Obama seeks big dividend tax hike for wealthy

[Deleted]

Incidentally, back in th 50s/60s, there were many more tax loopholes and methods to avoid taxes, many of which have been eliminated.

Overall tax rates were lowered as part of tax reform - removing loopholes and the such.

When I think of taxes I also tend to think of my overall tax burden. While federal taxes may have gone down state and local taxes have gone up.

[djAdvocate]

Feb 15, 2012 12:51:01 GMT -5 Savoir Faire-Demogague in NJ said:

you are the third person to point this out. tax rates have been FALLING for three decades, not INCREASING. how a person gets from one place to the other is beyond me.

oh, and it s 70% to 35%, btw. but who's quibbling?

Yet tax receipts have remained stable at 18 to 20% of GDP.

that is not what i seem to recall. my recollection is that they have historically been around 18-20% and are currently at about 14.4%, which is a post WW2 low, and a decline of 25%.

[djAdvocate]

Feb 15, 2012 13:00:16 GMT -5 @anne81 said:

Incidentally, back in th 50s/60s, there were many more tax loopholes and methods to avoid taxes, many of which have been eliminated.

Overall tax rates were lowered as part of tax reform - removing loopholes and the such.

When I think of taxes I also tend to think of my overall tax burden. While federal taxes may have gone down state and local taxes have gone up.

all true, which explains why revenues have only fallen 25%, not 50%.

[skweet]

It is time for the Republicans to vote "present". Let POTUS bring this bill forward, let the Democrats be the party of "No", for their own ridiculous bill. If enough dems are willing to vote "stupid" and put the bill on Obama's desk, he can't be dumb enough to sign it, it would be like signing his resignation letter mid-election. On the .00001% the bill becomes law, causing a certain economic armageddon ... well, I guess we were due a melt-down at some point, and it will remind the populus that socialism doesn't work, which should be a rebirth of the American spirit.

[floridayankee]

Feb 15, 2012 9:48:52 GMT -5 usaone said:

We have been raising taxes over the last several decades?

Top tax rates were 91% in the early 1980's. Now they are 36%.

Federal revenue, as a percentage of GDP, have generally held within a 5 point range since 1960. The fact that top income tax rates have decreased from 91% to 36% really mean nothing. Taxes were not reduced, they were simply moved and hidden from view.

We're being played like a 310 million fiddle orchestra.

[floridayankee]

Feb 15, 2012 13:52:02 GMT -5 djAdvocate said:

that is not what i seem to recall. my recollection is that they have historically been around 18-20% and are currently at about 14.4%, which is a post WW2 low, and a decline of 25%.

Considering the sharpest decreases to revenue occurred after the housing market started crashing in 2008, I'd say the lower than normal revenue has more to do with the recession than tax rates. Fixing the economy would recover most of that lost percentage.

[ugonow]

I sure am glad I don't have to worry about hitting the limit allowed to invest in my wifes and mine 401's and IRA's. .I would hate to be exposed to this.....

[Savoir Faire-Demogague in NJ]

Feb 15, 2012 15:42:55 GMT -5 ugonow said:

I sure am glad I don't have to worry about hitting the limit allowed to invest in my wifes and mine 401's and IRA's. .I would hate to be exposed to this.....

You should not have any restrictions on your 401K plans other than the plan being top heavy and what not.

Putting money into a Roth IRA could be limited somewhat on your AGI and reduced on a sliding scale.

In any event, you can always put your dough into a taxable account in a couple of index funds which would be tax advantaged in that they do not do much trading. Dividends would be taxable.

[Deleted]

Recession lowers overall GDP, yes.. But to lower tax as % of GDP is something more...

[djAdvocate]

Feb 15, 2012 15:28:57 GMT -5 floridayankee said:

Feb 15, 2012 13:52:02 GMT -5 djAdvocate said:

that is not what i seem to recall. my recollection is that they have historically been around 18-20% and are currently at about 14.4%, which is a post WW2 low, and a decline of 25%.

