yet again: taxes suck

[rbw1966]

At the federal, state, and local level combined, America spends more for K-12 education than it does for defense. And if you count spending on higher education, vocational training, special education, and other educational programs, the amount the nation spends is more than twice the entire defense budget .

*

 

. . . At every level of government combined, America has spent more than $10 trillion on K-12 education over the last century. . . .

*

 

 

Given the fact that the Defense Department budget for FY 2004 is 401.7 BILLION dollars, I find it excruciatingly hard to believe that the US has spent more on education than defense over the last century.

[j_b]

(Ah now here he agress that the trend is positive! )

 

i certainly don't. i said your trend is positive which as explained previously demonstrate the poor use of regression analysis.

 

 

(I add that the data I have trended is all federal taxes. In the priod 79 80 and 81 the top marginal rate was 70 % - if memory serves. But I would add that I have made a assessment of only the data presented in the CBO report. J_B's continued reference to periods of data outside of this period are not addressing my trend assertion and certainly obscurantist in nature.)

 

you used a limited data set, misrepresented its meaning, and drew unwarranted conclusions. just answer these questions: is the tax rate of the upper one-percentile (and all quintiles) in 2001 less than it was in 1979? answer: yes. is your best fit regression totally conditioned by the 1980's data points that are anomalous for the last 50 years? answer: yes they occrurred when reagan slashed taxes for the upper bracket. a first since the new deal. what long term trend in tax rate would clearly emerge if prior and subsequent years were included in the analysis? answer: negative of course. Has the upper percentile seen the largest decrease in tax rate since 1979? answer: yes. yet, despite all the evidence, this is what you said: "the progresssive nature of our tax system has in fact increased". when in fact it has clearly decreased.

 

Note he claims that my simple regression is not appropriate yet he examines two data points and in essence fits a line between them to explain trends intax rates - I say this is far more inaapropriate than a ny effort to consider the data points in between.)

 

looking at the beginning and end points of the sampling is not inappropriate since we know that the trend between the 2 end points (negative) is in agreement with the long term trend (since 2nd world war). which cannot be said for your linear best fit of a truncated sample.

 

You insist on comparing the top 1% to the quintiles however that is probably not a valid comparison. As a math guy you should know that. But then again there you go cherry picking.

 

of course i insist on considering what happened to the tax rate of the upper 1% that earns a full 1/3 of all income in america today. anyone with a little math sense and/or honesty would realize that a) 1/3 of all income is not cherry-picking and b)ignoring the taxation history of 1/3 of the national income while concluding that the tax system is more progressive is a flawed exercise. to me it is pretty clear you have no idea what you are looking at; but of course, in true form, this does not prevent you from drawing self-serving conclusions.

Self serving conclusions? Heck I even posted some projections from JEC on periods after 2001 that seem to show a different trend. Self serving ? NO.

 

nice dodge but pretty transparent. you want to exclude the one-percentile trend from your analysis even though the upper one percent earned 1/3 of all income in america in 2001. it is obviously self-serving since the one-percentile trend clearly shows they got the largest decrease in tax rate of all americans which implies: a less progressive tax system.

[willstrickland]

If you want a look at long term trends in the marginal tax rates take a gander at Stocks for the Long Run - Siegel. There is a section devoted to taxes with some telling charts, particularly WRT marginal rates.

 

Or LOOK AT THIS TABLE: http://www.taxpolicycenter.org/TaxFacts/TFDB/Content/PDF/toprate_historical.PDF

Edited April 9, 2004 by willstrickland

[j_b]

Given the fact that the Defense Department budget for FY 2004 is 401.7 BILLION dollars, I find it excruciatingly hard to believe that the US has spent more on education than defense over the last century.

 

i agree. it should also be noted that the declared defense budget does not include nuclear expenditures of a military nature by d.o.e., much military foreign aid, homeland security expenditure, etc ... actual defense budget is said to be around 600 billion $.

[willstrickland]

On the flip-side j_b, the DOD budget also covers thing such as the civil works projects that the Army Corps of Engineers does...flood control projects, channel dredging, etc, as well as Corps recreation facilities (many reservoirs with rec areas are administered by the Corp), and Wetlands protection/permitting activites through the Corps Regulatory Branch, Veterans social services (undefunded, admmittedly), and many other things that aren't directly related to defense.

 

Your point is well taken, but your bias is clear.

 

BTW, Did you examine the table I linked above? It supports your tax argument.

[Peter_Puget]

J_B - You are of course simply being silly again but anyway...

 

In 2001 estimates for total spending on education in the US were approx. $700 billion.

 

I wonder how you would include GI bill expense related to education. A defered defense expense? Would you expense the cost in the years earned?

[j_b]

will: yes i did look at it. thanks. i could not find data to back it up (even though it's a well known fact). do you think pp will continue claiming our tax system is more and more progressive?

