Tax Cuts

[elNastioBananaHando]

Read an interesting a while back on Tax Cut for Wall Street dudes.

Thoughts?

This is going to be a swell Christmas, Hanukkah or whatever at Goldman Sachs. The investment bank has done really well this year, so well that it has $16.5 billion to spend on salaries, benefits and bonuses -- or an average $622,000 per employee. Of course, the money won't be spread around evenly. A few star traders will reportedly find $50 million bonuses in their stockings. And for lower-down traders, multimillion-dollar bonus checks will become routine.


I do not wish to begrudge the Wall Street wizards their good fortune. They worked smart, and they worked long hours. And I assume they made the dough honestly, more or less.


What I can't understand is the president's reluctance to tax these dudes. And the American people are another puzzlement: What magic potion was dumped in their drinking water to make them sit passively by as Bush piled tax cuts onto those who needed them least? Where did Bush find the working stiffs to call into talk shows and indignantly accuse tax-cut opponents of "penalizing success"? Really, would a guy who walks home with only $16 million because the taxman took an extra $400,000 feel unsuccessful?


Bush's argument went as follows: If you cut the taxes of the people who make big money, they will invest their savings into businesses that provide ordinary Americans with good jobs at handsome pay. But in case you haven't noticed, they don't.


Actually, Goldman's bubbling bonuses reflect its passion for investing in Asia, not here. The firm's jackpot investment was ICBC, China's biggest bank. It made another bundle turning around an ailing Japanese golf course company.


Even before Bush started monkeying around with the tax code, upper-income Americans were already among the least-taxed rich people in the industrial world. And the gap between the rich and poor was ever widening, with incomes at the tippy top shooting off into outer space. In 2004, the 300,000 top-earning U.S. households reported more pre-tax income than the entire bottom 120 million.


When you add together all the Bush tax cuts, Americans making $10 million or more on their investments in 2003 -- a group whose average total income was $26 million -- saved an average $1 million in taxes, according to IRS data analyzed by The New York Times. These Americans paid the same percentage of their income in income taxes as their more modest neighbors making $200,000 to $500,000.


Again, the tax cuts were supposed to stimulate the economy and make everyone richer. However, just-released numbers show that total income reported to the IRS for 2004 was down 1.4 percent from 2000 -- and the population was smaller in 2000.


Many economists never bought into the idea that the wealthy would take their Bush tax cuts and plow them back into economy-pumping investments. No doubt some of the Goldman billions will be put into productive use. But, as in the case of bonanzas past, much of it will go into Park Avenue palaces, Ferraris and furs. Wall Street moguls also have a soft spot for personal jets, which save them and their friends from having to rub elbows with the peasants flying commercial.


Well, the global economy is here to stay, and there's no reason why American financiers should not try to make their billions off it. But the question remains, do they need tax cuts on top of their other economic blessings? No, this is not about taxing success. It's about taxing money, which these guys have. And the ones at the top would hardly take notice if an extra million or so went to reduce the federal deficit.

[PETA]

Originally Posted by House Bitch

Many economists never bought into the idea that the wealthy would take their Bush tax cuts and plow them back into economy-pumping investments. No doubt some of the Goldman billions will be put into productive use. But, as in the case of bonanzas past, much of it will go into Park Avenue palaces, Ferraris and furs. Wall Street moguls also have a soft spot for personal jets, which save them and their friends from having to rub elbows with the peasants flying commercial.

business need people to spend money in order to keep the doors open - spending the cash pumps it into the economy - that's a good thing - that the author lists items he holds with disapproval doesn't mean that the expenditures didn't help fuel the economy. The author's purpose seems to be to vent his ire that rich people have money and spend it on luxury items. Get over yourself author man... the more people make the more they pay in income tax.







my thoughts... with the Bush cuts about to expire and the ATM having descended into income brackets it was never intended to hit I'm fucking pissed - that's my thought

http://members.forbes.com/forbes/2007/0723/031.html

The Washington Tax Mess
David Malpass 07.23.07, 12:00 AM ET

Over the next few months Washington will almost certainly pass a massive tax bill to maintain the alternative minimum tax at roughly current levels. Without a new bill inflation and income growth will cause the AMT to automatically expand to an extra 20 million taxpayers, adding $50 billion to their 2007 tax bills. This makes the AMT bill one of the few remaining "must-pass" pieces of legislation before the 2008 elections.

