Isn't it Rich, Being Rich? (Cavuto)

FOX News ^ | 10/14/03 | Neil Cavuto

[Archangelsk]

Huh? Have you looked at the tables lately? The tax rates range from 10% to 38.6%. Those in the dreaded "top 1 percent" pay a much higer rate of their income that the bottom rungs. Where do you get your theory?

Let's do the hypothetical math here. Suppose your income is one million cool simmolians and your tax is the mythical, by-thunder-it's-killing-me 38.6%. Well, that would leave you with 614,000 slippery bananas. Now with a straight face say the following, "I can't live on 614K per year and I'm so depressed and that my incentive to work has come to a complete halt."

[Looking for Diogenes]

Must be nice to tuck that much away... makes me wonder what ol'John had to pay in taxes on the capital that went into that investment prior to the time of your example.

If the capital came income, he paid up to 35% on the original investment. If it came from an inheritance, the estate paid up to 50%.

If you'd like to go through the trouble of calculating the AMT for a hypothetical case, be my guest. I was just showing that there is a potential for a higher income person to pay a lower rate then a lower income person due to deductions, minus the AMT. The AMT allows some deductions at some income levels.

[cspackler]

Now with a straight face say the following, "I can't live on 614K per year and I'm so depressed and that my incentive to work has come to a complete halt."

So, why won't we just let you decide what everybody "needs" to live on, and have everyone get paid that amount, the rest goes to the government.

Oh wait, that sounds a lot like socialism, huh?

[PA Engineer]

Only with investment income. Again, how about some honesty. Your hypothetical taxpayers were based on payroll taxes and AMT is in play. Not only is AMT in play, but the threshold is creeping to the not so rich "rich". Can you say ongoing hidden tax increases.

I will agree that we need to do away with the income tax and go with a modified end product sales tax. This is the only way the US is going to be competitive in the world market.

[Looking for Diogenes]

Again, how about some honesty. Your hypothetical taxpayers were based on payroll taxes and AMT is in play.

Sorry to confuse you. I gave two separate examples. The one in post #30 concerns the regressivity of payroll tax rates. The one in #27 concerns the potential regressivity of income tax rates due to deductions. I was quite forthright in indicating that I did not include the AMT.

If you'd like to do the AMT calculations for a single filer earning taxable wages of $120k, with $60k of income from tax-free municipal bonds and a $60k mortgage, I'd be interested in seeing the result.

[Atlas Sneezed]

The tax paid per citizen is higher the more you earn. Regressive means the opposite.

I never said that the tax itself is regressive. I showed that the tax rate is regressive.

---

By your leftist logic, the death penalty is "regressive" for mass-murderers.

[Looking for Diogenes]

OK. I have endeavored to do the AMT calculation. As best as I can determine, the Alternative Minimum Tax does NOT apply to the hypothetical situation I outlined in post #27. In this hypothetical situation, the wealthier person would pay the same taxes as a person earning 1/3 as much.

[Looking for Diogenes]

"Regressive" has a conventional meaning when discussing tax rates. Of course, in your own private world words can mean whatever you want them to. But in the field of finance, a regressive income tax rate is one which declines with increasing income.

"Regressive Tax" defined

[PA Engineer]

Your original example was 180K payroll income and not 120K mixed income. Nice try.

[Chu Gary]

"...they still pay a smaller percentage of their income in taxes, after deductions, etc."

This is very worthy of a very large BRAVO SIERRA!!! Do you just expect the less successful to get a free ride because they are not contributing to society and should be able to milk everyone above them? Apparently you do think exactly so; I also think you're in the wrong place. OTOH, you do provoke discourse, so maybe that's good.

[P.O.E.]

Wow! Nice rant.

Those social re-engineers who thrive on failure need to get their money from somewhere.

[Looking for Diogenes]

"Taxpayer John earns three times as much $180,000, and has a nice house with a $5,000 per month mortgage, which is fully deductible. John also has $60,000 annual income from Treasury Bills, which is not taxed at all. "

Your original example was 180K payroll income and not 120K mixed income. Nice try.

Dude, chill out. OK, my wording was not crystal clear. I should not have written "John also has," instead it should have been more like "John receives $60k of his income from..." If you read it and my subseqent posts carefully, I think it is evident that the hypothetical example was of a guy with $180k of income, of which $60k was from non-taxable interest. I also made the mistake of specifyng T-bills rather than munis.

I sure hope you aren't relying on any advice I'm giving you. Please consult your tax attorney!

The point is that it is possible for higher income individuals to pay no more taxes then someone earning 1/3 as much. If you'd like to contest that then show me some figures, don't argue of piddly.

[Rollee]

Thanks for posting this. I worked for a man that was a billionaire twice over. I made a copy of the tax check he wrote to the IRS for his file. It was a check written to the tune of $12,000,000.00 Just one year's taxes.

Imagine how many "trough-feeding, social-program pushing pimps" that would support. Through his entrepreurship this man provided employment for over 50,000 people, not to mention countless others in auxiliary industries.

"Trough-feeding, social-program pushing pimps"! That's a great one. Cavuto is the best!

[lainde]

Ping~!

[PA Engineer]

" The point is that it is possible for higher income individuals to pay no more taxes then someone earning 1/3 as much. If you'd like to contest that then show me some figures, don't argue of piddly."

I got a good laugh from this one. Last year I paid the equivalent in taxes of someone who earned 1/3 of what I did. Possible is only in the mind of liberal tax policy makers. In reality my income group pays both the highest percentage and greatest amount of taxes. Your agenda is?

[riri]

I am just glad we finally have a medium to show these people for what they are. Granted, the average idiot doesn't watch FOX news and forms their opinion from Katie and Oprah but at least we have something.

[Looking for Diogenes]

" The point is that it is possible for higher income individuals to pay no more taxes then someone earning 1/3 as much. "

Last year I paid the equivalent in taxes of someone who earned 1/3 of what I did.

OK, so then you prove my point.

Your agenda is?

Agenda? I posted that particular example to back up what Halfdome said: "I get tired of the spin that the rich pay so much more in taxes -- of course they do, but they still pay a smaller percentage of their income in taxes, after deductions, etc." Now he may not 100% correct, but it can and does hapen.

I guess my 'agenda' is that I think taxes should be fair. Deductions, loopholes, shelters, etc, distort the tax code and we all know it. A flat tax, like the one proposed by Steve Forbes, would be fairer then the supposedly progressive income tax we now have.

This issue hasn't been raised on this thread but what is anybody's 'fair share?' If we could figure that one out building a good tax cdode would be easy!

[Looking for Diogenes]

Thanks for posting this. I worked for a man that was a billionaire twice over. I made a copy of the tax check he wrote to the IRS for his file. It was a check written to the tune of $12,000,000.00 Just one year's taxes.

That sounds like a big number, and it is. But as a percentage of his income, it doesn't sound like so much.

If your boss had $2bn in assets and he earned a mere 5% on his assets, that'd be $100 million. If he earned that much then he he paid only 12% of his income in taxes. By contrast, a grunt earning $60k pays 20% of his income in taxes. Is that fair?

[VRWCmember]

The one in #27 concerns the potential regressivity of income tax rates due to deductions. I was quite forthright in indicating that I did not include the AMT.

What did you mean by $5000 per month mortgage - fully deductible. Do you mean the INTEREST (the only part of the mortgage that is deductible) is $5000 per month? That must be one heckuva mansion. Also, how did you figure the deductibility. Once the taxpayer's income goes over $100K, the taxpayer starts losing the deductibility of his deductions so that he may only get to deduct say $20,000 of his $25K to $30K of itemized deductions.