Get Ready for a 70% Marginal Tax Rate

[mamboni]

Get Ready for a 70% Marginal Tax Rate

Some argue the U.S. economy can bear higher pre-Reagan tax rates. But those rates applied to a much smaller fraction of taxpayers than what we're headed for without spending cuts.

By MICHAEL J. BOSKIN (http://online.wsj.com/search/term.html?KEYWORDS=MICHAEL+J.+BOSKIN&bylinesearch=true)

President Obama has been using the debt-ceiling debate and bipartisan calls for deficit reduction to demand higher taxes. With unemployment stuck at 9.2% and a vigorous economic "recovery" appearing more and more elusive, his timing couldn't be worse.

Two problems arise when marginal tax rates are raised. First, as college students learn in Econ 101, higher marginal rates cause real economic harm. The combined marginal rate from all taxes is a vital metric, since it heavily influences incentives in the economy—workers and employers, savers and investors base decisions on after-tax returns. Thus tax rates need to be kept as low as possible, on the broadest possible base, consistent with financing necessary government spending.

Second, as tax rates rise, the tax base shrinks and ultimately, as Art Laffer has long argued, tax rates can become so prohibitive that raising them further reduces revenue—not to mention damaging the economy. That is where U.S. tax rates are headed if we do not control spending soon.

The current top federal rate of 35% is scheduled to rise to 39.6% in 2013 (plus one-to-two points from the phase-out of itemized deductions for singles making above $200,000 and couples earning above $250,000). The payroll tax is 12.4% for Social Security (capped at $106,000), and 2.9% for Medicare (no income cap). While the payroll tax is theoretically split between employers and employees, the employers' share is ultimately shifted to workers in the form of lower wages.

But there are also state income taxes that need to be kept in mind. They contribute to the burden. The top state personal rate in California, for example, is now about 10.5%. Thus the marginal tax rate paid on wages combining all these taxes is 44.1%. (This is a net figure because state income taxes paid are deducted from federal income.)
So, for a family in high-cost California taxed at the top federal rate, the expiration of the Bush tax cuts in 2013, the 0.9% increase in payroll taxes to fund ObamaCare, and the president's proposal to eventually uncap Social Security payroll taxes would lift its combined marginal tax rate to a stunning 58.4%.
http://si.wsj.net/public/resources/images/ED-AN917_Boskin_G_20110717164112.jpg


But wait, things get worse. As Milton Friedman taught decades ago, the true burden on taxpayers today is government spending; government borrowing requires future interest payments out of future taxes. To cover the Congressional Budget Office projection of Mr. Obama's $841 billion deficit in 2016 requires a 31.7% increase in all income tax rates (and that's assuming the Social Security income cap is removed). This raises the top rate to 52.2% and brings the total combined marginal tax rate to 68.8%. Government, in short, would take over two-thirds of any incremental earnings.

Many Democrats demand no changes to Social Security and Medicare spending. But these programs are projected to run ever-growing deficits totaling tens of trillions of dollars in coming decades, primarily from rising real benefits per beneficiary. To cover these projected deficits would require continually higher income and payroll taxes for Social Security and Medicare on all taxpayers that would drive the combined marginal tax rate on labor income to more than 70% by 2035 and 80% by 2050. And that's before accounting for the Laffer effect, likely future interest costs, state deficits and the rising ratio of voters receiving government payments to those paying income taxes.

It would be a huge mistake to imagine that the cumulative, cascading burden of many tax rates on the same income will leave the middle class untouched. Take a teacher in California earning $60,000. A current federal rate of 25%, a 9.5% California rate, and 15.3% payroll tax yield a combined income tax rate of 45%. The income tax increases to cover the CBO's projected federal deficit in 2016 raises that to 52%. Covering future Social Security and Medicare deficits brings the combined marginal tax rate on that middle-income taxpayer to an astounding 71%. That teacher working a summer job would keep just 29% of her wages. At the margin, virtually everyone would be working primarily for the government, reduced to a minority partner in their own labor.

Nobody—rich, middle-income or poor—can afford to have the economy so burdened. Higher tax rates are the major reason why European per-capita income, according to the Organization for Economic Cooperation and Development, is about 30% lower than in the United States—a permanent difference many times the temporary decline in the recent recession and anemic recovery.

Some argue the U.S. economy can easily bear higher pre-Reagan tax rates. They point to the 1930s-1950s, when top marginal rates were between 79% and 94%, or the Carter-era 1970s, when the top rate was about 70%. But those rates applied to a much smaller fraction of taxpayers and kicked in at much higher income levels relative to today.

