOP has framed into a Death Tax)....You check out that tax bracket?

Second if we are at the end of the line insofar as how much we can tax, we need to make cuts in spending. The rich need to either pay for wars they support or not partake. The poor do not care one way or the other. I am all for cutting welfare if we are not going to provide more options regarding birth control to the folks that can not afford kids.

At the end of the day....The proof is in the pudding. The rich have gotten fabulously richer since the 1980's. There are two forms of taxation. The Federal Progressive taxes and the Local regressive taxes. Because the GOP has done such a fine job of framing the debate into only one of these the general public is ignorant of the fact that the poor pay taxes.

Perfectly Legal , while not a 'perfect' read at least get to the heart of our tax system and busts many myths. Myths that you seem to have bought into.

http://www.laborlawtalk.com/showthread.php?t=6890&page=1

After the first chapter, Johnston turns to a discussion of demographic trends, focusing primarily on changes in the U.S. economy in the last thirty to thirty-five years. His principal point is that, once earnings are adjusted for inflation, the salaries of most Americans have remained relatively flat while "the incomes of those at the very top soared" (p. 29), resulting in increased income inequality.8 Johnston also discusses a trend over the same thirty or so years towards lower top income tax brackets and increased government reliance on Social Security revenue, which, because of its wage-base cap and lack of zero bracket, disproportionately burdens low-income individuals (p. 41

This is just such a BS statement. Originally Posted by WTF

No it isn't. It's exactly on the mark. The amount of additional revenue you can get from the wealthy is miniscule compared with what a VAT would extract from the middle class. We're running a budget deficit of about $1.4 trillion annually. The issue will have to be resolved sooner rather than later or we'll face a calamitous fiscal crisis. Do you really think you can make up more than a tiny percentage of the shortfall by taxing only the top 2% of the income strata?

Remember when I gently suggested to you that you refrain from popping off obnoxiously when you encounter a subject about which you have little knowledge? Well, this is one of those times.

There are two forms of taxation. The Federal Progressive taxes and the Local regressive taxes. Originally Posted by WTF

You're conflating two completely different things. Local regressive taxes such as the sales tax have been around for a long time. Along with property taxes and a few other taxes, they are how state, city, and county governments pay the bills. Nothing new about that. The subject here is federal income taxes.

At the end of the day....The proof is in the pudding. The rich have gotten fabulously richer since the 1980's. Originally Posted by WTF

The proof of what is in the pudding? Yes, inequality has increased greatly over the last three decades. That has nothing to do with tax rate changes, as is patently obvious. Yet you keep trying to muddy the waters and intimate that that's not the case.

Myths that you seem to have bought into. Originally Posted by WTF

I have not bought into any myths. I challenge you to refute any statement I made -- with facts, not the misguided opinions and misrepresentations of clueless bloggers and left-wing authors with axes to grind.

Besides, you're the one who posted the blog by that clueless fool from huppi.com.

Talk about buying into myths!

No it isn't. It's exactly on the mark. The amount of additional revenue you can get from the wealthy is miniscule compared with what a VAT would extract from the middle class. We're running a budget deficit of about $1.4 trillion annually. The issue will have to be resolved sooner rather than later or we'll face a calamitous fiscal crisis. Do you really think you can make up more than a tiny percentage of the shortfall by taxing only the top 2% of the income strata? Originally Posted by CaptainMidnight

No, I do not and I agree. We need to cut spending and raise taxes. But I also think the rich need to be hit with a bigger tax bill. Income inequity is a bitch on a country.

Remember when I gently suggested to you that you refrain from popping off obnoxiously when you encounter a subject about which you have little knowledge? Well, this is one of those times.


! Originally Posted by CaptainMidnight

Pleeeeeeeeeeeze.

You're conflating two completely different things. Local regressive taxes such as the sales tax have been around for a long time. Along with property taxes and a few other taxes, they are how state, city, and county governments pay the bills. Nothing new about that. The subject here is federal income taxes. Originally Posted by CaptainMidnight

Jesus....of course that is the very limited subject you guys want to concetrate on....cutting PROGRESSIVE TAXES. You never want to talk about cutting REGRESSIVE TAXES. The taxes that are killing the little guy!

WTF? ...and you think I know nothing about the subject of taxes! I know enough to know why you want to only talk about PROGRESSIVE TAXES.

The proof of what is in the pudding? Yes, inequality has increased greatly over the last three decades. That has nothing to do with tax rate changes, as is patently obvious. Originally Posted by CaptainMidnight

Yes it does! Though that is not the only reason. Both of us know that companies have been moving jobs overseas , contributing to income inequity.

I have not bought into any myths. I challenge you to refute any statement I made -- with facts Originally Posted by CaptainMidnight

No need to, you do it yourself. Below you at least admit the real problem.

