America is ungovernable

Clocker said:
I heard an interesting statistic on CNBC this morning, the top 1% of earners in the US have an effective tax rate of 18% while 51% of Americans pay no taxes at all.
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I hear the above quote (50% pay no tax) all the time from many different sources.

1) Now is that 50% of the all U.S. Citizens (50% of 312M) or 50% of tax payers (50% of say 150-200M)???

2) Is that 50% don't pay any taxes or 50% don't have to pay taxes IN ADDITION to the deductions that come out of every check?


I made $33,500 last year, which is well below the median of around 50k. After federal and state tax refunds and the $400 tax credit I got for "low income" people I still paid:

Federal Tax: 7.98% (of my gross income)
AZ State: 2.13%
Social Sec: 6.08%
Medicare: 1.42%
==============
Total: 17.61%

...lets recap...So I'm definitely in the bottom 50% of wage earners and I paid more than $0 in taxes so I'm confused.
 
His numbers weren't quite right. About 47% of federal tax payers pay no federal income tax. That doesn't consider state, social security, or medicare. The AGI for the middle is about $33k. Keep in mind that the statistic isn't that the bottom 47% of federal tax payers pay federal income tax.
 
Stereodude said:
His numbers weren't quite right. About 47% of federal tax payers pay no federal income tax. That doesn't consider state, social security, or medicare. The AGI for the middle is about $33k. Keep in mind that the statistic isn't that the bottom 47% of federal tax payers pay federal income tax.
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http://www.irs.gov/taxstats/article/0,,id=102886,00.html Looks like my AGI is close to the median.

Thanks for the explanation but I'm still confused. :scratch: The AGI on my 1040A was $32.6k and my taxable income was $23.2k. Subtracting my Fed refund from my Fed withholding I payed 2.7k in Fed tax which is 8.3% of my AGI.

What is the 47% number? The bottom 47% pay State, SocSec and Medicare tax but pay no fed tax? If the bottom half --which I'm a part of, or very close to-- pay no Fed Tax how come I did? Is there a sizable amount of people getting "refund" checks from the gov, but had NO withholding, that are skewing the bottom 50% pay nothing statistic?

If people are going to toss around the simple phrase: "50% of people pay no Fed Tax" it should have a simple explanation?

Maybe I'm just dumb.
 
I'm sure Merc could send you the phone numbers of a few clueless teen mothers. Might be harder to find one with kids who could plausibly come from you though.
 
The kids are one thing, and having a decent CPA is another. I know corps are willing to pay accountants and lawyers $0.99 to save $1 in taxes, and I must admit that I don't skimp on the professional services myself, paying on average $500/year to save probably $3-5k/year over doing it myself.

I consider all the money going to the preparation and avoidance of taxes to be pure waste, an inefficiency in the system. Not only are people and businesses spending loads of money, but that money isn't making it to the government. It also punishes those at the bottom, who can't afford to play this silly game.
 
Warren Buffett's opinion.

Similar to what they're doing in Italy, which is increasing taxes by 5% for people earning over 100,000 euros and 10% for those over 200,000 euros. And this despite the Prime Minister previously pledging to never do so.
 
That isn't what it's about, is it? Even as the richest man, his contribution is nothing compared to the rest of the Billionaires. He wants the system fixed.
 
There is also something to be said for wanting the system fixed and also not wanting to be at a competitive disadvantage. Calling him a hypocrite is simplastic.
 
He intentionally invests his money in ways to avoid paying taxes and then complains about the fact that the system lets him dodge taxes. Uh... No one forced him to invest his money in tax shelters like tax free municipal bonds. If he really felt that it was unfair that he can dodge taxes he could I don't know do something crazy like stop dodging them...

It's like a bank robber complaining that it's not fair that he can rob banks and not get caught. Then lobbying for tougher penalties for bank robbers and better security for banks all the while he refuses to stop robbing banks.
 
ddrueding said:
He disagrees with you, so obviously that must be the case.
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Slow down there ace... I didn't say he's a coward because he disagrees with me. I called him a coward because he clearly doesn't act on his beliefs. I'm not the hypocrite, he is. But, I'm told my belief that he's a hypocrite is simplistic. I disagree. If his beliefs were so strong he'd hold to them, but he doesn't.

You guys can try to spin this all you want, but you can't argue the facts. He's advocating changing the system he's busy abusing. When he stops abusing the system and leads by example I'll give his complaints some consideration. Until then he can get bent.
 
Just a guess, but his belief is probably that the system is broken, not that he should single-handedly fix the debt problem.

