AP POLL: How to pay for health overhaul? Tax the rich

[Zanza]

Ergo we should raise taxes on everyone to pay for it, progressively.

That would assume that the current level of progression is the best possible. Maybe a steeper or shallower progression would be better. In this case they opted for a steeper progression. But I don't think there is a conclusive logical argument for one or the other, it's just a matter of opinion and what you want to achieve.

[Hansmeister]

Doesn't the US have really low taxes on the rich right now?

Actually the US only taxes the rich.  The bottom 47% pay no taxes at all.  Since income for the rich tends to be highly volatile, so is our tax system.

[Josephus]

I'm not saying a word.

[alfred russel]

I can only dream of tax surcharges kicking in at 500,000.

Here in Canuckistan our highest tax rate kicks in somewhere under 100,000.

We dont here much about middle class tax breaks anymore since middle class kicks in at around the highest tax bracket.

What are the top rates in Canada?

In the US, they are 35% federal with another 10% in high tax jurisdictions such as California or New York City. The 35% federal is likely to go up to 39.5% soon.

[Admiral Yi]

That would assume that the current level of progression is the best possible. Maybe a steeper or shallower progression would be better. In this case they opted for a steeper progression. But I don't think there is a conclusive logical argument for one or the other, it's just a matter of opinion and what you want to achieve.

Actually I didn't specify the level of progressivity I wanted.  I am defending the principle of shared sacrifice.

[Sheilbh]

Actually the US only taxes the rich.  The bottom 47% pay no taxes at all.  Since income for the rich tends to be highly volatile, so is our tax system.

I've read that statistic before.  It's absolutely ridiculous.

The options they don't like include taxing insurers on the high-value coverage packages derided by Obama and Democrats as "Cadillac plans." That tax approach, being weighed in the Senate, is one of the few proposals in any congressional legislation that analysts say would help reduce the nation's health expenditures. It has come under fire from organized labor and has little support in the House.

I think this is the best option. 

[crazy canuck]

I can only dream of tax surcharges kicking in at 500,000.

Here in Canuckistan our highest tax rate kicks in somewhere under 100,000.

We dont here much about middle class tax breaks anymore since middle class kicks in at around the highest tax bracket.

What are the top rates in Canada?

In the US, they are 35% federal with another 10% in high tax jurisdictions such as California or New York City. The 35% federal is likely to go up to 39.5% soon.

I will look up some stats for you but I can tell you that back when I took my remuneration as employment income my overall tax bill was about 44-46% of what I earned - from both Federal and Provincial taxes.  I forget the exact percentage as I am trying to repress* the memory and the laughing my accountant did when I first went to her to restructure things for me.

* I realize that Garbon used the word repression correctly in the other thread.

[alfred russel]

Hans statistic doesn't include payroll taxes.

In the US, there are social security and medicare taxes that are about 7.5% for individuals and the same amount for employers--effectively a 15% tax on earned income. While in theory these pay for "social insurance", a lot of the money also goes to the general budget. People with investment income don't pay these taxes, and most of them phase out after a certain threshold (I think it is around $105k).

So it is true that many people don't pay income taxes, but they still contribute through payroll taxes on any income they earn.

[Zanza]

Actually the US only taxes the rich.  The bottom 47% pay no taxes at all.  Since income for the rich tends to be highly volatile, so is our tax system.

I've read that statistic before.  It's absolutely ridiculous.

I've read similar numbers for Germany.

The 10% highest income earners pay more than 50%.

The 25% highest income earners pay more than 80%.

The 50% lowest income earners pay 4.3%.

[crazy canuck]

So it is true that many people don't pay income taxes, but they still contribute through payroll taxes on any income they earn.

Isnt payroll tax the same thing as income tax - its just a prepayment on income tax isnt it.  If so, all Hans is saying is that a certain percentage dont have to pay anything more then what they have already paid at the end of the tax year.

[alfred russel]

So it is true that many people don't pay income taxes, but they still contribute through payroll taxes on any income they earn.

Isnt payroll tax the same thing as income tax - its just a prepayment on income tax isnt it.  If so, all Hans is saying is that a certain percentage dont have to pay anything more then what they have already paid at the end of the tax year.

No--at least in the US the payroll tax is separate from the income tax.

[Zanza]

Hans statistic doesn't include payroll taxes.

In the US, there are social security and medicare taxes that are about 7.5% for individuals and the same amount for employers--effectively a 15% tax on earned income. While in theory these pay for "social insurance", a lot of the money also goes to the general budget. People with investment income don't pay these taxes, and most of them phase out after a certain threshold (I think it is around $105k).

So it is true that many people don't pay income taxes, but they still contribute through payroll taxes on any income they earn.

We have that too. But ours costs like 20% or so and the regression starts at about 50k Euro. So the middle class incomes pay the most of that too.

[crazy canuck]

Here is the Canadian Federal Chart - it turns out for this tax year the top taxable income is now above 100,000.

15% on the first $40,726 of taxable income, +
22% on the next $40,726 of taxable income (on the portion of taxable income between $40,726 and $81,452), +
26% on the next $44,812 of taxable income (on the portion of taxable income between $81,452 and $126,264), +
29% of taxable income over $126,264.

And here is the Chart for the additional tax I pay in BC.

5.06% on the first $35,716 of taxable income, +
7.7% on the next $35,717, +
10.5% on the next $10,581, +
12.29% on the next $17,574, +
14.7% on the amount over $99,588

Here is the link for everyone else.  Alberta has a flat 10% tax...

http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

[Admiral Yi]

Isnt payroll tax the same thing as income tax - its just a prepayment on income tax isnt it.  If so, all Hans is saying is that a certain percentage dont have to pay anything more then what they have already paid at the end of the tax year.

You're thinking of withholding.  As Fredo said payroll taxes are the dedicated taxes for Social Security and Medicare/Medicaid.

[Fate]

I've read that statistic before.  It's absolutely ridiculous.

I agree, the income gap between rich and poor is absolutely obscene. We can cap the incomes of rich people so they're paying less as a percentage, but for some reason I believe Hans would object. 

I love how people act shocked over basic math.