Boards - Do you agree with this assessment of Bernie's tax plan and the GDP?

SheWrites wrote:Economic Impact
According to the Tax Foundation’s Taxes and Growth Model, Senator Bernie Sanders’s tax plan would reduce the economy’s size by 9.5 percent in the long run. The plan would lead to 4.3 percent lower wages, an 18.6 percent smaller capital stock, and 6.0 million fewer full-time equivalent jobs. The smaller economy results from higher marginal tax rates on capital and labor income.
Table 2.
Economic Impact of Senator Sanders’s Tax Reform Proposals
GDP
-9.5%
Capital Investment
-18.6%
Wage Rate
-4.3%
Full-time Equivalent Jobs (in thousands)
-5,973
Source: Tax Foundation Taxes and Growth Model, October 2015.

SheWrites wrote:I was not sure of the source, The Tax Foundation.  This is why I ran it past you.  I also have not found the specifics they site here about Bernie.

Would Bernie/Hillary revive the budget turn around that we saw with Pres. Clinton?  

SheWrites wrote:Reasonable thoughts.  

What were the tax rates during the Clinton era surplus?

Is there a site that shows the changes in tax rates since that time?

EmeraldGhost wrote:Individual tax rates are not the problem .... Federal government spending is the problem.

(Corporate taxes could use some tweaking/reductions though ... and we need to get rid of a lot of tax credits/deductions for both corporations and individuals)

boards of FL wrote:

SheWrites wrote:I was not sure of the source, The Tax Foundation.  This is why I ran it past you.  I also have not found the specifics they site here about Bernie.

Would Bernie/Hillary revive the budget turn around that we saw with Pres. Clinton?  

If we can get some common sense tax increases on top tier brackets, if we can eliminate various caps on taxable income, if we can increase taxes on capital gains and treat that like regular income, all while staying out of wars/occupations in the middle east and keeping defense spending in check, I think there is a very good chance that we could see our budget revert back to perennial surplus just as it did during the Clinton era.

boards of FL wrote:

SheWrites wrote:Reasonable thoughts.  

What were the tax rates during the Clinton era surplus?

Is there a site that shows the changes in tax rates since that time?

Here they are.  1998 was the first year that saw a budget surplus under Clinton.  And then I included our current tax rates.

colaguy wrote:

boards of FL wrote:

SheWrites wrote:I was not sure of the source, The Tax Foundation.  This is why I ran it past you.  I also have not found the specifics they site here about Bernie.

Would Bernie/Hillary revive the budget turn around that we saw with Pres. Clinton?  

If we can get some common sense tax increases on top tier brackets, if we can eliminate various caps on taxable income, if we can increase taxes on capital gains and treat that like regular income, all while staying out of wars/occupations in the middle east and keeping defense spending in check, I think there is a very good chance that we could see our budget revert back to perennial surplus just as it did during the Clinton era.

The wealthy in America already pay most of the individual federal income taxes, yet they make up only 2.4% of the returns filed. As of 2013, per the Pew Research Center, taxes paid by individuals earning over $250K make up almost 50% of taxes collected. Raising the tax rate on a mere 2.4% of taxpayers will not significantly increase tax revenue.

Also, there's this: individuals earning under $50K make up only 6.2% of the taxes collected - their average tax rate is 4.2%. The top 0.1% of families pay 37.9% and the bottom 20% have negative tax rates

So, again, almost half of the individual federal income taxes are paid by 2.4% of filers - those making over $250K - the wealthy.

boards of FL wrote:

colaguy wrote:

boards of FL wrote:

SheWrites wrote:I was not sure of the source, The Tax Foundation.  This is why I ran it past you.  I also have not found the specifics they site here about Bernie.

Would Bernie/Hillary revive the budget turn around that we saw with Pres. Clinton?  

If we can get some common sense tax increases on top tier brackets, if we can eliminate various caps on taxable income, if we can increase taxes on capital gains and treat that like regular income, all while staying out of wars/occupations in the middle east and keeping defense spending in check, I think there is a very good chance that we could see our budget revert back to perennial surplus just as it did during the Clinton era.

The wealthy in America already pay most of the individual federal income taxes, yet they make up only 2.4% of the returns filed. As of 2013, per the Pew Research Center, taxes paid by individuals earning over $250K make up almost 50% of taxes collected. Raising the tax rate on a mere 2.4% of taxpayers will not significantly increase tax revenue.

