Taxes and Wealth Distribution

Glenn Quagmire

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Apr 30, 2012
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"Since the Reagan administration, upward wealth distribution has accelerated in the United States resulting in increasing inequality of both income and wealth.5 The growth of inequality since the 1980s is particularly shocking because, from the turn of the century and until the Reagan administration, the United States and Western Europe ex- perienced small but stable declines in wealth and income inequality.6 Now, three decades after the Reagan Revolution, the United States enjoys both growing poverty and a shrinking middle class.7"

http://taxprof.typepad.com/files/howard-article-3.pdf

From another forum post:

"If we don't switch to VAT or sales tax or flat tax:

The 1% have about 45% of the wealth I the US. I think to be "fair"they should pay about 45% of the taxes.

Loopholes in the tax code are NOT available to all...not even close. The richer you are the more loopholes there are..and many of these "legal"loopholes used to be illegal.

One example is the AMT. AMT starts at around $65K, depending on a host of factors, and ends at $400K. I typically pay a lot of AMT, while the richest pay nothing. That is crap. Why do I legally have to pay an extra tax that the wealthiest avoid? Another one is Social Security tax....the ceiling is about $100K...above that you pay no SS tax on your income...while at the same time, if we don't change our SS system out will bankrupt the country.

Our whole system is rigged so that the top 1%, and even moreso the top 0.1%, get special rules so they can increase their wealth by taking more from the rest of us. THAT is our WELFARE system....keep the wealth flowing from the bottom to the top. We (the rest of us) are stupid and don't deserve wealth...we should be happy to give more to the top. I don't agree, but I am stupid, as evidenced by my lack of wealth, so my opinion is invalid."

Citizens United has only worsened the problem. Politicians must appease the richest lobby to get into office. They fight any change to the current system. I read some on here complain of "welfare queens" and generational "parasites". Look no further to some of our richest corporations and industries for examples of generational welfare.

View attachment 10360

"The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% -- that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) -- it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read "Is Our Tax System Helping Us Create Wealth?").

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It's also worth noting that only the first $106,800 of a person's income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone -- not just those making less than $106,800 -- paid the Social Security tax on their full incomes."

You can read the full study here: "Is Our Tax System Helping Us Create Wealth?"

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

http://www2.ucsc.edu/whorulesamerica/power/is_our_tax_system_helping_us_create_wealth.pdf
 

MCI transplant

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Jun 4, 2003
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Tax reform is definitely needed. But the term "wealth distribution"  sounds too much like it comes straight out of Mao's little red hand book for my likes!----- In fact it probably makes a lot of people nerviness.
 

southwind

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Agree. There is no way anything will happen using the socialist term "Wealth redistribution"!
 
Again, imo, the Fair Tax, is the way to go !
 
http://fairtax.org/
 
The FairTax is a national sales tax that treats every person equally and
allows American businesses to thrive, while generating the same tax revenue
as the current four-million-word-plus word tax code. Under the FairTax, every
person living in the United States pays a sales tax on purchases of new goods and services, excluding necessities due to the prebate. The FairTax rate after necessities is 23% and equal to the lowest current income tax bracket (15%) combined with employee
payroll taxes (7.65%), both of which will be eliminated.
 
Oh, and you only pay taxes on new goods!
 

Kev3188

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Oct 5, 2003
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Right in the middle.
southwind said:
Oh, and you only pay taxes on new goods!
I wonder if that wouldn't have the unintended consequence of things like manufacturing taking a huge hit?

On the one hand reduce/reuse/recycle is obviously good. On the other, one could argue that people won't bother buying a new car when they can just get a used one tax-free.
 

MCI transplant

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Jun 4, 2003
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Another thing to consider, it would free up the IRS to focus all it's attention on obamacare exclusively!------- I haven't figured out if that would be a good thing, or not! -------- I guess it would be alright if they determined that  you are a Liberal. But you'd be in deep sh@#t if they found out you are a Conservative!!!
 

PHXConx

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May 13, 2008
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first thing we need to do before reform the tax code is reform the dollar and repeal the fed...
 
101 years in existence and the value of the dollar has lost 97% of its ground 
 
if we dont take care of inflation of the dollar, tax reform is pointles because if your money is worth less... they have to raise taxes to break even
 
or....
 
every 30 years or so you need to have a massive influx of new tax payers... you think its a coincedence that after the baby boom declined, we had the amnesty in the 80s, and now, 30 years later we are talking the same thing?  wanna fix immigration? fix the dollar..  
 

southwind

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Kev3188 said:
I wonder if that wouldn't have the unintended consequence of things like manufacturing taking a huge hit?

