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| ▲ | ceejayoz 5 days ago | parent | next [-] | | > the top 1% still pay 40+% of federal taxes No. They pay 40% of Federal income tax, specifically. https://nymag.com/intelligencer/article/fact-check-richest-1... > The bottom 50% pay no taxes Same mistake here. They pay plenty of payroll etc. tax. | | |
| ▲ | loeg 5 days ago | parent | next [-] | | The numbers from your link are: The top 1% pays 24% of Federal taxes, and the bottom 50% pays somewhere between 7% (bottom 40%) and 16% (bottom 60%). | | |
| ▲ | dmoy 5 days ago | parent | next [-] | | Yes, that sounds about correct. It's a lot more than "bottom 50% pay no tax". Also I'm unclear if that source includes only the "employee half" of the 15% FICA. | |
| ▲ | NuclearPM 5 days ago | parent | prev [-] | | That’s a crystal clear sign that the top 1% have way too much money. | | |
| ▲ | estearum 5 days ago | parent [-] | | Yeah this argument is so silly: "the top 1% pay 60% of income tax" oh okay, so as they get closer and closer to escape velocity from the rest of us, that number will climb to 1% paying 70%, then 80%, then 90%, so your argument to tax them gets weaker while the functional need to tax them gets stronger. Brilliant! | | |
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| ▲ | throwawaymaths 5 days ago | parent | prev [-] | | no, employees do not pay payroll tax, employers do. | | |
| ▲ | ceejayoz 5 days ago | parent | next [-] | | I assure you we do. https://en.wikipedia.org/wiki/Federal_Insurance_Contribution... > The Federal Insurance Contributions Act (FICA /ˈfaɪkə/) is a United States federal payroll (or employment) tax payable by both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers. 7.65% of your check until you hit the cap. Employer pays a similar amount. | | |
| ▲ | quickthrowman 5 days ago | parent [-] | | Additionally, removing the cap on FICA contributions would likely push Social Security back into long-term solvency, but that would be far too much of a burden on the top 1% of wage earners so it’ll never happen. | | |
| ▲ | scarface_74 5 days ago | parent [-] | | To be precise, social security maxes out at around the income of the 93 percentile of income https://dqydj.com/income-percentile-calculator/ But that would also mean uncapping the maximum amount you are eligible for for social security. | | |
| ▲ | kgermino 5 days ago | parent | next [-] | | It wouldn’t _have_ to, that’s a political decision not a mathematical requirement. But, even if you did it would still help tremendously and possibly still be sufficient. There’s diminishing returns where lower income people get a higher percentage of their income as a social security benefit. As long as that policy is maintained the ultra high wage earners would be contributing far in excess of the benefit they get paid back out | | |
| ▲ | scarface_74 4 days ago | parent [-] | | In that case it’s no longer about social security it’s just a 12.4% marginal tax increase (employer + employee). |
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| ▲ | ceejayoz 5 days ago | parent | prev [-] | | > But that would also mean uncapping the maximum amount you are eligible for for social security. No? Why would it mean that? | | |
| ▲ | scarface_74 4 days ago | parent [-] | | Currently, the amount you put in social security over the years determines how much you get when you retire. Why would anyone support a system that is suppose to be to help you in retirement where you are paying an unlimited amount into a fund and then capping how much you get out? | | |
| ▲ | quickthrowman 4 days ago | parent | next [-] | | Because they likely already have more than enough and have been blessed by society/civilization as a top earner who will enjoy a comfortable retirement without any social security, and they’ll be better off if other people that didn’t earn and save as much are able to retire without being destitute in old age. That perspective could be someone who is willing to say “You know what, I already have enough, let’s make sure the floor is raised for everyone.” Someone who believes more in individualism would probably disagree with that perspective. | | |
| ▲ | scarface_74 4 days ago | parent [-] | | You think someone making just over $175K (the current social security taxable maximum amount) is able to save enough to ensure a comfortable retirement? | | |
| ▲ | quickthrowman 2 days ago | parent [-] | | I would hope so, I make half that right now and will be able to save enough for a comfortable retirement but I save almost half of my income. | | |
| ▲ | scarface_74 2 days ago | parent [-] | | I love when people say that “I live in East MiddleOfNowhere Nebraska with no kids and I can save half for my retirement”. |
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| ▲ | ceejayoz 4 days ago | parent | prev [-] | | > Currently, the amount you put in social security over the years determines how much you get when you retire. Currently, there's also a maximum amount of benefits. That could easily stay. > Why would anyone support a system that is suppose to be to help you in retirement where you are paying an unlimited amount into a fund and then capping how much you get out? Same reason people pay school taxes if they don't have kids. Because we live in a society, and we tax people to fund things like this. | | |
| ▲ | scarface_74 4 days ago | parent [-] | | So you want to raise the marginal tax rate by 12.4% (employee + employer) without the person getting any benefit? > Same reason people pay school taxes if they don't have kids. Because we live in a society, and we tax people to fund things like this. And educated children, police, roads, etc benefit society and we were all at one point kids who could take advantage of public education, I don’t even have a problem paying more in taxes for universal healthcare that will reduce my + employer expenses on my healthcare. But paying an extra 12.4% for what was suppose to be a retirement account that I don’t get any benefit from and reduces the amount I can save toward my own retirement is a bridge too far. Since 2018, I’ve been slightly above the increasing social security maximum. So it’s not that I’m one of the 1%. | | |
