Federal Tax Revenue

[leftwinger]

Question: How would the FEDERAL GOVT confiscate $1T - $2T more dollars to balance over-spending.

One Poster keeps saying "TAX the RICH" in a different thread. HOW? Income Tax rate on Rich does not move the revenue.
Poster screamed to put the top tax bracket back before Reagan dropped it down or other.

Chart below shows FED revenue collected as percentage of GDP. Notice revenue is pretty constant at ~20%*GDP no matter where the UPPER INCOME TAX rate is set (over 100 years).
Red is TAX rate (90% to 28% or so). Green is percentage of GDP collected. In fact when Upper Tax rate is lower GOVT gets higher percentage of GDP.

Blanket Theory: IF TAXES are too high GDP drops, GOVT revenue drops also as GDP drops.
Example: $20T GDP * 20% is $4T. If GOVT tried to take $5T they won't get it by raising the top income TAX RATE (over 100 years proves this fact).
This is not a new subject or issue. I have yet to hear an alternative workable solution over decades.

HELP ME: Where would they be able to confiscate another $1T? $2T without killing the economy.
1.) Capital Gains? make it 90%? would anyone buy stocks? 80%? 70% where would they buy stocks?
2.) 90% Upper income tax? History has proven this does not work. why not? Rich quit making income as too much is taken? they leave the country?
3.) A New special tax? 10% property tax on Property worth over $10million? Affects coastal elite........doubtful they would do that.
4.) Raise Business tax to 90%? Would any business stay open? Would they hire anyone.
5.) A National Sales Tax of 10%? Would sales drop? GDP drop and its' a wash?
6.) A Wealth TAX? They take 10% of everything you own each year? Tax was paid when wealth had been accumulated. Likely un-constitutional.
7.) A New special tax? 10% property tax on Property worth over $1million? Affects many. would everyone buy $500K houses only?
8.) Luxury Tax. Define Luxury? A Boat? Car over $100K.........very sticky. moving target.

Bottom line: I don't have any answer. note: Would they stop additional new spending when they "had enough"? would it be indexed to increase with what? GDP?

So I open it to the masses. Come one, come all. Where do they confiscate money to cover over-spending without killing the economy?
I do not know the answer? Maybe I am way way off base. If so, consider this an entry point. Make your case.

 

[Augustine_]

In the 80's we decided that we had to concentrate the nation's wealth in a small number of people and massive businesses, and the country has been on the path towards failure ever since. You ask how we change that? We probably don't. Expect another round of wealth redistribution towards the ruling class in the form of more deregulation, tax cuts, and labor crackdowns. Tech oligarchs got a bailout secured before we even knew their bank was in trouble, meanwhile East Palestinians have to continue their weeks of begging for any scrap they can get. It's a shame.

 

[Moonglow]

proscriptions or stop letting wealthy people deduct expenses from their taxes.

 

[Winston]

Question: How would the FEDERAL GOVT confiscate $1T - $2T more dollars to balance over-spending.

One Poster keeps saying "TAX the RICH" in a different thread. HOW? Income Tax rate on Rich does not move the revenue.
Poster screamed to put the top tax bracket back before Reagan dropped it down or other.

Chart below shows FED revenue collected as percentage of GDP. Notice revenue is pretty constant at ~20%*GDP no matter where the UPPER INCOME TAX rate is set (over 100 years).
Red is TAX rate (90% to 28% or so). Green is percentage of GDP collected. In fact when Upper Tax rate is lower GOVT gets higher percentage of GDP.

Blanket Theory: IF TAXES are too high GDP drops, GOVT revenue drops also as GDP drops.
Example: $20T GDP * 20% is $4T. If GOVT tried to take $5T they won't get it by raising the top income TAX RATE (over 100 years proves this fact).
This is not a new subject or issue. I have yet to hear an alternative workable solution over decades.