The 2007 bill will be important in and of itself--a typical tome of tax complexity--but its bigger impact will be as a prototype for dealing with the 2010 expiration of the Bush 2003 tax cuts. The 2010 expirations are a much larger problem than the AMT--roughly $4 trillion versus $600 billion, using congressional scoring. They would penalize the most growth-oriented parts of the economy, raising tax rates on capital gains and dividends and increasing personal income tax rates and those on small businesses. Thus, resolving the 2010 expirations may well be the biggest economic and market event of the next Administration.

At the core of the issue--for both the AMT and the expirations--is the definition of a tax increase. President Bush's aides have said he will veto any tax increase, but Washington's standard dodge is that a bill that is scored as "revenue neutral" is not a tax increase, even if it increases many taxes and causes a heavier net tax burden.

The revenue neutrality standard creates two major biases toward higher taxes. First, Congress scores a tax bill (guesses the revenue impact) on the explicit assumption that economic growth and asset prices are unchanged by tax rates--expressly denying the 2003 experience, when the economy, equity markets and tax receipts surged after the growth-oriented tax cut. This is called a static model. It's Washington's dream concept: taxes without consequences. The scoring procedure is now deeply embedded, having been perpetuated over successive Republican and Democratic majorities in Congress.

The second major tax bias is Congress' choosing to use hypothetical revenues as its baseline for defining a tax increase instead of using the actual or likely tax burden. For example, the AMT bill's baseline is the large hypothetical 2007 revenue gain, in the event that millions more people pay the AMT and U.S. economic growth is unaffected by their having to do so. Congress' ideal. A more realistic choice would be one based on the actual 2006 AMT tax burden. The current method invites Congress to impose big new taxes to offset the theoretical cost of keeping the AMT the way it is.

Unlike the appropriations process, in which Republicans have taken a clear stand against budget-busters and have assured the President that they will support his vetoes, the coming AMT debate may split the Republicans. Many simply want to keep the AMT from going up and don't want to fight business tax increases, especially if they're labeled as taxes on the rich. Others support "revenue neutrality" in principle, perhaps thinking that it, rather than economic growth, controls the fiscal deficit. While President Bush opposes tax increases, his position on a "revenue neutral" tax bill including hikes and extensions is unclear. The President instructed the 2005 tax reform commission to adhere to revenue neutrality. And the Administration's latest budget proposed paying for the deficit-neutral cost of maintaining the 2006 AMT burden with spending cuts.

Fixing the Mess

Given current political dynamics, Washington will likely choose "business as usual": a big tax increase masked in "revenue neutrality" and marketed as a "cut" in the alternative minimum tax. Within the bill--and mostly unread until after the congressional vote is taken--will be hundreds of winners and losers carefully chosen to lock in key legislators, interest groups and lobbyists and win the President's signature. The net effect? Another upward ratchet in business taxation as payment for Washington's maintaining the 2006 AMT treatment.

With every year that Congress nurses these surreal procedures (pretending that tax hikes aren't hikes and don't slow the economy), the tax code gets more convoluted. Congress must develop a more balanced technique for calculating revenue neutrality. It could do this in two steps. The first would be to use the actual 2006 tax burden instead of hypothetical tax revenue as the baseline for this summer's AMT bill. This would, in effect, allow the AMT to be inflation-indexed without requiring tax increases as offsets. It would also set a pro-growth precedent for the 2010 expirations, causing a major celebration in U.S. growth expectations and asset prices. The second step could be taken when Congress considers larger tax bills. In scoring them it could decide, perhaps by vote, to factor in at least a portion of the growth and asset-price impact of constructive tax changes (assumed to be nil under current procedures). This would create a more level playing field for considering tax changes on their merits, raising the chances of reforming the tax code before it pushes us into recession.

With the President practicing his veto power on appropriations bills, it's too early to give up on constructive changes in tax procedures during the next few months. Mr. Bush would have to define a tax increase using the duck test: If it walks and quacks like a duck, it probably is one.

David Malpass, chief economist for Bear Stearns

http://www.ntu.org/main/page.php?PageID=6

Percentiles Ranked by AGI
AGI Threshold on Percentiles
Percentage of Federal Personal Income Tax Paid



Top 1%
$328,049
36.89

Top 5%
$137,056
57.13

Top 10%
$99,112
68.19

Top 25%
$60,041
84.86

Top 50%
$30,122
96.70

Bottom 50%
<$30,122
3.30



http://www.taxfoundation.org/blog/show/341.html
http://www.allegromedia.com/sugi/taxes/
http://usgovinfo.about.com/od/income...hopaysmost.htm