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The Real Tax Rate Conundrum
Despite the eloquence of our taxer-in-chief, the facts, as noted by Professor Antony Davies in this clip, are that whether you raise or lower taxes at the highest-marginal or average tax rate, the share of the GDP pie that government gets to take out of our pockets remains stubbornly flat at around 17-18%. It seems growing the pie may be a more attractive approach than raising taxes but then how would that play in an election year with below trend growth and stagnant income.
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he shoulda remained anon-y-mouse!
"Volunteers"
Look what's happening out in the streets
Got a revolution Got to revolution
Hey I'm dancing down the streets
Got a revolution Got to revolution
Ain't it amazing all the people I meet
Got a revolution Got to revolution
One generation got old
One generation got soul
This generation got no destination to hold
Pick up the cry
Hey now it's time for you and me
Got a revolution Got to revolution
Come on now we're marching to the sea
Got a revolution Got to revolution
Who will take it from you
We will and who are we
We are volunteers of America
You don't raise the tax rate. You inflate, inflate, inflate, and then tax revenues go up as you tax the @#!* out of those capital gains that results in no real gain in purchasing power.
This guy is truly "amateur hour". A real pro would talk up keeping rates the same and inflate asset prices and increase the take / extraction on each transaction. He's gonna ruin the gig running his yap.
Balance the budget? ROFL
The budget could be balanced tomorrow, and we would still have $16T in debt as well as who the funk really knows how much in unfunded liabilities. You think it matters? You think a 'balanced' budget would get the Country back 'on track'?? Considering the budget can't be balanced in the first place, I would suggest that we all stop worrying about. Collect as much PM as you can while you can and relax. The end is nigh; and right quick if you ask me!
It is truly sad that during the last 50 years, Democrats and Republicans alike have mostly ignored this sage advice from a famous Democrat.
Good stuff.
So many enemies, left and right. Cut taxes, control spending, fight corruption and racketering, get out of Nam.
No wonder the commission folded and proclaimed the dead guy did it.
Rick Santelli had a great piece today. He showed where if you taxed the "million dollar earners" a BILLION$$$ each, it wouldn't even pay the interest on the debt.
Spending less is our only hope. I wonder if ANYONE in the GOP will be able to SUCCESSFULLY be able to relate that message to the American voter? Or
Will they fall for obamas "fairness" doctrine.
As Rush reiterated today, if Clinton's budgets and surpluses were really as great as libs make them out to be, then let's go back to the 1996 budget. It's time to put up or shut up Dems.
Did you actually listen to that? The guy doesn't seem to have a clue how anything works.
Just heard him say that "full employment" will lead to higher profits.
WTF?
High unemployment is better for profits--you can drive down labor costs when there's fierce competition for jobs. "Profit" is most simply understood as the discrepancy between what it costs a company to produce a product or perform a service and the price they're able to charge for that product or service. You most effectively increase profit by reducing costs, because market price is determined by negotiation in which the seller and the buyer have potentially equal levels of power, whereas the labor market negotiation (currently) favors the employer over the employee.
JFK was just another idiot. He looked good, started a war, made good speeches. You could say the same of many of our recent presidents.
I thought everyone knew pie are squared....
NFLX breaking a 100
If taxes were designed to raise revenue for the operation of the government, this approach would make sense. However, since the purposes of the current income tax regime is to redistribute wages, this approach is dead in the water.
The purpose of income taxes is to fix the dollar in the domestic economy. Raising or lowering rates is just a side show to distract people from the anal inflation probe we all get to take up the derriere.
My question is: he talks about the top tax bracket rate but has the cut off for the top tax bracket always been the same (I think it is about 390k for a single person now)? Isn't the tax bracket system a whole lot more complicated than just the top tax bracket rate? Am I trying to distract myself?
Not sure how this lines up with your train of thought, but the actual purpose of the income tax is to pay the federal reserve REAL interest on money they magically poof into existence and loan to their thieving corruptocrat puppets in Con-gress.
There's a reason the Federal Reserve Act and the 16th Amendment were hellspawned into existence around the same time.
True, since the government can print/borrow whatever money it needs the sole purpose of taxation is to control and especially inhibit wage class mobility,
you don't want the people to get the notion that more work == higher standard of living after all we are all supposed to be equal no matter the effort right?
Hence taxation is a political tool primarily and not an economical,the government is not interested in prosperity(for you anyway) only in power and control
This too. I see regulations, fees, and taxes as a sorta Roundup for the field so only the Roundup ready crops can grow. Only the select who jump through the hoops, pay the right bribes, and have the right friends get to play.
