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59% support AOC's plan to raise top bracket to 70%
- Thread starter LV426
- Start date
Do you know or understand how effective tax rates are calculated?
To find your effective tax rate, add up the amounts of the varying tax rates to find a single sum. Divide that number by income to find your average tax rate. The higher your income, the higher your effective tax rate. That's just math.
So if your income has skyrocketed the last 40 years, as it has for the top 1%, then their effective rate will also increase because more income is being taxed at a higher rate.
But for high income earners, the effective tax rate is only lower on a much smaller share of their income which has little effect on their effective tax rates.
In 2018 a person hits the top 37% tax rate at $500,000. If he makes $20 million he paid the top rate on $19.5 million. The lower rate on the first $500,000 will not have much of an effect on the percent of taxes he paid on his total income.
Their income doesn't increase once they reach a bracket?
What?
In a scenario where there is just a 70% rate on income over $10M, if you make $10.1M one year, and then $10.2M the next, does your effective tax rate go up year-to-year?
Once you hit the top marginal tax rate, it cannot increase past 37%. At $10.2 million they guy pays more money than he did on $10.1, but he is still paying 37% and has been since $500,000. His effective tax rate did not increase more than a fraction because he paid the top rate on $9.7 million.
But for high income earners, the effective tax rate is only lower on a much smaller share of their income which has little effect on their effective tax rates
I've read this three times and I still don't know what you're trying to say.
It sounds to me like you're making a tacit admission that you pay a higher effective tax rate as your income increases.
Now, since 1980, the 1% have seen their income increase by an exponential amount (242%). So naturally, they would pay a higher effective rate because more and more income each year is being earned in that top bracket.
So if we raised the marginal rates, the effective rate would also increase because all that income that was taxed at 39.6% is now taxed at 70%. So that has what effect on the effective tax rate?
Slowly but surely, you're making an argument for higher marginal rates.
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In 2018 a person hits the top 37% tax rate at $500,000. If he makes $20 million he paid the top rate on $19.5 million. The lower rate on the first $500,000 will not have much of an effect on the percent of taxes he paid on his total income.
OK...
So how is this an argument against raising the rate from 39.6% to 70%, or just creating a brand new 70% bracket at $10M?
You're confirming right here that the effective rate would be higher if taxes were raised.
And before, you showed how slight changes to the effective rate lead to slight changes to the rev-GDP rate, which leads to YUGE changes to gross revenues collected.
So every argument you've made here has just been a rehashing of what I've said, with an attempt to show it as the antithesis, when it's really confirming the truths I've been saying all along.
That raising the top marginal rate would raise the effective rate, which would raise revenues, which can be used to pay for things like M4A, free college, Green New Deal, etc.
So...thanks?
Once you hit the top marginal tax rate, it cannot increase past 37%.
No shit.
But the effective rate increases, which is what I've been saying this whole fucking time.
You've been disagreeing with me on that. You've been insisting, somehow, that raising marginal rates would lower effective rates, but that's not true because of the income gains by the 1%.
His effective tax rate did not increase more than a fraction because he paid the top rate on $9.7 million.
But it did increase, did it not? And why did it increase? Because more income was taxed at that higher level. $100K more. Now, imagine if instead of making $10.2 million the second year, that same rich person made $50.2M. So what happens to that person's effective tax rate then? It goes up by more than a fraction, right?
So....that means....what?
You're very nearly there.
Once you hit the top marginal tax rate, it cannot increase past 37%. At $10.2 million they guy pays more money than he did on $10.1, but he is still paying 37% and has been since $500,000. His effective tax rate did not increase more than a fraction because he paid the top rate on $9.7 million.
I love this because it's so close to getting the point but it's just like, one little nudge away from confirming my argument.
So the more someone makes, the higher their effective tax rate. When someone exceeds the top bracket, all income thereafter is taxed at that top bracket rate. So if your income has grown 242%, then that means more of it is being taxed at the higher marginal rate, which pushes that effective rate higher because more of the income it taxed at the higher rate.
So in no world does that result in a lower effective rate.
His effective tax rate did not increase more than a fraction because he paid the top rate on $9.7 million.
Right.
Because the income increase was just $100K.
Now, imagine that the income increase was 242%, and that the income went from $10.1M to $24.4M. Now in that scenario, with the marginal rates staying the same, is that person paying a higher effective rate on $24.4M than they did on $10.1M?