Considering the sharpest decreases to revenue occurred after the housing market started crashing in 2008, I'd say the lower than normal revenue has more to do with the recession than tax rates. Fixing the economy would recover most of that lost percentage.

probably. but pretending the revenue is anywhere near NORMAL right now is dubious at best.

[floridayankee]

Feb 15, 2012 16:51:52 GMT -5 djAdvocate said:

Feb 15, 2012 15:28:57 GMT -5 floridayankee said:

Considering the sharpest decreases to revenue occurred after the housing market started crashing in 2008, I'd say the lower than normal revenue has more to do with the recession than tax rates. Fixing the economy would recover most of that lost percentage.

probably. but pretending the revenue is anywhere near NORMAL right now is dubious at best.

So is blaming the sharp decrease in revenue on any single event (aka the 'Bush Tax Cuts') as some do. The cuts happened in '01 and '03. According to the chart I posted, revenues as a percentage of GDP began to increase shortly after the second 'Bush tax cut'.

The economy is simply too large and too complicated to be driven by one single factor alone. Besides, I am not naive enough to think that taxes were simply 'cut'. One tax may be cut but other taxes and fees are increased to make up for it. This is how we manage to stay in that relatively narrow 5 point range...under normal circumstances anyway. It's all nothing but slight of hand.

[Value Buy]

Feb 15, 2012 11:07:46 GMT -5 djAdvocate said:

Feb 15, 2012 9:48:52 GMT -5 usaone said:

We have been raising taxes over the last several decades?

Top tax rates were 91% in the early 1980's. Now they are 36%.

you are the third person to point this out. tax rates have been FALLING for three decades, not INCREASING. how a person gets from one place to the other is beyond me.

oh, and it s 70% to 35%, btw. but who's quibbling?

Ok, fair enough. Federal rates have come down.
I am basically speaking from my personal experience.
When I was 23 and single, working fulltime, and basically pocketing much of my paycheck and not spending it in bars and restaurants, I received the wake up call from both the state and federal tax offices.
Up til that time, I always received a "refund", in other words, I over paid both entities thru ample deductions.
All of a sudden in the next year, I owed both institutions, as I had ample bank interest, and dividend income, that wiped out my withholding totals.
What did it get me?
Letters from both institutions telling me I had to make quarterly payments of extra payments to fulfill my obligations, or face penalties for underpayment.
Believe it or not, back then, for the state it was all of about fifteen dollars a quarter.
I satisfied the obligations by having book keeping witholding extra dollars every two weeks.
I think that is when I realized how wrong it was for the Government to double tax me on money that I had previously paid my fair share on. Yes, I realize the 99 percenters do not understand this simple fact.
Now, if the Feds do raise tax rates, will the state and local tax departments lower rates that they have raised over the years due to th Feds dropping programs back to the states to pay for that the Feds always covered previously?
In a word, no.
Our taxes have skyrocketed in the last fifty years.It just is a lot of smoke and mirrors, as to which pocket it is taken from., and by whom.
I imagine most do not even realize how bracket creep, ATM, and social security with holding percents have affected everyone.
Smoke and mirrors, people, smoke and mirrors, Paying Peter to rob Paul.

[Savoir Faire-Demogague in NJ]

Feb 15, 2012 16:51:52 GMT -5 djAdvocate said:

Feb 15, 2012 15:28:57 GMT -5 floridayankee said:

Considering the sharpest decreases to revenue occurred after the housing market started crashing in 2008, I'd say the lower than normal revenue has more to do with the recession than tax rates. Fixing the economy would recover most of that lost percentage.

probably. but pretending the revenue is anywhere near NORMAL right now is dubious at best.

I've arleady posted data from the St. Louis Federal reserve numerous times, that show consumer spending is above the levels just prior to the 2008 meltdown. In fact, the first time I posted it, you replied it was interesting data.
The problem the economy has is investment activity is still below pre-2008 levels.

