Tuesday, July 13, 2004

I won't comment...
Just read this.

10 comments:

Anonymous said...

There's a key problem that, to my eyes, makes this article's claim nonsensical. Kerry is currently promising to lower taxes on the middle class and small businesses and raise taxes on people like himself. It is exactly these types of rich-only loopholes, for people and for large corporations, that Kerry has been railing against in his speeches.

Somehow, however, the article manages to construe the fact that Kerry and Edwards have been promising to raise taxes on themselves and lower taxes on the middle class to mean that they will do precisely the opposite.

The authors purport to supply evidence in the form of claims that Kerry and Edwards are taking advantage of the current loopholes provided for the rich. The implication seems to be that Kerry and Edwards, being in favor of higher taxes on the rich, should be voluntarily paying higher taxes already.

Unfortunately, that's a rather hollow claim, equivalent to saying that a wage-earner paying 30% should instead pay 35% if they think that's what taxes should be. In effect, the existence of major loopholes in the tax code sets the tax rate for the wealthiest Americans to much lower than that of the middle class. If they raise taxes on the rich, then Kerry and Edwards will end up paying significantly more money to the federal government.

So far as I can see, the argument the article makes actually reinforces the "two americas" message of Kerry and Edwards, and argues in their favor. Moreover, I tend to think highly of a person who wants to reform a system for the greater good, even if it negatively impacts himself.

Would you care to defend the article?

-Jake

RFTR said...

As I understand it, the article is pointing out that raising taxes on the "wealthy" is not merely raising taxes on people like Senators Kerry and Edwards. Their concept of "wealthy" includes a large slice of the middle class, who cannot afford the loopholes that these two are priveleged to have available. So what ends up happening is the tax hike has little effect on people of their stature, while the middle class people included do get a significantly higher rate. The middle class cuts are for the lower middle class, and that's great, but they're still screwing the middle and upper middle class.

Beth said...

So then you'd be in favor of making more tax brackets so we can shield the upper middle class (which, if they're making more than $200,000/yr makes them not so much middle class and actually top 3% of Americans) while hitting the uber-wealthy with higher rates and tighter loopholes?

sweet. i'm down.

RFTR said...

No, I said no such thing.

I think, to begin with, that no one should pay more than 30% of their income in taxes, TOTAL, between federal, state, and local.

I'd also rather that was down below 20%.

And I want to cut services across the board, except in defense. Still down?

Anonymous said...

A brief buzz over by the US Census Bureau tells a somewhat different story. The 2002 income data shows that the richest 5% of American households had a minimum income of $150,002.

Now, as it happens, Kerry is promising that 98% of Americans will receive a tax cut. That puts the impacted income even higher, to $200,000.Now, if you'd like to claim that a family making $200,000 is middle class, that's an entirely different problem. However, as currently presented, the Kerry tax plan will hit only the rich, leaving everybody up to a very generous notion of middle class at worst untouched.

-Jake

Beth said...

Nope, I'm still down for my thing, with the health care, education, and equal opportunities that come along with it.

But I would be down with shifting some percentage of federal income tax to state and local income taxes, especially to de-emphasize or kill the property tax.

Very Connecticut of you, though, to be so against the most progressive tax structure we've found.

RFTR said...

Jake, my question to you is, how much of that $150,000, allegedly to become $200,000, income is going to be taken by the various forms of government? 50%?
So, a two-child household with an income of $200,000 gets $100,000 after taxes. Take out $40,000 for the kid who's in college. Now we're at $60,000. Take out mortgage payments, car payments, food, gas, clothing. Suddenly, I wouldn't be calling a family that earns $200,000 a year "rich" anymore.

Anonymous said...

Man. you're living in a fantasy world if you think $200,000 per year isn't wealthy. It's not jet-setting filthy rich, but it's five times the median income. If $200,000 won't let you live the good life, how do you think the other 98% of us live? Again: raising taxes on the top 2% of earners is not raising taxes on the middle class.

-Jake

RFTR said...

Jake, my new question to you is: when did you become aliberal again?

Just because the median income is low does not prove that a higher income is wealthy. Maybe we ought to be thinking about letting everyone keep more money, instead of using the fact that the mediam people don't make enough to justify taking more from the people who do...

Anonymous said...

I'm not sure why you're asking when I became a liberal, and frankly am not sure whether you understand what the word means or merely wish to use it as a meaningless caricature. So before I give you a serious answer to that question, I'd ask you to verify that you're asking a non-rhetorical question.

Now, back to the question of whether $200,000 per year is middle class or not. I'm going to overestimate all the way through, here... A household making $200,000 per year with no deductions, no tax shelters, and the most punitive rates available, will pay $53,571 in federal taxes. Now, a famously punitive state like mine, Massachusetts, will take an additional 5.3% of your taxable income: $10,600. A nice, expensive single-family home in my city's hyperinflated housing market will runs about $500,000, adding $5,585 in property taxes. So after applying a maximal tax of approximately 35%, the family has about $130,000 left to spend.

Now, the big squeeze on the middle class at present is the fixed expenses you mentioned: mortgage, car payments and education, plus health care. A 30-year mortgage on that expensive house consumes $35,000 per year, and a brand new Ford Explorer will run you $6,800 per year. A really good family health plan will run $10,000 and the kid at an Ivy League college being paid entirely out of pocket with no savings consumes $35,000.

So after paying for really nice stuff with all the big fixed expenses, and without having taken a single tax deduction there's still more than $40,000 of annual income to blow on gas, food, toys and trips to Aruba. That's twice my annual pre-tax income, and I live pretty well, albeit somewhat more economically.

So, I suppose it's a question of what you think middle class means. If it's the ability to afford really nice everything brand new, and still have a big wad of cash to spare, then you can almost maybe stretch it up that high. A more realistic ceiling on the middle class is $100,000, at which point you take the blatantly obvious tax deductions, pick up some federal student loans, and only get to go to Aruba once a year. Oh, the horror.

Now the interesting thing here is that most of the post-tax income gets consumed by health, education, and real-estate. Real-estate is market driven, so changing people's cash on hand won't actually change it much. As for health care and education... aren't those the things that Kerry's planning to pay for with this tax hike on the wealthy? It appears that the middle class would get a pretty sweet deal under Kerry...