Here it is ladies and gentlemen: All of the screaming and vitriol over allowing the top rate to "skyrocket" back up to where it was in 2000 and how raising taxes will kill jobs, and it is but a blip on the chart. Take a look at 1993-94. Bill Clinton, coming out of a recession and after getting hammered in the midterm elections, got an increase in the top rate passed and that increase helped fuel a great expansion and helped to stop the bleeding on our debt problems created in the 80s. I did the math in another thread, but even when we raise the top rate to where it was, a person making $250,000 will still be paying $6,700 less than he or she did under Clinton because they will still get the benefit of the reductions in the lower marginal rates.
We spend money in two (2) ways: entitlements and war. Many "Entitlements" like soc serc are actually payroll deductions and are revenue neutral (to hugely positive) and war, well war is expensive. We will not balance the budget with spending cuts. The only answer to the budget deficit is a greatly enhanced marginal tax rate for high incomes. If ya can't see that then we are just a banana republic. A FORMER world power. The deficit matters, or it doesn't. If it matters, then let's address it.
Chris, I thought you would know better than this. The rate by itself is meaningless, and has always been meaningless. It is the threshold, combined with the rate, that really matters. If the rate by itself really mattered, we could create a new tax rate of 99.99999% that kicks in at a threshold of $100 million dollars, and all of our problems would be solved. Right? I know that is an exaggeration, but when you look at some of these tax rates in the context of their threshold, it isn't much of an exaggeration. The painful truth is that we now have a government budget (as a percentage of GDP) that is much higher than we have ever had, and the burden of that budget is increasingly falling on fewer and fewer people. Do the rich need to pay more? Of course they do...but so does everyone else. We can't pay for the size of our government on the backs of the rich alone...there simply are not enough of them at the income levels necessary to be able to support the government. We could bump the tax rate to 50% for those over $250k and it still wouldn't put a dent in our deficit. If we as a nation really have decided that we want big European style government, then we as a nation have implicitly decided that we also want European style taxation...which means VATs, heavy property taxes, and high tax rates that kick in at near poverty levels.
What significant gov spending should be cut? Soc serc gets you nowhere, since it runs a surplus. Remember, you have to save TRILLIONS. SPECIFICALLY; what spending cuts get us there? Name a few, and their contribution to the deficit.
Well, the rate isn't meaningless when the threshold has remained pretty constant, adjusted for inflation, for a couple of decades. And when we lower it -- from Bush I to Bush II -- we run even bigger deficits that require adjustments. I have never argued that we can cure all of our ills by taxing the wealthy, but I do think that the rate on the wealthy was more than fair ten years ago. In fact, I agree with you in principle that we should let all of the Bush tax cuts expire, but that is a non-starter this year AND there is a stimulative effect of lower taxes on the middle class who tend to spend the savings. I wasn't trying to state a conclusion by starting the thread. I'm opening up a discussion. Go back to 39.6% as a top rate. Now let's talk about where that kicks in. I'm fine with $250,000 but if you want to raise it to $300,000 or even $500,000 I'm open to the idea. My main point in starting the thread is to rein in the talk of economic disaster if we raise the top rate to 39.6%. The fluctuation of the top rate has not been all that great over the last 20 years. We are talking about a tweak more than a structural overhaul.
I just said it in another thread. You have defense and you have medicare. It's not about deciding that we want a European form of government. It's a question of whether or not we want to maintain our world cop status and our socialized medicine for those over 65 or not. By the way, can you think of the chaos we would have in our health care/insurance system without medicare? Would anyone over 65 NOT have a pre-existing condition? The debt/deficit republicans who ran on this issue need to step up now and walk the walk. They have the branch that passes budgets and appropriates money. Let's see if the close military bases or if they yank benefits to grandma and grandpa. Those are the options in a nut shell. Of course, Medicare could be significantly helped on the cost side, but they have already come out against the public option or other reforms that would bring down costs.
No. Check my posting history, I've done this on quite a few separate occasions, and I'm not going to go into this here.
