Re: G & J, in cahoots?

From: Dave Long (dl@silcom.com)
Date: Thu Mar 22 2001 - 11:09:09 PST


Now that we finally have some numbers, a slight
digression into the world of arithmetic:

> 39.6% regular income tax
> 6.5% social security tax
> 1.5% medicare tax
> 8.5% local sales tax
> ~4% of annual income to property tax est.
>
> That's 60.1% right there.

Yeah, if you can add half a dozen bananas and
a father, son, and holy ghost, and get 1 1/2.

For a single taxpayer making $300K/yr:

$300K regular income
  76K social security income (capped, hence a regressive tax)
 300K medicare income
  30K in goods bought (services aren't subject to sales tax)

I'm leaving out the house, because I don't
have any direct experience with property taxes,
and under an AGI of about $120K (at what point
do itemized deductions get hosed?) they're
deductible. Last I heard, homeownership was
supposed to be beneficial to tax burden; is
that not true?
 
 97 income 300 @ schedule X = 39.6% (agi-288350) + 92K
  5 ss 76 @ 6.5%
  5 m'care 300 @ 1.5%
  3 sales 30 @ 8.5%
===
109K ~= 36% aggregate tax rate

> Let's forget about capital gains for a second.

But what if we have a fortunate upper-income
earner who has managed to incur all $300K as
long term gains? That's 300K @ only 20%, for
a savings of 37K over income tax, and no need
for 9K of FICA taxes, so now we have a total
tax burden of 63K, or only 21% aggregate rate.
(AMT probably kicks in here, and brings the
rate back up. What'd the pain be, 25%?)

-Dave

> 2/3 as the aggregate tax rate is a HELL of a lot more accurate an
> approximation for the effective tax rate on an individual upper-earner
> than your crack-smoking 1% number.

Sorry, that 1% was to show that, in a discussion of
the relative merits of progressive vs. regressive
tax systems, I don't (and you shouldn't) care what
the actual tax rate over all taxpayers may be.
(ok, 0 or 100% would make it moot, but anything in
the middle is orthogonal to the entire argument)

You'll recall my approximation for an individual
"upper-earner" was 44%, which now seems too high.

> Tariffs and duties in imported items; additional taxes on gasoline,
> tobacco, liquour, etc; tolls for roads, parking, etc.; bond
> elections; etc. etc. These are all taxes, people.

Tariffs, duties, gasoline, tobacco, liquor, road
tolls, etc. are all like the sales tax. How much
can one really incur? Bond elections are either
paid for out of sales or property taxes in my
experience, so that'd be double counting.



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