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Class warfare

roman_mir (125474) writes | about 2 years ago

User Journal 17

Given the modern time attitudes on class warfare with comments like these insisting that the class war is waged by the rich on the middle class and the poor, and generally the media and politicians insisting that the 'rich are not paying the fair share', I decided to take a look at historic income tax data that can still be found on IRS site

Given the modern time attitudes on class warfare with comments like these insisting that the class war is waged by the rich on the middle class and the poor, and generally the media and politicians insisting that the 'rich are not paying the fair share', I decided to take a look at historic income tax data that can still be found on IRS site
Individual income tax returns starting from 1954

Business tax returns starting from 1959

The current tax returns up to 2010

It is a surprise to look at those records, since the currently accepted message is that the rich are paying much less than before and that they were paying much more in the fifties when the tax rates were up to 70 and even 91%.

Happy to report that this is pure nonsensical propaganda.

An example of individual income returns from 1958 and 2012 shows that only 236 people paid some money at the silly 91% rate that is out of 45.6 Million tax returns that were filed.

Another interesting finding is that 0.178% of all returns filed paid 35% or higher, which means only 8549 people paid 35% in taxes or more. 3.5% of all income taxes in 1958 were paid by these top earners, who paid 35% or more in taxes.

Compare that to the current situation, there are 2.5Million taxpayers (which is almost 2% of all tax payers) that paid 35% or more.
Interestingly enough today 3.5% of top earners pay 41.5% of all income taxes.

So how can this be that the populist message is that in 1950s the tax code was so much more progressive and the rich paid so much more in taxes (and that's apparently why the economy was so strong, or so the liberals and progressives tell us today), yet today 2.5 Million people pay 35% or more in taxes and pay 41.5% of all income taxes while in 1958 only 8549 people (0.178 of all filers) paid 35% or more in taxes, which constituted only 3.5% of all income taxes.

Clearly the propaganda machine is well and running.

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you said one thing that makes sense (0)

Anonymous Coward | about 2 years ago | (#42136591)

this is pure nonsensical propaganda

because indeed your interpretation of reality is nothing but pure nonsensical propaganda. you and your cult yearn to bring the us back to the 50s - the 1850s. you openly embrace the thought of the restoration of human slavery and yet for some reason you are surprised to see that some people disagree with the idea.

Re:you said one thing that makes sense (0)

Anonymous Coward | about 2 years ago | (#42141435)

"you openly embrace the thought of the restoration of human slavery and yet for some reason you are surprised to see that some people disagree with the idea"

juvenile though my comment might be, i still have to say, "LOLWUT?"

Re:you said one thing that makes sense (0)

Anonymous Coward | about 2 years ago | (#42151837)

you must not have read many of roman_mir's comments. go back and read through his comment history. he wants to see a restoration of america from the 50s - the 1850s. roman_mir's fantasy does away with education for anyone who cannot afford it. voting becomes a privilege for the entitled. minimum wage of course would be gone. employers would have no restrictions whatsoever on what they do with their land, their neighbors, or their employees. employees would have no ability to seek retribution from their employer if they are horribly maimed or killed on the job, as courts would be owned by - you guessed it - the wealthy. eventually employees would be bought and sold like used cars on the street corner, and discarded unceremoniously at the town dump in the same way.

it is, undoubtedly, the restoration of human slavery. even somalia has higher regards for human life than roman_mir.

Re:you said one thing that makes sense (0)

Anonymous Coward | about 2 years ago | (#42156857)

Dumb_registrars, you really are stupid. Your copy/pasta isn't fooling anybody.

Re:you said one thing that makes sense (0)

Anonymous Coward | about 2 years ago | (#42168619)

and here we have dumb_registrars, late to the party as usual. she thinks she can fool people into giving her credit for this!

All men are created equal (0)

Anonymous Coward | about 2 years ago | (#42141695)

There was a famous line from a famous document from around the time of the founding of our nation that says something to the effect that all men are created equal... and yet our government can't seem to get around the need to treat people differently based on different defining criteria.