 

sorry to belabor the point but isn't it ironic to note that the major reason pp gets a positive trending linear fit only for the upper quintile is because reagan mostly decreased the tax rate for the upper quintile.

[Peter_Puget]

will: yes i did look at it. thanks. i could not find data to back it up (even though it's a well known fact). do you think pp will continue claiming our tax system is more and more progressive?

 

sorry to belabor the point but isn't it ironic to note that the major reason pp gets a positive trending linear fit only for the upper quintile is because reagan mostly decreased the tax rate for the upper quintile.

 

Egads you guys crack me up...J_B at this point is saying in essence isn't it ironic that PP is right! By the way Will the schedule I have been referencing is effective not marginal and includes taxes other than FIT.

[willstrickland]

Don't lump me in with j_b Pete. I think you're both being disingenous

[j_b]

Egads you guys crack me up...J_B at this point is saying in essence isn't it ironic that PP is right!

 

once again, it appears your delusion impairs your reading comprehension. the irony resides in your using reagan mostly lowering taxes for the upper brackets only to pretend that only the upper bracket has a positive trend. is there something you understand in the above?

[j_b]

Don't lump me in with j_b Pete. I think you're both being disingenous

 

this argument is obviously getting pretty old at this stage but i'd like to hear why you think i am being desingenuous.

[willstrickland]

I think you both argue from a set-point of view and are unwilling to accept any evidence to the contrary.

 

j_b, I provided the marginal table because it APPEARS to show that the wealthy are paying much less in taxes. However, this is certainly debatable and marginal rates on income are only a part of the burden. PPs original link supports the assertion that the burden in the top earners has increased since 1979, and further information at the site I linked supports that is is higher since 1955 as well...although the 1955 data is lacking in breadth.

 

However, although I think PPs data is sound, I believe it misrepresents the situation. I've said before and I reiterate: The wealthy are extremely savy (or hire people who are) with respect to tax shelters and avoiding taxes in general. In that respect, the data such as that he provided will never present a true picture of the tax burden.

 

So I think you're both taking untenable positions. But if you didn't, we'd have nothing to argue about eh?

[j_b]

PPs original link supports the assertion that the burden in the top earners has increased since 1979

 

have the top earners received the greatest decrease in tax rate since 1979? yes, so how could their tax burden have increased?

 

but whatever. this conversation defies logic. i am done here.

[willstrickland]

Ok j_b, let's look at the Top 1%...you seem to love to focus on this group. You claim that "the upper one percent earned 1/3 of all income in america in 2001"

 

From PPs link for 2001:

Share of Pretax Income Top 1%: 14.8%

Share of Total Federal Federal Tax Liabilities Top 1%: 22.7%

 

Kinda sinks your argument j_b. On the other hand, the share of income of the Top 1% has increased more or less steadily from 1979 to 2001 from 9.1% to 14.8%.

 

 

If you want to approach it from a trends perspective, the Share of Fed Tax Liabilities (top 1%) has increased from 15.4 to 22.7, or 7.3% on an income share increase of 5.7%.

 

Easy conclusions: Fewer people are earning a big chunk of the pie, but they are paying a greater share of taxes as well.

 

Again, I don't buy that they are carrying more than their share of the burden(due to sheltering), but your arguments don't hold water either.

[Peter_Puget]

Let's talk employment and the election. One thing is certain, the vested interests (which includes both political party establishments) have no interest in raising issues that might awaken the U.S. working class from the deep sleep into which it has fallen and thus invite the class struggle from below. Hence every effort will be made by the powers that be to ensure that the real nature of the employment problem in our country continues to be swept under the rug. The job debate that is building up in the context of the jobless recovery and current election fight is thus likely to be kept within very narrow limits by representatives of both parties. The Democrats will blame it on the Bush administration. The Bush administration will project huge employment increases in the future arising from its tax cuts—coming into play after an enormous lag. Our responsibility in these circumstances is clear: to reject all such opportunistic responses and to connect these problems to their root causes and to the evolution of the structural crisis.

Edited April 9, 2004 by Peter_Puget

[j_b]

"In 1979, the share of the nation’s after-tax income flowing to the top one percent of the population was less than half the share received by the bottom 40 percent of the population. But in 2000, the share of income received by the top one percent exceeded that of the bottom 40 percent. As a result, the 2.8 million people who made up the top one percent of the population received more after-tax income in 2000 than did the 110 million Americans in the bottom 40 percent of the population."

 

 

"Among the top one percent of taxpayers, the federal tax rate was much lower in 1989 than in 1979, and then rose part of the way back between 1989 and 2000. Still, in 2000, the average tax rate for this group was 3.8 percentage points below its 1979 level. This drop in the average tax rate for the top one percent of households between 1979 and 2000 reduced the average tax bill for this high-income group by about $50,000 per household in 2000.[4] The percentage-point decline in the federal tax rate for the top one percent of households exceeded the decline for all other income groups."

