This has been the Year of Percentages. It started off with the Occupy movement, which declared “we are the 99 percent,” as they railed against the 1 percent. Then, at a private fundraiser, Mitt Romney bad-mouthed the 47 percent who don’t pay federal income taxes. Then Romney lost to President Obama, who campaigned on a pledge to raise taxes on the top 2 percent — individuals earning more than $200,000 a year or couples earning more than $250,000 — while leaving the rest of us alone.
As the year draws to a close, Republicans are fighting that plan. Obama is at an impasse. If they fail to reach a deal, taxes will automatically go up for everyone. Which brings me to perhaps the most important — and least talked about — group of all: the 20 percent.
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we will all pay higher taxes, no other choice. Of course when the economy recovers, we could be here for a very long time, save your money.
50% don't pay any tax. That's a disgrace. How do we ever expect anything to get better when half free load?
That is simply not true -- that 50% are freeloaders -- and I am surprised anyone keeps parroting it. People may not be paying FEDERAL INCOME TAXES but that is only one part of the U.S. tax burden. If people have jobs, they are paying payroll taxes. They are paying sales taxes even if they don't have jobs. They may be paying state income taxes and real estate taxes. Heck, if they have cars, they are paying gasoline taxes.
There's a reason that your "20 percent" don't feel so rich in Massachusetts. That's because the cost of living is so much higher than elsewhere. In a state where the median income is over $80K - and the costs are there to match, taxing $100K earners puts another burden on areas with higher costs of living. Not saying that $100K is anything to shake a stick at... but around here, $100K doesn't make you rich. It makes you someone with enough income to do OK without any handouts from the government. And isn't that what we are trying to encourage?
Massachusetts median income is 64,000, not 80,000!
You're right... I meant to say "median family income" - which I meant to highlight because it highlights that two-income families are the ones who would be most likely to get caught in this... median family income is more than $81K in Mass. That's why I shouldn't comment on stories before 6am.
Muddying the waters with additional percentages of people to tax only makes clear thinking worse. Congressional Republicans are not even close to understanding their fellow citizen's lifestyles. They even think people making over $250,000 taxable income(what is left after taking out deductions) is a disincentive to investing or job growth. If a taxpayer has a taxable income of $300,000 then the extra $50,000 under the President's proposal pays a tax of $19500 instead of $17000 under present rates. For someone in this bracket this is hardly a make or break moment. It is less than 1% of the total taxable income. So let's stick with the present discussed percentages to demonstrate that there is no economic crisis or hardship to stymy growth. History tells us that proper taxation to pay government bills has occurred during our most prosperous periods. The only other percentage fact to play with is that 80% of the population must live very careful lives to survive. Only 25% of households make $85,000 or more. We do not have a tax problem or a spending problem. We have a living wage problem. Somehow the value of a livable life has not become part of mainstream American thought.
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you are both right
There is no advantage that I can see to Republicans striking any kind of deal prior to the first of the year. After we go "off the cliff" then they can come out with proposals to lower taxes on as many Americans as they can and they will give some small, small concession to Obama on raising rates on the very rich. That way, they will turn around and say that Obama is being stubborn and unreasonable if he doesn't sign. Like it was their idea all along. They get to frame the narrative in their own way. Politicians playing games with the American people. What else is new?
You don't seem to understand the situation. That's exactly what the Democrats should do. The rates rise automactically Jan. 1. Obama doesn't need any "small concession" from the Repubs. Then Obama offers to cut taxes for the lower 98% and the Repubs are even harder pressed to disagree, since now it is a tax cut.
I understand it perfectly well. I'm just saying you have to treat Republicans like babies because that's where they are right now. Absolute babies. When the Republican electorate sees a situation where Democrats are offering to lower taxes on almost everyone in the country and House Republicans are holding things up to specifically protect the one percent, well even a five-year-old can figure that out.
The whole system needs reform - both individual and corproate. The system is already too skewed to the top - that is unsustainable as is the liberal spending machine. What is lost a bit in this argument is the coming tax increases (real and pass thru) from PPACA.
Here is a good article w/ CBO numbers: http://online.wsj.com/article/SB10000872396390444873204577537250318931044.html
I am tired of the Dems class warfare and pay your fair share. That is BS.
Mind your language Begsy..
golf, I read your stuff (and there is a lot of it) but you seem to be always contridicting yourself ...."skewed to the top" and "dems class warfare pay yor fare share" Please either make up your mind, express yourself more clearly,or put less drivil here that the rest of us have to wade through.
and we are on the edge of another recession too - what then?
"Raising taxes on them would help a lot."
Farah, you dont know what you arte talking about.
The Federal deficit this past year was $1.1 trillion dollars. Obama's proposed tax rate increases for the top 1% promises additional re4venue of approximately $80 billion a year, unfortuantely a drop in ther bucket against a deficit 12 times as large. Obama's focus on this tac increase is just changing the subject form the spedning problem the Federal govenment has had for many years, which has gone into turbo mode under Obama.
$80 billion a year is noise. The Obama tax rate increase argument is noise. He still plans to run annual deficits of $ trillion dollars forever...or until the Chinese decide that the USA has become another Greece.
The Federal goivernment needs to cut its psending hard and big, knowck off a full trillion the "would help a lot".