Why does the government care what your income level is? All they should care about is that everyone puts in the same percent toward the maintenance of said government.

I realize that a flat tax weighs heavily on low income individuals. 20% for someone making 15k per year is a lot more onerous than on someone who is making 50k per year. I don't have an answer for using a flat tax and allowing an adjustment for income - perhaps something like we have now where you get a standard deduction that would encompass\offset the taxes required at low levels of income. But such a standard deduction should apply to all levels of income. You could make it state that, in recognition of the need to feed yourselves and your families the governement does not tax the first (poverty line) of income you make.

Re:All men are created equal (1)

udachny (2454394) | about 2 years ago | (#42142151)

Well, the answer to the question of flat tax is very simple:

1. There shouldn't be an income tax, people's work should not be taxed.

2. If there is an income tax, it must be flat rate, this would ensure that the rate would be very low and thus the government spending would be capped at some percentage point of overall productivity in the economy.

By the way, at some point the government tried (successfully enough) to hide what the individuals were paying in income taxes by requiring that the taxes are collected by the employers (source deductions). If people had to actually take money out of their savings that they have accrued over the year and give part of it to the government at the year-end the income taxes would have been as low as possible (if they survived at all).

Re:All men are created equal (0)

Anonymous Coward | about 2 years ago | (#42150433)

The only fair tax is a head tax. Why should I pay more than you just because I make more than you? That just punishes success.

Re:All men are created equal (1)

flaming error (1041742) | about 2 years ago | (#42188957)

I don't get the "punishes success" meme. How many cases have there been of people turning down $5 because it would cost them $1?

What does "success" even mean? People who have boatloads of money fall into five categories:
1) well-connected sons of bitches
2) criminal sons of bitches,
3) savvy, driven, lucky sons of bitches,
4) the just plain fabulously lucky
5) Warren Buffett

Having any of those groups kick in a little more won't stop the wheels of commerce, nor sap ambition from the human race.

By the way, I'm politically with GP - there should be no tax on individuals' wages, especially not a federal tax. The original arrangement, as I understand it, was that each state paid its dues to the federal government, the states raised that money however they wanted, and the citizens had no interaction with the feds. I would love to have no interaction with the feds.

Re:All men are created equal (1)

flaming error (1041742) | about 2 years ago | (#42188975)

5) Warren Buffett and The Woz

Propangda is indeed alive and well (0)

Anonymous Coward | about 2 years ago | (#42142823)

https://en.wikipedia.org/wiki/Internal_Revenue_Code_of_1954#Progressivity_of_the_1954_Code [wikipedia.org]

People who were taxed at 91% would be making the equivalent of 3.75 million in 2011 dollars.

The 2.5 million people today paying 35% is anyone who makes above ~379k.

https://en.wikipedia.org/wiki/Tax_bracket#Tax_brackets_in_the_United_States [wikipedia.org]

So no shit more people are paying the top bracket and paying a bigger % of taxes today. It's not that the rich are paying more. It's that more people are counted as "the rich" when it comes to taxes, even when they're not that rich

This means the rich does pay less, because all those other people (the middle and upper middle class) is sharing (more like taking over) their burden, and it creates the APPEARANCE that "the rich" are paying more.

The trick they have pulled on you is that "the rich" means only the 1% ruling elite when it comes to being "job creators" and "captains of industry", but they suddenly include the 51-99% when it comes to taxes, to shield and excuse the 1% of any wrong doing

"But we're paying more taxes than ever!" says the 200-8000 people

The correct response to that is 'BULLSHIT. It's not you, it's the 2.4 million other people you dragged in to pay for you who is paying more taxes"

The propaganda is alive and well, and you, roman_mir, has fallen for it and is actually perpetuating it.

Re:Propangda is indeed alive and well (0)

Anonymous Coward | about 2 years ago | (#42143427)

I am not pulling any tricks, I have actual data, hard facts showing that only about 8500 people in 1958 paid 35% or more in income taxes and only a couple of hundred people qualified for 91% income tax, all of which constituted 0.178% of all income tax filers and together they paid the total of 3.5% of all income taxes. Today 2% of income tax filers pay 35% or more in income taxes and they contribute 41.5% of all income taxes.