There were also greater opportunities for sheltering income from the income tax. The lower marginal tax rates in the 1980s led to the best quarter-century of economic performance in American history. Large increases in tax rates are a recipe for economic stagnation, socioeconomic ossification, and the loss of American global competitiveness and leadership.

continued at: http://online.wsj.com/article/SB10001424052702304911104576443893352153776.html?m od=WSJ_Opinion_LEADTop

[chad]

my village wants to rezone agricultural + raise property taxes from $300 an acre to $780. my property taxes would go from $3,000 a year to $7,800.

it's not fair that "so many of us live out + enjoy the lake area while doing nothing to use our farm property in an agricultural manner."

since i do not use my acreage to graze cows, i should pay an extra $4,800 per year.

[Dogman]

my village wants to rezone agricultural + raise property taxes from $300 an acre to $780. my property taxes would go from $3,000 a year to $7,800.

it's not fair that "so many of us live out + enjoy the lake area while doing nothing to use our farm property in an agricultural manner."

since i do not use my acreage to graze cows, i should pay an extra $4,800 per year.

Sucks, they are looking for revenue. If they do it , get a dam calf every year and feed it, 6 or so months to fatten for the freezer. Know bunch of familys in this area that have done it for years. For two reasons, 1. Tax reasons , cow=farm=less tax. 2. Best dam beef that you can eat if done right and hung long enough,18-25 days or more. And you know what is in the meat.

It may turn out cheaper, than the tax increase. And also to thumb your nose saying fuckum to the money grabbers.

[chad]

the ultimate purpose of it is to run us all off. then this land we all own around the lake can be sold to developers, split up and built in to subdivisions, rezoned, and then taxed at a hugely increased rate.

there's about 22 of us versus a town of 12,000, so we'll see how it goes.

[Dogman]

the ultimate purpose of it is to run us all off. then this land we all own around the lake can be sold to developers, split up and built in to subdivisions, rezoned, and then taxed at a hugely increased rate.

there's about 22 of us versus a town of 12,000, so we'll see how it goes.

Oh , that kind of deal. There has to be a developer that is pushing this, sorry to hear he or they are so dam lucky that bad things do not happen to them , accidents and the such. Yep, it is called greed and that is very hard to fight. The village looking at tax revenue at minimum. And the developers looking at the profits they will make building and selling the property's. I know a few here that should be hung/shot on sight.

Good luck in the contest!

[mightymanx]

The cancer is metastatizing.

It's going to get much worse before it finnaly breaks.

Think the UK and where thay take 100% and then give you what they think you "need".

[mrnhtbr2232]

This is the real SHTF scenario right here - while everyone is waiting for food riots and social collapse the real end of a person's life as they know it will be when they simply stop paying taxes because they are too onerous and a squad of IRS SWAT officers show up at their home to finish them off. THAT is likely to end up being the ultimate game changer when the Feds bring it to your doorstep to take you away. At that point your life, everything you've worked hard for, and your family's future will all be destroyed by the government with a petty apparatus out to collect the King's tribute. Think about it - we all pay taxes because it is the one thing we all know the Feds will not tolerate if we refuse, less people begin to realize that cutting off the revenue stream is a powerful way to starve the beast and improve their own lives. Can't have anything like that in the new America when there's oligarchs to support. Remember Edward and Elaine Brown - they are the harbinger of things to come.

[chad]

if this passes, i will be paying my village $650 a month to live on land i own. also consider, that since i live far out in the country i receive no:

- police (we have a sheriff)
- no fire services (volunteer department that charges)
- no garbage pickup (pay for your own via private company)
- no city services (water, sewer, etc).

basically i am paying for the school system (which i don't use, my kids go to private, christian school).

$650 a month in taxes is very near my mortgage payment amount. now that is fucked up.

[Dogman]

if this passes, i will be paying my village $650 a month to live on land i own. also consider, that since i live far out in the country i receive no:

- police (we have a sheriff)
- no fire services (volunteer department that charges)
- no garbage pickup (pay for your own via private company)
- no city services (water, sewer, etc).

basically i am paying for the school system (which i don't use, my kids go to private, christian school).

$650 a month in taxes is very near my mortgage payment amount. now that is fucked up.

That sucks, maybe time to get the hell out of dodge, if things turn for the worse. It may boil down into a lawsuit that will cost out of the ass. So are you in the village limits? Does anyone in the village have water , and the other things that you will be forced to pay for?

[platinumdude]

if this passes, i will be paying my village $650 a month to live on land i own. also consider, that since i live far out in the country i receive no:

- police (we have a sheriff)
- no fire services (volunteer department that charges)
- no garbage pickup (pay for your own via private company)
- no city services (water, sewer, etc).

basically i am paying for the school system (which i don't use, my kids go to private, christian school).

