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Your real tax rate: 40%

articles.moneycentral.msn.com

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Re: Your real tax rate: 40%

#61

Post by camiller »

_delirium wrote: post #41
tbrownaw wrote: post #8

Earlier quoted context omitted.

If your marginal tax rate is approximately constant, then it will also approximately equal your overall ratio of tax/income. So even though the article doesn't seem to be particularly careful with the difference, it doesn't really matter in this case.

The numbers don't add up to the macro numbers, though--- the governments at all levels added together pull in about 25-30% of U.S. GDP in taxes, not 40%. One thing throwing off his numbers is that he assumes all income to be ordinary income, whereas a large proportion of Americans' income, especially at the high end, get classified as capital gains or qualified dividends, which are taxed at lower rates. I believe War…

I make considerably less than Warren, and virtually none is capitol gains. After home mortgage deduction, charitable deductions, etc. My effective federal tax rate was like 7.2% (If I remember what TurboTax told me correctly). The previous year it was 6.9%. My marginal federal bracket rate is 28% ($82,400-171,850).

Warren really like to talk that crap up about how he pays less taxes than his secretary. To me his secretary just needs a better tax guy.

Re: Your real tax rate: 40%

#62

Post by mcknz »

randallsquared wrote: post #34
mcknz wrote: post #29

It's not like the entire tax goes into a black hole -- it would be interesting to see what the return is on the average tax rate: how much benefit is derived from state, federal, and city services (roads, water, security, libraries, parks) and benefits (unemployment, social security, disability).

It's not like the entire tax goes into a black hole It's arguable that we'd be better off were that so... part of the tax burden is all the people employed by those taxes who don't actually contribute anything to society on net (that is, whose jobs wouldn't be done at all on the free market)... in this way, taxes can have something like double their cost in harm, potentially.

I'll concede that's true for government agencies where the work could be done more efficiently in the for-profit world (say the USPS), but there are plenty of agencies whose jobs "wouldn't be done at all on the free market" because there is little profit motive, but are essential none the less. Could you imagine regulatory agencies (SEC, EPA) as for-profit entities? Job and Family services?

Re: Your real tax rate: 40%

#63

Post by Retric »

anamax wrote: post #57
buro9 wrote: post #38

Earlier quoted context omitted.

You could always try the military... you've got one hell of an expensive lean, mean fighting machine there. I'm pretty sure it would still be as good for defence at a fraction of the cost.

> You could always try the military... you've got one hell of an expensive lean, mean fighting machine there. I'm pretty sure it would still be as good for defence at a fraction of the cost. The US military is about 6% of Federal spending and didn't jump significantly during Iraq. For example, Iraq cost about $1T over 8 years. At least one of the stimulus cost about that, and we've had several since 2007. The long te…

It's closer to 1/4 of total spending. Out of $3.552 trillion in total federal spending:

Defense-related expenditures outside of the Department of Defense constitute between $216 billion and $361 billion in additional spending, bringing the total for defense spending to between $880 billion and $1.03 trillion in fiscal year 2010.[6] http://en.wikipedia.org/wiki/Military_budget_of_the_United_S...

PS: The range of costs depends on what and when you consider something military spending. Do you count future pensions under current spending or do you count current pensions? etc.

Re: Your real tax rate: 40%

#64

Post by kgroll »

run4yourlives wrote: post #40
pragmatic wrote: post #30

Earlier quoted context omitted.

Can you explain how this is different from the FairTax and why a sales tax style VAT would be better?

In all forms of sales tax, the devil is in the details. The differences are not in the concept but how one chooses to administer the particulars. Where and if you choose to credit low income, what "sales" you choose to tax or not, and the overall tax rates themselves. FairTax, in my personal opinion isn't the best example of where to draw these lines. It is rightly criticized for that, but that says nothing about the…

I'd be really interested in seeing the numbers from Buffet's assertion. Could you provide a link please? (Thanks!)

Re: Your real tax rate: 40%

#65

Post by rada »

The actual paper is here:

http://www.kotlikoff.net/sites/default/files/Does%20It%20Pay...

and perhaps the most practical bit is here:

The paper provides four main takeaways. First, thanks to the incredible complexity of the U.S. fiscal system, it's essentially impossible for anyone to understand her incentive to work, save, or contribute to retirement acounts absent highly advanced computer technology and software. Second, the U.S. fiscal system provides most households with very strong reasons to limit their labor supply and saving. Third, the system offers very high-income young and middle aged households as well as most older households tremendous opportunities to arbitrage the tax system by contributing to retirement accounts. Fourth, the patterns by age and income of marginal net tax rates on earnings, marginal net tax rates on saving, and tax-arbitrage opportunities can be summarized with one word - bizarre.