The difference between 1958 and today is also clear from those same documents, it's the deductions, the non-taxed income and all the credits that were carried to the next years, which was only possible in 1958 because there was only 1 type of income, not 4 types as exist today.

So if you had a high enough salary that would propel you into the 35% or higher tax territory if at the same time you had any losses during the year, you could deduct the losses from your gains dollar for dollar. The house depreciation was deducted from earnings, the stock market losses were deducted. Also people didn't report as much income specifically because they spent so much of it instead of saving it, and I explained the reasons for it here [slashdot.org] . Obviously it makes much more sense to spend your money than to give 91% of it to government. What's the difference, lose 91% or lose 100% Almost no difference. OTOH if you can spend the 100% you don't have to pay the 91% and every single purchase and every club membership and every trip was deductible.

Of-course this actually prevents many investments from taking place, so the economy was stagnating in the fifties instead of growing because of the high taxes.

So, the people didn't show income, instead they spent as much as they could (why not, everything you buy is at 91% discount if your taxes are 91%). People could deduct all of their losses from all of their gains and that's also a huge reason as to why the entire industries were created at the time helping people to avoid paying taxes. People were transferring their money so that they would NOT pay dividends in 1958, instead they transferred the money to pay capital gain taxes, which were significantly lower.

By the way this proves what a huge liar Warren Buffet is (I explained [slashdot.org] ) he was selling people investments at the time and today he is insisting that people didn't care about taxes. Of-course he is completely full of shit, a complete liar and a fraud. No way he wasn't doing everything at the time (and he is doing everything today) to avoid taxes. His entire life is based around avoiding taxes one way or another. Nobody was paying dividends in the fifties, so when he was selling his investment advices he clearly was not pushing his customers into 91% tax territory. He was clearly selling investments as non-dividend paying stock so that the gains could be realised as capital gains, which were completely tax deductible in case of losses and could be used to transfer tax credits from one year to the next. Today Buffet is fighting IRS on his corporate tax rate, which is supposed to be 35% but he is paying 30 or 31 or so, he is in court on this issue all the time.

In any case, today 2.5 million people or 2% of all income tax payers pay 41.5% of all income taxes at rates 35% and higher, while in 1958 8500 or so people were paying taxes at 35% or higher rate, which was 0.178 of all tax payers and they contributed a total of 3.5% of income taxes and the rest of taxes were paid by the lower income paying brackets.

Yes, the propaganda is alive and well and it's full of shit and it's progressive and liberal.

Re:Propangda is indeed alive and well (0)

Anonymous Coward | about 2 years ago | (#42144757)

I am not pulling any tricks

I didn't say you were pulling any tricks.

With people with as little reading ability as you, it's no wonder the propaganda works so well.

Warren Buffett (0)

roman_mir (125474) | about 2 years ago | (#42150003)

Warrent Buffett [thedailyshow.com] appeared on The Daily Show and since every idea concept and word in that episode was carefully crafted for the consumption of the modern American Socialist, I decided to take it apart for what it is, so here it goes.

Let's start with Buffett admitting that he hadn't had a thought since 1966, I find it hard to believe, what I do find believable is that Buffett hadn't expressed a genuine opinion since 1966, that is closer to truth. By the way, Warren Buffett is one of the 30 self made richest Americans born in the last 200 years, he is one of 3 born in 20th century. Except for 2 others, the rest were born before US Civil war and only Gates was born after WWII.

Now, back to the topic. Buffett proposes that everybody who makes at least 1,000,000 dollars must pay 30% in taxes and anybody making at least 10,000,000 must pay at least 35% in taxes. Of-course what he is implying that people in those tax brackets aren't paying that. It is a lie.

As shown in data reference to IRS income tax returns for the years 1954 to now this very Journal Entry [slashdot.org] , today 2.5 Million people pay taxes that are 35% or more, that is 2% of all income filers and it constitutes 41.5% of all income taxes collected by the Federal gov't (this does not include State income taxes and any other taxes, FICA, property, etc.).