The worldwide competitive wage rate is set by Foxconn (makes all AAPL products and employs millions) at $1.25/hr. Over time the $40+/hr union wages (and standard of living) in the West will decline and meet the rising wages (and living standards) in the East. The "Buffett tax plan" raises about $4 billion (assuming the rich don't leave the US). Thats 1 day of deficits in the USA. So Obama has a plan, maybe cut the deficit by 1/365. Yea thats going to work. Get ready for a decade of change. The subprime trillion dollar student aid waste is next up for some trimming.
Awesome. Just 'print' it.
Politicians want their cake and eat it
they grab more from productive peoples pockets and want the productive economy to rebound with green shoots ...say hello to being double-dumb
in Blighty we have the most preverse debate ever where public sector "austerity" is argued as "bad for the economy".. eh? ...the village idiot Govt is spending more than ever (there is zero austerity, it's a pig-faced lie) whilst increasing taxes (political thieving) left, right and centre
..and Govts (and central bwankers) wonder why growth is anemic ..you can't make this crap up!
+1, though Blighty has an own national currency that can be devalued in the most precise and helpful manner for the economy (at least if I read the anti-EUR articles correctly), so there should be no prob at all...
I once read that the overall tax burden on individuals during the British Industrial Revolution was about 12 percent in total, so if you ever wondered how all those wonderful stone buildings with marble interiors were built in Liverpool, Manchester and Bradford, there is your answer.
Our tax burden per average individual now is nearer 60 percent in total, and average folk are not living in bigger homes (in my area, most people live in homes that were built in the 19th century), nor eating better food, and many are just as sick and ill as those back in the 19th century, except the diseases and illnesses are different (obesity as opposed to, say, hunger, but it is all malnutrition at the end of the day) ... except now we don't have the public transport nor the civic amenities nor the community we had back then.
Sometimes, I wonder whether anything has actually improved apart from post-natal care and the decrease in infectious disease.
I wonder whether anything has actually improved apart from post-natal care and the decrease in infectious disease.
Not in any kind of *ethical* sense. The rich still run the world and work towards increasing control over resources; the poor are still just livestock.
BUT...life's a LOT easier for the poor in the industrialized nations than it used to be, and the rich today have the powers of gods compared to the rich of the pre-industrial period.
"BUT...life's a LOT easier for the poor in the industrialized nations than it used to be, and the rich today have the powers of gods compared to the rich of the pre-industrial period."
This must be credited to increased technological know-how, not to a better structuring of society. The wealth of knowledge created by economic science sits largely unused.
There are some endeavors which really do increase the welfare of everyone on Earth.
Those endeavors have absolutely nothing to do with chasing zeroes to add to your bank balance. That's why all the anger over money is such a sorry waste of time.
i.e. you don't understand economic calculation
To wit: that's what YOU think.
>Politicians ... grab more from productive peoples pockets and want the productive economy to rebound with green shoots ...say hello to being double-dumb
They seem smart to me.
They keep getting elected, after all.
Taxes are for chumps. Inflation is where the real money is at.
True dat.
Double True.
Exactly Doc. Taxes are a way to keep the people believing that they have a say in the system.
Nevermind the fact that these same people have seen not only their future but also their past gains through productivity sucked away by this monster.
The growth meme sickens me almost as much as the phoney election year tripe about God, country and restoring the constitution.
pods
I would suggest that with more invasive data collection, sophisticated statistical methods and a paradigm shift in the philosophy of taxation, the 18% figure can be exceeded. Since the targets of this new methodology are not Obama supporters, expect BOHICA after the election.
I do not favor the use of these techniques. All I am saying is that the post WWII era ended on 9/11. Do not look to the history of the post-WWII era for comfort. Of any kind. Don't snooze. This time it is different.
They certainly extract more than 17-18% from my veins.
Booga booga. GDP is a fictitious invention. You cannot say the government is 18% of the GDP with a straight face. The only number that matters is the summed income of all Americans less taxes and mandated spending. That comes to about $4 trillion. That is just about what the government budget is. And what about state and local taxes?
GDP is an imaginary number, the government controls at least 50% of the nations Free Cash Flow and regulates the rest of it minus the black market, what freedom ?
ok now that you figured out federal taxes, move over to state taxes, county taxes, town taxes, sales taxes , school taxes and property taxes.....i am sure at the end of this your pie will show it is not possible to LEGALLY make a living and have enough left over to pay your bills
some observations for the kenyan:
you stated in your speech yesterday that warren buffet's secretary makes "around 60,000 a year and pays 30% income tax, while warren buffet pays only 15%." it is impossible for this to happen because of two things:
1) the top marginal tax rate for someone making 60,000 a year is around 13%. it's impossible to pay 30% in this income bracket.