You are aware Clinton ran a bubble that ended in recession, right? Tax revenues would not have been as high had there been no tech bubble. You don't actually understand economics or taxation do you? This is one of the most simplistic and silly posts I've seen in a while.
Enlighten us: Like the Bush tax cuts created jobs. The Clinton taxes on top earners spurred economic growth, or didn't. Tax rates can never be raised during a recession...or during a boom. Deficits don't matter.
You do know what "helped" means don't you? Your don't actually understand the English language do you? Seriously, I thought I covered this when responding to Danny. Of course I'm not saying that setting a tax rate is responsible for everything that happens in an economic boom or bust. My point was simply that the rich survive and the economy can move with a rate that is the same as the one proposed. Yes, there was a bubble, but the arguments that people have made around here and elsewhere would have you believe that all of those small business owners would never have STARTED up tech companies because of this huge tax burden. That is what is silly about the current argument. Do you deny the negative effects of lowering the top rate on the debt? Reagan reduced rates without adequate cuts in spending and we began running larger deficit budgets and the debt piled up. Bush Sr. said, "read my lips" but he then recognized that we couldn't sustain the drop in the highest rates. Despite all the noise about Clinton turning hard right after the midterms in 1994, he actually got an increase in the top marginal rate. This all is relevant to now simply to point out that leaving the top rate where it is, we will run bigger deficits unless the republicans find some way to offset the lost revenue.
Ok, is it even "primarily" responsible? Although I think raising the rate might be part of an entire plan to cut the deficit once the economy is on better footing.. This original post is like something Superdave would post.. I thought you were better than that.
Jesus Christ people, lighten up. I wanted to start a discussion on the top marginal rate because that is the main sticking point in extending the tax cuts from 2000 to everyone else. I never introduced this as a fix for anything. To answer your question, no it wasn't primarily responsible for the economic boom but that wasn't my point. It didn't hinder that boom either and isn't that the argument right now? I do think it was a big factor in allowing us to then run surpluses. When you increase economic activity, you increase government revenues, but if the top rates were left 10% lower as they were at the beginning of the decade, my guess is that even with that huge economic activity -- bubble driven or not -- we would have been running minor deficits. Forgetting about how the economic activity happened, it seems to me that we had hit something of a nice equilibrium with taxes and spending in those last few years of the 90s. Now, if we can get the economy chugging again (and there are signs that we are headed that direction) then wouldn't similar rates make sense? I'm not convinced that raising the top rate to 39.6% will stifle any activity. I believe that most people making over $250,000 will not take that difference of taxes collected in their pockets and spend it. But, even if we accept that as true, why not pass a bill where that rate goes up in two years? Or all the rates back to pre-2000 levels? If you simply say, "we should revisit it when the economy is doing better," the clowns in Washington never will. If this election meant anything, it means that voters are serious about the idea of balanced budgets and debt reduction. That hasn't translated into a willingness to sacrifice, but at least the mind set is there. So, this is the time to address both spending and taxes in a meaningful way. I'm sorry if the thread offends you and pollster. It was designed to start a discussion and not have people come in here and start throwing partisan jabs. I don't think my original posts does that. It does call out the fearful screams we here from some partisans in congress about what a horrible tax increase this would be, but beyond that, it simply invites discussion on debt from the revenue side. Feel free to add in spending to the discussion if you would like. Both you and pollster are too focused on my comment about Clinton. The only reason I brought that up was because the marginal rate was increased at a similar time to right now. We were coming out of recession. The sitting democratic president had just took a beating at the ballot box. The rate was raised and it did not have the negative impact on growth that some said it would.
When the hell is anybody ever gonna get it? If you make $250k per year you are not rich. Period. A person with millions of dollars will be pay a lower rate than the poor guy (relatively) who makes $250k per year based on the current tax structure. You want to raises real money real fast and have things more "fair"? Add another tax bracket at $2 million dollars and do away with the dividend tax and capital gains tax and have that stuff taxed as ordinary income. Problem solved.