 

http://www.cbpp.org/9-23-03tax.htm

[Peter_Puget]

"Among the top one percent of taxpayers, the federal tax rate was much lower in 1989 than in 1979, and then rose part of the way back between 1989 and 2000. Still, in 2000, the average tax rate for this group was 3.8 percentage points below its 1979 level. This drop in the average tax rate for the top one percent of households between 1979 and 2000 reduced the average tax bill for this high-income group by about $50,000 per household in 2000.[4] The percentage-point decline in the federal tax rate for the top one percent of households exceeded the decline for all other income groups."

 

Mr Math of course presents no analysis of his own which is a good thing as the "minutia" when he does reveals sloppiness in his understanding/argumentation. Here notice how % pts are being discussed not %. Anyway since J_B himself brought up the minutia part I thought it appropriate to point this out.

 

Secondly, notice the highlight in the quote. Slowly ever so slowly J_B is recognizing that I was correct and the trend for the 79-01 was of increased progressivity. Something he at first denied and then ignored by attempting to enlarge the timeline. I suggest those interested should play with the data themselves.

 

Well at least he is stubborn.

 

PP

[j_b]

wtf? are you always this clueless?

 

"The percentage-point decline in the federal tax rate for the top one percent of households exceeded the decline for all other income groups"

 

btw i came up with my own observations and only found the link above 30minutes ago. lo-and-behold they arrived at the same conclusion i did: the upper 1% (who, collectively, earn as much as the bottom 40% of americans) saw the greatest decrease in tax rate between 1979 and 2001 which implies a less progressive system in 2001 than in 1979. now if you have evidence to refute the above please share but don't attempt to distort what i say.

[j_b]

Ok j_b, let's look at the Top 1%...you seem to love to focus on this group. You claim that "the upper one percent earned 1/3 of all income in america in 2001"

 

ok i mispoke. i meant collectively earns as much as the bottom 1/3 (actually 40%). would you dismiss the earnings of the bottom 40% of americans to discuss the evolution of the tax system in america? obviously not. so why would you not specifically consider the one percent that earns as much as the bottom 40%?

 

From PPs link for 2001:

Share of Pretax Income Top 1%: 14.8%

Share of Total Federal Federal Tax Liabilities Top 1%: 22.7%

 

Kinda sinks your argument j_b. On the other hand, the share of income of the Top 1% has increased more or less steadily from 1979 to 2001 from 9.1% to 14.8%.

 

 

If you want to approach it from a trends perspective, the Share of Fed Tax Liabilities (top 1%) has increased from 15.4 to 22.7, or 7.3% on an income share increase of 5.7%.

 

Easy conclusions: Fewer people are earning a big chunk of the pie, but they are paying a greater share of taxes as well.

 

it does not sink my argument. on the contrary it makes it stronger, because even though they pay a greater fraction of absolute tax revenues, their tax rate is still decreasing at a faster pace than anybody else. which of course points further to growing income inequalities.

[willstrickland]

j_b, you want to play with rates instead of revenue percent...fine, there is some merit in that view so let's investigate:

 

The Total RATE for the Top 1% declined by 4% vs. 2.6% for the lowest quintile. A discrepancy in the rate decrease between the bottom and the top equal to 1.4% That is the essence of your argument, but let's go farther -

 

A particularly telling set numbers is the Effective Excise Tax Rates. While the Top 1%'s rate decreased by 0.2%, the lowest quintile increased by 0.8%. This yields a net difference of 1%. Let's keep in mind that excise taxes are largely voluntary (alcohol & tobacco).

 

So we're down to a 0.4% advantage for the Top 1% in the decline of rate. Let's continue:

 

1.4% of the discrepancy in rate change between the Top 1%

and the lowest quintile can be attributed to the Social Insurance rate changes. Considering that the Top 1% are capped on what they receive in payout from SS and, as far as I know, are not capped on what they pay in....one might argue that the difference is greater than the 0.4% remaining.

 

Your argument is not holding up very well.

 

If you look purely at Individual Income Tax rate changes the Top 1% rate INCREASED by 2.3% while the bottom quintile DECREASED by 5.6%.

 

Enlighten me please j_b.

[j_b]

A particularly telling set numbers is the Effective Excise Tax Rates. While the Top 1%'s rate decreased by 0.2%, the lowest quintile increased by 0.8%. This yields a net difference of 1%. Let's keep in mind that excise taxes are largely voluntary (alcohol & tobacco).