HELP ME: Where would they be able to confiscate another $1T? $2T without killing the economy.
1.) Capital Gains? make it 90%? would anyone buy stocks? 80%? 70% where would they buy stocks?
2.) 90% Upper income tax? History has proven this does not work. why not? Rich quit making income as too much is taken? they leave the country?
3.) A New special tax? 10% property tax on Property worth over $10million? Affects coastal elite........doubtful they would do that.
4.) Raise Business tax to 90%? Would any business stay open? Would they hire anyone.
5.) A National Sales Tax of 10%? Would sales drop? GDP drop and its' a wash?
6.) A Wealth TAX? They take 10% of everything you own each year? Tax was paid when wealth had been accumulated. Likely un-constitutional.
7.) A New special tax? 10% property tax on Property worth over $1million? Affects many. would everyone buy $500K houses only?
8.) Luxury Tax. Define Luxury? A Boat? Car over $100K.........very sticky. moving target.

Bottom line: I don't have any answer. note: Would they stop additional new spending when they "had enough"? would it be indexed to increase with what? GDP?

So I open it to the masses. Come one, come all. Where do they confiscate money to cover over-spending without killing the economy?
I do not know the answer? Maybe I am way way off base. If so, consider this an entry point. Make your case.

The solution is really very simple. In 1980 the average "margin" for all businesses was 21%, today it is 61%, In 1980 corporations paid one dollar in taxes for every four dollars in income taxes, in 1950 it was two for every three. Today, it is one for every five, and counting the Social Security tax, it is one in nine. This ain't about taxing the rich, it is about making corporations stand up and pay their fair share. With profits quickly approaching two trillion dollars a year, doubling the corporate tax rate, and yes, I said DOUBLE, would knock out about half a trillion a year.

 

[leftwinger]

proscriptions or stop letting wealthy people deduct expenses from their taxes.

c

OK, thats' an idea. Which deductions amount to $1T-$2T dollars? Interest payments on Primary residence Properties? 2nd homes too? Who gets hit with it? Everyone?

Big $10M houses are in CA or CONN mainly. Only they pay? If you can buy a $10M house you probably could pay cash I suppose?

 

[leftwinger]

The solution is really very simple. In 1980 the average "margin" for all businesses was 21%, today it is 61%, In 1980 corporations paid one dollar in taxes for every four dollars in income taxes, in 1950 it was two for every three. Today, it is one for every five, and counting the Social Security tax, it is one in nine. This ain't about taxing the rich, it is about making corporations stand up and pay their fair share. With profits quickly approaching two trillion dollars a year, doubling the corporate tax rate, and yes, I said DOUBLE, would knock out about half a trillion a year.

OK, so you want to go to 42% Corporate Tax rate (now 21%). That is a reasonable answer. Ho much it would generate is a good question?
Would they quit hiring? So less would be buying the stuff they are selling? I don't know.

I appreciate the answer. If that would get $2T........$1T then that is a good answer. As long as it does not kill everything else.
hmmm....up above it shows 2019 Corporate taxes only 7% of ~$4T ($280B). Doubling would go to ($560B) as you stated. Not enough but a start.

 

[Moonglow]

c

OK, thats' an idea. Which deductions amount to $1T-$2T dollars? Interest payments on Primary residence Properties? 2nd homes too? Who gets hit with it? Everyone?

Big $10M houses are in CA or CONN mainly. Only they pay? If you can buy a $10M house you probably could pay cash I suppose?

You are not going to get 1-2 trillion from one item.

 

[Winston]

OK, so you want to go to 42% Corporate Tax rate (now 21%). That is a reasonable answer. Ho much it would generate is a good question?
Would they quit hiring? So less would be buying the stuff they are selling? I don't know.

I appreciate the answer. If that would get $2T........$1T then that is a good answer. As long as it does not kill everything else.
hmmm....up above it shows 2019 Corporate taxes only 7% of ~$4T ($280B). Doubling would go to ($560B) as you stated. Not enough but a start.

First, you are using the effective corporate tax rate, which is insultingly low. Close the damn loopholes, adopt a minimum corporate tax, oh wait, Biden already did that.