Forget about margin tax rates for a second. How can anyone compare the current economic downturn with the 1992 recession? The 1992 recession was short and shallow and by the time Clinton took office a robust economic recovery was already underway. You can not describe our current economic recovery as “robust” or the downturn as “short and shallow”.
Uh. Yeah. Sincerely, The Rest of the Planet The reality is that w/ federally allowed tax deductions and proper financial advice, you're looking at a figure of gross income of $300K. I work at a private university that charges students over $30K/yr in tuition. We openly state that most students outside of the need-based token minority or white lower class first generation college student need to come from families whose gross income is $165,000+. I'm guessing 80% of my students will NOT be affected by the Obama "Oh. My. Gawd, Becky... It's the Largest Tax Increase in the HISTORy of Mankind!!!111!!! " tax increase. I'm sorry. But these kids are pretty rich. Now. The ones that come from NYC aren't b/c $165,000 there is still middle class. But $300,000 sure as hell ain't.
Wow Carlos, this board has really come a long way in 5 years. Back then I couldn’t even get BigSoccer’s intelligentsia like SuperDave and JohnGault to admit that a family of 4 making $100k was middle class.
You're not clipping coupons or shopping at Target either. If it's a matter of semantics then someone making $250K would be "well off" and not struggling to get by. They're not middle class by any standard definition of the term. They're probably safely in the top 3-5% of earners in this country.
Surprising. We're a family of 2 making around that much and we're firmly in the middle class. I guess once we pay off student loans and balloon payments to the 'rents for the down payment on the house, maybe we'll have the discretionary income to warrant being considered upper class. Maybe. Our fellow academic friends all laugh at the fact that after 4 years of undergrad and 10 years of post-grad work, all of us are still holding onto some undergrad survival habits. Somebody gets a book published and they're opening a bottle of Prosecco or Cava, no Champagne.
Only in government accounting, where you get to pretend the world ends at the end of the fiscal year, is social security revenue hugely positive. Any non-government entity that budgeted like that would have its principals sent to jail. And why can't we cut war from the budget?
As of 2004, $277k is the top 1%. I would definitely consider that upper class, as long as we are trying to extrapolate wealth from income. The only reason why we are having this discussion though is because we want to feel good about taxing certain people. If I can find a way to classify someone as rich, I won't feel as bad asking for them to pay higher rates. It is class warfare at best. I much prefer we all take tax hikes and cuts together.
'Cept it doesn't actually help us pay for stuff we want by being "fair" across the board. We've seen this song & dance before. If you want to raise rates just a bit more on those making < $500,000 (still rich IMO) and then wallop millionaires, you're still going to have someone - usually quite connected - bitching about it. Pols just have to do it and stop splitting hairs so much. Otherwise just continue running deficits forever and agree that the rich have won the class war and not had to sacrifice much to help the country.
I know you know this, but they are paying exactly the same taxes as us on all dollars from 1 to 249,999 (except that the don't pay any payroll taxes on about 145K of that). It's not class warfare. Unless you consider a progressive income tax as "class warfare." The wealthy live a pretty damn nice life in this country. I'm not trying to penalize them in any way. I'm just looking for the top rate to return to a place where we had a chance at solvency. If not for the recession and painfully slow recovery, I would agree that we should just let all of the cuts expire and put us back to where we were in 2000. In fact, I'd have no problem returning the top rate there now and then extending the rest for only two years. By that time, we should be in a stronger growth period.
The rich alone ($250k and up) make an absolutely insignificant dent in the deficit, even if we raised rates to 50%. If we want to keep our spending, taxes on everybody need to go up. The focus on the rich here is absolutely meaningless to anybody with a long term focus.
The vast majority have been spinning their wheels wage-wise for the past 30 years while the top 1% now controls 25% of the wealth. So these middle class suckers who have not really basked in the prosperity but have worked just as hard are being asked to take one for the team? F*ck no.