2) warren buffet pays zero income tax, because he hasn't earned a salary since the early 1990s. he makes all of his money via capital gains investments. so, anyting his secretary pays in would be more than what he pays.
please stop being a douche bag.
Did you forget the Social Security, Medicare, FICA, gasoline, road, telephone, property, excise, sales, telecom, energy, and AMT taxes for the Secretary?
Only talking personal federal income taxes. Evaluating all taxes known to man in one bucket is almost impossible.
But if you want to include all taxes --- then for calculating a comparison with Buffet's taxes you have to include his share of corporate taxes paid by the corporation before he could get the dividend or have any profit from which to create capital gains (the ole double taxation thing -- taxed first at the corporate level and then again upon receipt at the individual level) as well as the Social Security and Medicare taxes paid by the corporation. Not to mention the excise tax on jet fuel for his personal jet -- which is a lot! And there are others....
Warren is a hypocritical fraud -- if he really wanted to pay more in taxes he could just send the check. It is tax deductible to boot. But he just likes being BHO's poster boy.
If you make $60, 000 as single taxpayer you would pay 25% tax at anything over $34,501. Yes people making over 35,000 are rich?
Stop being a duche bag and for the 8+ you got, majority of readers here are as STUPIP as a piece of granite.
hey math genius, even if you add 25% on everything over $34,501, it's still mathmatically impossible to pay 30% of your income in tax if you make $60,000 per year.
also, ss, medi, sales tax, etc. are not "income tax."
free tip: never go full reatrd if you can't do basic 5th grade math.
To pay for ongoing baby-boomer public retirements local governments have been boosting taxes and fees. Some by 100%.
Even with all these icreases local governments are getting farther and father in the hole. So they raise taxes and fees again.
Put in speed cameras, more tickets, enforcinging more laws to generate revenue.
In the meantime public retirees get COLA for their pensions and free healthcare. It won't stop until the public demands an end to the unrealistic promises made to public workers and pensioneers. It's a financial black hole.
The problem for US .gov: they spend like Sweden (yeah, as a portion of GDP government spending is at the same level in our countries) but collect a measly 18%, less than half of what ours collects.
Either start taxing like a socialist country or stop spending like one. It´s that easy.
awwww... ugly decisions, ugly decisions
let's stick to what you want and blame the other for not keeping up it's part, that's much easier, isn't it? ;-)
by the way, does this 18% rule apply to Sweden, too?
Not really following but as an answer to your last question I can say no. There is absolutley no limits to what the Swedish government feel they can tax.
oh, yes, I know, I know - Sweden is not exactly a tax haven, isn't it? ;-)
what I mean is that I remember reading that the "state" part of the Swedish GDP was between 40% and 50% for three generations
in the video the prof is somehow implying that it's impossible to extract "for their own good" more than 18% from the US taxpayers
Sweden is actually sort of a tax haven. You can get away with paying 0.75% of your total portfolio instead of 30% capital gains tax. The catch is that you void all capital loss deductions on your tax returns.
And the thought that 18% is some magical ceiling is BS of course. Just smack on a federal sales tax of 25%, an employers tax...sorry, fee of 36% of gross salaries and a few other select Swedish specialities and the government will soon be gobbling up 45-50% of GDP. How big that GDP will be is another question... These tax levels were introduced gradually over the boom years 1965-1990 in Sweden so the economy adapted.
To be quite honest, this is not the time for any tax hikes at all, anywhere, regardless of what you think of taxes.
Well, there was me thinking ' the Prof described that simply, in words of one syllable, that even a cretin could understand", but then along came swedish chef....
dont give up your day job mucker,
try watching the clip about tax yields again, Get some help on it. Good luck! You're smart enough to be a politician.......
Amen to that, but .gov is now officially friend-less. Even the moonbats -- generally a gubmint 'loving' people -- have grown apathetic, the rest of the story we already know. Government will from now on be a simple PR tool to manage the collapse with monotone rhetoric and numbingly reassuring lullabies for the US of Infants.
There is a bright side though: AAPL $1000!!
inflation is the real tax Americans should be talking about... & of course using a legitimate measure of inflation rather than this game that has gone of for a while... INFLATION is a TAX & it COMPOUNDS year after year!!!