On the one hand reduce/reuse/recycle is obviously good. On the other, one could argue that people won't bother buying a new car when they can just get a used one tax-free.
 
Which encourages lower prices on new goods.
 

southwind

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MCI transplant said:
Another thing to consider, it would free up the IRS to focus all it's attention on obamacare exclusively!------- I haven't figured out if that would be a good thing, or not! -------- I guess it would be alright if they determined that  you are a Liberal. But you'd be in deep sh@#t if they found out you are a Conservative!!!
Actually the IRS peeps would keep their jobs, in another capacity.
Instead of worrying about whether or not citizens were paying "Their fair share", they would be put in charge of managing the prebate checks every citizen would be receiving, monthly.
 
[youtube]http://www.youtube.com/watch?v=QRpWir4eDrs[youtube]
 

delldude

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Oct 29, 2002
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Glenn Quagmire said:
"Since the Reagan administration, upward wealth distribution has accelerated in the United States resulting in increasing inequality of both income and wealth.5 The growth of inequality since the 1980s is particularly shocking because, from the turn of the century and until the Reagan administration, the United States and Western Europe ex- perienced small but stable declines in wealth and income inequality.6 Now, three decades after the Reagan Revolution, the United States enjoys both growing poverty and a shrinking middle class.7"

http://taxprof.typepad.com/files/howard-article-3.pdf

From another forum post:

"If we don't switch to VAT or sales tax or flat tax:

The 1% have about 45% of the wealth I the US. I think to be "fair"they should pay about 45% of the taxes.

Loopholes in the tax code are NOT available to all...not even close. The richer you are the more loopholes there are..and many of these "legal"loopholes used to be illegal.

One example is the AMT. AMT starts at around $65K, depending on a host of factors, and ends at $400K. I typically pay a lot of AMT, while the richest pay nothing. That is crap. Why do I legally have to pay an extra tax that the wealthiest avoid? Another one is Social Security tax....the ceiling is about $100K...above that you pay no SS tax on your income...while at the same time, if we don't change our SS system out will bankrupt the country.

Our whole system is rigged so that the top 1%, and even moreso the top 0.1%, get special rules so they can increase their wealth by taking more from the rest of us. THAT is our WELFARE system....keep the wealth flowing from the bottom to the top. We (the rest of us) are stupid and don't deserve wealth...we should be happy to give more to the top. I don't agree, but I am stupid, as evidenced by my lack of wealth, so my opinion is invalid."

Citizens United has only worsened the problem. Politicians must appease the richest lobby to get into office. They fight any change to the current system. I read some on here complain of "welfare queens" and generational "parasites". Look no further to some of our richest corporations and industries for examples of generational welfare.

attachicon.gif
image.jpg

"The rising concentration of income can be seen in a special New York Times analysis by David Cay Johnston of an Internal Revenue Service report on income in 2004. Although overall income had grown by 27% since 1979, 33% of the gains went to the top 1%. Meanwhile, the bottom 60% were making less: about 95 cents for each dollar they made in 1979. The next 20% - those between the 60th and 80th rungs of the income ladder -- made $1.02 for each dollar they earned in 1979. Furthermore, Johnston concludes that only the top 5% made significant gains ($1.53 for each 1979 dollar). Most amazing of all, the top 0.1% -- that's one-tenth of one percent -- had more combined pre-tax income than the poorest 120 million people (Johnston, 2006).

But the increase in what is going to the few at the top did not level off, even with all that. As of 2007, income inequality in the United States was at an all-time high for the past 95 years, with the top 0.01% -- that's one-hundredth of one percent -- receiving 6% of all U.S. wages, which is double what it was for that tiny slice in 2000; the top 10% received 49.7%, the highest since 1917 (Saez, 2009). However, in an analysis of 2008 tax returns for the top 0.2% -- that is, those whose income tax returns reported $1,000,000 or more in income (mostly from individuals, but nearly a third from couples) -- it was found that they received 13% of all income, down slightly from 16.1% in 2007 due to the decline in payoffs from financial assets (Norris, 2010).

And the rate of increase is even higher for the very richest of the rich: the top 400 income earners in the United States. According to another analysis by Johnston (2010a), the average income of the top 400 tripled during the Clinton Administration and doubled during the first seven years of the Bush Administration. So by 2007, the top 400 averaged $344.8 million per person, up 31% from an average of $263.3 million just one year earlier. (For another recent revealing study by Johnston, read "Is Our Tax System Helping Us Create Wealth?").

