Oh those millionaires, they suffer so. Seems Obama has dusted off some past campaign rhetoric and is now proposing to tax millionaires to pay down the deficit.
President Obama on Monday will call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers, according to administration officials.
Details are sketchy yet it seems to be some sort of alternative minimum tax so millionaires aren't paying glorified capital gains tax rates on their yearly income. Shame Obama caved on letting the Bush tax cuts expire when he had a Democratic Congress.
When investment managers, hedge fund managers receive compensation, it's in the form of stocks, options, which are taxed at a 15% capital gains rate, not the top tier 35% income tax bracket.
Additionally, millionaires don't pay additional social security contribution taxes past $106,800 of their yearly earnings.
To wit, Populist House Democrat Peter Defazio has introduced legislation to raise that cap on social security contributions and stop the attacks and social security defunding attempts:
Nervous that Social Security seems under siege from all sides, congressional liberals on Wednesday proposed raising the payroll tax that funds the program, but only for people earning more than $250,000 a year.
The legislation is designed to keep the pension program solvent for the next 75 years, which is the standard used by government actuaries, by putting an additional $6.5 trillion into the Social Security trust fund over that period. The plan also is intended to head off other efforts to overhaul the program or trim benefits, or to use its funds to help pay for debt reduction.
"No more discussion about raising the retirement age, no more discussion about cutting benefits, no more discussion about privatization," said Rep. Peter DeFazio, D-Ore., one of the sponsors.
Recall this is one of Obama's lost forgotten campaign promises, to ensure social security is funded, plus make it more progressive by raising the social security contribution tax on people making over 250,000 a year.
Below is an interview with Defazio on this bill.
About time this is going on. There is no way, none, to balance the budget and not raise taxes. Now if we could only get some action on a Wall Street transaction tax.
Below Senator Bernie Sanders gives a speech on the critical importance of social security. No, it's not goin' broke and no, it's not a ponzi scheme.
DeFazio and Sanders bill is important because social security is under attack, and under the guise of budget deficits, the most successful anti-poverty program of all time is being threatened.
Watch out on this story. Pundit's love to quote percentages in order to hide the massive income inequality in the United States. What's one dollar paid in taxes when one only has $2? Is that a 50% tax rate or is that only 0.0000000000001% of total taxes collected? When a billionaire pays a dollar in taxes for each million, that's $1000 dollars. Does that billionaire pay more in taxes than the guy with $2? Why yes. With that reasoning, do billionaire's pay most of the taxes collected? Of course. You get the picture. Using numbers to spin is a favorite when it comes to the U.S. tax code, This example is precisely one of the classic Grover Noquist spin techniques, parroted out by Fox News pundits on cue.
Tax The Rich!
Personally, I'm tired of seeing schools, libraries and parks shut down. Tax the rich because it's practical to tax those who actually have the money.
Taxes on the grossly rich
I suppose paying a little more tax is better than a bullet in the head which is probably coming if they continue to cheat the rest of us who made them rich. America has had enough crap from these idiots who don't mind exploiting the middle class proletariat. Looks just like the ancient Roman Empire, and we know how that ended!
If you guys would do the
If you guys would do the research and truly understand economics it makes no sense to do another AMT tax. We already have one that keeps getting bumped every year because it's a bad idea. A more broad based tax without deductions and eliminating or greatly lowering the corporate tax would make more sense. Review the proposal by Herman Cain on a 9-9-9 tax.
We do research here
You might read the rest of the site. There were not any details on this tax yet, so the conjecture it's probably another AMT is a guess.
Yes, we know about AMT and it catching people with options and it should not plus the adjustments
But Herman Cain wants to really go regressive, tax the poor, let the rich run free with a glorified national sales tax, highly regressive.
The only one of these that is useful is a VAT, for trade reasons, but you must offset such a tax with Progressive taxation and credits after the fact.
Bottom line, tax cuts and not taxing the rich does not create jobs and is another major contributor to wealth inequality in the U.S.