Most people simply do not understand wealth transfer via inflaton.
Plus the govt has assured us that inflation is not an issue.
Tax rates going up or down is easier to digest.
Enough of this nonsense. Get back to your television set.
Barack Obama -- transforming the working class into the welfare class, one family at a time!
Vote Emperor Obama, Panderer President!
More soft lies to keep believing things will be okay.
Grow the pie. ROFLMAO. We have not had any real growth (outside of debt) in like 30 or 40 years.
More theater.
Grow the pie. ROFLMAO.+1
So a very good description of Hauser's Law you can share with your friends.
I would like to see zerohedge write an article showing the amount of taxes that could be collected from the thousands of people who do cash only transactions daily!
It’s Tax Time: Time to Occupy the IRS
Every year I trek down to a nondescript office building near Wall Street with a bag full of receipts and a belly full of anxiety.
http://www.secretnews-compact.com/index.php?option=com_content&view=article&id=501:its-tax-time-time-to-occupy-the-irs&catid=1:latest-news&Itemid=50
Clearly we need more taxes so that Eric Holder can have the resources necessary to whimsically go after who he deems a threat... /sarc
~~~
AG vows thorough review in Trayvon Martin case
http://news.yahoo.com/ag-vows-thorough-review-trayvon-martin-case-134923315.html
Considering EH's spotless record on non-biased enforcement of the Constitution and the laws of these United States, I am at a loss to explain why George Zimmerman would want to disappear from the public eye. It is of course helpful that the MSM has tried the case in the news so that will make EH's job that much easier to do. I dare say that race relations under this Administration have improved remarkably as well as complete lack of the useless old class-warfare gambit previously employed in politics to divide the country based on tax bills and income alone. How refreshing...
/sarc
Another PROPAGANDA Video form learnliberty.org. You guys ar being played for sheeple.
You are NOT going to increase the size of the pie because you can't increase the size of credit economy. This video is a ploy like Paul Ryan(R) tax proposal to lower taxes on the rich. The propagandist in this video fails to mention the simple fact that tax brackets don't matter, if tax exemptions and tax credits grow at a faster rate than the economic pie.
So even though, today's top bracket is set at 35%, the real tax rate for taxpayers in this bracket is less than 18%.
Furthermore the 17-18% of GDP that government collects in revenues is not MERE COINCIDENCE. This is in fact a benchmark that tax policy makers strive to maintain--self imposed phony limitation.
+1, intriguing and interesting, sounds it could be explained as an 18% multigenerational "tax benchmark conspiracy"?
can we say, OFFSHORE TAX HAVENS?.. Can we say subsidies for GIANT corporations that have the same rights as people, but have limited legal liability? Those poor poor rich people, let's all feel so so so sorry for them, booooo hooooo hooooo
A little off the topic but...
How about Barbara Boxer's (CA) proposed new law that will prevent anyone with an unpaid tax bill of $50k or more from leaving the USSA?!!!!!!!
I can't believe the MSM hasn't been reporting on this one (wait a sec, of course I can).
In fact, I happened on a MSM site where a commenter complained that a prior 90+ comments on the bill had been mysteriously deleted by the site. Interesting.
I'm thinking this is yet another violation of our rights (4th amendment?)...those violations keep coming and coming.
Well, at least the U.S. leads the world in the production of 'Weapons of Mass Destruction'. As usual, I will refer you to "The Permanent War Economy" by Prof. Seymour Mellman of Columbia. It's the 600++ billion$$$ gorilla in the room that nobody will talk about. Why is that? Idiots rule, er uhh, the Military Industrial Comples Rules...The EMPIRE is run by blood sucking vampire zombies....
It seems growing the pie may be a more attractive approach than raising taxes but then how would that play in an election year with below trend growth and stagnant income.
So, putting the government on a diet and serving them a smaller slice of pie instead is ...ah...off the table?
If we grow the pie, what are the chances that the government remains happy with it's 17-18% size slice?
If they can't get more that that from GDP do you think they'll throw up their hands and call it a day...or go after private assets directly?
Thought that this might be appropriate:
Whether it's government, or the wealthy, the fortunes of both are dependent on a vibrant economy, so if either are sucking more then necessary out of the rest of the economy, it is economically negative. Yes, the government does a lot of wasteful stuff, often at the behest of those who might profit from it, but anyone who is taking more out of the economy then they are actually putting back in, is part of the problem. No matter how much they may pay their publicists to claim otherwise.
