Can Afford Higher Taxes. Will Work Less.

[Revere]

George Lucas did the same thing. That's was the reason there was such a long break between Episode 6 and Episode 1: he was trying to screw his ex-wife out of any of the proceeds.

People who make a fraction of what Lucas does don't have that option.

Exactly. Class envy gets us nowhere, because the wealthy are always going to have more options than those with less money. More options is rather the whole POINT of becoming wealthy, in fact.

The bottom tax bracket will see their income taxes rise 25% or from 15% to 20% under Obama, as of midnight 1/1/2011. They don't have the option to cut 25% of the top of their income to mitigate that.

 

[Ravi]

People who make a fraction of what Lucas does don't have that option.

Exactly. Class envy gets us nowhere, because the wealthy are always going to have more options than those with less money. More options is rather the whole POINT of becoming wealthy, in fact.

The bottom tax bracket will see their income taxes rise 25% or from 15% to 20% under Obama, as of midnight 1/1/2011. They don't have the option to cut 25% of the top of their income to mitigate that.

The bottom bracket is currently at 10%, not 15%. There is no indication under Obama that this bracket would change. And it certainly wouldn't go up to 20%.

 

[MikeK]

So is this Mankiw's way of announcing he's giving up his column at the NYT because the pay for that extracurricular won't be worth it anymore?

And he seems to assume that he and he alone is capable of writing a column worthy of publication in the Times. Let the egotistical jerk resign and he'll quickly realize just how mistaken he is -- as are all those who believe that singers only sing for money.

There are very few producers of anything in America who cannot be replaced.

Who cannot be replaced?

Jennifer Lopez.

 

[MikeK]

No it's not. Has nothing to do with the paper's lackof demand for the columnists's services. It's government serfdom. Government confiscating most of your wages is not freedom, it's serfdom.

The paper did not ask the writer to take a pay cut, the goverment forced him over a cliff. He has some expertise they are willing to continue to pay him for, they are not looking to replace hiim.

That's not how "our system" works.

That is specious reasoning. And Professor Mankiw is either a dolt or an anti-Obama propagandist. I'm surprised the Times Editor would accept columns from this man.

You should know that the progressive income tax rate during the most economically productive and stable period in American history, 1945 - 1980, was significantly higher for the upper income levels than that which is proposed by Obama.

Here is a thumbnail reference.

The income tax rate of $200,000 annual income, or more:

1950 - 91%

1980 - 70%

1985 - 50%

1987 - 38%

2004 - 35%

http://www.taxfoundation.org/files/f...y-june2010.pdf

Note the 91% rate during the era I noted. And America did just fine during that period. So don't let the right-wing propagandists delude you. The tax increase is necessary and will be a good thing for the Nation.

 

[Annie]

And he seems to assume that he and he alone is capable of writing a column worthy of publication in the Times. Let the egotistical jerk resign and he'll quickly realize just how mistaken he is -- as are all those who believe that singers only sing for money.

There are very few producers of anything in America who cannot be replaced.

Who cannot be replaced?

Jennifer Lopez.

That's sad.

 

[NYcarbineer]

Explaining the why and wherefore of raising or lowering taxes.

The New York Times > Log In

October 9, 2010
I Can Afford Higher Taxes. But They’ll Make Me Work Less.
By N. GREGORY MANKIW

AN important issue dividing the political parties is whether to raise taxes on those earning more than $250,000 a year. Democrats say these taxpayers can afford to chip in a bit more. Republicans say raising taxes on those who already face the highest marginal tax rates will hurt the economy.

So I thought it might be useful to do a case study on one of these high-income taxpayers. Fortunately, I have one handy: me.

As a professor at Harvard and the author of some popular textbooks, I am comfortably in the income range that would be hit by this tax increase. I have been thinking — narcissistically, to be sure — about how higher taxes would affect me. Maybe these thoughts can shed some light on some of the broader policy issues.

First, I have to acknowledge that the Democrats are right about one thing: I can afford to pay more in taxes. My income is not in the same league as superstar actors and hedge fund managers, but I have been very lucky nonetheless. Unlike many other Americans, I don’t have trouble making ends meet.

Indeed, I could go so far as to say I am almost completely sated. One reason is that I don’t aspire for much more than a typical upper-middle-class lifestyle. I don’t fly around on a private jet. I have little desire to own a yacht or a Ferrari. I own only one home, in which I have lived since 1987. Paying an extra few percent in taxes wouldn’t create a lot of hardship.