Alternative Minimum Tax
For those wanting some information IRS AMT levels. The AMT is really low and not graduated, i.e. it's quite the mess.
But as we can see, it's quite complicated and Obama's tax idea is clearly to not allow hedge fund managers to pay glorified income taxes at a 15% year, the capital gains tax rate if one holds stocks, investments for over 1 year.
This article here does a great job in explaining AMT, especially with company stock options, a common place where people got hit with AMT even though their exercised options became worthless.
Washington Post Spins like a Washing Machine
This article is ridiculous. Of course the majority of tax loopholes, tax breaks are with households. There are thousands of businesses but millions of people. Hello. Also, the median wage is about $26k (2009), so of course the majority of tax breaks goes to households.
Yet another prime example of how to spin with numbers, of course the majority of tax breaks goes to households, they outnumber corporations/businesses 300 to 1 at least.
See the spin? They use aggregate numbers instead of individual's income, to try to promote more taxation on the back so the poor, middle class. Somehow Joe Blow with his $6.16/hr. job is now equal to G.E. pulling in mufti-billion yearly profits by using aggregate numbers.
Ridiculous to compare corporations as people (on wait, isn't that actually the law in the United States, corporations are people? Why, yes it is!)
I've heard it before,
how President Zero is going to do this and that. Zero's rich friends have nothing to worry about accept the proletariat. Zero's deeds are a betrayal of labor. Anyone who believes the erosion of the middle class is anything other than the plan is fooling themselves. http://www.stateofworkingamerica.org/charts/view/146.
Zero and Less Than Zero
Those are the options. It does seem Obama is putting forward a few popular ideas to ramp up for 2012 election. But I believe people voted for those popular ideas in 2008, a huge one being repeal NAFTA, China PNTR, and redo trade agreements with U.S. jobs, sovereignty, worker rights, environmental standards first and foremost.
Beyond that, those trade agreements are just pure stupidity, "would you like to buy the Brooklyn Bridge" level of agreements, written by and for multinational corporations.
If you notice, DeFazio and Sanders literally put together a bill that was an often touted and repeated campaign promise from 2008. If Obama was serious, he would pick up that bill and push for it's passage.
It doesn't matter if crazy tea party and radical right, Boehner, Cantor, McConnell kiss the feat of Grover Norquist and worship the corporate manufactured religion of "no taxes" at all here. It's simple. You write up legislation based on what you promised during the campaign and lobby, use influence to pass it.
If you're got an insane blockhead block like the situation in Congress, you use the bully pulpit to point that out and make sure those blocking campaign promises are challenged and possibly lose their seats or lose power and so on.
It's like LBJ politickin' 101. You don't put Larry Summers, Tim Geithner and G.E., Goldman Sachs in the white house running your (cough) economic policy.
Oh, if only we had a "President for a day" rotation in here. I'll bet 50% of Americans could do a better job.
All of that said, Obama's grand hoodwink of the nation, look what's coming at you on the radical right. So it's another worse and worser situation.
Prostituting the base and fraud.
Both major political parties are guilty of protecting the wealthy and MNC's but the Democratic party is additionally guilty of fraud by misrepresenting their platform, then pimping their constituents. I will vote third party.
The first step to getting what you need is asking for it. If Democrats don't represent you, stop voting for them! Vote Green!
You tax the rich because they've got the money
Take a look at Robert's article today on the Household Wealth decline in the Fed's quarterly economic data dump. Households - the consumer - the individual, however you want to define them, are bust. Their wealth is shrinking. Their earnings power we used to say in the 00s has plateaued; now we have to say it has collapsed altogether. There is no tax money to be squeezed from the consumer, however much The Washington Post, the Republican Party, and other mouthpieces and agents for the wealthy want to portray things. Just where did all the money go from the cut in the Social Security payroll tax this year? To food and energy and paying down debt. Nobody's buying flat screen TVs anymore. The only credit people can get is for buying cars using sub-prime loans, and we all know how that is going to play out eventually for the lenders.
