Where is the US economy headed?

@spendius,

I don't agree that it is ad hominem. It has quite a bit of relevance to the discussion.

@Finn dAbuzz,

Being lumped in with ci. is an ad hominem in my book. It's the kiss of death.

@Finn dAbuzz,

"Thanks to the internet, companies can be managed on line, and if they can, the managers can live anywhere that has bandwith. Costa Rica and Ecuador keep coming up in dscussions."(sic)

top notch Americans, every one...

just because the wealthy can manipulate the rules to avoid taxes does not make it something I wish to condone.

your morals or lack thereof is your own business..

1 Reply

@spendius,

It may be insulting but it's not necessaryl ad hominem.

0 Replies

@Finn dAbuzz,

Quote:

All of the money the rich earn can't pay off our national debt and continue to fund the drunken sailor that is our government, but hey, it will be a start...right?

A few points -

1, nobody is talking about taking ALL the money the rich earn. They will still be very, very rich if we institute marginal tax rates that are much higher than today.

2, it would be a start; but it wouldn't be enough. We also need to raise taxes on the middle and lower classes from their historical low rates. I've consistently advocated for this here at a2k.

It's not about some sort of class warfare. It's about actually doing what is necessary to balance the books for the country, and that's both cutting spending and raising taxes.

Quote:

I always suspected you were an idiot, but an idiot savant? You know every word I have posted to A2K? Amazing!

As I've made a habit of reading every post of yours that I've seen over the years - and catching up on stuff you've written during the weeks that I take breaks - I think it's fair to say that I've seen the vast majority of your posts here, yes. And no, you hardly if ever rail against federal and war spending by Republicans. You know it as well as I do.

Quote:

Aren't you in the least embarrassed by your reflexive response to someone pointing out the sins of Obama and Democrats?

I don't think that what Obama and the Dems have done is a sin. Advancing the cause of renewable energy is a top national interest of ours and will do more to secure our long-term future than pretty much anything else we can do at this point. And not every investment pans out, or is a home-run.

Cycloptichorn

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@georgeob1,

Quote:

Thus in the hypothetical situation we ware addressing, our millionaire, if he made exactly $1 million/year, would see his marginal tax rate go from 49.5% to 80.5 % on approximately the last $600K of his income - a difference of $186K, or 18.6 % of his total income. Assuming the lower brackets were raised proportionally the increase would be even larger, probably at least $30K, even if the increased rate affected only the second highest bracket.

His rate isn't 49.5% to begin with. You can't even get the basic numbers for your argument right. How many times do we have to patiently explain to you that you CANNOT ADD STATE AND LOCAL TAXES TO GET A COMBINED NUMBER when you can deduct one from the other???

Not only that, but you don't seem to recall that nobody proposed taxing monies at a 70% marginal rate on income less than a million dollars a year. Thomas didn't and I didn't. You are arguing against a position that nobody here has taken. Nothing new about that tho.

I'm starting to doubt that you can think OR surf the web. You can't seem to keep what people are talking about straight.

Cycloptichorn

1 Reply

@georgeob1,

georgeob1 wrote:

A continuing, and stunning, silence from parados & cyclo....

Amazing - take a day off to go shopping with the wife, and all of a sudden, it's a 'stunning silence!' Laughing

Cycloptichorn

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@spendius,

spendius wrote:

I think "our millionaire", having more choices than most, will live where the weather suits best.

And that's supposed to be Nevada? That's the silly pretense of this entire argument - the rich aren't the ones moving out of California. At all.

Cycloptichorn

1 Reply

@Cycloptichorn,

Actually, California has a macro-climate that's ideal for those who love the ocean, the mountains, dessert, trees, national parks, and Disnelyland. We have it all! Hey, we even have San Francisco, one of the most favorite tourist destinations from around the world. Did I say we also have some great wines and cheese?

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@Cycloptichorn,

Cycloptichorn wrote:

Quote:

Thus in the hypothetical situation we ware addressing, our millionaire, if he made exactly $1 million/year, would see his marginal tax rate go from 49.5% to 80.5 % on approximately the last $600K of his income - a difference of $186K, or 18.6 % of his total income. Assuming the lower brackets were raised proportionally the increase would be even larger, probably at least $30K, even if the increased rate affected only the second highest bracket.

His rate isn't 49.5% to begin with. You can't even get the basic numbers for your argument right. How many times do we have to patiently explain to you that you CANNOT ADD STATE AND LOCAL TAXES TO GET A COMBINED NUMBER when you can deduct one from the other???