Also, there's this: individuals earning under $50K make up only 6.2% of the taxes collected - their average tax rate is 4.2%. The top 0.1% of families pay 37.9% and the bottom 20% have negative tax rates

So, again, almost half of the individual federal income taxes are paid by 2.4% of filers - those making over $250K - the wealthy.

Your argument isn't even logically consistent.  First, you say that the wealthy pay nearly 50% of taxes collected.  Then you say that raising taxes on those people will not have any impact on taxes collected.  OK.  Those two statements cannot both be true.  If the wealthy are paying 50% of taxes collected, increasing their tax rates will absolutely increase taxes collected.  You're making claims - one after the other - that are irreconcilable.

In other news, there is a 100% chance of rain today.  Therefore, you should not bring an umbrella.  You see, when we say that there is a 100% chance of rain, that means that it is absolutely certain that water will fall from the sky today.  And, thus, you will need no umbrella.

The above is good description of exactly how logically inconsistent your comment is, colaboy.

colaguy wrote:

boards of FL wrote:

colaguy wrote:

boards of FL wrote:

SheWrites wrote:I was not sure of the source, The Tax Foundation.  This is why I ran it past you.  I also have not found the specifics they site here about Bernie.

Would Bernie/Hillary revive the budget turn around that we saw with Pres. Clinton?  

If we can get some common sense tax increases on top tier brackets, if we can eliminate various caps on taxable income, if we can increase taxes on capital gains and treat that like regular income, all while staying out of wars/occupations in the middle east and keeping defense spending in check, I think there is a very good chance that we could see our budget revert back to perennial surplus just as it did during the Clinton era.

The wealthy in America already pay most of the individual federal income taxes, yet they make up only 2.4% of the returns filed. As of 2013, per the Pew Research Center, taxes paid by individuals earning over $250K make up almost 50% of taxes collected. Raising the tax rate on a mere 2.4% of taxpayers will not significantly increase tax revenue.

Also, there's this: individuals earning under $50K make up only 6.2% of the taxes collected - their average tax rate is 4.2%. The top 0.1% of families pay 37.9% and the bottom 20% have negative tax rates

So, again, almost half of the individual federal income taxes are paid by 2.4% of filers - those making over $250K - the wealthy.

Your argument isn't even logically consistent.  First, you say that the wealthy pay nearly 50% of taxes collected.  Then you say that raising taxes on those people will not have any impact on taxes collected.  OK.  Those two statements cannot both be true.  If the wealthy are paying 50% of taxes collected, increasing their tax rates will absolutely increase taxes collected.  You're making claims - one after the other - that are irreconcilable.

In other news, there is a 100% chance of rain today.  Therefore, you should not bring an umbrella.  You see, when we say that there is a 100% chance of rain, that means that it is absolutely certain that water will fall from the sky today.  And, thus, you will need no umbrella.

The above is good description of exactly how logically inconsistent your comment is, colaboy.

Either I didn’t explain it well, or you misunderstood.  Let’s try again.

First, I didn’t say that raising tax rates wouldn’t generate additional revenue, I said it would not significantly increase tax revenue.  My assumption is that you want to raise income tax revenue to “revive the budget”, lower the debt, etc.

50% of individual taxes collected by the Fed came from ONLY 2.4% of filers.  To put that in perspective - if there were only 100 taxpaying families in the US and the Feds collected $1 million in federal income taxes – two (and a half) families would have paid almost $500,000 of that $1 million. The other half of the $1 million was paid by the other 97 (and a half) families.  BTW, I don’t have so much of a problem with this scenario, since those 2.5 families made a LOT of income.  

colaguy wrote:Families earning >$250K are in the 33% tax bracket.  Since our tax system is marginal, the additional 1% applies only to the amount in excess of about $190K (the first $190K is taxed at 28%). Using this tax rate on a family earning $1 million would yield the following tax revenue: $1M less the $190K is $810. $810 x 1% = $8,100. This family would be paying $8,100 in additional taxes.  This is not a significant amount, even when applied to all families making over $250 (remember that this will apply to only 2.4% of families filing tax returns).

So, one might say “then raise the percentage by even more – maybe a 5% increase”.  At some point this becomes onerous to these high earners and there will be a rebellion and  these families will relocate to another place in order to avoid paying the confiscatory rates.  The main point is that since there are relatively few earners paying most of the taxes collected, raising the rate will not generate enough to make a difference in reducing the debt or balancing the budget. It would make more sense to raise (modestly) the tax rate on the middle earners – those making between $50K and $200K.  These families make up about 39% of the total amount of tax revenue.  

