Tax Burden

Who cares

Since most top earners get their income from capital gains and dividends, they get effectively lower tax rates than earners that get most of their income from salaries. And over the last few years, taxes on capital gains have been reduced substantially; if I recall correctly, the tax rate on capital gains is almost half of the highest tax rate on salary income.

They have mostly moved out of high cost states (see Tom Golisano) and filed in no-income tax states like Florida and Texas which effectively reduced their tax rates by 7-8% and the rest was because of the Bush tax cuts which took them down another 4-5%...

Of course all this is changing so pay back will be something fierce.....

A combination of what garelj and Pirot said, but mostly what Pirot said. Most of the nation's richest people get the bulk of their income from capital gains and interest income, which are taxed at a fraction of "wages, salaries, and tips", on which most of the rest of us are taxed.

I was absolutely livid the year that the Cheneys' effective tax rate on their 3 million dollars was only 9 percent, while mine (substantially less, of course) was taxed at an effective rate of 46%.

Matt you make no sense. Cneney's income was from either holding stock - the dividends or the appreciation based on the profit - where the company already paid income taxes to the government on their profits before paying shareholders, or on holding bonds which is taxed at income tax rates. You want double taxation?

is the corporate tax rate plus capital gains rate anything near the highest marginal personal income tax rate?

yes... http://www.taxfoundation.org/taxdata/show/2140.html

personal income brackets...

http://www.moneychimp.com/features/tax_brackets.htm

wouldn't that only be true for dividends? stock appreciation isn't realized until a sale, and that can have nothing to do with the profits of a company. look at our current stock market. many other kinds of capital appreciation taxation would involve no double taxation.

There's no double taxation: a corporation is one entity, and a shareholder is a second entity. Similarly, I'm one entity (so I pay taxes on my income), and Joe the Pizza Guy is another entity (so he pays taxes on the slice of Greek-style pizza with olives, artichoke hearts, feta, tomato slices and oregano that I buy from him with my money).

"double taxation" is another right-wing sleigh of hand from the people who brought you "death taxes" (in which money is taxed when it moves to one person, and then when it moves to a different person; except it's untaxed in 99.99.99% of the latter cases anyway).

also, a company can pay dividends via stock sales or debt. it isn't necessarily tied to profits. that would be a partnership.

This primarily a function of the private equity and hudge fund craze, where virtually all income was paid in the form of capital gains and dividends, taxed at 15%. Looking at the top 400 earners (however that was computed) also is pretty misleading. If you were sitting on a billion dollars and decided to invest only in triple tax free municipal bonds, you could have $30 million of tax free income.

thank you alan--true all that--like the pizza analogy, and the death tax propaganda has been hilarious--i continue to be stunned by the working class people i hear trumpetting the death tax line--when i explain the details to them and how wealthy (by working class standards) one has to be to pay any estate taxes, they are always shocked--rove does good work

thanks to globalization if you are mobile you win. easier for capital markets, not so easy yet for labor. that's why taxes on non mobile labor will end up being the highest when all is said and done. crazy? well, i think that might be coming, different tax rates on earned income depending on whether you are mobile or not. afterall, those mobile tend to be high earners, and it's better some revenue than 0.

check gordon's experiment on taxing foreign companies. it took less than a year for many europe's headquarters to be relocated to switzerland. it's not only money (who wouldn't prefer geneva to london???), but still, it's part of the equation. bottom line: if you can do tax arbitrage by being mobile, you are fine. avoid being stuck by all means necessary.

Easiest and most fair solution is to up capital gains.

"They have mostly moved out of high cost states (see Tom Golisano) and filed in no-income tax states like Florida and Texas"

Not necessarily true. New York and California have the largest number of billionaires.

http://newsmambo.blogspot.com/2007/05/21-top-cities-and-towns-with-most.html

"Easiest and most fair solution is to up capital gains."

Nope.

The easiest and most fair solution is to abolish the income tax altogether.

"The easiest and most fair solution is to abolish the income tax altogether."

And where is the govt. going to get it's money from genius? You sound like one of those crazy Ron Paul people.

