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Born at the Crest of the Empire

Monday, April 17, 2006

Tax policy

I'll leave the judgement up to you....
As a result, people with income between $500,000 and $1 million owed the same share of their income in combined federal income and payroll taxes — 22% — as did taxpayers reporting at least $1 million in income, according to the Tax Policy Center.

Taxpayers in the $100,000 to $200,000 range paid nearly the same rate, 20.6%. Those in the $50,000 to $75,000 range paid 17.4%; taxpayers in the $40,000 to $50,000 range paid 15.8%; and those in the $30,000 to $40,000 range paid 13.6%.

posted by mikevotes at 7:23 AM

4 Comments:

  • When discussing taxes, it's really quite difficult to know the full impact of tax policy. You have to always remember that the tax code is over 1,000,000 pages.

    Let me give you an example, without being too personal. My wife and I had a combined six figure income. Our net income tax was 7.3%.

    That's obscene, and I'm sure we're not alone. There are plenty of smart financial planners and accountants that can help those who can affort it, to avoid paying taxes like crazy vs. those who may be less sophisticated, or cannot afford tax dodges, who get stuck with the tax bill.

    If possible, I'd like to see some real world numbers of actual percent of taxes paid listed by income.

    By Blogger Greyhair, at 10:12 AM  

  • You're totally right. It's the years and years of specific tax breaks pushed through as years and years of congressmen and little bits here and there.

    Also, there is this multi billion dollar accounting industry that lobbies hard to keep it as comlicated as possible.

    I don't really know the answer, but if I were to propose one in a few sentences, I would say reduce the deductions massively to house, kids, and energy efficiency. Change the way the rates are calculated so everybody pays on the same scale.(these numbers are arbitrary just as example.)

    Something like

    0% on the first $30,000 of income for everybody.

    5% on the next $30,000

    10% on the next $30,000

    etc. so, somebody grossing $90,000 would pay $4500. I don't know how you handle it as you get higher, and I don't know if you bracket differently for cap gains, but I would put the cap gains under the same kind of system, but seperate. So, the small ivestors would be encouraged to invest and save and could take their gains tax free.

    I am not a tax expert, not my field, so this may be horribly flawed or stupid, so, if you're going to laugh at me, keep that in mind, but I think it would reestablish some clarity and fairness in the balance of the burden on the lower end.

    And, tax simplicity would save billions.

    Mike

    By Blogger mikevotes, at 10:36 AM  

  • I'm certainly not a tax expert either. Your suggestions sound as good as any.

    The key is simplification. But I think even more important is balancing the budget, based on priorities that have some type of sanity, particularly regarding the defense budget. Don't need to be a CPA to see we spend more than we make.

    By Blogger Greyhair, at 11:05 AM  

  • I completely agree. I've long been a proponent of non-defense national security spending. Our long term military supremacy is based more on our economy than our weapons. And, elements that increase our long term capital, infrastructure, education, developmental tax policies will lead to a stronger country which will lead to a stronger future military.

    Throwing money at weapons systems is just siphoning that productive capacity out of the economy. Certainly, the military is a necessity, today, tomorrow, and the day after that, but I think everyone could agree that the money is not spent as wisely as it could be.

    And we pay for that today, and in lost opportunity costs, we will pay for it tomorrow.

    Mike

    By Blogger mikevotes, at 1:04 PM  

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