Thursday, April 15, 2010

Taxes: Myths And Realities

Campaign for America's Future wrote Taxes: Myths And Realities.

The average tax cut the working poor got in 2009 under President Obama.

The average tax cut the working poor got under President Bush's tax cuts.

The percentage of income that a family of four in the exact middle of the income spectrum will pay in income taxes this year, according to the Center for Budget and Policy Priorities. That's the second-lowest percentage in the past 50 years.

10 percent
The increase in the average tax return that most working families are receiving this year due to tax cuts enacted under President Obama.

66.7 percent
The percentage of U.S.-owned corporations that paid no income tax in 2005, according to the Government Accountability Office."


Karl said...

This article may have pulled out some hard verifiable(?) statistics, but it's tone was flat out propaganda, no better than those so called conservative villains. I like to think of myself as a fair person, but I'm not sure why people think "fair" and "rich people should pay more" are the same thing. That is, by definition, communism.

Howard said...

Unusually for things post I did only skim it. I usually try to avoid flaming from the left. Though I suspect it was mostly as a response to the flaming from the right this week on the 47% number from a report from last June (as I remember Rachel Maddow explaining it). I'll try to do better.

I'm not sure that progressive income taxes are necessarily communism.

Most people are ok with the concept of income tax based on a percentage of income. If everyone pays 20% that means the wealthier pay more. That's not communism.

My dad used to tell me that there were classically 5 deductions like medical expenses, mortgages, education, and some more. As tax law got more complicated there were more of these. He always complained that the tax simplification act of 1986 doubled the length of the tax code; hardly "simpler".

But further than a flat tax with deductions, a progressive tax tiers the rates so that the weather pay higher rates on those larger amounts (and only on the large amounts). The theory being that 20% is a much bigger deal to someone supporting a family on $40,000 than to someone doing so on $200,000.

That seems reasonable to me though it also seems like a point of reasonable debate. The problem is that for a flat tax to work, particularly given the distribution in income, the rate needs to be very high; so that it would hurt the lower income segments a lot. And things that are usually proposed in their stead like sales taxes and VATs and usage fees are the least progressive kinds of taxes.

I think the current trend of rich people should pay more, is because in the last couple of decades, the very rich got MUCH richer and at the same time had their tax rates lowered a lot. That's at least by some measure a double benefit.

Michael Critz said...

It’s fair – and logical - that those who have benefitted most from the society which enabled their wealth & safety should better fund its continued existence.

I agree with Karl that the tone of was off-putting even though the content was accurate. It’s worth a follow-up post to check its factual accuracy.

Karl said...

I do understand some of the logic behind a tiered tax rate, and I'm all for closing loopholes. I just get a little touchy this time of year and the article set me off.

I don't agree that people who make more owe it to society or get more out of society. But I could see if you break income into "necessary" and "extra" (or levels of each) you could justify taxing the "extra" portion more. Anyway, the tax code has always been more about endorsing behaviors than raising money.
Oh, and by communism, I guess I was referring more to the Marxist philosophy than modern implementations.

Howard said...

Ok, I finally read the whole article. I found it extensive, well cited, and compelling. It clearly has a point of view but I think it supports it with evidence. I don't think it demonizes conservatives which is what I think of "conservative villains" doing to the left.

The harshest (and only) thing that came close to name calling I saw was this: "The current capital gains tax rate of 15 percent is the lowest it’s been in years and is two-and-a-third times the top tax rate for wage income, 35 percent. That’s simply unfair. "

Can you point me to examples of a tone of propaganda inherent in the article?

Michael: I also generally don't agree with the argument that if you made more, it's because you benefited from society so you should pay for it. I think you can make more based on your own work. I do agree with progressive taxes as putting the burden on those with an ability to pay and afford it.

Karl: I still don't think Marxism. We have private property and not all earnings go to the state. I don't call trying to raise a 15% capital gains tax marxism. Reagan removed a 90% top income tax bracket and I can agree with that. There is a happy medium.

Karl said...

It seemed like the quoted statistics were cherry picked. The metrics used seemed to bounce around from paragraph to paragraph. First average tax payer, then lowest 20%, the focusing on the top 400 households. Dates moved around too. Now I get that the available information varies, so what else?

The poor formatting (possible a result of my browser) didn't help my view of the article. Nor did some of their colorful phrasing choices or mixing generalizations like "the wealthy" and "working americans" in with statistics. In the end I just got the sense that they were trying to sell me the idea rather than give me information. Maybe I've just been looking at dry technical reports for too long.
As for communism/marxism, this is porbably just the case of a little knowledge being dangerous. I associate communism with the saying "from each according to his means...".