How are these huge gains possible for the top 400? It's due to cuts in the tax rates on capital gains and dividends, which were down to a mere 15% in 2007 thanks to the tax cuts proposed by the Bush Administration and passed by Congress in 2003. Since almost 75% of the income for the top 400 comes from capital gains and dividends, it's not hard to see why tax cuts on income sources available to only a tiny percent of Americans mattered greatly for the high-earning few. Overall, the effective tax rate on high incomes fell by 7% during the Clinton presidency and 6% in the Bush era, so the top 400 had a tax rate of 20% or less in 2007, far lower than the marginal tax rate of 35% that the highest income earners (over $372,650) supposedly pay. It's also worth noting that only the first $106,800 of a person's income is taxed for Social Security purposes (as of 2010), so it would clearly be a boon to the Social Security Fund if everyone -- not just those making less than $106,800 -- paid the Social Security tax on their full incomes."

You can read the full study here: "Is Our Tax System Helping Us Create Wealth?"

http://www2.ucsc.edu/whorulesamerica/power/wealth.html

http://www2.ucsc.edu/whorulesamerica/power/is_our_tax_system_helping_us_create_wealth.pdf
 
Your tax/wealth redistribution began around the time Social Security and a myriad of other lame programs began, not just Reagan.
 

Kev3188

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Oct 5, 2003
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Right in the middle.
southwind said:
 
Which encourages lower prices on new goods.
 
Okay, but that also puts downward pressure on wages, which dampens consumer demand, which brings us right back around to where we were just a couple of short years ago...
 
OP
Glenn Quagmire

Glenn Quagmire

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Apr 30, 2012
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delldude said:
Your tax/wealth redistribution began around the time Social Security and a myriad of other lame programs began, not just Reagan.
The thesis statement is worth repeating:

"Since the Reagan administration, upward wealth distribution has accelerated in the United States resulting in increasing inequality of both income and wealth. The growth of inequality since the 1980s is particularly shocking because, from the turn of the century and until the Reagan administration, the United States and Western Europe ex- perienced small but stable declines in wealth and income inequality. Now, three decades after the Reagan Revolution, the United States enjoys both growing poverty and a shrinking middle class."

To be fair, income inequality and wealth disparity are two distinct subject areas. They do not always share causal relationship.
 

La Li Lu Le Lo

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May 29, 2010
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PHXConx said:
first thing we need to do before reform the tax code is reform the dollar and repeal the fed...
 
101 years in existence and the value of the dollar has lost 97% of its ground 
 
if we dont take care of inflation of the dollar, tax reform is pointles because if your money is worth less... they have to raise taxes to break even
 
or....
 
every 30 years or so you need to have a massive influx of new tax payers... you think its a coincedence that after the baby boom declined, we had the amnesty in the 80s, and now, 30 years later we are talking the same thing?  wanna fix immigration? fix the dollar..  
That is why I have made the statement that the government is pushing for immigration because they need new blood to fund their ponzi scheme welfare scams.
 
OP
Glenn Quagmire

Glenn Quagmire

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La Li Lu Le Lo said:
That is why I have made the statement that the government is pushing for immigration because they need new blood to fund their ponzi scheme welfare scams.
La Li Lu Le Lo said:
Now immigrants come here (illegally) for a handout.
Which is it?

How would bringing in immigrants who, according to you, are here for a "handout", fund a "Ponzi scheme"?

You really need to pick a position and stick with it. Are they here for free stuff, or are they here to fund the "ponzi scheme"?

If it is the latter, then they are working and paying taxes. If it is the former, you agree with the original premise of the thesis.
 

southwind

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Kev3188 said:
 
Okay, but that also puts downward pressure on wages, which dampens consumer demand, which brings us right back around to where we were just a couple of short years ago...
People buy used goods now and I don't believe people will be swayed any more than now, about buying new vs. used, considering they will be bringing home their entire paycheck ! In fact, I think they will lean more towards new.
Not paying taxes on used goods, is just one of the ways to simplify the tax system.
 
You decide how much tax you want to pay........do I want to pay 0 tax, buy used, do I want to pay some tax, buy the latest $15,000 rice burner or do I want everyone to notice me coming down the street and pay a lot of tax, buy the $50,000 CVT!
 

MCI transplant

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Jun 4, 2003
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Social Security was supposed to go into a trust that was not supposed to be used for anything except that which it was intended.------- But guess what? Both parties have been using it as a cash cow to fund all their pet projects, and the National debt, leaving nothing but a stack of worthless I.O.U.'s to fund future payments. It can also be argued that because of the thousands of aborted babies in the past years since WWII, that did not grow to become part of the work force, and contribute to Social Security, at a time when the mass of Baby Bomers are retiring, have played a negative role in the SS fund short fall!