
Really rich people are suddenly paying quite a bit more in taxes - ourmandave
https://www.washingtonpost.com/news/wonk/wp/2015/12/30/really-rich-people-are-suddenly-paying-quite-a-bit-more-in-taxes/
======
gopi
Most of the these articles never consider state/local level income taxes. For
a person in California the total top capital gain tax rate is more than 33%.
This is actually the second highest in the world.

If you consider the regular income tax its even much worse, currently the
combined income tax rate in California is more than 50%

~~~
SlowComputer
I live in California. I'm not "super rich" but we earn more than $1MM/year.

For every additional dollar I earn, I only get to keep 47 cents of it, just
counting _income_ taxes. In reality, only high earners pay taxes. And high-
salaried people are getting screwed under Obama's war against the most
productive citizens.

~~~
nitrogen
_For every additional dollar I earn, I only get to keep 47 cents of it, just
counting _income_ taxes._

If that were for _all_ taxes, and the marginal rate was still better for lower
incomes, I don't think that sounds so bad. Sure, we humans always want to keep
more of our hard work for ourselves, but pragmatically speaking I'd be okay if
my marginal rate at 7 figures (which I'm nowhere near) was 53% in exchange for
the societal stability and upward mobility my taxes could enable.

~~~
curiousgeorgio
While you are entitled to that opinion, I think it's _really_ hard to say with
any confidence what your attitude would be at a vastly different income level.
It may be useful to frame the idea in a different way:

You sound as if you'd approve of a ~53% tax rate at an income level higher
than your own, but not necessarily at your own level. For the sake of
argument, if you were to work just as hard for every dollar at that level as
you do now for every dollar, but simply worked that much _more_ (so every
dollar required the same amount of work), do you think you'd still be willing
to only keep 47 cents of each dollar? Similarly, if you were earning 7 figures
and wanted to help society / people in need, would the government really be
your best choice in terms of bang for your buck?

~~~
harryh
> if you were earning 7 figures and wanted to help society / people in need,
> would the government really be your best choice in terms of bang for your
> buck?

Has anyone ever tried to make a serious attempt to analytically tackle this
question? There are a lot of people that try to rank charities against each
other in terms of effectiveness. Could the same be done with government? Or
even some portion of government? I have absolutely no idea, but this seems
like an interesting question.

~~~
morgante
> Could the same be done with government?

I don't think so, just because the goods it provides are so numerous and
muddled.

Take one example: the fact that if I sign a contract I will feel legally
obligated to follow through on it. This provides tremendous social good
(billions of dollars worth), but it's very hard to quantify exactly how much.

Then you have to figure out how much it costs to provide that good. Should you
include the total cost of government? No, probably not, because that includes
lots of other goods. But the direct cost of say the courts isn't enough
because they can only function thanks to the explicit backing of law
enforcement and the implicit backing of the military.

It might be useful to start with a comparative analysis for governments
though. It's probably impossible to delineate and assess every good the
government provides, but you can compare the cost of governance and standard
of living between countries.

In such an analysis, I highly doubt the US comes out well. Personally, I am
99% sure that my donations to the Against Malaria Foundation provide more
total social good per dollar than my taxes.

~~~
baddox
> Take one example: the fact that if I sign a contract I will feel legally
> obligated to follow through on it. This provides tremendous social good
> (billions of dollars worth), but it's very hard to quantify exactly how
> much.

It's not so clear how much of a service the government is providing there. Do
you eagerly sign contracts with people you suspect would cheat you if they
thought they could get away with it?

~~~
morgante
> Do you eagerly sign contracts with people you suspect would cheat you if
> they thought they could get away with it?

Yes, especially you include corporations as "people." Without the rule of law,
I'm quite sure that corporations would find even more ways to generally break
contracts and not honor their commitments.

~~~
baddox
Why would they do that, and why would any corporations deal with corporations
with a history of cheating?

~~~
ori_b
Because the likelyhood of cheating is low, largely because there is a legal
recourse to recover the costs of cheating.

------
jmspring
I'm not a Trump fan, and despite likely tax hits, his proposal of simplifying
the tax code (as many have done before him), getting rid of the IRS (yes jobs
lost, but really, I got a certified letter owing $0.51 and they were "too busy
with this category to answer. _click_ ") would be a positive thing.

One short summary of his proposal --
[http://www.thepoliticalinsider.com/donald-trump-unveils-
his-...](http://www.thepoliticalinsider.com/donald-trump-unveils-his-bold-
income-tax-proposal-this-is-a-big-deal/)

I think a pure flat tax would actually be bad for the country implemented
immediately, but maybe a gradual rescinding of tax breaks (mortgage, etc -- i
use said benefit) might be worth considering.

Wall Street bankers running off pure capital gains is a big problem.

