
The middle class doesn’t want a tax cut. It wants better government - mbgaxyz
https://www.washingtonpost.com/news/wonk/wp/2017/09/27/the-middle-class-doesnt-want-a-tax-cut-it-wants-better-government/
======
pascalxus
The middle class referred to in the article is middle class of US. middle
class of the bay area, might be a totally different story.

The article is basically saying, those who aren't paying any income taxes are
quite happy with their income tax rate. Meanwhile, anyone who lives in a more
expensive part of the country like CA/ Bay area is paying higher taxes:
30%-40% for most people, not counting all the taxes paid on the employers side
as well as all the taxes you pay with the remainder of your paycheck.

Still, you might think, that's enough to live off. But, if you are working in
high tech with a decent salary, you've only got so many years before you get
aged out of the work force ~ 50 according to the other article:
[http://www.businessinsider.com/stressful-lives-of-older-
tech...](http://www.businessinsider.com/stressful-lives-of-older-tech-
workers-2015-11?_lrsc=e525de47-81f1-48b4-bc62-2a1e336af828).

~~~
jogjayr
Except that even in the Bay Area you're paying a marginal tax rate of 30-40%,
not an effective rate. They're different things. If you're actually paying >
30% effective federal tax rate you'd have to be earning > $600k (assuming
married filing jointly)[1]. At that level of income, anywhere in the world at
all, getting by and saving for retirement should really not be a problem.

1\.
[http://www.effectivetaxcalculator.com/](http://www.effectivetaxcalculator.com/)

~~~
mandelbrotwurst
The federal income tax isn't the only income tax. There are also state, local,
FICA, and medicare taxes. Add those in and someone with a $100K salary ends up
in that 30-40% range.

~~~
mikeyouse
Yep, if you file as a single person making $100k with the standard deduction,
you'd pay right around 32% in total tax between State, Federal, and FICA. If
you're a married couple making the same amount, you'd pay roughly 29%.

~~~
jogjayr
FICA contributions top out at $127k gross income. Someone earning $300k/year
is paying the same amount in FICA as someone earning $127k. Which I actually
think is unfair, but that's another topic entirely.

The standard deduction isn't the only deduction available.

If you're filing as a married couple and maxing out your 401k and/or IRA
you're suddenly saving money and _gasp_ down a couple of tax brackets. A
married couple making $100k jointly, and both working jobs with benefits,
could put away $36k/year in 401k money alone, which is more than enough for a
comfortable retirement after 30 years (and I didn't even take into account any
potential employer matching). A couple with one earner can save 23.5k (18k +
5.5k traditional IRA).

If you pay for health insurance, more deductions. Ditto for FSA benefits.

If you have eligible educational expenses (kid in school/college, spouse
getting another degree etc), same thing.

If you have receive commuter benefits through work (buying a parking or public
transit pass)...you guessed it. (weirdly this is the only deduction you can
take for FICA, which is otherwise calculated on gross income).

If you're itemizing deductions, there's mortgage interest, state tax, property
tax, charitable contributions, car registration fees. I'm sure I'm missing
more here because I don't itemize.

The point I'm making is, no one takes just the standard deduction. If you're
going to add all the other taxes in, you really should count all the
deductions you can take too. Add all that in and there's no way you should be
paying anywhere close to 30%.

------
gumby
I am always amazed by the number of people who obsess on tax payments in
isolation.

Even though my taxes are quite low here in California when compared to other
places I've lived (France, Germany, Australia), I find overall it costs more
to live here. Taxes + medical expense total more here than in those other
countries. Fuel is cheaper but I have to drive more to get around easily. The
schools are dreadful (and Palo Alto schools are supposedly the best in CA) so
I paid a lot to get around that. Telecom is expensive (well, cheaper than
AUS!). Etc. Not to mention that a strawberry doesn't taste like strawberry.

Americans seem to put up with huge transaction costs (both in time and money)
to get some "savings" which seems backwards.

------
burntrelish1273
\- The middle class should get a tax cut.

\- Tax code loopholes used by the rich to pay nothing should be simplified /
removed.

\- Decamillionaires and up should pay more than zero, i.e., Alternative
Minimum Tax (AMT) isn't working except to snare the upper-middle class.