So 2% of filers, that's 2.5Million people pay 35% or more in income taxes today in USA. The same journal entry shows that in 1958 for example, only 0.178% of income tax filers paid 35% or more in income taxes. This made up a total of 3.5% of all income taxes that were collected from about 46.5 Million people. 236 people paid some income taxes in 91% bracket. Those were the people who couldn't find enough deductions to not pay taxes in that bracket, the rest obviously did find enough deductions and other ways to reduce their tax burden.

Exactly how people did it and why is explain in this comment [slashdot.org] . But the short of it is that at the time there was only one type of income, not 4 as there are today, and people could deduct losses in one income type from gains in another. Also every purchase was tax deductible and instead of paying high income taxes people spent lavishly, deducting purchases from their income to pay less taxes. Of-course this hurt investment capital and that is a main reason why US economy didn't grow much better in the fifties and the later years either, while economies of other countries grew much more percentage wise.

Another point that Buffett made was employees pay payroll taxes and apparently he finds it appalling that he does not. Of-course he conveniently doesn't mention (and Jon Stewart doesn't ask) that Warren Buffett chooses to pay himself not a salary but dividends from BH (his company) profits.

Why does it matter that he pays dividends? Because dividends are not earned income, they are investment income but as such they are not tax deductible by the corporation, they are paid out of the after-tax corporate profits. Of-course 33% of BH is owned by Warren Buffett [forbes.com] , so when it makes him a billion dollars (like in 2009, when BW made 3.2Billion, so Buffett's portion of that was over a billion), he paid himself a salary of 100,000 (and a payroll tax on that) and he paid himself dividends of some 60,000,000 and paid 11 to 15% in dividend taxes on that (and as to why he can reduce his rate from 15% to 12% or 11% you can look at more detailed accounts of his taxes) [seekingalpha.com] , what he does not say is that he chooses to pay himself dividends.

By paying himself dividends what Buffett does is he puts the tax obligation on his company, so his 1Billion that the company made him and he didn't take as salary or as dividends is reinvested but it is also reduced by some deductions, and Buffet is fighting IRS on this, he doesn't want to pay 35% corporate tax rate on his money, Forbes calculates his tax not at 35% but at 29% [huffingtonpost.com] .

If Buffett paid 35% corporate and 15% dividend tax without doing some more tricky stuff, he'd be paying 44% only in Federal income taxes. With 29% and 11-12% he pays less than that, his blended Federal income tax is over 33% the way he does it.

BTW, Buffetts home state is Nebraska, where the income taxes are between 6 and 8% approximately, so there is a good reason Buffet isn't taking a large salary of a billion or tens or hundreds of millions. His effective tax rate on federal and State level would be near 60% then (including FICA).

Now, Buffett declared in the show that in 2009 he paid some of his income to himself as a capital gains 'without double taxation', what he says is that he sold some of his stock. However this is also just plain nonsense, since in the year 2009 BH did pay corporate income tax and as such, it reduced the overall earnings of the company.

The price of stock is a function of future earnings of a company and thus by having the company pay corporate taxes the earnings are guaranteed to be lower than if corporate taxes weren't paid, thus the price of each stock, each share in the company reflects the earning potential and takes into account the corporate tax. If the corporate taxes didn't exist the prices for BH stock would have been much higher, reflecting the earning potential of about 35% higher per annum, which means that the sale of stock reflects this and Buffett simply pays the tax in getting a lower price per share.

Then Buffett said something about investment opportunity, he said: "if I call you at night and tell you to buy this once in a life time stock, you are not going to ask me about taxes".

Ok, there are many problems with this, first of all how often does Buffett himself call people with stock tips? Maybe if he called nobody would ask anything else, after all, it's Buffett. However it is absolutely a lie coming from Buffett that taxes are no consideration when looking at investments. Here is a comment where some of this is explained in more details [slashdot.org] , the short of it is that investments are inherently risky and taxes make a huge difference in looking at investments because investments are risky.

