
The Rich Do Pay Higher Taxes Than You - Bostonian
https://www.bloomberg.com/opinion/articles/2019-10-10/the-rich-really-do-pay-higher-taxes-than-you
======
htfu
What terrible analysis.

"Saez and Zucman train much of their focus on the 400 wealthiest Americans.
This group makes up 0.0003% of households. The New York Times column
describing the Saez-Zucman estimates reports that last year this group had a
23% combined federal, state and local tax rate.

In fact, the jury is still out on that number, which is based on a forecast of
what income might have been last year. (The data for 2018 aren’t in. If you
filed for an extension, your taxes for 2018 aren’t due until next week.) Even
if it turns out to be correct, it doesn’t follow that the U.S. system is not
progressive."

Basically saying "sure, by their metric they're right, but whatever, so there.
I win!!"

~~~
refurb
That seems like a reasonable argument to me.

The data they used wasn’t actual data.

~~~
htfu
I think we all know a ten-point swing is not forthcoming. Especially looking
back, it's not like this is the first time someone's run the numbers...

And most of the piece is spent arguing against something somewhere between an
aside and a strawman, then towards the end they admit as much(!), but have
nothing substantial to add.

Whether your gut agrees with the "message", rhetorically it's just really
awful.

~~~
refurb
Maybe.

Another thing that jumped out to me is why the top 400? Why not 500? Why not
100? 400 is an odd number to choose.

We know the very top earners tend to be cases of windfalls. You sell your
company, you offload all your shares, you sell a ton of land. Those can have
odd tax implications.

My guess is that they cherry picked the top 400 because it supported their
conclusion. And the tax rates were a 1-off event that doesn’t normally happen.

~~~
htfu
How are you commenting on something like this without knowing about Forbes
400? Are you serious?

~~~
refurb
Huh? The Forbes 400 have a number of non-Americans on the list. They don't pay
US taxes at all.

And doing a study where you look at the top 400 because "Forbes has a list of
400" makes zero sense.

Hack job!

~~~
htfu
Nope, 400 is strictly Americans, and was released a week ago. I give up.

~~~
refurb
400 is net worth, not income.

And it's an academic study. Who cares what Forbes does?

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blacksqr
Author asserts that the poor pay less in taxes after counting stuff that's not
taxes.

Meanwhile, Warren Buffet pays his taxes at the same effective rate as his
secretary.

~~~
darawk
> Author asserts that the poor pay less in taxes after counting stuff that's
> not taxes.

Except that his statement was already true before accounting for those things.

> According to the nonpartisan Congressional Budget Office, the lowest-income
> 20% of households have an average federal tax rate of about 2%. Those in the
> middle 20% pay 14% of their income in federal taxes. Higher-income
> households face higher rates. The top 20% pay a 27% federal rate. And the
> federal tax rate for the top 1% is 33%. These data are for 2016, the most
> recent year available.

~~~
uberman
The top 1% tend to have significant income that is not wage based. The rich
pay less as a percentage thanks to long term capital gains being taxed at 20%.

Note, the truly rich would consider anyone (no matter how much they make) as a
poor wage slave if their primary source of income was wage based.

~~~
darawk
Capital gains are included in these numbers.

Source: [https://www.cbo.gov/system/files/2019-07/55413-CBO-
distribut...](https://www.cbo.gov/system/files/2019-07/55413-CBO-distribution-
of-household-income-2016.pdf)

ctrl+f "Definitions"

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berndtj
This is looking purely at income tax rate, not rate based on actual taxes
paid. Article is misleading at best.

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kangnkodos
One of the biggest issues is that the long term capital gains rate is only 15%
(or perhaps 20% in some cases). It's likely that most of the taxed income of
people with high net worth is from capital gains, and not from ordinary
income. I'm not sure, but I think he's only talking about people with high
ordinary income. He could be including capital gains too. Not sure. He's
definitely ignoring high net worth.

The author does not directly address the low rate for capital gains.

Also, there are two ideas which are easily confused: 1) Do the rich pay more
in taxes? Yes. The number of dollars Warren Buffet pays in taxes each year is
more than his secratary. 2) Do the rich pay taxes at a higher percentage of
their income? This article indicates the answer to this question is also yes.
However because capital gains are taxed at such a low rate, and because of
other loopholes, Warren Buffet's percentage tax rate is lower than his
secretary's percentage tax rate.

Also, people with a high net worth do not have to sell stocks which have
gained every single year. Maybe they sold some stocks a few years ago, and
they are spending the cash. In the author's analysis, a high net worth
individual with no ordinary income and no capital gains for this year would
not be included in this analysis at all, because they had almost no income
last year (probabaly a little interest and dividends, but nothing else).

~~~
jshaqaw
This is not a defense of the low capital gains tax rate but comprehensively it
needs to be included that for a C corp each dollar of income is already taxed
at the corp level before being distributed as capital gains or dividends. On a
per dollar of income basis the gap between ordinary income and capital income
is collapsed due to that double taxation.

~~~
blacksqr
Only net corporate income is taxed, not gross income.

Imagine if you only had to pay income tax on the money you had left over after
paying all your living expenses. That's the deal corporations get.

~~~
jshaqaw
I’m not sure how the math on gross income (which I assume you mean to be
revenue) would work. Any business without insanely high gross margins would
cease to exist. Could you explain?

~~~
blacksqr
I was not advocating that gross corporate income be taxed. I was pointing out
that your statement: "for a C corp each dollar of income is already taxed at
the corp level", is flatly untrue.

A lot of large corporations get their net income down to zero or next to zero,
deliberately pushing their business strategies to bolster their stock price
rather than net revenue. In those cases, capital gains tax is the only tax
paid on their activities, and the advantage of capital gains tax rates vs
ordinary income rates is by no means collapsed.