I've read this three times and I still don't know what you're trying to say.
It sounds to me like you're making a tacit admission that you pay a higher effective tax rate as your income increases.
Now, since 1980, the 1% have seen their income increase by an exponential amount. So naturally, they would pay a higher effective rate because more and more income each year is being earned in that top bracket.
So if we raised the marginal rates, the effective rate would also increase because all that income that was taxed at 39.6% is now taxed at 70%. So that has what effect on the effective tax rate?
Slowly but surely, you're making an argument for higher marginal rates.
The top 1% (or whatever group you choose) pays a higher percent of all federal income taxes. The individuals in that group do not pay a higher effective rate once they get to the top rate.
If a guy makes $100 million he paying the top rate (37%) on everything over $500,000. If he makes $200 million the next year he is paying 37% on that entire $100 additional income. His total income tax increases but his effective rate is still the same (except for the smaller rate he paid on the first $500,000).
For example, in 1994 the top 1% paid an average federal income tax rate of 23.7%. In 2012 they paid an average tax rate of 19.9%. If total share of income and share of all federal income taxes paid increased during those 18 years, but their effective tax rate declined. It did not increase because their share of the income increased--there are other variables involved.
The top 1% (or whatever group you choose) pays a higher percent of all federal income taxes. The individuals in that group do not pay a higher effective rate once they get to the top rate.
They do pay a higher effective rate for every dollar they make above that final bracket.
You said so yourself when you admitted that the effective rate increased "by more than a fraction" when income went from $10.1M to $10.2M.
Now, try and imagine what the effective rate would be if the income went from $10.1M to $24.4M (the 242% income growth for the 1% since 1980)?
Would the effective rate increase the higher that income gets? You said before it did when it was just an increase of $100K. So you gotta be consistent now.
I love this because it's so close to getting the point but it's just like, one little nudge away from confirming my argument.
So the more someone makes, the higher their effective tax rate. When someone exceeds the top bracket, all income thereafter is taxed at that top bracket rate. So if your income has grown 242%, then that means more of it is being taxed at the higher marginal rate, which pushes that effective rate higher because more of the income it taxed at the higher rate.
So in no world does that result in a lower effective rate.
Yes, but it would only be a fraction of 1%. That is not enough of an increase in the effective rate to be significant when looking at revenue gained or tax rates over time.
If a guy makes $100 million he paying the top rate (37%) on everything over $500,000. If he makes $200 million the next year he is paying 37% on that entire $100 additional income. His total income tax increases but his effective rate is still the same (except for the smaller rate he paid on the first $500,000)
No you fucking idiot, his effect rate goes up because more of his income is being taxed at that top rate.
This is like, Jr. High-level algebra. It's not that complicated, so you're either incredibly illiterate when it comes to math, or you're lying your fat ass off.
So which is it?
Are you an idiot or a liar?
For example, in 1994 the top 1% paid an average federal income tax rate of 23.7%. In 2012 they paid an average tax rate of 19.9%.
In 1994, the top tax rate was 39.6%
In 2012, the top tax rate was 35%
So of course the effective rate would be lower in 2012, because the top marginal rate was lower.
Jesus fucking Christ, is this really happening? Am I really having this debate right now?
If total share of income and share of all federal income taxes paid increased during those 18 years, but their effective tax rate declined. It did not increase because their share of the income increased--there are other variables involved.
No there isn't!
The variable is that the top tax rate is lower in 2012 than it was in 1994.
FFS, you can't even keep your goddamn argument straight on facts.
No you fucking idiot, his effect rate goes up because more of his income is being taxed at that top rate.
This is like, Jr. High-level algebra. It's not that complicated, so you're either incredibly illiterate when it comes to math, or you're lying your fat ass off.
So which is it?
Are you an idiot or a liar?
Maybe his effective rate goes up from 21.003 to 21.005. Hardly significant in terms of our discussion. We would not even include those additional fractions in our data.
Yes, but it would only be a fraction of 1%.
Not if the income gain was 242%, like it's been for the 1% since 1980.
It was a fraction of a percent in the scenario where the income goes from $10.1M to $10.2M.
But when you go from $10.1M to $24.4M, that will have a much larger effect on the effective rate.
Which has been my fucking point, and which is the point you practically made yourself.
Maybe his effective rate goes up from 21.003 to 21.005.
Show your work!