Yes, if the government guaranteed all the losses (as it did for Warren Buffett and he thanked government for it, if US government didn't bail out AIG, Warren Buffett would have been bankrupt back in 2009 [nytimes.com] ) then it wouldn't matter if the taxes are high, after all, if you lose money and government gives it back to you but if you make money and government takes a huge cut, well, it's a no-lose proposition. You can't lose on the deal.

Investments don't work that way, read the comment that is linked above, investments are always risky and the higher the tax the less likely people are to take the risk.

Jon Stewart talked about 'robust economy of the last 80 years based on high taxes and a social safety net'. First of all in the beginning of this comment I already showed that wealthy people paid much lower taxes in the fifties than they do today, both as the percentage points of their earnings and as percentage of all income taxes collected (and as absolute amounts as well obviously).

However was the economy of the last 80 years really that robust? The economy of 1800 to 1917 grew dramatically, creating all of the factories, infrastructure, cities, towns, products and services that never existed before, while the gold dollar gained 2x the value. That is when people saw their purchasing power grow dramatically while the wealthiest people were wealthier than Warren Buffett by a factor of 10 easy (Carnegie was 300 Billion by the end, Rockefeller was 600Billion by the end, both men started with nothing and worked their way to their riches). That century was not an easy one, USA had the bloodiest conflict on its own soil it ever saw (the Civil War), yet the economy became industrialised, entire new industries were created, new products invented, etc.

The last 80 years were not stellar at all when compared to the first 124 years of the union. The creation of IRS and Fed, introduction of income taxes and paper money, inflation, Fed creating the depression of 1921 and 1929 by printing money from 1917 and 1925 respectively. Government officials turning the 1929 crash and recession into the Great Depression by more money printing and bail outs and stimulus packages. The stagflation of 1970s and the default on the dollar in 1971. The 1990s with its stock market bubble and the 2000-2009 with the housing bubble and financial collapse based on it. The currently inflated bond and dollar bubbles.

The only times in the last 80 years that were actually prosperous happened after drastic reduction in government spending (1921 the spending was cut by 70% and the depression ended in 1.5 years. 1947 the spending was cut by 64% and taxes by 32% and that's when the Depression ended. 1981 the interest rates were taken to 21.5% to end the stagflation, which also cut government spending based on borrowing). In order to achieve economic growth the money has to be reallocated from the government to the private sector, which actually creates that wealth in the first place.

As to the 20% of economy being financial economy, that is the consequence of growing government spending, which results from more and more regulations and taxes, which push real businesses away. In turn the inflation (money printing by government, creation of fake credit and money laundry from the Fed to the banks and to the Treasury) destroyed the real investments and pushed real jobs abroad, the void was filled in with whatever was left behind, the ever inflating financial sector.

At the end I must say that Jon Stewart clearly had an agenda, calling Buffett 'the nicest person' he'd like to have around. He didn't ask him any questions regarding the real record, he was happy to see this pro-government propagandist on his show, it was a shame and a sham.

Re:Warren Buffett (0)

Anonymous Coward | about 2 years ago | (#42150727)

You will be marked a troll because you are not for us.

that phrase, it does not mean what you think it to (0)

Anonymous Coward | about 2 years ago | (#42151605)

just because you say you will

take it apart for what it is

does not mean you will actually succeed at doing so. or do you have some alternate understanding of what that phrase means? normal, thinking people would understand it to mean a thoughtful analysis of a situation, complete with a well-reasoned critique of the same. however no normal thinking person or anyone capable of the simplest kind of reason would read your comment and conclude it to be that.

you started off with a "clever" typo, and then a bald-faced lie. and that was before you even made it through your first line. if you cannot at least try to present a reason for people to believe you to have more credibility than a gerbil, you have lost your argument before you have even begun to present it.

The shifting meaning of 'rich' (1)

Arker (91948) | about 2 years ago | (#42151761)

A 'rich' person is one who doesnt need wage income. The idea of soaking the rich with an income tax is therefore nonsensical. The truly rich are not necessarily the ones that earn high incomes. They are people that control truly monstrous amounts of wealth through political power and favors.
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