Nonetheless, as Republicans emphasize, taxes influence the decisions I make. I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article. I turn down most but accept a few.

...

HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working.

Now you might not care if I supply less of my services to the marketplace — although, because you are reading this article, you are one of my customers. But I bet there are some high-income taxpayers whose services you enjoy.

Maybe you are looking forward to a particular actor’s next movie or a particular novelist’s next book. Perhaps you wish that your favorite singer would have a concert near where you live. Or, someday, you may need treatment from a highly trained surgeon, or your child may need braces from the local orthodontist. Like me, these individuals respond to incentives. (Indeed, some studies report that high-income taxpayers are particularly responsive to taxes.) As they face higher tax rates, their services will be in shorter supply.

Reasonable people can disagree about whether and how much the government should redistribute income. And, to be sure, the looming budget deficits require hard choices about spending and taxes. But don’t let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.

I'd like to see proof that his marginal tax rate is 90%.

Secondly, what are we all supposed to miss if Mankiw doesn't write or talk as much?

Thirdly, where's the evidence that the rich worked less to avoid the top rate increase that passed under Clinton -

we have a historical reference to prove this nonsense beyond the theoretical. Show us that evidence. Show us that something detrimental happened to our economy 1994 to 2001 because the rich couldn't handle the marginal rate increase on the top of their income,

and so they quit 'producing'.

(Hint: there is no evidence, because it's basically horseshit)

 

[BlindBoo]

So where are all the benefits of lowering the top tax bracket from 39% to 36% during Bush Jr's years? Where did those tax cuts and W's other policies get us. This voodoo ecomomics is just a sham, to allow more income to flow into the richest bank accounts. It was never about creating Jobs or trickling down anything but........

The most important question this Nov. election day will answer is this: Are the American people stupid enough to give the keys back to the drivers who sent us off the cliff? Personally I think they are. I mean these are the same citizens who in March of 2003 believed Saddam was in cohoots with bin Laden during the 9-11 attack, so yeah they are a pretty gullible lot.

 

[MaggieMae]

Explaining the why and wherefore of raising or lowering taxes.

The New York Times > Log In

October 9, 2010
I Can Afford Higher Taxes. But They’ll Make Me Work Less.
By N. GREGORY MANKIW

AN important issue dividing the political parties is whether to raise taxes on those earning more than $250,000 a year. Democrats say these taxpayers can afford to chip in a bit more. Republicans say raising taxes on those who already face the highest marginal tax rates will hurt the economy.

So I thought it might be useful to do a case study on one of these high-income taxpayers. Fortunately, I have one handy: me.

As a professor at Harvard and the author of some popular textbooks, I am comfortably in the income range that would be hit by this tax increase. I have been thinking — narcissistically, to be sure — about how higher taxes would affect me. Maybe these thoughts can shed some light on some of the broader policy issues.

First, I have to acknowledge that the Democrats are right about one thing: I can afford to pay more in taxes. My income is not in the same league as superstar actors and hedge fund managers, but I have been very lucky nonetheless. Unlike many other Americans, I don’t have trouble making ends meet.

Indeed, I could go so far as to say I am almost completely sated. One reason is that I don’t aspire for much more than a typical upper-middle-class lifestyle. I don’t fly around on a private jet. I have little desire to own a yacht or a Ferrari. I own only one home, in which I have lived since 1987. Paying an extra few percent in taxes wouldn’t create a lot of hardship.

Nonetheless, as Republicans emphasize, taxes influence the decisions I make. I am regularly offered opportunities to earn extra money. It could be by talking to a business group, consulting on a legal case, giving a guest lecture, teaching summer school or writing an article. I turn down most but accept a few.

...

HERE’S the bottom line: Without any taxes, accepting that editor’s assignment would have yielded my children an extra $10,000. With taxes, it yields only $1,000. In effect, once the entire tax system is taken into account, my family’s marginal tax rate is about 90 percent. Is it any wonder that I turn down most of the money-making opportunities I am offered?

By contrast, without the tax increases advocated by the Obama administration, the numbers would look quite different. I would face a lower income tax rate, a lower Medicare tax rate, and no deduction phaseout or estate tax. Taking that writing assignment would yield my kids about $2,000. I would have twice the incentive to keep working.

