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  1. #41
    Administrator highlander's Avatar
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    Quote Originally Posted by Zarathustra View Post
    There, and in their houses.
    You know I thought about that (also tax deferred up to a limit when they sell) but for a lot of people these days, they haven't made much of anything in the last 10 years.

    Quote Originally Posted by Zarathustra View Post
    Depends on how much you choose to have taken out, tho, right?

    You get some from social security, and then some from your 401k/IRA.

    You cross that 20% capital gains level pretty quickly, tho, don't you?
    I'm not aware of any capital gains threshold. All of it is taxed as ordinary income. However, your marginal tax rate is generally lower when you are retired than when you are working because you are making less.

    One problem with having the majority of your investments in tax deferred accounts is that it introduces tax risk (i.e. laws change, rates go up, etc.)

    Quote Originally Posted by Zarathustra View Post
    Many of the affluent still put their money into 401ks and IRAs as well.

    But they also probably have investment accounts in addition to these that have the more advantageous tax treatment.

    Oh, but those accounts are being taxed every year, which will lower the post-tax rate of return of the portfolio.

    Hmm... I wonder which ends up being the better post-tax investment, assuming equal rate of return...

    Sure, they put the max in 401Ks, IRAs, Profit Sharing plans, etc. The more affluent you are, the more likely it is that you're putting money in taxable investments too.

    Quote Originally Posted by Zarathustra View Post
    If the tax rate at the end is the same as the tax rate at the beginning, the deferral doesn't do anything tho.

    It's the exact same as putting it into a Roth.
    Actually, the deferral has a huge impact. It has to do with the compounding of interest on the larger investment that is put in and because you don't have to annually pay those taxes which eat away at your return every year. I don't have a handy example, but this thread might shed some light.

    http://answers.yahoo.com/question/in...0225642AAVeys4

    I don't know much about Roth IRAs - haven't ever been able to do that though they sound tremendous.

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  2. #42
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    Quote Originally Posted by gasoline View Post
    or do they pay less? just want to establish this point is true or false on this forum because the opinion seems mixed.
    They pay 70% of all taxes and earn 50% of all income.

    Middle and lower income folks pay more in European social democracies.

    CBO: The wealthy pay 70 percent of taxes

    Wealthy Americans earn about 50 percent of all income but pay nearly 70 percent of the federal tax burden, according to the latest analysis Tuesday by the Congressional Budget Office — though the agency said the very richest have seen their share of taxes fall the last few years.

    CBO looked at 2007 through 2009 and found the bottom 20 percent of American earners paid just three-tenths of a percent of the total tax burden, while the richest 20 percent paid 67.9 percent of taxes.

    The top 1 percent, who President Obama has made a target during the presidential campaign, earns 13.4 percent of all pre-tax income, but paid 22.3 percent of taxes in 2009, CBO said. But that share was down 4.4 percentage points from 2007, CBO said in a finding likely to bolster Mr. Obama’s calls for them to pay more by letting the Bush-era tax cuts expire.

    The big losers over the last few years were the rest of the well-off, especially those in the top fifth, who saw their tax burdens go up.

    “Specifically, between 2007 and 2009, the share of taxes paid fell for the bottom three income quintiles, was close to flat for the fourth quintile, but rose for the highest quintile,” CBO said. “Within the top quintile, however, the shift was uneven; the share paid by the top percentile fell, and the share paid by the rest of the top quintile rose.”

    The tax fight has risen to the top of this year’s presidential campaign, with Mr. Obama calling for the wealthy to pay more money both to lower the deficit and fund his new spending promises. He wants households making $250,000 or more a year to see their rates return to Clinton-era levels, though he has proposed a one-year extension of the rest of the Bush-era rates.

    Republicans have countered that they want a one-year extension of all current rates in order to have breathing space to tackle a broader overhaul of the tax code.

    CBO, the nonpartisan agency that serves as Congress’ official scorekeeper, said the current tax code is progressive chiefly because of the income-tax structure. On average, the lowest 40 percent of earners actually get money back through the income-tax code because of refundable tax credits.

    Overall, the federal tax rates in 2008 and 2009 — at 18 percent and 17.4 percent — were the lowest in the last three decades, suggesting at least part of the reason the federal government has run record deficits in recent years.

    In terms of actual earnings, the top 1 percent suffered the most in the recession, with their average earnings dropping from $1.9 million to $1.2 million. The lowest 20 percent saw their incomes drop from $23,900 to $23,500 during that time.

    CBO included a wide range of measures of income including wages, employer-paid health insurance premiums and capital gains.