And here is what no one understands. Would they quit hiring? Hell no, they would start hiring. The effective corporate tax rate is the price a company pays to TAKE MONEY OUT OF THE BUSINESS. When it is seven damn cents on the dollar is it any surprise that corporations are taking money out of their business hand over fist? Charge them forty cents on the dollar to take money out and watch how diligently they look for places to REINVEST and FLIPPIN GROW.

 

[leftwinger]

First, you are using the effective corporate tax rate, which is insultingly low. Close the damn loopholes, adopt a minimum corporate tax, oh wait, Biden already did that.

And here is what no one understands. Would they quit hiring? Hell no, they would start hiring. The effective corporate tax rate is the price a company pays to TAKE MONEY OUT OF THE BUSINESS. When it is seven damn cents on the dollar is it any surprise that corporations are taking money out of their business hand over fist? Charge them forty cents on the dollar to take money out and watch how diligently they look for places to REINVEST and FLIPPIN GROW.

I need help on all that. I dont get effective rate? Business tax rate is 21% or so I heard.


Please, econonic experts explain?

 

[Winston]

I need help on all that. I dont get effective rate? Business tax rate is 21% or so I heard.


Please, econonic experts explain?

While the business rate might be 21%, the effective rate is the actual percentage of income corporations pay in taxes. Think of it this way, while you might make 75 grand a year and have a income tax rate of 20.5%, after your standard deduction you might end up paying only 17.5%, that is your "effective rate".

So while the corporate tax rate might be one thing, the actual rate companies pay is far less. Which makes the oft argument that US corporations are taxed so high totally disingenuous, and even worse so when you consider most companies in Europe also pay a VAT.

 

[leftwinger]

Found this from 2019. Higher than 21%?
Above AVG over Planet? Says Almost 25%. Now its calculated differently, political? I cant get a break from confusion.

 

[leftwinger]

View attachment 765846
Found this from 2019. Higher than 21%?
Above AVG over Planet? Says Almost 25%. Now its calculated differently, political? I cant get a break from confusion.

OK forget that one. CA is additional 28% already. Varies across states. Too complicated.

Find $2T easy dollars to confiscate.

 

[leftwinger]

You are not going to get 1-2 trillion from one item.

The why does poster say "Tax the Rich" over and over. Raise income tax on the rich, he says

 

[Winston]

View attachment 765846
Found this from 2019. Higher than 21%?
Above AVG over Planet? Says Almost 25%. Now its calculated differently, political? I cant get a break from confusion.

Your first problem is the Tax Foundation, a bias source. They have their own definition of effective tax rate, or what they call the Effective Average Tax Rate, here it is,

Another way of comparing the tax burden faced by corporations is to look at the effective average tax rate (EATR), which is a forward-looking indicator of the tax burden on a prospective investment made by a corporation, accounting for tax rates, depreciation, and other tax provisions.

Practically meaningless, "forward looking indicator", in other words, a guesstimate, "on a prospective investment", maybe a number to plug into a Monte Carlo evaluation but not a real world number. The real effective tax rate is the amount of corporate taxes collected divided by corporate income. In 2020 corporate income was 2.24 Trillion dollars. Corporate income taxes collected, 212 billion dollars. Google the numbers, they are there. The EFFECTIVE TAX RATE ain't even ten percent, and that was in a bad year.

 

[leftwinger]

The EFFECTIVE TAX RATE ain't even ten percent, and that was in a bad ye

Ok so i got a bad link? I dearched Google?

Ssomeonene grosses 100K but has pretax deductions (401K + HSA + medical INS) of 25K - standards deduction 25K married are left ~50K taxable at 10-12% or paying 5%.

Congress sets the rules. They could have changed the rules many times. Only Trump made it simpler on regular Americans. We are off track in my thread.

Wher do you pull $2T? If not cut spending to $4T.

Tax should be easy? Correct? 10% on all? 10% of what? all who? Purchases?
Where? HOW? Without killing GDP.