Data from BEA and BLS:



St. Louis Federal Reserve:

[djAdvocate]

Feb 16, 2012 9:23:02 GMT -5 Savoir Faire-Demogague in NJ said:

Feb 15, 2012 16:51:52 GMT -5 djAdvocate said:

probably. but pretending the revenue is anywhere near NORMAL right now is dubious at best.

I've arleady posted data from the St. Louis Federal reserve numerous times, that show consumer spending is above the levels just prior to the 2008 meltdown.

i didn't say anything about spending. i said revenues. i thought that was what YOU were talking about, SF. no?

the graph that FY posted is what i was talking about. revenues have fallen 30% since FY2000.

[djAdvocate]

Feb 16, 2012 9:19:30 GMT -5 Value Buy said:

Feb 15, 2012 11:07:46 GMT -5 djAdvocate said:

you are the third person to point this out. tax rates have been FALLING for three decades, not INCREASING. how a person gets from one place to the other is beyond me.

oh, and it s 70% to 35%, btw. but who's quibbling?

Ok, fair enough. Federal rates have come down.
I am basically speaking from my personal experience.
When I was 23 and single, working fulltime, and basically pocketing much of my paycheck and not spending it in bars and restaurants, I received the wake up call from both the state and federal tax offices.
Up til that time, I always received a "refund", in other words, I over paid both entities thru ample deductions.
All of a sudden in the next year, I owed both institutions, as I had ample bank interest, and dividend income, that wiped out my withholding totals.
What did it get me?
Letters from both institutions telling me I had to make quarterly payments of extra payments to fulfill my obligations, or face penalties for underpayment.
Believe it or not, back then, for the state it was all of about fifteen dollars a quarter.
I satisfied the obligations by having book keeping witholding extra dollars every two weeks.
I think that is when I realized how wrong it was for the Government to double tax me on money that I had previously paid my fair share on. Yes, I realize the 99 percenters do not understand this simple fact.

bullshit. we realize it just fine. it just doesn't bother us as much as it bothers the 1%, since so little of our income is made that way.

Now, if the Feds do raise tax rates, will the state and local tax departments lower rates that they have raised over the years due to th Feds dropping programs back to the states to pay for that the Feds always covered previously?

wtf are you talking about? capital gains rates have ALSO fallen, right?

[Driftr]

Feb 16, 2012 9:19:30 GMT -5 Value Buy said:

I think that is when I realized how wrong it was for the Government to double tax me on money that I had previously paid my fair share on. Yes, I realize the 99 percenters do not understand this simple fact.

I used to feel that way. I no longer do.

You are not being taxed twice on the same money. You're being taxed on the income you receive from the investment of your surplus. You aren't getting taxed a second time on the principle itself.

[djAdvocate]

Feb 16, 2012 10:49:01 GMT -5 Driftr said:

Feb 16, 2012 9:19:30 GMT -5 Value Buy said:

I think that is when I realized how wrong it was for the Government to double tax me on money that I had previously paid my fair share on. Yes, I realize the 99 percenters do not understand this simple fact.

I used to feel that way. I no longer do.

You are not being taxed twice on the same money. You're being taxed on the income you receive from the investment of your surplus. You aren't getting taxed a second time on the principle itself.

very well put, driftr. well put indeed.

[Savoir Faire-Demogague in NJ]

Feb 16, 2012 10:49:01 GMT -5 Driftr said:

Feb 16, 2012 9:19:30 GMT -5 Value Buy said:

I think that is when I realized how wrong it was for the Government to double tax me on money that I had previously paid my fair share on. Yes, I realize the 99 percenters do not understand this simple fact.

I used to feel that way. I no longer do.

You are not being taxed twice on the same money. You're being taxed on the income you receive from the investment of your surplus. You aren't getting taxed a second time on the principle itself.

Economically speaking this is a false statement.

[djAdvocate]

Feb 16, 2012 10:54:29 GMT -5 Savoir Faire-Demogague in NJ said:

Feb 16, 2012 10:49:01 GMT -5 Driftr said:

I used to feel that way. I no longer do.