If you want to squeeze more blood out of the consumer by increasing their taxes, you just hasten the day when the economy implodes altogether and federal tax revenues fall by 50% from already record-low levels.
But since the United States must, sooner or later, and in the face of strenuous objections from the Republicans, raise revenue by increasing taxes, there are only two places to go where there is any money to be found: the wealthy, and corporations.
We are wasting a lot of time pretending otherwise.
P.S. Don't get me started on that joke of an argument that we can't tax corporations because they create jobs. The argument actually is true. The part never discussed by the conservatives is the fact that almost all of these jobs are created in China.
net asset tax
Hate to say it, but the most progressive tax reform plan was offered by right wing (unbelievably right wing) writer James Bowery. Introduce an annual net asset tax (the estate tax is, essentially, a one-time net asset tax).
Since wealth is far more stratified than income-- the Forbes 400 alone has a greater net wealth than the bottom 50% of the population-- even a flat tax on wealth would be very progressive. By tying, as Bowery suggests, the net asset tax rate to 3 month T-bill rate, it becomes rather powerful counter-cyclical tool that Congress could fire and forget since the Treasuries market itself (cough*Fed Funds rate*cough) would automatically adjust the tax rate. There is (these numbers are necessarily approx.) $58 billion in household net worth this year, of which top 1% ($5 million threshold) controls 35% or $20 Trillion. You could double these numbers by looking at top 10% ($1 million threshold) with $40T in household net worth. It almost goes without saying that public financing of campaigns is a necessary precursor for Congress to ever reform the tax code to make it more progressive.
So let's see, 3 month T-bills today only yield 0.01%. However the CBO projects for 2016 and every year thereafter a 3 month T-bill rate of 5% (CBO is surely wrong that rates will get that high but they won't figure that out for years). So a net asset tax on top 1% would raise a $2 billion this year but by 2016 (per CBO) would raise $1 trillion a year.
Interesting from 'Beowulf'
The idea is interesting, so I looked up the blog -- seems to be out of the UK and Europe, but Bowery is apparently located in the US with focus on the US.
I could not find the comment that you reference, since the link is incomplete. However, the analysis you give and a James Bowery blog that I could locate, 'Citizen’s Dividends To Capture Parliamentary Governments', gets the idea across. Except that you are leaving out Bowery's "Citizen's Dividends" (proposed political party for some hypothetical country with a parliamentary proportional-representation system).
I'm not sure how or why you describe Bowery as "incredibly right wing" since he is very big on what "the right wing" in this country (what we would think of as "right wing") would abhor and adjure as "redistribution." I am assuming that the "right wing" would be like Ron Paul and the von Mises Institute, Heritage Foundation or the National Review. I think they would consider Bowery to be a flat-out Communist.
Myself, at first view, I consider Bowery to be a radical libertarian, but since his information says something about an "environment party," maybe he is what used to be known as a "watermelon Green." Probably he can't stand the Green Party on "social issues" -- in which he would not be alone.
Anyway, that's good about an estate tax as a tax on assets or wealth -- even though it is premised upon a tax on transfers of assets or wealth ("income" per the 16th Amendment). Bowery has an interesting theoretical viewpoint, probably completely off the map, although maybe not. As I recall, none other than David Rockefeller, a few years back when he was still active as CEO of Chase Manhattan (before they added JP Morgan), went to the trouble of purchasing a full-page ad in the NYT to state his opinion in support of the estate tax.
The MajorityRights blog generally seems to be coming from the European phenomena of native (white) people reacting to influx into Europe of (non-white) immigrants. But that's an over-simplification, since the bloggers at MajorityRights are complicated thinkers ... many nuances. Anyway, the general idea is that the majority have rights, as well as minorities. That could be applicable in USA as well, of course.
How did you ever come across this to connect it up and post it here at EP? Remarkable.