~~~
addicted
The flat tax is an incredibly pointless solution.

The flat tax is opposed to a progressive tax, that says that instead of having
a tax rate of 15% for 100% of your income, you have a tax rate of 0% for the
first $10000 of your income, 10% of the next 20000, and so on. This is
something that can be calculated mentally, looked up using IRS published
tables, or calculated with no effort in a 10 line script or some of the
simplest Excel sheets possible.

The progressive nature of income tax is absolutely not a problem and
recognizes the marginal value of money.

The problem is exemptions, etc., which a flat tax as opposed to a progressive
tax does nothing to resolve.

~~~
Mikeb85
It's not a terrible solution. Ideally a flat tax (which pretty much always
means a lower rate than high earners pay) simplifies the tax system, and makes
high earners less likely to evade taxes. However it doesn't change the fact
that really high earners get a lot of their wealth from investments, so in the
end they'll still pay a lower total 'rate'. The highest tax burden will still
be paid by upper middle-class professionals who have a high salary but few
investments.

If governments really want to collect taxes from the ultra-rich, a wealth tax
is what is necessary. However that alone poses problems because 'wealth' is
not always liquid - do you tax the old lady whose house has appreciated
significantly but who doesn't have an income? Do you tax an entrepreneur whose
firm is worth several million but hasn't actually realized any significant
income?

Anyhow, just a few musings, but the summary is that taxes are hard. Too high
and people evade them, too low and the government has a shortfall...

~~~
gnaritas
> It's not a terrible solution.

It's precisely a terrible solution. Yes, taxes are hard, but a solution that
punishes the poor (or the not rich) by not recognizing the marginal utility of
money is terrible in any form.

~~~
Mikeb85
There's pretty much always a minimum amount you need to make to pay taxes,
most flat tax schemes are still progressive on the low end. Very few 'flat
tax' proponents want to tax the poor (not much money in it anyway).

The idea with a flat tax isn't to punish the poor, but to reduce tax evasion
on the higher end, and to reduce to burden on the middle class.

~~~
gnaritas
Taxes should be progressive at all levels, setting a floor to exclude the poor
from the unfairness doesn't make it more fair for the guy in the middle income
ranges. All flat tax solutions are bad as they are all inherently unfair.

~~~
Mikeb85
Depends what your definition of 'fair' is. Conservatives think it's 'fair'
that everyone pays the same rate. Progressives think it's 'fair' that everyone
pays what they can afford.

'Fair' depends strongly upon one's beliefs, and can't be objectively defined.

~~~
gnaritas
> Conservatives think it's 'fair' that everyone pays the same rate.

Which is a position completely ignorant of the marginal utility of money. No,
it isn't fair that for one guy 10% could be the difference between getting by
and not getting by while for the other guy 10% means no change to his
lifestyle all.

No, progressives think it's fair that the burden is felt equally and that
requires understanding how money works.

> 'Fair' depends strongly upon one's beliefs, and can't be objectively
> defined.

Fair does depend on beliefs, but some people's beliefs are objectively stupid.
Anyone who denies the marginal utility of money and insists a flat percentage
is fair, doesn't understand money and doesn't belong in the conversation just
as anyone who believes vaccines cause autism is objective stupid and doesn't
belong in that conversation. Everyone has opinions, that doesn't make them
equal.

~~~
Mikeb85
Some people also thought "From each according to his ability, to each
according to his needs" was fair. Most seemingly disagreed, given how history
has unfolded.

For the record, I agree with Piketty, Marx, and others of that particular
persuasion. I'm all for progressive taxation, wealth and inheritance tax, all
of it. But I'm also not ignorant of history...

~~~
gnaritas
Nor am I, and implying progressives are communists is quite intellectually
dishonest.

~~~
Mikeb85
Nor are you what? I said I agree with Piketty and Marx.

Anyhow, the example was just rhetoric. The point is that communism started
because people thought it was unfair that there was a rentier class who
essentially monopolized wealth because they had inherited wealth. And
communism fell because people thought it was unfair that people who were lazy
made the same as people who worked hard.

Studies have shown that most people in western societies prefer inequality as
long as someone has less than them. They think inequality is 'fair'. Why do
you think people value celebrities and rich people? People are happy with our
'lottery' system, where anyone can become rich, even if the majority don't,
and even if the average struggles...