\- Corporate income taxes are far too low, and need to return to 1950's
levels.

Unfortunately, doing any of this requires difficult-but-worthy fundamental
changes first: campaign finance reforms, lobbyist reforms and basically a
purge of corrupt politicians in DC.

------
ringaroundthetx
I like the repeal of AMT. Silicon Valley's equity options offerings just got a
lot more attractive!

I don't like removing the state tax deduction from federal tax. With federal
income tax not being marginal anymore it is the real percentage deal, and then
you have to throw state tax on top of that? Yikes thats a big tax increase.

I LOVE the lowered corporate flat tax for entities. For some reason he throws
in pass through entities like single member LLCs, which suggests that all the
personal income tax brackets are a complete red herring since anyone can just
form an LLC and get taxed at 20% instead. How is that not the main discussion?

It could all be balanced by the trillions in repatriation. Even though the US
government could not count on getting trickled down tax revenues from all that
money back in the economy, they could count on a lot of being parked right
back in US treasuries, which is basically the same money in a different
account.

------
jack9
I'm middle class and long ago soured on the tax vs deduction games. Better
government would lead to more confidence that I'm not financing corruption. My
perennial view, since I first understood what taxation was, has been dour. No
event has changed that one bit.

~~~
Feniks
That's quite sad. If people believe their government is broken beyond repair
what future does the US have?

~~~
jack9
A car without an engine can still roll downhill. The US will continue to
plummet into tyranny and corruption, like most democracies tend to UNLESS the
information age results in an altered pattern and misinformation is trumped
(pun?) by education. The post modernist corruption of education has resulted
in a bastardized anti-establishment movement that focuses on the least
important causes. I have little hope for the future.

------
AnimalMuppet
HN has a fair amount of international readership, so I'll ask:

It's my impression that the US government is fairly incompetent by first-world
standards. I'm not just talking about the presidency, but about the total
overall governance. Is that accurate? Or is it just that US news reports US
problems more than they report problems in, say, Netherlands or Switzerland,
so I hear about our problems and don't hear about theirs?

------
_pmf_
I want a tax cut, thank you very much. The fact that this is from a
publication owned by an entrepreneur famous for giving his company a billion
tax cut is somewhat ironic.

------
pablo13
Im middle class and prefer a tax cut.

------
perseusprime11
Is it possible for the Govt to make money without my taxes?

~~~
cjrp
See Norway's sovereign wealth fund

~~~
perseusprime11
I am looking for more of these kinds of ideas. I do not believe tax should be
a function of Govt because Govt has become a function of two political parties
with two different ideologies. There are incentives for both sides but it has
become a biased system. I am looking for ideas that decouple tax from Govt.
and the ideologies of political parties. If a political party likes to spend
more then they should not raise taxes to achieve those goals. Also it does not
inspire confidence that our Social security fund will not be sufficient though
we are paying taxes because now people are living longer.

------
kdamken
Hey all, middle class here and I would most certainly take the tax cuts.

Appreciate the out of touch media speaking for me as usual though.

~~~
nielsbot
"As a whole, the middle class doesn’t want a tax cut. It wants better
government."

------
plandis
To be in the 30%+ tax brackets you would need an income of about $200k. The
highest federal tax bracket is 39.6% so I'm not sure how you'd be in a 40% tax
bracket. Additionally you'd need to be making much more than $200k to have an
effective tax rate over 30%.

If you're concerned about state taxes, well, nobody is forcing you to live in
that particular state. I'm not sure what your point is but even in SF if you
can live off of $200k+ a year you're leading a fairly excessive life on
average.

~~~
ringaroundthetx
People only care about what they get to take home.

If you get hit with 30% by one institution, another 2% by the same institution
in another category, and then another 10% by your state, people are going to
say they got taxed 42%.

I have lived as a resident in 3 states. The combination of city, county, and
state taxes has always been around 10% for me. You are right though, I could
have emancipated myself while a minor and moved to Florida where there is no
income tax. I could have chosen a different university where I didn't have a
scholarship. And subsequently I could have lived anywhere after that and
enjoyed the lowest tax brackets because of my lower salary.

