Comments on Next Big Future: Obama's plan to tax the rich won't work

Added in details on tax brackets for the sixties a...

2008-06-11T22:08:00.000-07:00

Added in details on tax brackets for the sixties and seventies and correlated to median income and multiples of median income for 200k-250k equivalent of today.

The point is that even when income tax rates for tax brackets are higher it triggers tax avoidance strategies.

Just as many tax strategies today revolve around AMT avoidance.

The current international rates are shown so that it can be seen that wealthier people have lower tax rate jurisdiction options. If one is wealthier it is far easier to change citizenship and tax home.

Increasing the tax rate on the rich for "fairness" or for tax revenues will not work to get more money so tax revenues do not increase and "fairness" is not increased if no more money is obtained.

The holdings (net worth) of the already wealthy is mostly not touched because there is no tax if assets are not sold. There has to be taxable events.

The tax rate is just one variable, exceptions and ...

2008-06-11T03:22:00.000-07:00

The tax rate is just one variable, exceptions and other rules are very important as well.

The Laffer curve doesn't mean tax cuts = more tax revenue, that works only if the tax rate is too high, beyond the optimum.
The U.S. is likely already short of the optimum due to past cuts.

Two things:1) The percentage tax levied on the hi...

2008-06-10T02:42:00.000-07:00

Two things:

1) The percentage tax levied on the highest earners is only a very small part of the total tax picture. The income bracket at which that rate kicks in, used to be $400K when it was 90%, in 1988 and 1989 it was $88K when it was 28%. That's a big difference in who's paying that 19.5% to the government.

2) And about that 19.5% percent. The revenue and income tax revenues are all squashed down because of the high numbers in the percentage lines. This hides the fact that income tax revenues decreased when the Bush tax cuts took effect. If you look carefully, though, you can still see that there's a lot of activity in those two lines, but you can't see it at the vertical scale chosen in this graph.

3) Economists accept the Laffer curve, they just think it doesn't apply when the overall tax rate is as low as it is in the US. For total taxes rates below 40%, cutting taxes, cuts revenue, period.

The graphics in this post are dishonest and the arguments are misleading. They are the economic equivalent of a physicist trying to convince you he has a perpetual motion machine.

It seems the argument says that progressive tax ra...

2008-06-10T00:28:00.000-07:00

It seems the argument says that progressive tax rates including the rich have a minor effect because the wealthy are a minor percentage. "3% reported income between $200,000 and $500,000; fewer than 1% claimed income above half a million dollars."

But this impression clouds the tremendous holdings of this small factor. One percent or less owns 49% or more of the whole and entire planet!

One, we know too little about these rich. Two, we know too little to settle. Three, the bottom is the challenge, the duty, and the path to both our sustenance and prosperity.

We've been suckered, I'm saying, at least a generation and maybe forever.

In my view, no argument about taxation is valid if relief is an option but obligation is the task.

Good analysis, but Obama isn't interested in highe...

2008-06-09T23:30:00.000-07:00

Good analysis, but Obama isn't interested in higher tax revenues and doesn't care if his plan works or not.

All he is interested in is a tax plan that he deems "fair." He believes the "rich" should pay higher taxes because he feels that is "fair." This is what he has been saying on the campaign trail.