Now you might not care if I supply less of my services to the marketplace — although, because you are reading this article, you are one of my customers. But I bet there are some high-income taxpayers whose services you enjoy.

Maybe you are looking forward to a particular actor’s next movie or a particular novelist’s next book. Perhaps you wish that your favorite singer would have a concert near where you live. Or, someday, you may need treatment from a highly trained surgeon, or your child may need braces from the local orthodontist. Like me, these individuals respond to incentives. (Indeed, some studies report that high-income taxpayers are particularly responsive to taxes.) As they face higher tax rates, their services will be in shorter supply.

Reasonable people can disagree about whether and how much the government should redistribute income. And, to be sure, the looming budget deficits require hard choices about spending and taxes. But don’t let anyone fool you into thinking that when the government taxes the rich, only the rich bear the burden.

This guy needs to call Suse Ormond, and she'll give him a plethora of ways he can yield a bang for his extra bucks, even with higher taxes. He's not trying hard enough.

 

[MikeK]

People who make a fraction of what Lucas does don't have that option.

Exactly. Class envy gets us nowhere, because the wealthy are always going to have more options than those with less money. More options is rather the whole POINT of becoming wealthy, in fact.

The bottom tax bracket will see their income taxes rise 25% or from 15% to 20% under Obama, as of midnight 1/1/2011. They don't have the option to cut 25% of the top of their income to mitigate that.

Who told you this? Glenn Beck? Sean Hannity? Or Rush Limbaugh? Whoever it was is a goddam liar. If your income is below $250k your annual federal tax liability will remain exactly as it is now.

So stop spreading this propaganda.

 

[edthecynic]

Not the point. These tax increases will actually result in upper income earners paying a smaller percent of the overall Federal income tax burden.

It will soak the working class.

No it won't. There is no evidence of this.

Ironically, the author of the OP, Greg Mankiw, who was Bush's chair of the Council of Economic Advisers, concluded that for every 1% drop in the marginal income tax rate, government revenues drop 0.83%. What that means is that a 3.5% increase in the marginal tax rate will increase government revenues by 2.9%. The relationship isn't linear but it is positive nonetheless.

Yes, there is, the percent of overall taxes paid by the rich went up as their taxes were cut.

As I have pointed out many times before, CON$ always leave out very critical information, effectively lying to your level of ignorance.

The percent of overall taxes paid by the rich went up as their INCOME went up.

 

[Annie]

No it won't. There is no evidence of this.

Ironically, the author of the OP, Greg Mankiw, who was Bush's chair of the Council of Economic Advisers, concluded that for every 1% drop in the marginal income tax rate, government revenues drop 0.83%. What that means is that a 3.5% increase in the marginal tax rate will increase government revenues by 2.9%. The relationship isn't linear but it is positive nonetheless.

Yes, there is, the percent of overall taxes paid by the rich went up as their taxes were cut.

As I have pointed out many times before, CON$ always leave out very critical information, effectively lying to your level of ignorance.

The percent of overall taxes paid by the rich went up as their INCOME went up.

Your assumption then there are lies is wrong. Perhaps the rich will keep working and increasing their wealth. Perhaps instead they'll choose to work less, they can afford to, and use their time in different ways. I'm certain there are those at both ends and in the middle. Question would be, which has the incentives?

 

[elvis]

the laffer curve......

where does it turn back toward the y-axis?

 

[edthecynic]

Yes, there is, the percent of overall taxes paid by the rich went up as their taxes were cut.

As I have pointed out many times before, CON$ always leave out very critical information, effectively lying to your level of ignorance.

The percent of overall taxes paid by the rich went up as their INCOME went up.

Your assumption then there are lies is wrong. Perhaps the rich will keep working and increasing their wealth. Perhaps instead they'll choose to work less, they can afford to, and use their time in different ways. I'm certain there are those at both ends and in the middle. Question would be, which has the incentives?

The lie is, of course, the implication that SINCE the percent of overall taxes paid by the rich went up as their taxes were cut, that was BECAUSE their taxes were cut. They paid more taxes BECAUSE their income went up.

Your implication that their income went up because their taxes were cut and they chose to work more and might choose to work less when their taxes go up is contradicted by the fact that their income went up after Clinton's 1993 tax increase. That Clinton tax level they will be returning to when the Bush tax increases take effect did not discourage them from working harder back then so it is not historically accurate to say they will work less now.