| ▲ | rkomorn 4 days ago | parent [-] | | Pet peeve/nit, but social security is not a retirement account. Our taxes are a way of funding current retirees' (and other SS recipients') benefits, not a way of funding our own individual future benefits. The fact that paying more in increases our future benefit doesn't make it a retirement account. | | |
| ▲ | scarface_74 4 days ago | parent [-] | | It very much is. The more you put in the more you get out. From a financial accounting standpoint, the money you put in goes in a “trust fund” that is constantly borrowed against. It was never suppose to be that way. Social Security taxes is not allocated for current retirees. It just goes in the general budget. | | |
| ▲ | rkomorn 4 days ago | parent [-] | | It is not a personal account where what you put in is yours. You don't have a balance that runs down to zero if you live too long. "The more you put in the more you get out" is only because that is how your benefit is computed. It is not because there is a certain amount of your money somewhere. Related: your benefit is calculated on your 35 highest income years, not the total sum of your contributions. [1] Other thing worth noting: the AARP page about SS myths that literally says: "Myth #7: Social Security is like a retirement savings account." [2] The trust funds for social security are used to pay for everyone's current benefits and the rest is invested [3]. The fact that it's supposed to remain solvent still doesn't make it a retirement account. Yes: it feels like a retirement account because you pay in now and (hopefully) cash out later. But that is only a feeling. And finally, I started my GP comment with "nit" as one of my first three words because I understand the distinction is somewhat hair-splitty, but it is still real and relevant to how we think about it. 1- https://www.forbes.com/sites/ebauer/2020/11/11/social-securi... 2- https://www.aarp.org/social-security/myths-misconceptions-ex... 3- https://www.ssa.gov/oact/progdata/describeoasi.html |
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| ▲ | Spivak 5 days ago | parent | prev | next [-] | | And stores pay sales tax. > By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Who is charged the tax and who pays it are different things. | | |
| ▲ | gamblor956 5 days ago | parent [-] | | In some states, the stores are the ones that owe the "sales" tax (which in these states are actually excise taxes that the business can pass through to the customer). The "tax" the customer pays in those states is the "pass thru" charge. To make things fun, Hawaii imposes the excise tax (on the business) recursively on any tax charges passed thru to the customer. |
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| ▲ | Groxx 5 days ago | parent | prev [-] | | this is roughly equivalent to saying "we don't pay import tariffs, importers do". it may be technically correct, but it still impacts individual costs/income at pretty much exactly the same amount, because the costs are just passed down the chain. |
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| ▲ | loeg 5 days ago | parent | prev | next [-] | | > That deduction was worth $100K to a $1M/year income in a 10% State income tax state earner. What? Income deductions are only worth the marginal tax rate on that income -- ~40% on $100k of income deducted is worth ~$40k. (With the $10k SALT cap, he can still deduct $10k, worth about $4k.) The top bracket being reduced from 40% to 37%, and starting at a higher income threshold, likely saved the same high earner more than $36k. | | |
| ▲ | happyopossum 5 days ago | parent [-] | | You’re over mathing here - GP is simply saying that if someone lives in a 10% income tax state and makes 1m, they can deduct $100k from their income (presumably because it was never really theirs). | | |
| ▲ | loeg 5 days ago | parent [-] | | They specifically make the claim that the TCJA is a net negative for this hypothetical $1M earner in a 10% income tax state, and I don't think that's true. |
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| ▲ | triceratops 5 days ago | parent | prev [-] | | > The bottom 50% pay no taxes and the top 1% still pay 40+% of federal taxes. This tells us nothing unless we know how their relative income shares. If the bottom 50% earns only 20% of all income (just an example) this is quite fair. If they earn 60%, it's unfair. The number of people who just trot out this statistic without context is quite tiresome. And of course everyone pays sales tax, property tax (even if they're a renter), payroll tax and so on. | | |
| ▲ | mdorazio 5 days ago | parent | next [-] | | Varies by year, but top 1% share of income is around 21% right now in the US: https://ourworldindata.org/grapher/income-share-top-1-before... i.e. the US tax system is still fairly progressive despite what many people think. | |
| ▲ | gruez 5 days ago | parent | prev | next [-] | | See this chart: https://media4.manhattan-institute.org/wp-content/uploads/co... | | |
| ▲ | verteu 5 days ago | parent | next [-] | | True, though it's irksome how the chart conflates "Rich" with "High taxable income." These are not the same, which is exactly the problem! eg: The #1 most wealthy American is Larry Ellison, whose net worth increased $89B today with zero tax implications. | | |
