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Pastimes : Discussion Thread -- Ignore unavailable to you. Want to Upgrade?

To: tejek who wrote (3232)	2/28/2009 9:39:42 PM
From: TimF	Read Replies (1) \| Respond to of 3816

Your question - Obama's budget: Taxing for fairness or class warfare? Answer. Class warfare. This is before any increase from Obama, and it DOES include payroll taxes (while not including the portion of corporate taxes effectively paid for by the stockholder/owner when the corporation pays corporate tax, also not including the lower return in lieu of paying taxes that many rich people get on their tax free bonds) The Progressivity of the Tax System The CBO has released a new report on effective tax rates (total taxes divided by total income). Compared with previous reports, it includes more information about thin slices at the top of the income distribution. Here are the total effective federal tax rates for 2005, the most recent year available: Lowest quintile: 4.3 percent Second quintile: 9.9 percent Middle quintile: 14.2 percent Fourth quintile: 17.4 percent Percentiles 81-90: 20.3 percent Percentiles 91-95: 22.4 percent Percentiles 96-99: 25.7 percent Percentiles 99.0-99.5: 29.7 percent Percentiles 99.5-99.9: 31.2 percent Percentiles 99.9-99.99: 32.1 percent Top 0.01 Percentile: 31.5 percent N.B.: These figures include all federal taxes, not just income taxes. gregmankiw.blogspot.com Since President Reagan began an era of tax-cutting in the 1980s, lower-class incomes have stagnated and middle-class incomes have increased only slightly If you measuring wages, or household income. Both of which don't give a good picture. Measured total compensation rather than wages (which you should because that's what employer's pay and that's what employee's earn), or individual income rather than household income (since household are getting smaller household income doesn't show how real income per person is changing), and you get a different story. Or look at the same people over time, and they tend to get richer. New immigrants moving in might be poorer, but they are also richer than they where before. In any case if middle class incomes really where stagnating (which they where not over the time period in question), raising taxes on the rich would hardly be a good strategy to deal with it. You might hurt the rich, but you'd also hurt every broad segment. Bringing down the rich doesn't help everyone else, and its likely to hurt them. As the research by Obama's own chair of Economic Advisors found out in her research a few years ago "The results of this more reliable test indicate that tax changes have very large effects: an exogenous tax increase of 1 percent of GDP lowers real GDP by roughly 2 to 3 percent." - Christina Romer, chair of Obama's Council of Economic Advisers, in in research conducted with David Romer in 2007