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Taxing the rich - what is the cutoff?

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Old 06-17-2008, 12:56 PM   #136
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Re: Taxing the rich - what is the cutoff?

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Originally Posted by saden1 View Post
You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).
Your fuzzy liberal math makes my head spin. Flat tax baby!!
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Old 06-17-2008, 12:56 PM   #137
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Re: Taxing the rich - what is the cutoff?

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Originally Posted by onlydarksets View Post
If you have young kids requiring daycare and student loans, this budget goes out the window, and the 3% is going to be felt.
Not for a couple making exactly $250K. They would not be affected at all. They make 0 in excess of $250K. 3% of 0 is 0. Me = good at math.

A couple making $300K would pay an extra 3% on the $50,000 in excess of $250K. 3% of $50,000 is $1500 per year.

The extra $50K a year in income would allow someone to cover the student loans you mention, the daycare, and the $1500 extra in taxes, and still fit just fine into the budget I laid out.
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Old 06-17-2008, 12:57 PM   #138
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Re: Taxing the rich - what is the cutoff?

I think I agree with those who said that the question isn't "What is rich?" but rather "Is it fair that the 'rich' should pay a higher percentage?" Whether it is 250k, 500k or whatever is minutae to me. All the same. You're still arbitrarily making someone fork over more money than the next guy.
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Old 06-17-2008, 12:59 PM   #139
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Re: Taxing the rich - what is the cutoff?

One final point, doesn't saying that you need more than $250K to be comfortable in DC just fail to pass the sniff test? If anybody wants to see how $250K can be comfortable in any market, give it to me, I promise I'll show you!

Keep in mind, the budget I laid out is LAVISH. That is a ton of discretionary spending. If you need more than $250K to be comfortable, you need to have your head examined.
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Old 06-17-2008, 01:14 PM   #140
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Re: Taxing the rich - what is the cutoff?

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One final point, doesn't saying that you need more than $250K to be comfortable in DC just fail to pass the sniff test? If anybody wants to see how $250K can be comfortable in any market, give it to me, I promise I'll show you!

Keep in mind, the budget I laid out is LAVISH. That is a ton of discretionary spending. If you need more than $250K to be comfortable, you need to have your head examined.
Sorry, Schneed, but that's just picking and choosing. You laid out what you believe is an average budget. You missed a number of huge expenses, which we discussed. Let's look at another realistic budget, based of your initial work:

Quote:
PreTax Income $250,000

Expenses
Federal Taxes -61,229
State Income Tax: Maryland -11,948
Healthcare Insurance: PPO @ $120 per Paycheck -3,120
Dental Insurance: $20 per Paycheck -520
Mortgage: $750K House, $600K Mortgage @ 6.0% -43,168
Childcare (all 3) -43,200
Car Payment 1: $30,000 Car -6,453
Car Payment 2: $40,000 Van/SUV
Car Maintenance -2,000
Gasoline @ $300 per Month Per Car -7,200
Groceries for Family of 5: $1200 per Month -14,400
Electricity & Heat -2,400
Water -540
Cable TV, Phone, Hi Speed Internet, Cell Phone -3,000
Home Maintenance -5,000
Groundskeeping -2,000
Student Loans -15,000
Total Expenses -221,178

Discretionary Income before Federal Tax Return 70,419
Federal Tax Return: Assuming AMT Kicks In 21,407
Discretionary Income 91,826

Discretionary Spending
Retirement Savings @ 10% of Income -62,500
College Savings: 3 Kids @ $300 per Month Per Child -10,800
Vacation -5,000
Christmas, Birthdays, and Gifts -5,000
Entertainment & Merchandise @ $400 per Month -4,800
Eating Out @ $200 Per Month -2,400
Discretionary Spending -90,500

Annual Savings (Loss) ($40,271)
That's a $40k negative budget. I think that covers all of the "lavish discretionary funds". I even took out one of the cars (assuming you have a jalopy that's paid off). You can even remove one of the kids, and it doesn't get you down to break even.

I am certainly not saying you can't live comfortably at $250k. I'm saying it sure ain't "rich" (even from a cash flow perspective), which was the original question.
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Old 06-17-2008, 01:17 PM   #141
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Re: Taxing the rich - what is the cutoff?

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I think I agree with those who said that the question isn't "What is rich?" but rather "Is it fair that the 'rich' should pay a higher percentage?" Whether it is 250k, 500k or whatever is minutae to me. All the same. You're still arbitrarily making someone fork over more money than the next guy.
Is it really arbitrary if it is based on income? Arbitrary indicates randomness, like everyone whose social security number ends it 8 is placed in tax bracket X. That would be arbitrary.

I mean, even the Fair Tax people argue that their plan is a progressive form of taxation. I guess I'm confused by what you would offer in place of progressive taxation. A flat tax for everyone regardless of income?
Abolishing the Federal Government entirely?
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Old 06-17-2008, 01:21 PM   #142
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Re: Taxing the rich - what is the cutoff?

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I guess I'm confused by what you would offer in place of progressive taxation. A flat tax for everyone regardless of income?
Abolishing the Federal Government entirely?
I would like to see a flat tax, with people making under $X exempt altogether. Of course, that would force the government to drastically reduce spending, but I'm all for slashing various budgets (e.g., defense, certain farm subsidies, etc.).
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Old 06-17-2008, 01:25 PM   #143
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Re: Taxing the rich - what is the cutoff?

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Not for a couple making exactly $250K. They would not be affected at all. They make 0 in excess of $250K. 3% of 0 is 0. Me = good at math.

A couple making $300K would pay an extra 3% on the $50,000 in excess of $250K. 3% of $50,000 is $1500 per year.