I agree with some of your other points.  I am in favor of eliminating the FICA caps.  Not so much on treating capital gains as income.  While this would apply to many rich folks, there are also many regular folks with pensions, 401Ks, IRAs, etc. that would have to pay taxes on the gains too.    

boards of FL wrote:

SheWrites wrote:Economic Impact
According to the Tax Foundation’s Taxes and Growth Model, Senator Bernie Sanders’s tax plan would reduce the economy’s size by 9.5 percent in the long run. The plan would lead to 4.3 percent lower wages, an 18.6 percent smaller capital stock, and 6.0 million fewer full-time equivalent jobs. The smaller economy results from higher marginal tax rates on capital and labor income.
Table 2.
Economic Impact of Senator Sanders’s Tax Reform Proposals
GDP
-9.5%
Capital Investment
-18.6%
Wage Rate
-4.3%
Full-time Equivalent Jobs (in thousands)
-5,973
Source: Tax Foundation Taxes and Growth Model, October 2015.

I reject their analysis.   The Tax Foundation also said that the 1993 budget proposal and tax policy changes under Clinton would have a negative impact on the economy, would hurt stocks and investment, and would likely have little to no impact on the actual budget.  But what followed was the most prosperous era of economic growth in US history, one of the lowest unemployment rates on record, 30 million jobs added the economy, and perennial budget surplus.  They also viewed the 2001-2003 Bush tax cuts very positively.  We were supposed to see all sorts of jobs, economic growth was supposed to take off such that the tax cuts would ultimately pay for themselves, and long term economic growth prospects were supposed to be great.   But what followed was a 180 u-turn from perennial budget surplus to ballooning deficits (leading to the worst deficit in US history), a net loss of 400k private sector jobs over an 8 year period, and the worst economy since the great depression.  

And beyond that, I'm not even sure from where they're getting Bernie Sanders' individual income tax brackets.  I'm not saying that they're wrong, though I wasn't able to corroborate them anywhere;  so not only do I question the Tax Foundation's analysis,  I also question the underlying data that they plug-in to their TAG model.

boards of FL wrote:

SheWrites wrote:Reasonable thoughts.  

What were the tax rates during the Clinton era surplus?

Is there a site that shows the changes in tax rates since that time?

Here they are.  1998 was the first year that saw a budget surplus under Clinton.  And then I included our current tax rates.

Markle wrote:

boards of FL wrote:

SheWrites wrote:Economic Impact
According to the Tax Foundation’s Taxes and Growth Model, Senator Bernie Sanders’s tax plan would reduce the economy’s size by 9.5 percent in the long run. The plan would lead to 4.3 percent lower wages, an 18.6 percent smaller capital stock, and 6.0 million fewer full-time equivalent jobs. The smaller economy results from higher marginal tax rates on capital and labor income.
Table 2.
Economic Impact of Senator Sanders’s Tax Reform Proposals
GDP
-9.5%
Capital Investment
-18.6%
Wage Rate
-4.3%
Full-time Equivalent Jobs (in thousands)
-5,973
Source: Tax Foundation Taxes and Growth Model, October 2015.

I reject their analysis.   The Tax Foundation also said that the 1993 budget proposal and tax policy changes under Clinton would have a negative impact on the economy, would hurt stocks and investment, and would likely have little to no impact on the actual budget.  But what followed was the most prosperous era of economic growth in US history, one of the lowest unemployment rates on record, 30 million jobs added the economy, and perennial budget surplus.  They also viewed the 2001-2003 Bush tax cuts very positively.  We were supposed to see all sorts of jobs, economic growth was supposed to take off such that the tax cuts would ultimately pay for themselves, and long term economic growth prospects were supposed to be great.   But what followed was a 180 u-turn from perennial budget surplus to ballooning deficits (leading to the worst deficit in US history), a net loss of 400k private sector jobs over an 8 year period, and the worst economy since the great depression.  

And beyond that, I'm not even sure from where they're getting Bernie Sanders' individual income tax brackets.  I'm not saying that they're wrong, though I wasn't able to corroborate them anywhere;  so not only do I question the Tax Foundation's analysis,  I also question the underlying data that they plug-in to their TAG model.

Of course you do.  

Now please provide the link to their article forecasting what you said.  Should be easy for you to find.

Markle wrote:

boards of FL wrote:

SheWrites wrote:Reasonable thoughts.  

What were the tax rates during the Clinton era surplus?

Is there a site that shows the changes in tax rates since that time?

Here they are.  1998 was the first year that saw a budget surplus under Clinton.  And then I included our current tax rates.