So again, you're trying to conflate the $10.1M - $10.2M scenario I put forth before, where you admitted the effective rate increased.
So, if income grows from $10.1M - $24.4M, what does that do to the effective rate?
Incomes for the top 1% have grown by 242% since 1980.
So those are the terms we are talking about here.
This is 7th grade algebra that you are failing because you simply don't want to admit that I'm right. Doing so would be too shattering for your ego.
We can simply do the math right here and show you how fucking wrong you are:
$10,100,000 (Married filing jointly) below is how much is paid in each bracket:
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $3,515,000
TOTAL TAX = $3,676,377
Effective tax rate (Tax/Income) = 36.3%
NOW - imagine that $10.1M is $24.4M (which reflects the 242% increase in incomes for the top 1%). Everything stays the same except for the last bracket.
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $8,806,000
Total tax = 8,967,377
Effective rate = 36.7%
So the effective rate goes up the more you make, but in no event will the effective rate be higher than the top marginal rate. The effective rate will slow down the closer it gets to that top rate because of math.
Now, if we add a new bracket at $10M at 70%, how does that affect the effective rate if income is $24.4M?
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $3,478,000
Bracket 8: 70% = $9,800,000
Total tax = 13,439,377
Effective rate = 55%
So not only would establishing a $10M bracket bring in 50% more revenue if the income was $24.4M, it would also increase the effective tax rate.
So that's why we're calling for a 70% top rate on income over $10M.
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In 1994, the top tax rate was 39.6%
In 2012, the top tax rate was 35%
So of course the effective rate would be lower in 2012, because the top marginal rate was lower.
Jesus fucking Christ, is this really happening? Am I really having this debate right now?
Sorry, I overlooked different tax rates. Let's look at effective tax rates when the tax rates were much higher:
1950's: 16.9% (91%)
2012: 19.9% (35%)
The effective tax rate was much lower in the 1950's when the top marginal rate was 91%.
https://taxfoundation.org/taxes-rich-1950-not-high/
Show your work!
So again, you're trying to conflate the $10.1M - $10.2M scenario I put forth before, where you admitted the effective rate increased.
So, if income grows from $10.1M - $24.4M, what does that do to the effective rate?
Incomes for the top 1% have grown by 242% since 1980.
So those are the terms we are talking about here.
This is 7th grade algebra that you are failing because you simply don't want to admit that I'm right. Doing so would be too shattering for your ego.
We can simply do the math right here and show you how fucking wrong you are:
$10,100,000 (Married filing jointly) below is how much is paid in each bracket:
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $3,515,000
TOTAL TAX = $3,676,377
Effective tax rate (Tax/Income) = 36.3%
NOW - imagine that $10.1M is $24.4M (which reflects the 242% increase in incomes for the top 1%). Everything stays the same except for the last bracket.
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $8,806,000
Total tax = 8,967,377
Effective rate = 36.7%
So the effective rate goes up the more you make, but in no event will the effective rate be higher than the top marginal rate. The effective rate will slow down the closer it gets to that top rate because of math.
Now, if we add a new bracket at $10M at 70%, how does that affect the effective rate if income is $24.4M?
Bracket 1: 10% = $1,905
Bracket 2: 12% = $7,001
Bracket 3: 22% = $19,271
Bracket 4: 24% = $36,000
Bracket 5: 32% = $27,200
Bracket 6: 35% = $70,000
Bracket 7: 37% = $3,478,000
Bracket 8: 70% = $9,800,000
Total tax = 13,439,377
Effective rate = 55%
So not only would establishing a $10M bracket bring in 50% more revenue if the income was $24.4M, it would also increase the effective tax rate.
So that's why we're calling for a 70% top rate on income over $10M.
You are not comparing the same thing--you are basing it on a different rate. The total effective rate on $24 million is only .4 higher than the effective rate on $10.1 million (36.7% v. 36.3%). You said the more money you make the higher the effective rate--it is only slightly higher. You raised the rate to 70% to get a higher effective rate.
A 70% tax rate would reduce our deficit from $985 billion to $913 billion.
Not if the income gain was 242%, like it's been for the 1% since 1980.
It was a fraction of a percent in the scenario where the income goes from $10.1M to $10.2M.
But when you go from $10.1M to $24.4M, that will have a much larger effect on the effective rate.
Which has been my fucking point, and which is the point you practically made yourself.
It went from 36.3% to 36.7%. Not a "much larger effect."