The extra $50K a year in income would allow someone to cover the student loans you mention, the daycare, and the $1500 extra in taxes, and still fit just fine into the budget I laid out.
Yes, you are correct on the 3% - my bad. I still disagree on the budget, though.
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Old 06-17-2008, 01:32 PM   #144
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Re: Taxing the rich - what is the cutoff?

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Originally Posted by onlydarksets View Post
Sorry, Schneed, but that's just picking and choosing. You laid out what you believe is an average budget. You missed a number of huge expenses, which we discussed. Let's look at another realistic budget, based of your initial work:

That's a $40k negative budget. I think that covers all of the "lavish discretionary funds". I even took out one of the cars (assuming you have a jalopy that's paid off). You can even remove one of the kids, and it doesn't get you down to break even.

I am certainly not saying you can't live comfortably at $250k. I'm saying it sure ain't "rich" (even from a cash flow perspective), which was the original question.
You're way biased on this one though. There are very few couples with 3 kids requiring daycare who also make $250K, mainly because people who make $250K are in their 40s or higher. If all 3 kids do require some form of care, it would be of the after-care variety for at least one (if not two) of the kids, which is a fraction of full daycare costs. I maintain that your daycare cost has to come out of the equation. Is there a scenario where someone could have 3 kids who were born back to back to back, ages 3, 2, and 1, all requiring full daycare? And at the same time owing $200K in student loans? I guess so, but it's so friggin rare and not worth discussing from a political standpoint.

Student loans are an issue in this budget, I'll grant you that. But I can find room for those. Drive a $20,000 car and a $20,000 minivan instead. Cut your grocery bill back by $200 a month by buying chicken instead of steak. Don't spend so much on Christmas. Do the yardwork your damn self. And cut your $400 a month in entertainment down by half.
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Old 06-17-2008, 01:53 PM   #145
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Re: Taxing the rich - what is the cutoff?

Not to mention that a portion of the couples who make $250K or more are made up of one bread-winner and one stay-at-home parent. Surgeons, high-level lawyers in the firms you mentioned, executives, brokers, real estate agents, and salesmen are some that come to mind. In which case there are no childcare costs.

You can come up with a scenario where someone would struggle on almost any income, but that doesn't mean it's worth discussing from a policy perspective. If we're setting a cutoff for a higher tax rate, we should be talking about whether MOST people would be comfortable. From a policy standpoint, we can't try to account for every worst case scenario.
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Old 06-17-2008, 02:02 PM   #146
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Re: Taxing the rich - what is the cutoff?

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Originally Posted by Schneed10 View Post
You're way biased on this one though. There are very few couples with 3 kids requiring daycare who also make $250K, mainly because people who make $250K are in their 40s or higher. If all 3 kids do require some form of care, it would be of the after-care variety for at least one (if not two) of the kids, which is a fraction of full daycare costs. I maintain that your daycare cost has to come out of the equation. Is there a scenario where someone could have 3 kids who were born back to back to back, ages 3, 2, and 1, all requiring full daycare? And at the same time owing $200K in student loans? I guess so, but it's so friggin rare and not worth discussing from a political standpoint.

Student loans are an issue in this budget, I'll grant you that. But I can find room for those. Drive a $20,000 car and a $20,000 minivan instead. Cut your grocery bill back by $200 a month by buying chicken instead of steak. Don't spend so much on Christmas. Do the yardwork your damn self. And cut your $400 a month in entertainment down by half.
Daycare is 3 mos-6 years, not 1-3 years. Even so, I addressed that:
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You can even remove one of the kids, and it doesn't get you down to break even.
Look, you setup a budget for one demographic and applied it across the entire tax bracket. You've made assumptions about the average age, education level, debt, parenting age, and child age that are not as universal as they once were. Pointing that out is not bias - it's informing the discussion.

And where did I ever say that you could not live comfortably on $250k?
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Old 06-17-2008, 02:06 PM   #147
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Re: Taxing the rich - what is the cutoff?

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Not to mention that a portion of the couples who make $250K or more are made up of one bread-winner and one stay-at-home parent. Surgeons, high-level lawyers in the firms you mentioned, executives, brokers, real estate agents, and salesmen are some that come to mind. In which case there are no childcare costs.
That's incorrect. Everyone pays for preschool.

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Originally Posted by Schneed10 View Post
You can come up with a scenario where someone would struggle on almost any income, but that doesn't mean it's worth discussing from a policy perspective. If we're setting a cutoff for a higher tax rate, we should be talking about whether MOST people would be comfortable. From a policy standpoint, we can't try to account for every worst case scenario.
That, we agree on. The difference of opinion is that I believe the demographic I describe makes up a larger portion of the population than I think you would admit. I can't find any numbers on it, but send them on if you have them.
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Old 06-17-2008, 02:10 PM   #148
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Re: Taxing the rich - what is the cutoff?

onlydarksets, your budget isn't realistic, it's someone living beyond their means budget.
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Old 06-17-2008, 02:14 PM   #149
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Re: Taxing the rich - what is the cutoff?

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onlydarksets, your budget isn't realistic, it's someone living beyond their means budget.
I never said it was - I said the "lavish discretionary money" that Schneed put in capital letters has to go away. With a couple of very realistic tweaks, it's a comfortable, but not lavish, budget.
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Old 06-17-2008, 02:30 PM   #150
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Re: Taxing the rich - what is the cutoff?

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You do realize that it's a progressive tax don't you? In 2008 you pay 33% on anything above $164,550 (you pay .33 on 85K not the entire 250K).
What source do you have that says its a progressive tax. I did find that he also wants to increase SS tax for people making over 250,000.
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