$650 a month in taxes is very near my mortgage payment amount. now that is fucked up.


That is way messed up. I live in the city with all of the so called benefits and only pay about $800 a year on property taxes.

[chad]

nobody has anything. we all have our own septic, wells, etc. ultimately, they want tax money. the lake we're near is a HIGHLY popular vacation spot for people from minneapolis, chicago, etc. they are pissed that a bunch of "yokels," are sitting on prime real estate that could be built into mcmansions.

the funny thing is, i bought this place primarily because it is out of dodge. now they want to expand dodge.

i am near a couple of apple orchards owned by people with big, huge, money, so we are all counting on them to fight the fight, so to speak.

there is no way i can keep this place if my taxes instantly go up $4,800 a year.

[Dogman]

nobody has anything. we all have our own septic, wells, etc. ultimately, they want tax money. the lake we're near is a HIGHLY popular vacation spot for people from Minneapolis, Chicago, etc. they are pissed that a bunch of "yokels," are sitting on prime real estate that could be built into mcmansions.

the funny thing is, i bought this place primarily because it is out of dodge. now they want to expand dodge.

i am near a couple of apple orchards owned by people with big, huge, money, so we are all counting on them to fight the fight, so to speak.

there is no way i can keep this place if my taxes instantly go up $4,800 a year. In my part of the world orchards are considered farms and agricultural. Orchards are considered working farms.So you have to have livestock? And the orchard people are going to be effected also?

[chad]

i haven't researched the working farm end of it yet. it's in the early stages. i'm sure there will be lots of citizens' groups organizing and attending meetings, etc. it only came out about 3-4 weeks ago that they're floating the idea. i know one of the orchard guys, and he's a gsus type with big money, so we have that going for us.

it just pisses me off that they can NEVER leave you alone.

[midnight rambler]

we all pay taxes

No, 'we' ALL don't.

[Dogman]

i haven't researched the working farm end of it yet. it's in the early stages. i'm sure there will be lots of citizens' groups organizing and attending meetings, etc. it only came out about 3-4 weeks ago that they're floating the idea. i know one of the orchard guys, and he's a gsus type with big money, so we have that going for us.

it just pisses me off that they can NEVER leave you alone. Again good luck in the fight! And as long as there are people, there will always be the ones that will try any way to make a buck of the backs of others. And in my book, developers are near the top of my list. One of them in your area got the ideal and pushed it, I will almost bet you on this.

[mamboni]

i haven't researched the working farm end of it yet. it's in the early stages. i'm sure there will be lots of citizens' groups organizing and attending meetings, etc. it only came out about 3-4 weeks ago that they're floating the idea. i know one of the orchard guys, and he's a gsus type with big money, so we have that going for us.

it just pisses me off that they can NEVER leave you alone.

"The price of freedom is eternal vigilance."

I feel your pain. Unfortunately, the government is a parasite and survives by parasitizing off of the productive. What's worse, government has bribed, seduced and indoctrinated fully half the population into believing that they are entitled to the fruits of your labor. In the end, the productive get angry, disgusted, tired and shrug the unappreciative and never-satisfied burden off their shoulders and stop producing surpluses - the system comes to a grinding halt. They had a saying in Soviet Russia: "They pretend to pay us; we pretend to work." We're getting very close to end game. Hang on brother!

[Ash_Williams]

I wish I knew the answer to fighting the city.

Up here you have to gross $7000 a year through some sort of agricultural business in order to have your land remain at the agri property tax limit.

[Son-of-Liberty]

Good point Mamboni. Property tax is the one area that really bothers me because i haven't found a workable solution to get out of it. If you have a decent piece of land you can always produce most of what you need from it even if everything else goes to shit. But if they keep raising property taxes they could steal pretty much everything away form you.

[mamboni]

Good point Mamboni. Property tax is the one area that really bothers me because i haven't found a workable solution to get out of it. If you have a decent piece of land you can always produce most of what you need from it even if everything else goes to shit. But if they keep raising property taxes they could steal pretty much everything away form you.

In the latter days of the Roman Empire, landowners willingly gave up their properties and citizenship, having themselves declared "slaves" to avoid the crushing taxation by the imperial government. When the imperial government finally collapsed in 476 AD, it is said that the people sighed in relief from the taxes, and welcomed rule by the Germans.

[midnight rambler]

Good point Mamboni. Property tax is the one area that really bothers me because i haven't found a workable solution to get out of it. If you have a decent piece of land you can always produce most of what you need from it even if everything else goes to shit. But if they keep raising property taxes they could steal pretty much everything away form you.