------
gok
The math in this article is much more correct than Leonhardt’s but they're
both kind of missing the real issue. Yes, income taxes are very progressive,
but that's going to need to change if we want to raise a meaningful amount of
more revenue. There just isn't enough income at the highest percentiles to
move the needle very far.

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golover721
What a useless article. No one is disputing the fact that “income tax” is
progressive. The problem is the truly wealthy make their money via other
mechanisms which are taxed differently. The main one being capital gains which
is taxed significantly less than income.

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jacknews
Is it me or does the content of the article not in fact support the headline.

Let alone the true facts, ie how the rich actually pay themselves (not just in
taxable income), etc.

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sedeki
Is the effective tax rate is _primarily_ a function of income, or rather on
how much you pay on tax professionals?

~~~
toast0
Tax professionals aren't going to have much to work with if you have a
traditional job with a salary. Make sure you take all the deductions that
apply and maybe change a couple behaviors to enable more deductions or
deferment.

To really make a difference in taxation, you need to have the ability to
change the character of your income. If you run a tightly held corporation,
you can (with some limits) reduce your salary but compensate by paying a
dividend, turning more of your income into capital gains. If you run a low
employee count company, you can move your income into employer paid 401k
contributions, deferring taxes, etc.

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fabiofzero
It's Bloomberg, of course they would publish a self-serving article like this.
The medium is the message, the source is part of the content.

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ojnabieoot
There are serious and intellectually honest disagreements about how to
actually measure wealth and taxation. And I don't want to accuse the author of
outright bad faith. But in my view this segment - the core of the argument -
plays fast-and-loose with the facts in a way that is reckless at best:

"According to the nonpartisan Congressional Budget Office, the lowest-income
20% of households have an average federal tax rate of about 2%. Those in the
middle 20% pay 14% of their income in federal taxes. Higher-income households
face higher rates. The top 20% pay a 27% federal rate. And the federal tax
rate for the top 1% is 33%. These data are for 2016, the most recent year
available.

This is half of the story. When assessing the progressivity of the U.S.
federal system, it makes sense to look at both taxes and the means-tested
transfer payments — Medicaid, food stamps and Supplemental Security Income —
that those taxes fund."

It is in fact one third of the story. It appears the author is conflating
federal income taxes with overall federal taxes - specifically, the truly
regressive payroll tax is ignored, yet the payments from this tax are counted
in the opposite direction. This is just plain bad accounting, and a common
enough bit of misunderstanding that Strain should have directly addressed it.

Partisan anti-tax activists don't mention the payroll tax, but for the very
wealthy it is a pittance, versus a serious burden for the working poor. I
think the income cap for payroll taxes is something like $150k: all income
beyond that is completely untaxed. For people with 7-figure incomes, it is
downright regressive. As someone trying to present a more intellectually
serious case than Grover Norquist, Strain should do better, and not let
readers like myself wonder if he's lying to them.

And I thought this "question" deserved a lot more than one line, considering
the issue of untaxed capital gains is the primary reason why left-liberals
(correctly) assert the US has a regressive tax system:

"How to account for unrealized capital gains when determining income?"

In fact, phrasing this as a "gee whiz, what a difficult but ultimately
technical question" makes me wonder about the author's intentions. This is the
same author who, in 2008 while doing research for the Fed, wrote a shameless
and factually ungrounded article supporting the payday loan industry:
[https://www.responsiblelending.org/sites/default/files/nodes...](https://www.responsiblelending.org/sites/default/files/nodes/files/research-
publication/crl-morgan-critique-12-10.pdf) It is worth noting that this is not
a "he got the facts wrong" problem so much as "there is no excuse for getting
these facts wrong." He has been a New Right Intellectual for quite some time
and I am not very impressed.

I am guessing there is a lot of motivated reasoning in here versus outright
dishonesty. But either way this Bloomberg article is bad, insulting to the
reader, and the ways that they are bad are easily predictable from this
author's career.

~~~
basch
payroll, property, corporate (paid by shareholders), estate, and sales tax all
being left out of this article make its argument exactly what it accuses other
arguments of being; incomplete.

plus, would you argue that payroll tax is a tax on the employee or the
shareholder, whos paying it? is it a cost of employing someone, or the cost of
being employed?

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yifanlu
Daily reminder that Bloomberg published “The Big Hack” a year ago and haven’t
redacted it or made any updates.

~~~
StriverGuy
What evidence do you have to support that the article was false?

Additionally, what in the world does it have to do with the OP?

Bloomberg is a relatively moderate news source with a strong track record.

~~~
EdwardCoffin
The burden of proof is on Bloomberg to show that the article has basis in
fact, not the other way around.

It is relevant to the OP because it gives an idea of how reliable other
articles from the same source might be.

> with a strong track record.

This is what they are disputing.

~~~
gamblor956
Bloomberg cited their evidence. In contrast, none of the companies in the
report have issued a convincing denial based on evidence. Moreover, this week
at least one of those companies gave in to China's demands on censorship and
it's clear that any prior rebuttal was instigated by the Chinese government as
a condition of continuing business in China.

~~~
mikhailt
Source of the said citation/evidence?

The burden is on Bloomberg to provide evidence. They didn’t mention this as a
rumor or opinion but acted as if they have evidence proving their statements.

In fact, the person they used for their article later said that he was
misquoted and even he didn’t believe it is the case: (Source:
[https://risky.biz/RB517_feature/](https://risky.biz/RB517_feature/))

Nobody found any evidence in any actual shipping hardware to prove any thing
that Bloomberg has said.

As the result, nobody should trust anything Bloomberg says because they are
basically making stuff up with no actual proof.