You are not being taxed twice on the same money. You're being taxed on the income you receive from the investment of your surplus. You aren't getting taxed a second time on the principle itself.

Economically speaking this is a false statement.

how so?

[floridayankee]

Feb 16, 2012 10:37:22 GMT -5 djAdvocate said:

Feb 16, 2012 9:23:02 GMT -5 Savoir Faire-Demogague in NJ said:

I've arleady posted data from the St. Louis Federal reserve numerous times, that show consumer spending is above the levels just prior to the 2008 meltdown.

i didn't say anything about spending. i said revenues. i thought that was what YOU were talking about, SF. no?

the graph that FY posted is what i was talking about. revenues have fallen 30% since FY2000.

Taking the starting number at Y2K and end point and ignoring the middle is quite a misleading.

In that time, they percentage dropped from 20% to near 15%, rebounded to 17-18% and then started to tank near the beginning of the recession.

Looking at the graph for the last 60 years, we have wide ranging differences in employment levels, marginal tax rates, income levels, etc., even back in the good 'ole days of the 70+% tax rates. Despite these vastly different rates, (fed) revenue as a percentage of GDP has remained in a relatively narrow range. This tells me that there are many more factors influencing revenues than simply "income tax rates are too low."

[djAdvocate]

Feb 16, 2012 11:02:31 GMT -5 floridayankee said:

Feb 16, 2012 10:37:22 GMT -5 djAdvocate said:

i didn't say anything about spending. i said revenues. i thought that was what YOU were talking about, SF. no?

the graph that FY posted is what i was talking about. revenues have fallen 30% since FY2000.

Taking the starting number at Y2K and end point and ignoring the middle is quite a misleading.

In that time, they percentage dropped from 20% to near 15%, rebounded to 17-18% and then started to tank near the beginning of the recession.

Looking at the graph for the last 60 years, we have wide ranging differences in employment levels, marginal tax rates, income levels, etc., even back in the good 'ole days of the 70+% tax rates. Despite these vastly different rates, (fed) revenue as a percentage of GDP has remained in a relatively narrow range. This tells me that there are many more factors influencing revenues than simply "income tax rates are too low."

agreed. tax rates were historically low in 2000, yet revenue was at an all time high. i am not going to argue with that. if you review my comments on this thread, they mostly contest the dubious claim that current revenues are near historical norms. they are not. they are near post WW2 lows.

[floridayankee]

Feb 16, 2012 11:07:58 GMT -5 djAdvocate said:

agreed. tax rates were historically low in 2000, yet revenue was at an all time high. i am not going to argue with that. if you review my comments on this thread, they mostly contest the dubious claim that current revenues are near historical norms. they are not. they are near post WW2 lows.

I agree that they are not near the norm. The question is why? I think a large majority of the decrease is due to the recession. If you look at recession history, revenues typically take a hit, but not always. The steep decrease after Y2K is likely due in part to the tax cuts as well as decreased economic activity following the dot com bust and the 9/11 attacks.

Again, We've gone from top marginal rates of +90% in the 60's to whatever it is today and still, we've nearly held the 15-20% range. It's all a game and we're the pawns being played for votes.

[Driftr]

Employed as % population is a main contributor IMO.

2000 64.4%
2001 63.7%
2002 62.7%
2003 62.3%
2004 62.3%
2005 62.7%
2006 63.1%
2007 63.0%
2008 62.2%
2009 59.3%
2010 58.5%
bottom 58.2% Jun/Jul'11
2011 58.5%

[floridayankee]

Feb 16, 2012 11:33:36 GMT -5 Driftr said:

Employed as % population is a main contributor IMO.

2000 64.4%
2001 63.7%
2002 62.7%
2003 62.3%
2004 62.3%
2005 62.7%
2006 63.1%
2007 63.0%
2008 62.2%
2009 59.3%
2010 58.5%
bottom 58.2% Jun/Jul'11
2011 58.5%

No doubt. The fed's biggest source of revenue is income tax.