I know of a fellow in east Texas who has not been paying property taxes on his land for several years. They haven't taken it from him, but it's not for lack of trying - they are persistently on him. A mutual friend turned him onto the Rod Class material. He studied it, filed some documents with the court, and then made a special appearance. They cleared the courtroom for his case, and then told him, "We'll get back to you on this."

[mamboni]

I know of a fellow in east Texas who has not been paying property taxes on his land for several years. They haven't taken it from him, but it's not for lack of trying - they are persistently on him. A mutual friend turned him onto the Rod Class material. He studied it, filed some documents with the court, and then made a special appearance. They cleared the courtroom for his case, and then told him, "We'll get back to you on this."

While I admire your friend's moxy, most of us cannot live in such a state of constant uncertainty. The government has declared war on private property and is forcing free men to live off the grid and under the tax-collectors radar to survive. This is why the economy is grinding to a halt. I tell my son: "You don't want to own a home; anything you do own is a potential target of taxation or outright siezure; the business of the future is a cash business; to work on the books today is to be a wage slave and a sap."

[po boy]

Good point Mamboni. Property tax is the one area that really bothers me because i haven't found a workable solution to get out of it. If you have a decent piece of land you can always produce most of what you need from it even if everything else goes to shit. But if they keep raising property taxes they could steal pretty much everything away form you.

There is a book called The final solution to property tax not sure it would work but, may be worth a look.

[midnight rambler]

most of us cannot live in such a state of constant uncertainty.

Life itself is uncertain. Certainty (in general) is an illusion. As a MD you should know this based upon your own observations and experiences.


You don't want to own a home

Question: WHO in this country OWNS their land?

Answer: ONLY those who don't pay property taxes.

[mamboni]

Life itself is uncertain. Certainty (in general) is an illusion. As a MD you should know this based upon your own observations and experiences.



Question: WHO in this country OWNS their land?

Answer: ONLY those who don't pay property taxes.

Amen......

[EE_]

Why doesn't the government have to pay property tax?

How Much Land Does the Federal Government Own?
By Gary DeMar | Published: October 1, 2009

you know how much land in the United States is owned by the Federal Government? It’s shocking:

Nevada : 84.5%
Alaska: 69.1%
Utah: 57.4%
Oregon: 53.1%
Idaho: 50.2%
Arizona: 48.1%
California: 45.3%
Wyoming: 42.3%
New Mexico: 41.8%
Colorado: 36.6%
See map http://bigthink.com/ideas/21343

http://strangemaps.files.wordpress.com/2008/06/map-owns_the_west.jpg?w=300

[midnight rambler]

most of us cannot live in such a state of constant uncertaintyOf course that's what the infernal human parasites are counting on, that come hell or high water 'self-respecting' people will WORK DILIGENTLY AND PERSISTENTLY to build and maintain their own little piece of the illusion - therefore no tax burden is too great. And thus, one day your tax subsidy (that which you're *allowed* to keep) WILL BE CUT OFF. It isn't being called 'austerity measures' here - yet, but that's precisely what this 'debt ceiling' *debate* is all about.

[Son-of-Liberty]

They are using it as a game of chicken, pitting those who get a monthly check from the government (food stamps, welfare, SS, disability, veterans pensions etc) against those that pay into the system.

Obama an Co. probably figure raising the debt ceiling and sending the checks out just short of the Aug 2 deadline will get everyone nervous enough that we will give them a pass for raising the debt ceiling. Maybe they won't and then after a few days of mayhem and rioting n the streets they will be able to pass any legislation and debt raising measures they want. We'll have to wait and see.

[midnight rambler]

They are using it as a game of chicken, pitting those who get a monthly check from the government (food stamps, welfare, SS, disability, veterans pensions etc) against those that pay into the system.

Obama an Co. probably figure raising the debt ceiling and sending the checks out just short of the Aug 2 deadline will get everyone nervous enough that we will give them a pass for raising the debt ceiling. Maybe they won't and then after a few days of mayhem and rioting n the streets they will be able to pass any legislation and debt raising measures they want. We'll have to wait and see.

I assert that is much bigger than the socio-economic hooliganism by gov.org and bankster parasites in '33.

[palani]

The government has declared war on private property

This happened in 1933 with gold confiscation. It was the opening salvo, merely a skirmish, not the entire war.