BUT YOU CANNOT DEDUCT ONE FROM ANOTHER !!!! You can deduct the state taxes paid from your Federal gross income, but you can't deduct Federal taxes paid from your State gross income. THAT is the essentail point here. So for our hypothetical California millionaire he is paying the same state tax on the same gross income, whether his Federal marginal tax rate is 39% opr 70%. Since he has MUCH less left over after paying his Federal tax bill at the higher rate, the more or less fixed state tax takes a bigger relative bite out of his remaining income after Federal taxes. Moving to Nevada would nearly double his after tax income at a 70% Federal Rate.

Cycloptichorn wrote:

Not only that, but you don't seem to recall that nobody proposed taxing monies at a 70% marginal rate on income less than a million dollars a year. Thomas didn't and I didn't. You are arguing against a position that nobody here has taken. Nothing new about that tho.

So what? We're been talking about someone who earns a million or more since the start, and that's exactly what I did. You are here guilty of exactly the same distortion of which you falsely accuse me.

Cycloptichorn wrote:

I'm starting to doubt that you can think OR surf the web. You can't seem to keep what people are talking about straight.

Cycloptichorn

Your syntax here is as screwed up as your understanding.

2 Replies

@georgeob1,

georgeob1 wrote:

Cycloptichorn wrote:

Quote:

Thus in the hypothetical situation we ware addressing, our millionaire, if he made exactly $1 million/year, would see his marginal tax rate go from 49.5% to 80.5 % on approximately the last $600K of his income - a difference of $186K, or 18.6 % of his total income. Assuming the lower brackets were raised proportionally the increase would be even larger, probably at least $30K, even if the increased rate affected only the second highest bracket.

His rate isn't 49.5% to begin with. You can't even get the basic numbers for your argument right. How many times do we have to patiently explain to you that you CANNOT ADD STATE AND LOCAL TAXES TO GET A COMBINED NUMBER when you can deduct one from the other???
BUT YOU CANNOT DEDUCT ONE FROM ANOTHER !!!! You can deduct the state taxes paid from your Federal gross income, but you can't deduct Federal taxes paid from your State gross income.

Well, in 6 states, you can. You didn't respond to my pointing that out earlier.

But more importantly - nobody is claiming that this is the case, or the important point. What we are instead claiming is that, due to the fact that you CAN deduct taxes paid to the state from your federal taxes, moving from one state to another makes very little difference in the after-tax income of our hypothetical millionaire. Certainly not enough of a difference to make a very rich person choose to live in a place they don't wish to live.

You keep quoting the combined state/local marginal tax rate for CA wealthy residents as 49.5%. It is not 49.5%, because you can't simply add tax rates to one another when you can deduct taxes paid to the state from federal income. When you are basing your argument on faulty calculations you should expect the people arguing the other side to point it out. I'd like to see you address this - so far, you have chosen to ignore it.

Quote:

THAT is the essentail point here.

No, it isn't the essential point.

Quote:

So for our hypothetical California millionaire he is paying the same state tax on the same gross income, whether his Federal marginal tax rate is 39% opr 70%. Since he has MUCH less left over after paying his Federal tax bill at the higher rate, the more or less fixed state tax takes a bigger relative bite out of his remaining income after Federal taxes. Moving to Nevada would nearly double his after tax income at a 70% Federal Rate.

You pay state taxes before you pay federal taxes, because state taxes paid are deducted from federal taxes. So, you're totally wrong here. You are continuing to make the same casual error over and over.

Do you do your own taxes? I sort of doubt it.

Quote:

Cycloptichorn wrote:

Not only that, but you don't seem to recall that nobody proposed taxing monies at a 70% marginal rate on income less than a million dollars a year. Thomas didn't and I didn't. You are arguing against a position that nobody here has taken. Nothing new about that tho.

Quote:

So what? We're been talking about someone who earns a million or more since the start, and that's exactly what I did. You are here guilty of exactly the same distortion of which you falsely accuse me.

But nobody proposed raising the marginal taxes on a person who earns a million dollars a year to 70%. Only you are arguing against this position. I can't put it any clearer than that.

Cycloptichorn

0 Replies

The first person to introduce the idea of a 70% tax rate to the discussion was Thomas. Here's what he said:

Quote:

Cycloptichorn will no doubt offer his own answer, but as for myself, I wouldn't limit them. I would merely tax all income after the 1,000,000th annual dollar at the top of the Laffer curve. That would be about 70%, according to current research into the matter.

