Political YouTube Clips Thread

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This one kind of builds on my previous post. There is a group called "Patriotic Millionaires". They have been lobbying Congress to raise their taxes as they don't believe they are paying their fair share. See what happens.

 

I agree Tal - the whole thing is they want everyone to supposedly pay their fair share. If only they and a few other people do this, while most of the rich do not - then a few millionaires forking over a few thousand dollars extra into the treasury each year isn't going to do squat. But there are hundreds of thousands of millionaires in the US, and if all of them paid more, it would make a difference.

 

One of my favorite lectures. Noam Chomsky on propaganda:

 

Rick Santelli is often called the Godfather of the Tea Party movement (I happen to agree).

 

Why is he yelling at me? I didn't do anything wrong...

 

A couple of points here. I think the guy is not making the point he wants to make. He said that by increasing the tax on the rich, it would only reduce about one month's worth of debt annually. To me, that's not an insignificant amount. It would reduce our debt by 1/12 annually, or about an 8% annual reduction.

I don't think we can "cut" our way out of our debt. We need additional revenue to help. One thing I find rather humorous is Obama's planned tax reform is nearly identical to the tax reform Reagan put in place in 1985 - and Reagan was hailed for it back then. What Obama wants here is just a return to sane taxation levels.

There's other points that aren't really being brought up on taxes that should be. You will often hear a statement to the effect of "40% of Americans don't pay any tax at all!" That's only kinda true. It is true if you are talking only about federal income tax. It's true that 40% of American adults between exemptions and deductions on their tax bill owe no federal income tax. They are mostly the very young adults, and the very old that have smaller incomes. However, every working American must pay into Social Security and Medicare, even if they are only making minimum wage, and it's the same flat percentage rate for everyone. They also have to pay state sales tax whenever they buy something. So it's not like they don't pay any taxes whatsoever, which is what that comment sounds like.

That said, I can see why some members of the 60% of Americans who do pay federal income tax can get peeved at the 40% who don't, especially in the way it is phrased that suggests 40% of people have no deductions from their paychecks, which simply isn't true.

 

While true, most of the government assistance programs are only offered to people who cannot provide for themselves. So any person receiving government benefits, be they food stamps, unemployment benefits, social security, medicare, welfare, etc, is by definition taking from the system while contributing little to nothing.

The concept though is that this isn't a permanent, always present condition. For example, if you're receiving social security benefits, you're taking from the system, but presumably you paid into the system while you were working. There are certainly people who are perpetual leeches on society, who are always taking and never giving (and as previously noted anyone who has a job contributes an equal percentage of their salary to social security* and medicare), but I doubt it's the same 40-something percent of people all the time.

*Assuming you make around $106K per year or less. If you make more than $106K, you actually pay a smaller percentage of your total salary to social security than those making less than you.

 

Federal income tax isn't the only tax that goes to the federal government iirc. And besides, if they support their state, they indirectly support the federal government.

When you have people who are rich and people who are poor, there are bound to be some people who are net donors and some who are net beneficiaries to the government. That in itself is hardly shocking - people have different means and can't be expected to put in the same. You want to have lower taxation on the poor, so they have as few problems climbing into the higher income brackets as possible.

 

Of course not, since by definition it's nearly half of the population. Even if it is the lowest 47% of income earners (which it clearly isn't as you state), some of them would have to be earning very near the median income of the country.

It's all in how you look at it. What a progressive tax system also includes is that everyone pays the same amount at a given tax rate, regardless of how much money they make for the year. This is because not only do we have a progressive system, but we also have a marginal tax rate. Here's the marginal tax table:

Code:

10% Bracket:    Married $0 – $17,000           Single  $0 – $8,500
15% Bracket:    Married $17,000 – $69,000      Single  $8,500 – $34,500
25% Bracket:    Married $69,000 – $139,350     Single  $35,500 – $83,600
28% Bracket:    Married $139,350 – $212,300    Single  $83,600 – $174,400
33% Bracket:    Married $212,300 – $379,150    Single  $174,400 – $379,150
35% Bracket:    Married Over $379,150          Single Over $379,150

EDIT: Added code tags to make table easier to read. [/edit]

When your income bumps you up to the next bracket you do pay a higher tax. But you only pay the higher percentage for the income amount that falls in that bracket. The income up to, but not including the next highest bracket, is taxed at the lower brackets marginal tax rate. When you move up a marginal tax rate, only that portion of your income that falls into the higher Federal Income Tax bracket is taxed at the higher rate, not your entire salary.

Perhaps easier to understand by example. Say after all of your deductions, a single guy has $10,000 worth of taxable income. That puts him in the 15% marginal tax rate. However, the first $8500 of his income is taxed at 10%, with only the last $1500 of his income taxed at 15%.

Keep in mind that those tax rates are for your taxable income. Everyone gets a personal exemption of $3,700 on their earnings, and everyone is entitled to at least the standard deduction ($5,800 if you're single, $11,600 if married). This is distinct from your effective tax rate which is simply the money you paid in taxes divided by your total income. To use me as an example, while my salary puts me in the 25% tax bracket, after my deductions from health care insurance, FSA, 401K, my married deduction and the exemption from having a child, it bumps me down into the 15% tax bracket. But my effective tax rate (because of all that stuff that wasn't taxed) isn't anywhere near 15% - it was 7.9% this year.

But here's what I don't get. If 47% of Americans aren't paying any federal income tax, that means that 47% of Americans don't have any taxable income. So I'm trying to figure out how there can be so many. If Social Security is your only income source, then it's not taxable. That has to be significant chunk of that 47%, but in no way accounts for all of it. Welfare is similarly not taxed. Unemployment benefits are taxable, so it's not the high unemployment rate contributing to the amount. There still has to be a significant portion of people who are employed but have deductions and exemptions exceeding their total income. And I don't know how that can be the case.

 

Well, I think there should be a minimum you pay if you make over a certain amount. I do not view my current federal income tax rate as excessive.

And thanks Tal - I was able to add the code text.

 

I’m not sure if you meant that seriously or not, but the notion some people have that “deductions” are “loopholes” is a pet peeve of mine. The term “loophole” has a negative connotation surrounding it, and implies that someone is abusing provisions of the law to achieve results that weren’t the intent of the law overall. If a deduction is specifically allowed under the tax law, then taking that deduction isn’t a loophole; it’s simply doing what the law says you can do. Now certainly there are ways you can structure your affairs to minimize tax, and it’s possible that some structures give unintended tax benefits (and thus those could be considered loopholes), but that is the consequence of poorly-written laws (due in large part to the complexity of the tax code). However, some people like to label deductions as loopholes simply on the basis that the deduction isn’t available to them. One of my favorites is depreciation, where a business is allowed to write off the cost of assets with a long life (buildings, equipment, etc.) over a period of time against the income those assets generate; some people call this a loophole, notwithstanding the fact that the law specifically says you can deduct depreciation. I would go so far as to say that depreciation could be considered a penalty in that, if a business has to lay out the cash up front, it should be allowed to deduct the cost in the year it was incurred, rather than being forced to take the deduction over a number of years.

/end slightly off-topic rant

 

Anyone want to hazard a guess as to whom these people voted for (and will vote for again)?