You don't fix a massive budget imbalance by cutting a check, you do it by balancing the budget. You do that by spending the same amount of money as you collect.

That he is in a unique situation to call out his rich friends for their tax shenanigans helps his cause. He, and everyone else in that income bracket, pay a smaller percentage of their income to the government than you or I. Doesn't that bother you?
 
Stereodude said:
You guys can try to spin this all you want, but you can't argue the facts. He's advocating changing the system he's busy abusing. When he stops abusing the system and leads by example I'll give his complaints some consideration. Until then he can get bent.
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'Fraid not. If he were to stop making noise on this issue it would disappear from the news. No-one else making that kind of money has the balls to step up and point out the gross inequities of the system.
 
My guess is that he probably donates more to charity than he would pay in taxes if the system were as 'fair' as he thinks it should be....so I won't knock him for not practicing what he preaches.
 
Clocker said:
My guess is that he probably donates more to charity than he would pay in taxes if the system were as 'fair' as he thinks it should be....so I won't knock him for not practicing what he preaches.
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My thoughts as well. He mentions that "Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here." He probably doesn't wish to give any more money to government until he can be sure it will be spent responsibly. If you just throw more money at government now without serious reform, history has shown it will be spent on yet more useless pork barrel projects, not on deficit reduction. Better to focus spending on what benefits the nation overall, not what might benefit the constituents of one Congressperson at the expense of everyone else.
 
jtr1962 said:
He probably doesn't wish to give any more money to government until he can be sure it will be spent responsibly. If you just throw more money at government now without serious reform, history has shown it will be spent on yet more useless pork barrel projects, not on deficit reduction.
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Then why should we raise taxes to give the gov't more money again? :scratch:

You just enumerated the reason why we shouldn't give them one cent more and why we shouldn't let them raise taxes.

Gov't spending is out of control. No matter how much money they take, they'll never have enough. They're spending several times more money than they were when Clinton was President (when everything was great). Why don't we roll back spending levels to the late 1990's?
 
Clocker said:
My guess is that he probably donates more to charity than he would pay in taxes if the system were as 'fair' as he thinks it should be....so I won't knock him for not practicing what he preaches.
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Then he's a fool if he thinks the gov't is more deserving of his money than private charity.
 
Here's an interesting article: Crumbling Infrastructure Symbolizes U.S. Economy

I agree with the basic premise of the article-namely that economic recovery is impossible if our infrastructure continues to crumble. Sure, it's absolutely a good idea to cut the kinds of government spending which have a questionable return on investment, but infrastructure spending generally more than pays for itself in the long run. Sadly, I don't expect infrastructure spending to reach reasonable levels any time soon. Even when the economy was better, we were loathe to spend much on infrastructure because it's not "sexy" or high-profile like other spending programs.
 
time said:
Warren Buffett's opinion.

Similar to what they're doing in Italy, which is increasing taxes by 5% for people earning over 100,000 euros and 10% for those over 200,000 euros. And this despite the Prime Minister previously pledging to never do so.
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It seems Warren Buffet isn't so good at math.
even taxing the nation’s millionaires at 50 percent – even eliminating loopholes and deductions – would only reduce the deficit by 8 percent and the national debt by 1 percent.
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In fact, the only way for the government to solve its fiscal issues with revenue would be to confiscate every single dollar from every single American making $200,000 or more per year...
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ddrueding said:
How about questioning the source as well?
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So, what specific problem do you have with the source? If your sole problem is a known hack and Keynesian idiot at the house organ of the DNC (New York Times) not liking them I'd consider that a resume enhancement.

I do like how you can't even discuss the merits of the piece. The bottom line is that there isn't enough "income" of the rich to tax to compensate for the out of control gov't spending. Warren Buffet is clueless.
 
I'm not qualified to argue the numbers, and neither are you. The best we can do is get expert opinions. You brought some, and I'm disputing their credibility. That is the advantage to Warren Buffet making this argument; it is clearly not in his best interest to lie.

Also, if there is any score keeping to be made in the world of finance, the smartest would have to be net worth. Saying that the richest man in the world doesn't know anything about money is like saying Usain Bolt doesn't know how to run.
 