In all the discussion Parados and I were having with you, at no point were we talking about or calculating the difference for someone who earns a million dollars being taxed on their income at the CURRENT highest bracket at 70%. Thomas discussed the creation of a NEW tax bracket at 70%. But you misunderstood him to have said that the CURRENT top tax bracket would be upped to 70%, latched right on that and immediately started to tailor all your arguments against it. It had nothing to do with what either Parados or I or Thomas or even CI were saying - our argument all along was that because you CAN deduct state taxes paid from federal taxes owed, your casual adding of tax brackets to determine a total overall tax burden is factually inaccurate and just plain sloppy. And Parados did some quick math to show that raising the federal tax rate actually makes moving from one state to another based on the size of current state taxes LESS effective.

As he said - you're claiming that people will shift location due to a 3% difference in their after-tax income (due to the higher and unavoidable federal taxes), but they won't do it thanks to a 6% difference (what currently exists)? That doesn't make any sense. The higher federal taxes are, the lower state taxes are in comparison to them, and the less effect they should have on your behavior.

You also made a comment earlier about flight from California and the shrunken tax base. You casually intimated that this was due to rich folks leaving the state and taking their businesses with them. There's zero evidence to back this up. Instead, there are two factors responsible for this:

1, many middle-class families saw their homes appreciate tremendously over the last decade and decided to sell them while the market was very high, realize a tremendous gain off of this, and retire to other states where housing was cheaper. In truth, it is mostly middle-class families who have left CA - not wealthy folks.

2, CA's tax base had grown to enjoy the very large taxes generated by the mortgage and real estate industry over the last 15 years. When that market plummeted, it disproportionately affected CA, as it not only destroyed the business tax base that had grown up around that industry, it also destroyed the individual tax payments that resulted from it as well.

Neither of these causes has anything to do with wealthy Californians fleeing the state in order to start businesses in lower-tax areas elsewhere. You are describing a right-wing myth. You have no evidence to back it up - and won't bother to find any in the face of my assertions that you don't. It would be too much work, and you are at heart a very lazy participant in these discussions.

Cycloptichorn

1 Reply

@Rockhead,

Quote:

top notch Americans, every one...

Typical.

If they don't subscribe to your politics they are un-American, despite the fact that you and your confreres always produce a bleating cacophany over how unfair it is for conservatives to suggest that anti-war liberals are unpatriotic.

Quote:

just because the wealthy can manipulate the rules to avoid taxes does not make it something I wish to condone. (sic)

No **** Sherlock and if you actually read what I posted you would see that I anticipated such a sanctimonius prenouncement.

Clearly, you think the government trying to seize large amounts of money from the rich is not only sensible but righteous, and so it is not unexpected that you would feel anyone who doesn't wish to fall in line or who might disagree with you is immoral.

If my alleged lack of morals is my business, why do you feel compelled to comment upon it?

Yest one more contradiction that is inevitable when you set yourself upon so high a horse.

3 Replies

@Cycloptichorn,

Someone making over a million dollars in income each year is paying the top marginal rate on both his state and federal taxes on almost 2/3rds of his income, and somewhat lower rates on the first 1/3rd.

The first key point here is that for the great majority of his income, it is exactly the sum of the top Federal & State tax rates that determines his total tax bill -- Your contrary statement notwithstanding.

The second key point is that his after tax income will be reduced in the hypothetical situation by the (very large) amount of the increase in his Federal Tax (there is no change in state taxes in the case we are considering). The 31% increase that Thomas proposed will significantly reduce his after tas income - so much so that the bill he must pay to the state would then be about half of his now much reduced after tax income - and that is likely enough to induce one to leave for a better tax clime.

There is no "CURRENT 70% TAX BRACKET". Your statements are inaccurate confusing and misleading. Perhaps you are so blinded by your preconceptions that you can no longer appreciate obvious facts or simple arithmetic.

In any event I have a large number of aquaintences who maintain residences in Nevada for precisely these reasons, even at today's rates. These folks are mostly from California and Illinois, a few from New York. The savings more than pay for the added residence and the extra travel.

1 Reply

@Finn dAbuzz,

extra points for using confreres in a coherent sentence.

other than that, blah blah blah blah blah...

have a nice evening.

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@georgeob1,

Quote:

THAT is the essentail point here. So for our hypothetical California millionaire he is paying the same state tax on the same gross income, whether his Federal marginal tax rate is 39% opr 70%. Since he has MUCH less left over after paying his Federal tax bill at the higher rate, the more or less fixed state tax takes a bigger relative bite out of his remaining income after Federal taxes. Moving to Nevada would nearly double his after tax income at a 70% Federal Rate.

