Money to spare for health care

[one...two...tree 2,762]

by Anna Turner

The chart below tracks the marginal tax rate on an ordinary income of $500,000 for joint filers. Over time, these marginal tax rates have fallen to nearly half the level typical in the 1950s through the 1970s. Since 1980, there has also been a huge income redistribution from the bottom 90% of earners to the upper 5%, and particularly to the upper 1%. House Speaker Nancy Pelosi is right in proposing a surtax on the nation's top earners to help fund health care reform. Pelosi says that in the final bill a 1% surtax will kick in for annual income levels of $500,000 and increase to as high as 5.4% for earners making $1 million or more. Even so, the proposed surtax would still leave the marginal tax rates on high earners at a lower level than it has been for most of the past 60 years.

Perhaps more important, however, is that the House-proposed surtax would apply to adjusted gross income, which includes both ordinary income (examined in the above chart) as well as capital gains and dividends that are currently taxed at a preferential rate no higher than 15%. Research from the Tax Policy Center suggests that capital gains and dividends often comprise a large portion of these top earners' overall income, meaning that these top earners are already enjoying a tax rate on all their combined sources of income that is significantly lower than the tax on income shown in the chart. In the end, the House's proposed surtax would provide a valuable source of revenue to help fund a new health care program.

http://www.epi.org/economic_snapshots/entr...pshot_20091028/

[mawilson 2,133]

Heh... when the top rate was 70%, people could deduct a hell of a lot more than they can now.

Not to mention that $500,000 in 1958 was about the same as $3.6 million today (adjusted for inflation.)

[rebeccajo 14]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

[Hilarious Clinton 452]

Heh... when the top rate was 70%, people could deduct a hell of a lot more than they can now.

Not to mention that $500,000 in 1958 was about the same as $3.6 million today (adjusted for inflation.)

Let's tax everyone at 90%. We would have revenue to spare!

[Joseph & Ana 0]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

An administration can't change a tax code. Only congress can do that.

[rebeccajo 14]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

An administration can't change a tax code. Only congress can do that.

Fair enough.

I couldn't remember the exact year. I was trying to cite a time frame.

[Mr. Big Dog 10,747]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

An administration can't change a tax code. Only congress can do that.

Really? But an administration can change the health care system?

[Ban Hammer 14,665]

let's just tax our way to prosperity!

[Joseph & Ana 0]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

An administration can't change a tax code. Only congress can do that.

Really? But an administration can change the health care system?

It was a swipe on you. Apparently a president does nothing. All he does is look good an sign papers.

[Mr. Big Dog 10,747]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

An administration can't change a tax code. Only congress can do that.

Really? But an administration can change the health care system?

It was a swipe on you. Apparently a president does nothing. All he does is look good an sign papers.

I don't remember ever having claimed any such ridiculous thing. Your problem is that you can't seem to grasp concepts of even modest complexity.

[Hilarious Clinton 452]

Steven is f#cking with us or..... um ..... uninformed.

by Anna Turner

The chart below tracks the marginal tax rate on an ordinary income of $500,000 for joint filers. Over time, these marginal tax rates have fallen to nearly half the level typical in the 1950s through the 1970s. Since 1980, there has also been a huge income redistribution from the bottom 90% of earners to the upper 5%, and particularly to the upper 1%. House Speaker Nancy Pelosi is right in proposing a surtax on the nation's top earners to help fund health care reform. Pelosi says that in the final bill a 1% surtax will kick in for annual income levels of $500,000 and increase to as high as 5.4% for earners making $1 million or more. Even so, the proposed surtax would still leave the marginal tax rates on high earners at a lower level than it has been for most of the past 60 years.

Perhaps more important, however, is that the House-proposed surtax would apply to adjusted gross income, which includes both ordinary income (examined in the above chart) as well as capital gains and dividends that are currently taxed at a preferential rate no higher than 15%. Research from the Tax Policy Center suggests that capital gains and dividends often comprise a large portion of these top earners' overall income, meaning that these top earners are already enjoying a tax rate on all their combined sources of income that is significantly lower than the tax on income shown in the chart. In the end, the House's proposed surtax would provide a valuable source of revenue to help fund a new health care program.

http://www.epi.org/economic_snapshots/entr...pshot_20091028/

[SMR 368]

by Anna Turner

The chart below tracks the marginal tax rate on an ordinary income of $500,000 for joint filers. Over time, these marginal tax rates have fallen to nearly half the level typical in the 1950s through the 1970s. Since 1980, there has also been a huge income redistribution from the bottom 90% of earners to the upper 5%, and particularly to the upper 1%. House Speaker Nancy Pelosi is right in proposing a surtax on the nation's top earners to help fund health care reform. Pelosi says that in the final bill a 1% surtax will kick in for annual income levels of $500,000 and increase to as high as 5.4% for earners making $1 million or more. Even so, the proposed surtax would still leave the marginal tax rates on high earners at a lower level than it has been for most of the past 60 years.

Perhaps more important, however, is that the House-proposed surtax would apply to adjusted gross income, which includes both ordinary income (examined in the above chart) as well as capital gains and dividends that are currently taxed at a preferential rate no higher than 15%. Research from the Tax Policy Center suggests that capital gains and dividends often comprise a large portion of these top earners' overall income, meaning that these top earners are already enjoying a tax rate on all their combined sources of income that is significantly lower than the tax on income shown in the chart. In the end, the House's proposed surtax would provide a valuable source of revenue to help fund a new health care program.

http://www.epi.org/economic_snapshots/entr...pshot_20091028/

I'm not sure of the accuracy of this graph and I'm sure there are tons of ways to crunch the numbers so it's really a pointless argument. However, even today people with higher incomes are paying a higher effective tax rate. Thus, income is still being redistributed from the top down. Just because taxes on the top 5% or 1% were reduced, doesn't mean they are less than those on people in lower brackets. Moreover, people in higher brackets receive much less from the government so income redistribution is even more top-down.

And in general, why do we think that a 70% tax rate or even 50% is justified? Do you really think that the government should be taking so much of what someone earns? Considering how little the government does to satisfy the basic needs of the average person, the percentage of income that they are collecting is ridiculous.

Edited November 16, 2009 by SMR

[mawilson 2,133]

Mark -

Even the average taxpayer used to be able to deduct a 'hell of a lot more' before the Reagan administration changed the tax code.

I agree. When the Reagan administration lowered the top marginal tax rate, they also eliminated

a lot of deductions. They had to do it to justify the tax breaks.

If we go back to the old, higher rate, do you really think the Obama administration will bring all

those deductions back? Fat chance.