[skweet]

Feb 16, 2012 11:39:45 GMT -5 floridayankee said:

Feb 16, 2012 11:33:36 GMT -5 Driftr said:

Employed as % population is a main contributor IMO.

2000 64.4%
2001 63.7%
2002 62.7%
2003 62.3%
2004 62.3%
2005 62.7%
2006 63.1%
2007 63.0%
2008 62.2%
2009 59.3%
2010 58.5%
bottom 58.2% Jun/Jul'11
2011 58.5%

No doubt. The fed's biggest source of revenue is income tax.

But the newly unemployed were not the greatest payers of income tax. It is not as though the folks laid off in the recession were the great rainmakers for companies. They were typically the $100k and under crowd, that doesn't pay a great deal of their net income in taxes, and didn't have a great deal of net income to pay taxes on. The largest portion of income taxes comes from small business owners taking their corporate profits as a pass-through income taxed at their personal income level. The unemployment is a non issue on the revenue side, the corporate reductions in small business profit are the primary issue. The biggest problem of increasing taxes on the $250k + "rich" crowd, is that they are the folks determining the price of their products, of course the price becomes a function of COGS&Overhead + net income + taxes. The market determines the net income, so that doesn't change. The government determines the taxes so that increase price. The market of the inputs + the government determine the COGS, so those increase, as well. What ends up happening is the government raises the tax rates, and the consumer pays the price.

[Savoir Faire-Demogague in NJ]

But the newly unemployed were not the greatest payers of income tax. It is not as though the folks laid off in the recession were the great rainmakers for companies. They were typically the $100k and under crowd, that doesn't pay a great deal of their net income in taxes, and didn't have a great deal of net income to pay taxes on. The largest portion of income taxes comes from small business owners taking their corporate profits as a pass-through income taxed at their personal income level. The unemployment is a non issue on the revenue side, the corporate reductions in small business profit are the primary issue. The biggest problem of increasing taxes on the $250k + "rich" crowd, is that they are the folks determining the price of their products, of course the price becomes a function of COGS&Overhead + net income + taxes. The market determines the net income, so that doesn't change. The government determines the taxes so that increase price. The market of the inputs + the government determine the COGS, so those increase, as well. What ends up happening is the government raises the tax rates, and the consumer pays the price.

The top 10% pay roughly 70% of income taxes. That 10% cut off is around $80-90K, roughly estimated.
The financial sector is approximately 16% of the US economy, and that segment was in free fall.

[skweet]

"The top 10% pay roughly 70% of income taxes. That 10% cut off is around $80-90K, roughly estimated.
The financial sector is approximately 16% of the US economy, and that segment was in free fall. "

How much of that 70% was paid by the 10th%, 9th%,8th% etc. You will find that the great majority of that 70% is paid by those making over $250k, and the great majority of those making over $250k are small business owners.

[Deleted]

But the newly unemployed were not the greatest payers of income tax

There were a lot of unskilled real estate agents, mortgage brokers, and construction workers who were making bank in the housing boom and who are now unemployed or underemployed.

edited: bonnap made an interesting comment on YM the other day. She pointed out that it's possible there was a bubble in wages as well.

[djAdvocate]

Feb 16, 2012 13:44:53 GMT -5 skweet said:

"The top 10% pay roughly 70% of income taxes. That 10% cut off is around $80-90K, roughly estimated.
The financial sector is approximately 16% of the US economy, and that segment was in free fall. "

How much of that 70% was paid by the 10th%, 9th%,8th% etc. You will find that the great majority of that 70% is paid by those making over $250k, and the great majority of those making over $250k are small business owners.

BZZZZZZZZZZZZZZZZZZZZZT

wrong answer. a very small % of those making over $250k/year were "small business owners". over 90% of all small business owners net less than $250k.

[Deleted]

How do you define a small business owner?