You figured it out! Unfortunately that's about 1% of the readership on this forum. A black athlete that makes over $100 million during his career and 10 years later files for bankruptcy is a contributor--no leechfuck. On the other hand, Bill Gates who took tens of billions of stock options and equity valued at terminal valuation(Multiple of P/E) in compensation is a parasitic economic unit because, he'll never contribute to what he is taking out in his lifetime. In fact, his wealth is Ponzi wealth valued at multiples of what he could make from MS earnings.
Yes, Gates is a robber baron, but microsoft did get the ball rolling and he is channeling some of that money back into the economy in presumably productive ways. My main beef is with those simply trying to multiply enormous wealth by compounding the size of their bank accounts, as an end unto itself. As my father used to put it, you can't starve a profit. There has to be some overall equilibrium between appreciating assets and precipitating benefits. Otherwise there are just enormous storm clouds of excess(ponzi) wealth hanging over an otherwise parched economy. Since most people then can't afford to buy much, there is less demand, so supply and investment in supply, shrinks. So those with the wealth can only lend it back out to create demand, charging interest and further squeezing the process. It's just plain lousy and destructive economics. When those idiot bankers crash the monetary system and find they have no way to pay their security contractors.... Say, "Hello Mexico."
"So those with the wealth can only lend it back out to create demand, charging interest and further squeezing the process."
The easy fix there is to not borrow the money they're lending. Less consumption (particularly debt financed consumption by consumption addicted borrowers) is the answer. But I know that is barbaric -- everyone deserves a more comfortable lifestyle than they can actually afford.
The tax revenue as a percentage of GDP varies widely by country, according to the OECD. If you count state and local taxes, the US hovers around 25-28%, well below places like Canada (31%), France (43%), and Finland (42%) using 2010 data. So clearly it's possible to capture more, does anyone know why this is?
To be clear, I'm not advocating higher tax rates, I'm just curious about the structure of some of these tax regimes that allow them to capture a higher proportion of GDP in tax revenues.
Here's the linkto the table:
http://www.oecd-ilibrary.org/docserver/download/fulltext/191500021e1t003.pdf?expires=1334163714&id=id&accname=freeContent&checksum=5DE0D61FC03B6217CC8E192593149C7F
ain't goin' happen
taxes should be raised to balance the budget once we figure out how to do accounting on massive government....debt financing is a much more painful and insidious way of covering the deficit for it eventually becomes a cancer with its implaccable interest rate.....zirp is a fantasy and fraud...
Total shit analysis. Typical of an academic.
What "pie" is this moron talking about growing? The almighty GDP, where head-up-your-ass government deficit spending counts as growth. All's you have to do is ignore the fact that you're growing the debt six times faster than actual incomes!
Well, that and then you have to rig the debt market to make it look like someone's actually willing to finance this insanity...and prop up asset bubbles (houses, stocks).
Thanks Professor!
If I were his teacher I would give him a "B" for preparation and delivery. but I would let him know he didn't get an "A" because his conclusion was simplistic. Like it is that easy or something magic. They grew the economy real good with the housing bubble. How did that work out? Our economy has always grown through phases of expansion and contraction. So here is simply another "Lets cancel the contraction phase" argument. If Krugman is his professor, he probably got an A.
(I know he is a professor but it is hard to resist a little poke. Jim Rogers said it best, (about someone else {he who must not be named} " He is a college professor and he taught at Princeton, and he thinks he is smarter than the rest of us but he isn't)
This relationship worked fine until the G in the GDP = C + I + G equation started including a large component due to borrowing.
The proof, known as Hauser's law, is borne out by the Brookings Inst here: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205
And this also proves that the politics of envy prevails in the Obammy philosophy. People can & do vote with their feet and change habits to fit the system. It is not a wonder that high tax Europe can't get out of its own way and has higher unemployment or that every high tax socialist system fails.
So what do we want? A system that the smart can navigate thru to avoid taxes or one where government policy encourages growth to increase the base?
The proof, known as Hauser's law, is borne out by the Brookings Inst here: http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205
And this also proves that the politics of envy prevails in the Obammy philosophy. People can & do vote with their feet and change habits to fit the system. It is not a wonder that high tax Europe can't get out of its own way and has higher unemployment or that every high tax socialist system fails.
So what do we want? A system that the smart can navigate thru to avoid taxes or one where government policy encourages growth to increase the base?
It also goes by "Sooner or later you run out of other people's money'. (Margaret Thatcher).
Also explains why crime in Detroit has gone down - "Sooner or later there is nothing left to steal".
I don't have any problems with paying taxes. It's how they are Allocated that bothers me<>