Yes, inequality has increased greatly over the last three decades. Originally Posted by CaptainMidnight

Yes, this is the cancer on our society, yet you want to talk about an ingrown hair (PROGRESSIVE TAXES). I'm not opposed to fixing your lil lo hair but it is really pointless unless we fix the larger problem.

have you ever noticed progressives throw around words rather loosely and they constantly re-define them for obfuscatory (and confiscatory) purposes....words dont have the same common meaning to them they do the average listener...

the serfdom of the middle class is in being a bondservant to the progressive tax structure.

the progressive tax structure inhibits the accumulation of wealth by the non-wealthy more than just about any thing else...its keeps you working..forever

work over time and go into another tax bracket...get bonuses and try to save and go into another tax bracket...

why should a guy working two jobs be taxed on one more than the other?

start a business and try to get ahead and see who's serf you are....

tax the rich? ..well ok but theres no money in that..we have to go for the middle class to raise our money!

stay on your butt and vote for taxes and spending ..cuz hey..we arent paying it, we get money back..and yeah ok so what i didnt pay any in Originally Posted by nevergaveitathought

Absolutely true!

WTF? ...and you think I know nothing about the subject of taxes! Originally Posted by WTF

Well, given what you've said several times in this and other threads, isn't it difficult to come to any other conclusion?

Are you still trying to maintain that income tax rate changes are a cause of inequalty in the U.S? If so, it's clear that you have no understanding of the issue. It's as simple as that.

The income tax burden on the non-affluent was lightened in the 1980s, and lightened again with the tax cuts of the early '00s. In fact, we're now at the point where almost half of all households pay virtually no federal income tax.

And your "answer" to my challenge to refute anything I posted was a non sequitur which has nothing to do with the issue. (Imagine my surprise!)

You never want to talk about cutting REGRESSIVE TAXES. Originally Posted by WTF

Huh??

That's just about all we've been talking about. The federal income tax code is far less regressive than it used to be. Do you seriously think the average American middle class family would be better off if we went back to the tax code and bracket structure (adjusted for inflation) of the 1970s?

...But I also think the rich need to be hit with a bigger tax bill. Originally Posted by WTF

That is certainly an opinion one may reasonably hold. But my basic point is that it would not raise more than a tiny fraction of the revenue needed to sufficiently reduce the deficit. In any event, the truly rich are unlikely to pay much additional tax; the burden of tax increases on the "wealthy" will fall on the upper middle class. I'm not telling you that's what's fair; I'm just saying that that's the way it is.

And in coming years, the burden will increasingly fall on those earning far less than $250K. Government can't spend like a drunken SMU trust fund brat and maintain promises to refrain from taxing non-affluent people.

Businesses that rely on consumer spending better start preparing themselves for a VAT.

(Maybe that's one of the main reasons so many of them are reticent to hire.)

Well, given what you've said several times in this and other threads, isn't it difficult to come to any other conclusion? Originally Posted by CaptainMidnight

Are you still trying to maintain that income tax rate changes are a cause of inequalty in the U.S? If so, it's clear that you have no understanding of the issue. It's as simple as that. Originally Posted by CaptainMidnight

Just because you do not want to discuss the bigger picture does not mean that I don't know WTF I am talking about!

Be like having Heart operation and only consulting with say the Heart Surgeon about the cost and not the anesthesiologist or hospital about the TOTAL costs and then griping about the additional costs. Good Lord, you may know about the cost to a patient about a heart but that is not effective care. That is only one part in effective care. You are looking at a snap shot and wanting to review a movie. I am wanting to watch the whole film.
I want to talk about ALL TAXES. You, well only FEDERAL TAXES.
I want to talk about WHY we are having this huge shift in income inequity!...If the wealthy are paying the majority of taxes at the Capital Gain rate then you are being foolish by not admitting that that is not part of the problem. I'm talking about generational wealth and how that goes against the grain of working for what you are worth. That is just another form of welfare.

Absolutely true! Originally Posted by Laurentius

It may be true but it is only half the story. Be like Clinton saying he did not have sex with that woman....It maybe true but it ain't accurate!

Just because you do not want to discuss the bigger picture does not mean that I don't know WTF I am talking about! Originally Posted by WTF

But it does show that you have no idea how to carry on an intelligent discussion.

Be like having Heart operation and only consulting with say the Heart Surgeon about the cost and not the anesthesiologist or hospital about the TOTAL costs and then griping about the additional costs. Good Lord, you may know about the cost to a patient about a heart but that is not effective care. That is only one part in effective care. You are looking at a snap shot and wanting to review a movie. I am wanting to watch the whole film.

I want to talk about ALL TAXES. You, well only FEDERAL TAXES.

No, it is like we are discussing football and you are bitching that we aren't mentioning baseball. Local taxes are a local matter and since we don't all live in the same place, it makes no sense to discuss here.

I want to talk about WHY we are having this huge shift in income inequity!...

Then start your own thread, don't hijack this one. But income inequality is certainly not due to current Federal tax rates or even tax burdens, that is clearly shown by the graph I posted a few pages ago.

Actually virtually every tax is progressive...becuase of the way it is administered.

Sales tax revenues (at least in the state of Texas) has less that 50 cents of every dollar coming from retail sales. The balance?...comes from business transactions amoung businesses. And many of the staples of living are exempt from sales taxes at the retail level.

Property tax revenues has homestead exemptions that allow up to 20% of the value of a residential homestead to be exempt from property tax. In addition, there are various freezes to property tax for residential homesteads due to age, disability, etc. I can't find anything that shows what percentage of the Texas tax base is attributable to non-residential, but my bet would be that well over 50% of the tax base is attributable to business properties.

So, most every type of tax you want to talk about (other than maybe the so-called sin taxes) is shifted away from the individual...and towards business. That is progressive...not regressive.