 

it is indeed particularly telling but first let's not forget that excise tax on gasoline is greater than alcohol and tobacco combined (or are you suggesting that the lowest quintile should not drive, smoke, drink, take airplanes, etc ...?). it is telling because it shows that more and more of the income of the lowest quintile is taken away by notoriously regressive taxation. especially since state excise taxes are not accounted for in these calculations.

 

1.4% of the discrepancy in rate change between the Top 1%

and the lowest quintile can be attributed to the Social Insurance rate changes. Considering that the Top 1% are capped on what they receive in payout from SS and, as far as I know, are not capped on what they pay in....one might argue that the difference is greater than the 0.4% remaining.

 

Your argument is not holding up very well.

 

 

 

If you look purely at Individual Income Tax rate changes the Top 1% rate INCREASED by 2.3% while the bottom quintile DECREASED by 5.6%.

 

Enlighten me please j_b.

 

are you know disagreeing with the cbo data?

 

let me quote johnston :

"The figures Piketty and Saez used were pretax incomes. But changes in the tax system had vastly expanded the ability of the megarich to save while those making less than $72,000 had their ability to save stripped away by rising Social Security taxes. In 1970, the top income tax bracket was 70 percent. By 2000 it had fallen to 39.6 percent-and it is now just 35 percent. Over those same years, however, the maximum Social Security soared from $327 to $4,724, figures that double if one counts the employer contribution.

 

Internal Revenue Service reports show that from 1973 to 2000, when the Democrats were mostly in control of Congress, Social Security and Medicare taxes grew 82 percent faster than incomes. Because Social Security taxes applied only to the first $76,200 of wages in 2000 (and lesser amounts in previous years), this rising burden fell mostly on the middle class and the upper middle class.

 

The rich got a tax break beginning when their wages passed the maximum subject to Social Security. On dollars above the Social Security ceiling an individual pays 6.2 percent less tax because Social Security is no longer deducted from paychecks. Employers get the same tax break. For the rich, the top 1.3 million households, the Social Security tax was inconsequential.

 

The tax rate on capital gains, the source of more than half of income for the super rich, was 28 percent starting in 1987, fell to 20 percent in 1998 and then was lowered again in 2003 to 15 percent.

 

Over the last three decades of the twentieth century the average income grew modestly, but the share of earnings going to income and Social Security taxes rose. At the same time the super rich saw their incomes skyrocket and, because their tax rates fell, they kept an even higher percentage than before.

 

In addition, the rates at which state and local governments levied sales, property and income taxes all rose in those last three decades, eating into incomes. Those taxes tend to be regressive; that is, they tend to hit harder the lower one's income."

 

johnston nyt article

[willstrickland]

I've said many times j_b, I don't think any of the numbers accurately reflect the situation, I'm just stirring the pot.

 

The CBO includes the employers contributions as taxes paid by the individual (if you are self-employed you are well aware of this)...so the break would be 12.4% by their standards. That said, consider this: the average historical annual return from the stock market is right around 10.5%, call it 7% accounting for inflation. The maximum an individual would pay into the SS system in 2003 would be 12.4% of the first $87,000, or $10,788. Using a 7% rate of return, it would take just over 10 years to double the principal.

 

The maximum one could receive in SS payments 2003 was $20,892. Given the lag time between when you start paying in and when you start receiving we are being robbed blind by SS. Let's say you start working at age 25, and retire at 65. The money you've put in on an annual basis could have multiplied 4x. You could be drawing out 4x what you paid in and then some if you take life expectancy into account.

 

Everyone is getting ripped off, but who's really getting screwed? I say the rich. Consider these social security stat:

 

If you were to turn 65 in 2003 and you’ve hit the maximum amount subject to Social Security for your full life, you would receive $1,721 per month in benefits.

 

A low-earning worker, on the other hand, at age 65 could expect to receive $701 per month in Social Security benefits and an average worker approximately $1,158 per month.

 

If you are self-employed, you are paying 15.3 percent on your total income up to $87,000. The Medicare portion (1.45 percent or 2.90 percent if you are self-employed) has no limit as long as it is earned income. Source: Desert Sun

 

Now how many rich folks do you know who use medicare?

 

FWIW, I'm a flat tax proponent. I think the money used to administer our current ridiculously complicated tax system is a waste of funds. I wonder how much we could cut taxes if we simplified the tax structure enough to cut the IRS down to 1/10 it's present budget. I haven't looked at the numbers to see if this is even feasible and I know the Tax Attorneys/CPA/HR Block lobby would never let this happen, but it sounds good and sounds fair.

 

Actually, I'd prefer to do away with ALL income taxes and go to a Federal sales tax with food exemptions. Of course this would fuel a huge black market and problems of it's own. There's no real answer...that's why I support the "less govt" stance, spend less and tax less.

[lummox]

and it wasnt as painful as i feared. but why does that rollins band song keep playin in my head?