 

[Winston]

Ok so i got a bad link? I dearched Google?

Ssomeonene grosses 100K but has pretax deductions (401K + HSA + medical INS) of 25K - standards deduction 25K married are left ~50K taxable at 10-12% or paying 5%.

Congress sets the rules. They could have changed the rules many times. Only Trump made it simpler on regular Americans. We are off track in my thread.

Wher do you pull $2T? If not cut spending to $4T. Tax should be easy? Correct? 10% on all? 10% of what? Purchases?
Where? HOW? Without killing GDP.

Well, taking the real effective corporate tax rate to 25% would get us close to one trillion. Taxing capital gains as ordinary income should get us another half trillion but it is hard to figure that out because the IRS folds capital gains taxes into the income tax category, go figure. Removing the cap on income subject to the Social Security tax should be enough to get us over the hump and means testing Social Security should give us some cushion.

 

[leftwinger]

Your first problem is the Tax Foundation, a bias source. They have their own definition of effective tax rate, or what they call the Effective Average Tax Rate, here it is,

Another way of comparing the tax burden faced by corporations is to look at the effective average tax rate (EATR), which is a forward-looking indicator of the tax burden on a prospective investment made by a corporation, accounting for tax rates, depreciation, and other tax provisions.

Practically meaningless, "forward looking indicator", in other words, a guesstimate, "on a prospective investment", maybe a number to plug into a Monte Carlo evaluation but not a real world number. The real effective tax rate is the amount of corporate taxes collected divided by corporate income. In 2020 corporate income was 2.24 Trillion dollars. Corporate income taxes collected, 212 billion dollars. Google the numbers, they are there. The EFFECTIVE TAX RATE ain't even ten percent, and that was in a bad year.

EATR), which is a forward-looking indicator of the tax burden on a prospective investment made by a corporation, accounting for tax rates, depreciation, and other tax provisions.

Imteresting. Business revenue only $2.24T yet GDP is over $20T?

 

[leftwinger]

Well, taking the real effective corporate tax rate to 25% would get us close to one trillion. Taxing capital gains as ordinary income should get us another half trillion but it is hard to figure that out because the IRS folds capital gains taxes into the income tax category, go figure. Removing the cap on income subject to the Social Security tax should be enough to get us over the hump and means testing Social Security should give us some cushion.

"effective" tax rate sounds shady. Give a number, pay a number. No games.

SS was not supposed to be a Tax? Does the max payout increase for those now paying more? Means test? Who decides?

It doesnt seem easy at all to find $2T.

I think i am right. They will need a new Tax. But it cant tank the economy. Or they stop spending at $4T. We cant over-spend.

 

[leftwinger]

Got It. I win. I win USMB board(s).

There is no easy (or non-destructive economic) simple plan to go get $2T more GOVT revenue.
Can't happen. No one has anything but Moon or Winston say it has consist of "many changes".

I guess "TAX the RICH" BS does not fly? afterall.
Solution: Cut spending to $4T income level as it is now. The Dirty Bastards won't stop running up debt.

I had one: Any "INCOME" over $1million dollars could be TAXED at 100%. That would not hurt anyone but RICH and FAMOUS. Must be $500B in there somewhere?

 

[WinterBorn]

The solution is really very simple. In 1980 the average "margin" for all businesses was 21%, today it is 61%, In 1980 corporations paid one dollar in taxes for every four dollars in income taxes, in 1950 it was two for every three. Today, it is one for every five, and counting the Social Security tax, it is one in nine. This ain't about taxing the rich, it is about making corporations stand up and pay their fair share. With profits quickly approaching two trillion dollars a year, doubling the corporate tax rate, and yes, I said DOUBLE, would knock out about half a trillion a year.

There was a time we taxed businesses heavily. So, in order to reduce their tax burden, corporations invested the money back into the business in the form of expansion, technology and payroll/benefits.

We built the biggest middle class in the world doing that.