 

[Care4all]

the laffer curve......

where does it turn back toward the y-axis?

on the laffer example...anything above 50% rate for taxes, reduces tax collections I believe it says....

is that what you were asking?

 

[elvis]

the laffer curve......

where does it turn back toward the y-axis?

on the laffer example...anything above 50% rate for taxes, reduces tax collections I believe it says....

is that what you were asking?

I don't think anyone has determined where it turns as far as I know.

It was rhetorical.

 

[Charles_Main]

As I have pointed out many times before, CON$ always leave out very critical information, effectively lying to your level of ignorance.

The percent of overall taxes paid by the rich went up as their INCOME went up.

Your assumption then there are lies is wrong. Perhaps the rich will keep working and increasing their wealth. Perhaps instead they'll choose to work less, they can afford to, and use their time in different ways. I'm certain there are those at both ends and in the middle. Question would be, which has the incentives?

The lie is, of course, the implication that SINCE the percent of overall taxes paid by the rich went up as their taxes were cut, that was BECAUSE their taxes were cut. They paid more taxes BECAUSE their income went up.

.

And why did their incomes go up? Could the fact that they got to keep more of their money to invest to make more money, have had anything to do with it?

 

[edthecynic]

Your assumption then there are lies is wrong. Perhaps the rich will keep working and increasing their wealth. Perhaps instead they'll choose to work less, they can afford to, and use their time in different ways. I'm certain there are those at both ends and in the middle. Question would be, which has the incentives?

The lie is, of course, the implication that SINCE the percent of overall taxes paid by the rich went up as their taxes were cut, that was BECAUSE their taxes were cut. They paid more taxes BECAUSE their income went up.

.

And why did their incomes go up? Could the fact that they got to keep more of their money to invest to make more money, have had anything to do with it?

Of course not, as you well know or you wouldn't have edited out the part of my post that directly contradicts your ASSumption.
Thank you.

Obviously they didn't get "to keep more of their money to invest to make more money" after Clinton's tax increase.

Your implication that their income went up because their taxes were cut and they chose to work more and might choose to work less when their taxes go up is contradicted by the fact that their income went up after Clinton's 1993 tax increase. That Clinton tax level they will be returning to when the Bush tax increases take effect did not discourage them from working harder back then so it is not historically accurate to say they will work less now.

 

[Revere]

Junk stat. Pretends the people in those percentiles at the beginning of that time period are the same people in the same percentiles at the end.

 

[Baruch Menachem]

Why would medicare come out of that $1,000? The writer of the article is a liar.

part of self employment tax. As a private contractor, he has to pay the whole of the FICA and medicare thing.

SE tax rate. The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).

Maximum earnings subject to SE tax. Only the first $106,800 of your combined wages, tips, and net earnings in 2009 is subject to any combination of the 12.4% social security part of SE tax, social security tax, or railroad retirement (tier 1) tax.

All your combined wages, tips, and net earnings in 2009 are subject to any combination of the 2.9% Medicare part of SE tax, social security tax, or railroad retirement (tier 1) tax.

Fiscal year filer. If you use a tax year other than the calendar year, you must use the tax rate and maximum earnings limit in effect at the beginning of your tax year. Even if the tax rate or maximum earnings limit changes during your tax year, continue to use the same rate and limit throughout your tax year.

Self-employment tax deduction. You can deduct half of your SE tax in figuring your adjusted gross income. This deduction only affects your income tax. It does not affect either your net earnings from self-employment or your SE tax.

 

[Baruch Menachem]

the laffer curve......

where does it turn back toward the y-axis?

on the laffer example...anything above 50% rate for taxes, reduces tax collections I believe it says....

is that what you were asking?

The concept does not have numbers attached, as it is personal to each individual depending on his own circumstances.

It is a garden variety Marginal revenue curve flipped upside down.

At the point where marginal cost of getting that next dollar exceeds the marginal gain from that next dollar, then people go "the hell with that!" and put in fewer hours doing productive labor, to the point where they perceive themselves better off by working harder.

It was a big deal in the 70s because large numbers of people were bailing out of the normal labor market, and going natural, bartering etc. The "Whole Earth" thing was a Laffer Curve response. What is the point of working so hard, when what you have to show for it is so little?