    CBO said the top 1 percent earned an average of $1.9 million in pre-tax income in 2009, while the top 20 percent as a whole averaged $273,000. The fourth quintile averaged $98,400, the middle quintile averaged $67,600, the second quintile averaged $45,600 and the lowest quintile averaged $23,900 in income.

  3. #43
    Analytical Dreamer Coriolis's Avatar
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    I'm not sure where these rates come from:

    Overall, the federal tax rates in 2008 and 2009 — at 18 percent and 17.4 percent — were the lowest in the last three decades, suggesting at least part of the reason the federal government has run record deficits in recent years.
    I checked several sources and all show income tax rates for both years up to 35% for the highest earners, with a minimum rate of 10% for those with $0-8,350 in taxable earnings.
    I've been called a criminal, a terrorist, and a threat to the known universe. But everything you were told is a lie. The truth is, they've taken our freedom, our home, and our future. The time has come for all humanity to take a stand...

  4. #44
    Senior Member KDude's Avatar
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    I don't think there's any "standard" or right or wrong way to this. Fairness is irrelevant. I think the ugly truth is that only power is relevant. Power sets the terms and appropriate amount of taxes. Not some mysterious sense of fairness. You want the rich man's money, then break their arm. Just don't break it so many times that they don't want to make money at all. That means you get no money. If you give them no incentive to work except to have all their shit taken and get beat down, then no one's going to work. So you just strongarm symbolic and key opponents. It puts the rest in line.. maybe. That is, until they have a revolution of their own.. rinse, repeat

  5. #45
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    Quote Originally Posted by Coriolis View Post
    I'm not sure where these rates come from:

    I checked several sources and all show income tax rates for both years up to 35% for the highest earners, with a minimum rate of 10% for those with $0-8,350 in taxable earnings.
    They're the actual tax rates for those years.

    The top marginal tax rate is not the actual rate.

    The actual rate is total tax revenue / total income.

  6. #46
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    p.s. If there was ever a clearer indicator of the intellectual bankruptcy of the left than this thread, I have not seen it.

    The answers in here are pathetic.

    They amount to no more than "RABBLE RABBLE RABBLE!!! THE RICH SHOULD PAY MORE!!!"

    Enjoy having control of the country.

    Just like the Republicans before you, the contradictions and emptiness of your ideas will reveal itself in time.

  7. #47
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    p.p.s. Taxes need to go up, and costs need to be cut, at about a 3:1 ratio of spending cuts to tax increases.

    The simple fact of the matter is that we are in the midst of a major demographic shift, in which more of our country is getting older, and, as such, we must allocate more of our resources to the government in order to pay for these old peoples' Social Security, Medicare, and Medicaid. But by the same token, we cannot afford to pay for everything we have promised them, and, as such, we must reform entitlements. Social Security was originally set up with the expectation that it would only pay for 2 years of benefits until the average retiree died. This is no longer the case, because life expectancies have increased so dramatically over the last 60-80 years. Now they're paying for 20 years, or more, of benefits. This is unsustainable. You can't have such a huge number of old people leeching off the system for so long a time, with such large benefits.

    "If something cannot go on forever, it will stop." - Herbert Stein, Chairman of the Council of Economic Advisors

  8. #48
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    And, lastly, whether you want to accept it or not, raising taxes lowers the rate of economic growth.

    And the class for which this is the truest, unfortunately, is the wealthy.

    Raising taxes on investment income has the worst effect on economic growth.

    Raising taxes on high income earners has the next worst effect on economic growth.

    Raising taxes on middle income earners has the next worst effect on economic growth.

    And, lastly, raising taxes on low income earners has the least effect on economic growth.

    It is unfortunate that this is the case, but, whether you want to accept it or not, this is the case.

    And in an economic environment where the economy is barely growing as is, raising taxes on investment income and high income earners, all other things being equal, is sure to further worsen the situation.

  9. #49
    Senior Member KDude's Avatar
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    Quote Originally Posted by Zarathustra View Post
    And, lastly, whether you want to accept it or not, raising taxes lowers the rate of economic growth.
    That's my point about not breaking too many arms.

    The trick is to break them "just enough".

    America is so used to [relatively] low taxes though that the rich whine about every dollar under threat. That kind of goes for everything actually. Right now, they cry about every change imaginable. "Party of No" is apt.

  10. #50
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    Quote Originally Posted by KDude View Post
    That's my point about not breaking too many arms.

    The trick is to break them "just enough".

    America is so used to [relatively] low taxes though that the rich whine about every dollar under threat.
    If you count federal income, state income, sales, and property taxes, the rich already pay somewhere between 50%-60% of their income in taxes. That's getting you damn well near the threshold of the Laffer curve at which raising tax rates actually lowers tax revenue, because you've taken away too much of the incentive to work that extra bit/put your capital at risk.

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