~~~
gnaritas
And we're back to communism again. This thread has nothing to do with
communism. That you keep going there shows you can't have a serious
conversation; goodbye.

~~~
Mikeb85
Socialism, the labour movement, and communism all come from the same place.

It's funny, you're arguing for progressive taxation, but you don't understand
the history behind labour movements, equal rights, welfare, socialism, etc...
Or why communism is relevant in a discussion about rational choice, inequality
and perceived fairness.

I do get it though - Americans have been taught to hate communism, and thus
have purged an entire century of socialist philosophy from their collective
thoughts.

------
rayiner
The top marginal long-term capital gains rate in 1992 was 28%. From 2003-2012
it was 15%. In 2013 it went up to 20%. I bet the difference between 20% and
28% explains the rest of the gap noted in the NYT article.

~~~
rubyfan
What does this translate to in terms of dollars from the 400 so called high
earners? And then what portion of US overall tax revenue is from that group vs
other segments? Any such data broken out like that exist?

------
jgalt212
The key takeaway:

> But today's IRS report suggests the biggest reason the super-rich paid lower
> tax rates over the last decade was the fact that Congress lowered taxes on
> the super-rich, particularly taxes on capital income.

------
golergka
It would be interesting to compare these yearly figures with movement of
capital between US and other international markets.

For example, how connected is this late raise in effective tax rate with the
fact that US seemed (at least, from what I seen) increasingly interesting for
investors compared to other markets in this period, especially with the
slowing growth of China?

Could it be that when the capital flows in, US decides to get a bigger cut,
but when investment is slowing down, US tries to slow the process by making
capital taxes lower? The article mentions that Bush's tax cuts happenned in
2001, right in the recession and after dot-com burst, when growth stopped and
investors started to pay more attention to China.

This is just a thought; I honestly don't know enough to understand if I'm
right about it.

------
madlynormal
I better call my local representative, I'm going to be rich any day now...

~~~
horsecaptin
Don't bother. This only applies to the _really_ reach.

------
anigbrowl
Some had argued that allowing taxes to rise would lead to an epidemic of
capital flight, but this has failed to take place in the two years since tax
rates went up. While I'm not hopeful, it would be nice if economic debates in
the coming election year were firmly grounded in empirical evidence. With the
increased computer power at our disposal it should be easier to model the
impact of policy changes on wealth distribution, economic activity and so on.

~~~
muzz
Yes those arguments often turn out to be false. In California, we had an
income tax increase on the "job creators" that many argued would cause the
affluent to leave the state, and an "Amazon Tax" that many argued would reduce
jobs in the state. Those predictions couldn't have been more at odds with the
eventual reality.

------
OneMoreGoogler
> It showed that the effective tax rate paid by those Americans jumped in 2013
> to nearly 23 percent.

As a data point, my family paid 28% average federal tax, on AGI of $355k. We
are California residents. Taxes are regressive on the higher incomes, and that
doesn't seem right.

~~~
maratd
> As a data point, my family paid 28% average federal tax

You made the mistake of earning that money by working. I am making the same
mistake.

If you factor in sales taxes, property taxes, state income taxes, etc. I'm
pretty sure you're giving half of what you earn to the government.

------
programmarchy
I'd be happier if taxes were cut from the bottom up, instead of increased from
the top down.

~~~
wonderlust
I too would be happy if I got every service the government offers for a
cheaper price.

~~~
programmarchy
Same here, which is why I'm a proponent of market anarchism. Central planning
does not have an effective price discovery mechanism, which is one reason why
we've been getting much less for much more. Just look at our shitty education
system or our police, which both seem to get worse and worse the more we spend
on them.

Markets allow experimentation and level the playing field, whereas states
ossify corporate power and centralize wealth. Not to mention, they're based on
mutually beneficial transactions between consenting individuals rather than a
monopoly on violence.

------
tmaly
who creates the jobs in this country? Think about it, if you start taxing
capital, what does that mean?

------
gnaritas
Good; they should be.

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anu_gupta
Good. About time some of these people paid their fair share instead of
exploiting loopholes that they can access because they have so much wealth.

~~~
bobby_9x
The top 10% pay over 80% of the federal taxes in the US. This, combined with
one of the highest corporate tax rates in the world means they are already
paying more than their "fair share".

~~~
njharman
If they own more than 80% of wealth then paying over 80% of the taxes is
exactly fair.

~~~
poke111
Wealth != Income