BTW: I am not connected with EP or anything like that, just a guest here like yourself, but please try the Rich Text Editor link button, like this --
'Citizen's Dividends to Capture Parliamentary Governments'
Also, please try, when you copy from Google, that you don't get the Google-abbreviated non-URL with parts left out by ellipsis dot-dot-dot ...... (Copy URL direct from the URL at the top of the browser page.)
Thanks for your comments
Here's a link to Bowery page I meant to link to
And his original 1992 article on the topic
His citizen dividend is nice as far as it goes, but its an idea that's been given fairly widespread support from everyone from James Tobin to Charles Murray. I highlighted Bowery's net asset tax proposal because its pretty unique and I think, damn clever. As for his extremely right wing comments, well, look at the topic headings just to the left of his 2009 piece at the first link. "Miscegenation Race FAQ White Genocide Project "
I dunno, it gives the impression he's extremely... something. I'm not a fan of his cultural politics but we must take knowledge from where we find it, I linked to his page because I'd be remiss to not give credit to where credit is due.
"How did you ever come across this to connect it up and post it here at EP? Remarkable."
I"ve been lurking at EP off and on for years. I came across a blog comment (by Bowery) at another site which linked back to his 2009 article. I figured it was worth sharing.
Why should a person that makes 251K a year be placed in to the same group as the group making 2.5M?..for example. also, is that 250K household income?
individual $250k/yr, not household
I hear what you're saying on $250k a year. That isn't rich. I think they should increase the tax, graduated to get those few super rich people and put the tax at more like $600k a year, make sure they are not getting small business people, although sole prop. LLC, have tax pass through, although while they changed the law for 5, 20 years on loss carry forward/backward, I'm not sure exactly how the accounting works for spreading the losses, gains over past one fiscal year.
But taxing hedge fund managers or anyone living from investment, which are taxed at capital gains rates is a great idea IMHO.
Tax the RICH!!
It is no secret most people just choose to ignore it. Most companys along with our government are built on the "Pyramid Scheme"! The company that I work for gives out annual "wage adjustments" which are %wage increases to help offset the rising cost of insurance. Well, it doesn't take a rocket scientist to figure out that if they give the same % across the board that upper management is getting their insurance paid for in full. On that same note why don't they price insurance and tax rates as an "across the board rate"?!? I for one am tired of carrying the RICH. For years I was told "go to school so you can get a decent job." Now you can't afford it. And if you can, good luck finding a job when you are done. I guess when this country falls on its but I will have to go back to farming and hunting for my food. I bet those at the top of those pyramids wouldn't know anything about that!!
Great Wealth Seen as the Greatest of Emotional Disorders
Today, NYTimes report that a Silicon Valley Venture Capitalist , Mr. King who made his fortune sponsoring Baidu wants to sponsor the planting of hazelnut trees on the border between China and India.
Mr. King, a Stanford business school alumnus, is largely unknown outside start-ups and venture capitalists, but has built a fortune out of R. Eliot King & Company and Peninsula Capital, which was one of the first investors in Baidu, the Chinese version of Google.
That investment came about when Xiangmin Cai, a Chinese graduate student who had lived with the Kings, introduced Mr. King to Robin Li, Baidu’s founder.
Baidu, like most ChiCom firms is based on the industrial model of the Third Reich. Military and top intelligence officers are given fiefdoms much like concentration camps to extract as much as they can from the work force under a 72 hour work week. The "Schindler's List" companies run by People's Liberation Army Colonel engage in 'competition' with Western firms.
Mr. King and his kind are praised in Republican Circles as important 'Job Creators.' We, the bottom feeders dare not question these lofty perches or even
bring up the forbidden subject of taxation.
The idea is that there is an incredible disconnect between the reality and what is perceived by the weatlthy in this age. Building this country, in the Guilded Age, was once seen as the absolute priority of the ruling class. Destroying this society is the sole focus of great wealth in America.
How to generate 1/2 Trillion/year
WNGTIAM: We're Not Gonna Take It Any More. A non-profit organization.
Taxing the rich and adding an alcohol tax will generate 1/2 trillion in revenue /year to help us with our fiscal crisis.
Please vote at