| ▲ | tracker1 5 days ago | parent | next [-] | | What do you think should happen to you if your house is more valuable in a year than the year before, even if you aren't selling or otherwise leaving that house? | | |
| ▲ | verteu a day ago | parent | next [-] | | Probably nothing. It seems quite reasonable that unrealized capital gains would be treated differently for "a primary residence" vs "a multi-billion-dollar stake in a company controlled by the owner." A far better question is: Why does my company pay me in cash (40% marginal tax rate) instead of "equity shares of 'special partnership units' representing the value added by verteu's labor" (20% capital gains tax)? Or: "How did Mitt Romney's Roth IRA grow to $100,000,000 with a $7,000 annual contribution limit?" | |
| ▲ | a day ago | parent | prev | next [-] | | [deleted] | |
| ▲ | a day ago | parent | prev | next [-] | | [deleted] | |
| ▲ | happyopossum 5 days ago | parent | prev | next [-] | | This varies wildly depending state you live in - some states adjust property taxes for current value, some don’t (or do but with severe limits) | | |
| ▲ | tracker1 5 days ago | parent [-] | | But do they do income-like taxes on the added value? This seems to be what people (GGP) are wanting from the increase in stock values, ie, unrealized capital gains.. which is frankly terrifying. | | |
| ▲ | ambicapter 5 days ago | parent [-] | | They increase property taxes, so yeah, you're getting taxed on a capital gain that you haven't realized yet (and won't until you...sell your house). | | |
| ▲ | tracker1 5 days ago | parent [-] | | What do you think should happen to people's retirement accounts each year then? | | |
| ▲ | triceratops 5 days ago | parent [-] | | Nothing. Retirement accounts are tax deferred or tax free. What a weird question to ask. | | |
| ▲ | tracker1 4 days ago | parent [-] | | Well, if you want to tax the stocks that the wealthy own.. why wouldn't you want to tax the stocks that many regular people own? Where do you draw the line between the two? | | |
| ▲ | triceratops 4 days ago | parent [-] | | Wealthy people's stock in retirement accounts would also not be taxed. This can be considerable: Peter Thiel's Facebook investment was made in an IRA. I imagine there'd be some net worth number, excluding retirement accounts, that policy wonks could work up. You draw the line between "wealthy" and "regular" there. Or, more likely, several lines because there would be wealth brackets similar to income brackets. Without that it would be a regressive tax. | | |
| ▲ | tracker1 4 days ago | parent [-] | | Why not just tax when someone SELLS the stock, or leverages it for a loan instead? You know, when they actually use it? I'm actually against property taxes, or any kind of tax where you risk losing property just because you managed to live another year. | | |
| ▲ | triceratops 4 days ago | parent [-] | | I don't disagree with that. But it's a much bigger discussion. Abolishing all property taxes means city and county finances need fundamental re-working. |
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| ▲ | triceratops 5 days ago | parent | prev [-] | | I know what does happen. Property taxes go up. A wealth tax by another name. |
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| ▲ | twoodfin 5 days ago | parent | prev | next [-] | | Capital gains absolutely have tax implications. Just like my house rising $100K in (unrealized) value over a year. | | |
| ▲ | cherrycherry98 5 days ago | parent [-] | | Capital gains receive favorable treatment under US tax code but are also a realized gain by definition. That is you actually have to sell the asset and are taxed based on any profit earned. An increase in the estimates value of your real estate holdings does not trigger a capital gain. Your municipality, however, may use it as an excuse to increase their assessment of the value of your property, which is used to calculate the tax they charge. | | |
| ▲ | triceratops 5 days ago | parent [-] | | So you admit that many people do pay unrealized gains taxes on their largest asset (their house)? | | |
| ▲ | cherrycherry98 5 days ago | parent [-] | | Yeah it functions like a wealth tax, but the claim was that it was a capital gains tax, which it isn't. |
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| ▲ | cherrycherry98 5 days ago | parent | prev [-] | | His net worth increased due to asset appreciation. Nobody physically transferred him any money and it can fall back down tomorrow. Should he get a refund if Oracle stock tanks? | | |
| ▲ | verteu a day ago | parent | next [-] | | > Should he get a refund if Oracle stock tanks? Presumably it would function the same way as realized capital gains taxes (no refund on tax already paid)? | |
| ▲ | triceratops 5 days ago | parent | prev [-] | | He pays less next year because Oracle stock is worth less. Just like property taxes on people's houses. The math on taxing unrealized gains or losses doesn't work out for the reasons you pointed out. Property taxes, on the other hand, have been working for a long time. |
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| ▲ | triceratops 5 days ago | parent | prev [-] | | That doesn't answer the question I posed. First off it conflates "high-earning" with "wealthy". Plenty of early career doctors are high earners but have a negative net worth. They pay more taxes than someone with millions in net worth but lower "income". Secondly, just because the median earner pays a 2% average income tax rate while the top 1% pays on average 21% doesn't tell us anything about its fairness. It ignores income share. |
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| ▲ | tracker1 5 days ago | parent | prev [-] | | Well, other than it's impossible for the bottom 50% of income earners to ever earn 60% of the income without weird communism in place... |
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