As you know, there was never a budget surplus under President Clinton.  What appears as a surplus is money paid into Social Security and Medicare.

colaguy wrote:"We could easily add an asterisk which states that retirement planning accounts would be subjected to a much lower tax rate. But if you have millions in hedge funds and earn millions each year in the stock market and this is your primary source of income, that should be taxed as if it is your primary source of income. There is no justifiable reason for why a guy like Warren Buffet should pay a lower tax rate than his secretary."

This is a fallacy. Buffet was comparing apples to oranges.  His (lower) tax is the capital gains tax rate (probably 15% in 2013, when he made this statement) and his secretary's tax was on her ordinary income (probably 35%).  Already a wealthy man, Buffet does not rely on earning an income (like most of us do). One of the reason capital gains are taxed at a lower rate is that the money that was used to make the original investment has already been taxed.  If I make $100K one year, and am taxed at an effective income tax rate of 28%, I'll pay $28K to Uncle Sam. If I don't actually spend all the rest of my earnings that year, and instead, buy some stock, I am buying that stock with money that has already been taxed.  When I sell that stock (assuming it has risen in value since I purchased it) the difference in what it sold for vs what I paid for it (the capital gain) is also taxed, but at a lower rate - the capital gains tax rate.  

colaguy wrote:"We could easily add an asterisk which states that retirement planning accounts would be subjected to a much lower tax rate. But if you have millions in hedge funds and earn millions each year in the stock market and this is your primary source of income, that should be taxed as if it is your primary source of income. There is no justifiable reason for why a guy like Warren Buffet should pay a lower tax rate than his secretary."

This is a fallacy. Buffet was comparing apples to oranges.  His (lower) tax is the capital gains tax rate (probably 15% in 2013, when he made this statement) and his secretary's tax was on her ordinary income (probably 35%).  Already a wealthy man, Buffet does not rely on earning an income (like most of us do). One of the reason capital gains are taxed at a lower rate is that the money that was used to make the original investment has already been taxed.  If I make $100K one year, and am taxed at an effective income tax rate of 28%, I'll pay $28K to Uncle Sam. If I don't actually spend all the rest of my earnings that year, and instead, buy some stock, I am buying that stock with money that has already been taxed.  When I sell that stock (assuming it has risen in value since I purchased it) the difference in what it sold for vs what I paid for it (the capital gain) is also taxed, but at a lower rate - the capital gains tax rate.  

Arguments for a lower capital gains rate include: the money has already been taxed - wages are first taxed by payroll and personal income taxes, then again by the corporate income tax (if one chooses to invest in corporate equities), and then again when those investments pay off in the form of dividends and capital gains; and, it discourages present consumption over future consumption - in other words, a lower capital gains rate encourages investment.

Markle wrote:

colaguy wrote:"We could easily add an asterisk which states that retirement planning accounts would be subjected to a much lower tax rate. But if you have millions in hedge funds and earn millions each year in the stock market and this is your primary source of income, that should be taxed as if it is your primary source of income. There is no justifiable reason for why a guy like Warren Buffet should pay a lower tax rate than his secretary."

This is a fallacy. Buffet was comparing apples to oranges.  His (lower) tax is the capital gains tax rate (probably 15% in 2013, when he made this statement) and his secretary's tax was on her ordinary income (probably 35%).  Already a wealthy man, Buffet does not rely on earning an income (like most of us do). One of the reason capital gains are taxed at a lower rate is that the money that was used to make the original investment has already been taxed.  If I make $100K one year, and am taxed at an effective income tax rate of 28%, I'll pay $28K to Uncle Sam. If I don't actually spend all the rest of my earnings that year, and instead, buy some stock, I am buying that stock with money that has already been taxed.  When I sell that stock (assuming it has risen in value since I purchased it) the difference in what it sold for vs what I paid for it (the capital gain) is also taxed, but at a lower rate - the capital gains tax rate.  

Arguments for a lower capital gains rate include: the money has already been taxed - wages are first taxed by payroll and personal income taxes, then again by the corporate income tax (if one chooses to invest in corporate equities), and then again when those investments pay off in the form of dividends and capital gains; and, it discourages present consumption over future consumption - in other words, a lower capital gains rate encourages investment.

No, actually if you have an effective gross income of $100,000.00 you will pay far less than 28% or $28,000.  From the $100,000. you will have your itemized deductions once which will reduce your net income drastically.

What Progressives also love to forget is that money I invest in the stock market, bonds or real estate for that matter, has already had taxes paid on it once.