Dear LifeLibertyPOH,
Many of the experts I spoke to say debt is not a problem in the shorter-term. Interest rates are at the lowest in our lifetime. Just from a business perspective, this is a great time to borrow money, if you can invest it in something that will pay down the road. But over time, let's say in a few years, or if Europe gets its act together and people stop wanting to buy US bonds, the debt issue will absolutely be a problem. Several people told me we need about 2 trillion over 10 years to address that. Obama's plan gets us to $1.6 trillion - much of the way there, but not enough. Somewhere down the line, people will have to agree to delay retirement, or take less money when they retire, for starters. That is just the reality of the math. That is also part of "paying our fair share" to keep the system alive. So when you talk about spending cuts, that is an important piece of it: each of us saving more for our own retirement, and taking less out of the system. And the ones who are most able to do that are those who make $200,000 a year now.
Farah
"Many of the experts I spoke to say debt is not a problem in the shorter-term. Interest rates are at the lowest in our lifetime..."
Sure, if by short term you mean a few months...but interest rates will be back up to 4-5% soon enoughm and annual deficits of $1 trillion eventually will bust even the US dollar.
All the hyped debt reduction schemes, like Obama's $1.6 trillion reduction that you quote, are not reductions in the debt, but in the expected INCREASE in that debt. Instead of having the debt increase $10 trillion over the next 10 years, Obama's plan reduces the INCREASE by $1.6 trillion, to only $8.4 trillion, given a planned debt level of about $25 trillion. Do the math, the interest on $25 trillion at 5% is $1.2 trillion. Where are we going to get that amont, just to stay in place, every year?
Answer: in10 years the next generation of politicans will tell babyboomers like me the government can't pay us our SS checks because our generation ran up so much debt, there's not money to spare after these interest payments and other base spending.
A good overview of the next 4 years and beyond: http://www.zerohedge.com/news/2012-12-04/bill-gross-latest-monthly-outlook-we-may-need-least-decade-healing
When was the last time you saw a politician make a decision based on what was best for the country, not what was best for their re-election prospects?
Obamacare taxes kicking in:
"To illustrate when the tax applies, the IRS offered an example of a taxpayer filing as a single individual who makes $180,000 in wage income plus $90,000 from investment income. The individual's modified adjusted gross income is $270,000.
The 3.8 percent tax applies to the $70,000, and the individual would pay $2,660 in surtaxes, the IRS said."
ahhh! The poor little upper middleclass guy is going to have to pay an extra $2,600. About 95% of the population would love to have that "problem."
Zerohedge:
You give speeches? Yeah, right.
How is it that our federal government runs such enormous deficits year after year when tax revenue consistently rises? Our government spends too much. And all this tax revenue funds a bloated military, ill-advised and immoral wars, the counterproductive war on drugs, absurd criminal prosecutions of individuals who pose no threat to us (i.e., Martha Stewart, Roger Clemens, John Edwards), and other law enforcement efforts that undermine our civil liberties. And despite the billions the government has confiscated from us to dispense to the poor in the form of entitlements, the poor remain mired in poverty. The government, in short, accomplishes little good with our tax dollars. As these entitlements explode in cost, we will find that we cannot tax our way out of these deficits. We've got to make substantial cuts to the budget -- military, entitlements, foreign aid, etc. -- or risk an eventual economic collapse, relegating us to third world status.
Agreed on military spending.
Most entitlement spending, however, is not spent on the poor, but rather everybody in the form or SS, Medicare and Medicaid (and no, Medicaid is not just for the poor. A huge chunk of it is spent on nursing home care after the elderly have spent down their assets and it makes sure their children don't go broke paying for it. And believe me, I know from personal experience, all but the wealthy would go broke as nursing home care now runs between $110,000 and $150,000 a year. How many readers here could afford that?)
Foreign aid is a pittance, less than 1% of our budget.
I also agree we are headed for third world status if we don't turn around a system that has been making the rich richer and the rest of us poorer for over 30 years now. To do that, we need: Major tax reform (see my letter above); a complete refocus of our military to only defending the homeland and drastically cutting its budget; a committment to building up our middleclass through investments in infrastructure and education; and labor and corporate law reform, to make it easier for unions in the private sector to organize and bargain, and to give more power to shareholders rather than boards of directors.
Just focusing on budget cuts will simply get us to Third World status even quicker.
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“But there’s a problem,” my friend said. “Most of the money in the country is still, thankfully, in hands of the people making between $100,000 to $300,000."
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yes there is a problem, this statement is simply not true.
The top 1% actually own over 90% of the nation's wealth.
Sure, if you are going to just keep this unfair tax system the way it is and only tax earned income higher, then you are going to have to hit up the people earning only $100,000. But why should they pay 39% or more while the Romney's among us pay only 14% and usually even lower (as would be revealed if Romney ever released his tax forms, which, of course, is why he never did).
We need to tax dividends and capital gains for those bringing in over say, $500,000, at the same rate as if it were earned income. And we need to add the SS and Medicare taxes to those as well. And we should consider a one-time wealth tax to really make a dent in the debt, which has been run up over the last 32 years thanks to all the tax cuts those wealthy elite got.
Where do you get you statistics about the top 1% owning 90% of the nation's wealth? My understanding is that 54% of the nation's money is in the hands of people making between $100,000 to $300,000. That is why it is called a middle class. The top 1% own about 35% of the nation's wealth. That is still a huge chunk for a group so small, but a far cry from 90%. For more information, check out this chart: http://www2.ucsc.edu/whorulesamerica/power/wealth.html
How about talking about fixing the most abusive of fundamental tax inequities while having this debate? Address carried interest. Many wage earners in the upper slice of the 1% have what are effectively bonuses for labor performed magically converted to capital gains taxed at 15% by calling them "carried interest". If most people understood this, they would be outraged. If we're going to raise rates on the wealthiest wage earners--let's make sure we don't have a substantial group of them getting massive breaks while milking everyone else.