[Libertytree]

Of course that's what the infernal human parasites are counting on, that come hell or high water 'self-respecting' people will WORK DILIGENTLY AND PERSISTENTLY to build and maintain their own little piece of the illusion - therefore no tax burden is too great. And thus, one day your tax subsidy (that which you're *allowed* to keep) WILL BE CUT OFF. It isn't being called 'austerity measures' here - yet, but that's precisely what this 'debt ceiling' *debate* is all about.

This is precisely why I chose to try and opt out on my own now instead of having that choice made for me in the not so distant future when I may not be as prepared to take such a gigantic leap. Taxes that are raised are not soley income taxes but also taxes we pay on basics like food, fuel, water etc...That's not to mention if these taxes forces businesses to close under the weight of them.

[mick silver]

That sucks, maybe time to get the hell out of dodge, if things turn for the worse. It may boil down into a lawsuit that will cost out of the ass. So are you in the village limits? Does anyone in the village have water , and the other things that you will be forced to pay for?

were he going to run to . it coming to a town or city near you . they cant not live of us all without sucking as all dry . this is my last place that why i moved out of the city like many others here . i have no were else to run an hide . i guess i am saying this is my last stand . it a sad time in our history when free man are saying things like this

[platinumdude]

http://www.businessweek.com/news/2011-07-21/grand-bargain-returns-to-u-s-debt-talks-with-path-to-compromise.html

Not a Tax Increase

“They would argue that this is not a tax increase, so I want to give them the benefit of the doubt,” Rubio said in an interview.

The proposal would require Senate committees to produce legislation to reduce spending and raise revenue. The Senate Finance Committee would be instructed to lower tax rates, eliminate the alternative minimum tax and “reform” tax breaks for health care, charitable giving and homeownership.

The outline calls for three individual income-tax brackets with a top rate between 23 percent and 29 percent, down from 35 percent now. The corporate rate would drop to a single rate of between 23 percent and 29 percent, down from a top rate of 35 percent. The tax system would need to retain its current progressivity and retain benefits for low-income workers such as the earned income tax credit.

Some lawmakers hold out hope for the compromise offered by the three Senate Republicans and three Democrats after months of opposition to new revenue among House Republicans.



That article mentions lowering the tax brackets. I don't see how they can balance the budget and lower taxes.

[Joe King]

The cancer is metastatizing.

It's going to get much worse before it finnaly breaks.

Think the UK and where thay take 100% and then give you what they think you "need".Seriously?!? They do that and people just go along with it? Wow! I never knew that.

Those people are fools.

[mamboni]

This debt ceiling crap is NOT about balancing the budget, it is nothing but a smoke screen to reduce taxes on the wealthy, I'm betting Obama waits until the final days and then comes out and says he had to agree to a tax cut for the upper class to save the people from an imminent default if he didn't agree.

It is no different then what we just went through with the extending unemployment benefits, the rich fukkers got 2 years of continued tax breaks and the average joe got one year of unemployment.

There's a lot of truth in what you're saying here. These cuts to high income and corporate tax rates are the same old supply side mentality and they will not work to stimulate growth or create jobs. It will worsen the federal deficit. America is like a wealth sieve - any cash or credit injected into the domestic economy quickly leaks abroad to China et al. This is why QE1 and QE2 failed and why QE3 and QE4 will fail to accomplish anything positive (for America). Anyway, paying for government spending with income tax receipts is an obsolete quaint notion from the past. If one analyzes the federal budget the true annual deficit is over $5 trillions - we are way past the point of being able to pay for spending with taxes. The order of the day is monetization, be it above or below the table. It continues now and will accelerate - the junkie must have it's monetary fix. But the greedy bastards in Washington will fudge the CPI down and squeeze the elderly on SSI and slowly bleed Medicare and ration care for us, the unwashed masses. The US dollar's reserve status is slowly being eroded and central banks have stated their intent to diversify away from the dollar towards a basket of currencies plus gold. When the dollar falls off a cliff in a couple of years, we will be a third world country and many imports will cease as no one will accept the dollar in payment. It's going to get very ugly out there, as the middle class transmogrifies into a mass underclass subsisting on government handouts and cable TV.

[steel_ag]

Good point Mamboni. Property tax is the one area that really bothers me because i haven't found a workable solution to get out of it. If you have a decent piece of land you can always produce most of what you need from it even if everything else goes to shit. But if they keep raising property taxes they could steal pretty much everything away form you.

Paul John Hansen's been fighting property taxes.... he's got an updated website with some newer info based off of a disbarred attorney...haven't looked at it yet myself, but I heard him talking about legal topics on a myprivateaudio podcast recently that sounded plausible...

freeinhabitant.info
www.pauljjhansen.com
http://www.edrivera.com/?p=978