Re: Your real tax rate: 40%

#66

Post by jeromec »

Semi-related: Can someone explain to me California CRV on recyclable containers? My understanding is that this is meant to encourage recycling, but the deposit amount you pay at the store doesn't equal what you get when you recycle your containers. I checked out the Wikipedia page, and it explains how the "Redemption Value" has changed over the years. If you take one of those large 2.5 Gallon containers of Arrowhead Water you are charged an additional $.50 each! There is no way you get that much to recycle it. How many bottles are sold annually in California? That looks like clear additional tax revenue. To add insult to injury, you are charged sales tax on the CRV deposit!

http://en.wikipedia.org/wiki/California_Redemption_Value

Re: Your real tax rate: 40%

#67

Post by endtime »

mcknz wrote: post #62
randallsquared wrote: post #34

Earlier quoted context omitted.

It's not like the entire tax goes into a black hole It's arguable that we'd be better off were that so... part of the tax burden is all the people employed by those taxes who don't actually contribute anything to society on net (that is, whose jobs wouldn't be done at all on the free market)... in this way, taxes can have something like double their cost in harm, potentially.

I'll concede that's true for government agencies where the work could be done more efficiently in the for-profit world (say the USPS), but there are plenty of agencies whose jobs "wouldn't be done at all on the free market" because there is little profit motive, but are essential none the less. Could you imagine regulatory agencies (SEC, EPA) as for-profit entities? Job and Family services?

There are some private regulatory agencies already - certificate authorities, for example. Seems to pretty much work.

Re: Your real tax rate: 40%

#68

Post by teamonkey »

tomwalker wrote: post #11

That is so low compared to the UK.

It's not. We British like to complain about being ripped off but we're better off than we think. Having moved to Canada much more leaves my paycheck than it would in the UK and, according to an online calculator, the same would be true if I moved to the States.

The things that really hurt in the UK are things like power and fuel costs, council taxes, and various other mortgage-related taxes. That's where I'm really seeing the difference.

Re: Your real tax rate: 40%

#69

Post by Retric »

camiller wrote: post #61
_delirium wrote: post #41

Earlier quoted context omitted.

The numbers don't add up to the macro numbers, though--- the governments at all levels added together pull in about 25-30% of U.S. GDP in taxes, not 40%. One thing throwing off his numbers is that he assumes all income to be ordinary income, whereas a large proportion of Americans' income, especially at the high end, get classified as capital gains or qualified dividends, which are taxed at lower rates. I believe War…

I make considerably less than Warren, and virtually none is capitol gains. After home mortgage deduction, charitable deductions, etc. My effective federal tax rate was like 7.2% (If I remember what TurboTax told me correctly). The previous year it was 6.9%. My marginal federal bracket rate is 28% ($82,400-171,850). Warren really like to talk that crap up about how he pays less taxes than his secretary. To me his secr…

Are you forgetting about the 12.4% you pay to SS? How about 2.9% to Medicare? Now let's add in sales and property taxes etc.

PS: Relative to his income his sales and property taxes are well under 0.1%.

Re: Your real tax rate: 40%

#70

Post by erikpukinskis »

_delirium wrote: post #50
mixmax wrote: post #46

If you think that's high you should be happy you don't live in Denmark. "The large public sector (30% of the entire workforce on a full-time basis) is financed by the world's highest taxes. A value added tax of 25% is levied on the sale of most goods and services (including groceries). The income tax in Denmark ranges from 42.9% to 63% progressively, levied on 4 out of 10 full-time employees. Such high rates mean tha…

The people who do live in Denmark seem pretty happy about doing so, though ( http://www.sciencedaily.com/releases/2006/11/061113093726.ht... ). One reason might be that they're fairly wealthy to begin with, so it's taking a large percentage out of a large pie (Denmark's per-capita GDP is ~DKK 375,000 = ~$62,000). The social safety net is also rather strong as a result of the government's large amount of income, and i…

And interestingly their unemployment rate is lower than ours* (at least since 2004). Evidence that providing more government services doesn't lead to people just sitting on their asses and cashing their welfare checks.

* http://globaleconstats.com/wp/2009/08/25/the-unemployment-ra...

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