CougTek said:
If I compare his economic resume to yours, I'd say that you're in no position to make a judgement like you did.
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So if Warren Buffet tells you that CDO's and CDS's are good investments you'd take his advice simply because he has a good economic resume? ;-)
 
ddrueding said:
I'm not qualified to argue the numbers, and neither are you. The best we can do is get expert opinions. You brought some, and I'm disputing their credibility.
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Oh please. What a cop out excuse. It's common sense. You're not qualified to argue the numbers? You don't see to have any problem judging Warren Buffet to be credible do you?
That is the advantage to Warren Buffet making this argument; it is clearly not in his best interest to lie.
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I didn't say he was lying. I suggested he's a misguided hypocrite who's wrong.
Also, if there is any score keeping to be made in the world of finance, the smartest would have to be net worth. Saying that the richest man in the world doesn't know anything about money is like saying Usain Bolt doesn't know how to run.
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I didn't say he didn't know anything about money. Just because he's got a massive net worth doesn't make him right. Besides, I don't see Warren Buffet running any of his business in the manner the federal gov't is run under. When he adopts the same business strategies as the federal gov't, specifically spending more than he makes indefinitely on black hole wastes of money that are proven failures everywhere they're tried, we'll talk. Until then...
 
Very weak, Stereodude.
Stereodude said:
Oh please. What a cop out excuse. It's common sense. You're not qualified to argue the numbers? You don't see to have any problem judging Warren Buffet to be credible do you?
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It isn't simple. If we wanted to do simple, common sense math we could look at the income distribution and to the math ourselves. Of course, that doesn't work because many at the top hide their earning elsewhere. This is a complicated matter because those with interests to protect are obfuscating the numbers.
Stereodude said:
I didn't say he was lying. I suggested he's a misguided hypocrite who's wrong.
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Wrong? It's not like he doesn't have an army of accountants and analysts, not to mention better data than you or I to take into consideration. In addition to the fact that this has been one of the major causes that he devotes his (not inconsiderable) resources towards. That would make him an authority on the subject in my opinion.
Stereodude said:
I didn't say he didn't know anything about money. Just because he's got a massive net worth doesn't make him right. Besides, I don't see Warren Buffet running any of his business in the manner the federal gov't is run under. When he adopts the same business strategies as the federal gov't, specifically spending more than he makes indefinitely on black hole wastes of money that are proven failures everywhere they're tried, we'll talk. Until then...
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Having a massive net worth doesn't make you right. Earning the largest net worth in the world yourself makes you an authority in matters of finance. I don't see him complimenting the state of government, just wanting to plug some holes in the tax system. Considering he is lobbying for change, equating him with the status quo seems odd.
 
ddrueding said:
Very weak, Stereodude.
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Really, common sense elementary school math is weak?
It isn't simple.
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Wrong, it's super simple. The US can't spend more than you make indefinitely. The idea that by 2020 the world will spend 1/5th of it's GDP buying US debt to finance our out of control spending is laughable. It's not going to happen.
If we wanted to do simple, common sense math we could look at the income distribution and to the math ourselves.
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You're arguing from a faulty premise. There's no one or no part of the gov't distributing money, income or wealth. The gov't doesn't create wealth or income. It doesn't hand it out to the well off. The gov't is a parasite on the economy, not the engine of the economy. The well off didn't steal the money from the poor. As such the whole idea that the income and wealth gap between people isn't fair is utterly and completely bogus. But, class warfare plays pretty well.
Wrong? It's not like he doesn't have an army of accountants and analysts, not to mention better data than you or I to take into consideration.
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Where the evidence of this better data and an army of accountant?
In addition to the fact that this has been one of the major causes that he devotes his (not inconsiderable) resources towards. That would make him an authority on the subject in my opinion.
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You can't tax & spend your way out of debt. The idea that such a result is possible is preposterous regardless of how many accountants you have. Buffet acts like we've got a small cut and just need a bandaid (slight tweaks to the tax code) to make it all better when we've lost a limb and have serious bleeding going on.
Having a massive net worth doesn't make you right. Earning the largest net worth in the world yourself makes you an authority in matters of finance. I don't see him complimenting the state of government, just wanting to plug some holes in the tax system. Considering he is lobbying for change, equating him with the status quo seems odd.
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You're completely missing the point. The changes he's lobbying for are like slowly using a 5 gallon bucket to empty a swimming pool in a torrential downpour and thinking it'll be empty in no time.
 
The gov't doesn't create wealth or income. It doesn't hand it out to the well off. The gov't is a parasite on the economy, not the engine of the economy. The well off didn't steal the money from the poor. As such the whole idea that the income and wealth gap between people isn't fair is utterly and completely bogus. But, class warfare plays pretty well.
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+1 on that.
 
You're broadening the argument. Your original statement in this line was that taxing the rich more couldn't put a dent in the deficit. This is a simple math problem were one to have the numbers. You are now arguing fiscal policy, which is a much broader argument where you and I are more in agreement.
 
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