" If you were sitting on a billion dollars and decided to invest only in triple tax free municipal bonds, you could have $30 million of tax free income."

And get tiny returns. You're paying for the tax freedom.

You're subsiudizing the goverment with your loan, taxing that would be a double whammy.

Government makes out either way.

Actually, if we were to abolish the income tax (and the entire IRS infrastructure that comes with it), we'd have only a 40% total reduction in federal revenue. Can you imagine our government surviving on a 40% less than it does today? Of course you can. You'd have to go all the way back to ... 1997.

It can be done. And giving nearly every working American an immediate 30% pay raise would do wonders for the economy.

"Easiest and most fair solution is to up capital gains."

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for whom? those that should pay more just shift their portfolio to cayman island and end up paying less than before. the fair thing is to be realistic and think before getting populist (like gordon did in uk and failed miserably). anyway, who am i kidding? those are going up, but don't think you are gonna collect a whole lot from them, so the earned income rates will have to increase later too. higher taxes in hte future is a certainty (imho).

"Actually, if we were to abolish the income tax (and the entire IRS infrastructure that comes with it), we'd have only a 40% total reduction in federal revenue. Can you imagine our government surviving on a 40% less than it does today? Of course you can. You'd have to go all the way back to ... 1997."

Well put.

"those that should pay more just shift their portfolio to cayman island and end up paying less than before. "

Thats a myth made up by politicians and poor people.

I've tried all that stuff, and it doesn't work. The legal stuff is gone. The illegal stuff, well, Switzerland just got its ass kicked and now the americans who used that will, too. The foreign debit card scams are being unravelled as well.

It 'aint easy being rich.

"And giving nearly every working American an immediate 30% pay raise would do wonders for the economy."

i agree, but remember that hte typical family of 4 in USA barely pays income taxes. it's the payroll tax what they pay (along with property taxes and sales tax). giving a 1 year break in hte payroll tax will do the trick, cause it doesn't benefit those with high incomes much, but it's the tax that the poor pay the most.

I just saw the stat... the bottom 60% pays 1% of the taxes. Thats mainly because the bottom 20% or so pays negative taxes (with the tax credit, the government pays them... and we're not talking about social services, I mean checks beyond welfare)

Tyranny of the majority -- Ugh!

"I just saw the stat... the bottom 60% pays 1% of the taxes. Thats mainly because the bottom 20% or so pays negative taxes (with the tax credit, the government pays them... and we're not talking about social services, I mean checks beyond welfare)"

most "middle class" families don't pay income taxes either. it's not only the poor.

"Not necessarily true. New York and California have the largest number of billionaires."

I guess the fact that they have 2 of the largest populations has nothing to do with it...

How about you go find out a percentage instead of number and then get back to me

New Jersey Has Highest Percentage of Millionaire Residents

http://www.reuters.com/article/pressRelease/idUS178767+09-Jan-2008+BW20080109

"This is afunction of three factors: high levels of education; access to top paying jobs in finance and technology; and a stock market that has advanced over the past four years," notes Thompson.

Nothing like using pre-bubble data

Since when is January 2008 considered "pre bubble"?

$1 million net worth? Seriously.

I guess in Jersey that's considered rich.

$1 million is a lot more than what you have bubble boy.

Alpo, as long as you live in New Jersey, you have no leg to stand on. Come talk to me when you can afford Manhattan.

assuming you actually live in Manhattan nyc10022 and are not full of sh*t, I find it shocking that you do not know that there are no embassies in NYC (embassies are always in a country's capitol, DUH!) and you do not know the difference between "Manhattan" and "New York County."

OTNYC, don't worry about it. This will never affect you.

"Phoenix Marketing International Research Shows East Coast Dominating 2007 Rankings as Hawaii Falls from First to Fourth and Alaska Cracks the Top Ten"

The_President - Seriously...do you read the articles you quote

I'm actually getting dumber having this conversation

Trying to compare capital gains/dividend tax rates with income tax rates shows a complete lack of understanding of how those streams are created and the risks involved, not to mention the double taxation.