I would love to see your math in support of that idiotic statement george.

The correct math for the 70% tax rate would be.

The same math is used to calculate that dollar amount for state purposes is 111.73.
Moving to Nevada means they would pay 70% on 111.73. That means they get to keep $33.52 out of their total. It certainly doesn't double his income nor does it double the money he keeps after taxes.

X - .105X = 100
X = 100/.895 = $111.73 (Total before state taxes)

$111.73 * .7 = $78.21 in Fed taxes if living in NV, Taxpayer keeps $33.52
($111.73*.105) + (100*.7) = $81.73 in total State and Federal Taxes. Taxpayer keeps $30.

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@Finn dAbuzz,

Quote:

If they don't subscribe to your politics they are un-American

What would you call people that leave America and renounce their citizenship to avoid paying taxes?

0 Replies

@georgeob1,

georgeob1 wrote:

Someone making over a million dollars in income each year is paying the top marginal rate on both his state and federal taxes on almost 2/3rds of his income, and somewhat lower rates on the first 1/3rd.

Yes - The current amount is 31% federal tax rate on a million of income, before deductions.

Quote:

The first key point here is that for the great majority of his income, it is exactly the sum of the top Federal & State tax rates that determines his total tax bill -- Your contrary statement notwithstanding.

Untrue - the amount paid in state taxes is deductible from federal taxes. Earlier, when you said this wasn't true, you were perfectly wrong, but don't have what it takes to admit it.

If, say, the person was in CA, and paid 10.5% tax on his income, his total tax rate, including state and federal taxes, would be 38.5% on 1 million dollars of income, before other deductions. The top marginal federal rates are lowered by the state taxes that he takes as a deduction. The top marginal rate of state and federal taxes added together is about 7 points higher than that.

Just for fun, I plugged the numbers into Turbotax after our conversation, and they confirmed that I am right and you are wrong. I can't put it any plainer than that.

Quote:

The second key point is that his after tax income will be reduced in the hypothetical situation by the (very large) amount of the increase in his Federal Tax (there is no change in state taxes in the case we are considering).

The hypothetical situation Thomas proposed was on income over 1 million dollars a year. The hypothetical person in question wouldn't pay a single dollar more in taxes under his scenario. You don't seem to realize that you are arguing against an argument that nobody here made - even though I have clearly laid this out to you, and Thomas clearly wrote it in the first place.

Quote:

There is no "CURRENT 70% TAX BRACKET".

No ****, George! Thomas proposed the creation of a new bracket. Do you really not understand this? That was the entire point of what he wrote!

Once again, this is what Thomas wrote:

Quote:

Cycloptichorn will no doubt offer his own answer, but as for myself, I wouldn't limit them. I would merely tax all income after the 1,000,000th annual dollar at the top of the Laffer curve. That would be about 70%, according to current research into the matter.

There's nothing confusing about that at all.

Quote:

Your statements are inaccurate confusing and misleading.

Nobody else seems to have been confused by it other than you.

Quote:

In any event I have a large number of aquaintences who maintain residences in Nevada for precisely these reasons, even at today's rates. These folks are mostly from California and Illinois, a few from New York. The savings more than pay for the added residence and the extra travel.

While they may maintain a residence there, have they moved their businesses there? Do they spend all their time and money there? Have you moved there? Why not?

Guys like you and Finn are all talk, you know that? Why haven't you up and moved your entire business out of state? Why haven't YOU moved out of state? When are you going to? Any day now? Going to move your company any day now?

I didn't think so.

You think we should congratulate or laud rich people who buy houses in low-tax states, so they can avoid personal income taxes? The funny thing is that you seem to think this is some sort of honorable behavior. It is the opposite. At heart, you guys are just tax-dodgers who have a lot of money and lawyers. And this during a time of historically low tax rates!

Cycloptichorn

2 Replies

Most of the rich are rich because of government activity aren't they? A lot of them are rich because of the deficits.

0 Replies

@Cycloptichorn,

Cycloptichorn wrote:

georgeob1 wrote:

Someone making over a million dollars in income each year is paying the top marginal rate on both his state and federal taxes on almost 2/3rds of his income, and somewhat lower rates on the first 1/3rd.

Yes - The current amount is 31% federal tax rate on a million of income, before deductions.

Except of course for the exceptions to income that allow someone making millions to only pay 15% or less on that income.

1 Reply

Where is the US economy headed?

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