"Chuck Marr, the Center on Budget and Policy Priorities' director of Federal Tax Policy, said in a statement that this year's Tax Freedom Day report "leaves a strikingly misleading impression of tax burdens. He said the 29% share of income that the Tax Foundation cites as the 'average' tax burden is higher than what 80% of American families actually pay."
CNN Tax Freedom Day
Tax Foundation: Tax Freedom Day
CBPP: Tax Freedom Day
And it was not wasted on me that the states with the earliest tax freedom day are where many people would not want to live....
21 comments:
While I am generally not inclined to complain about taxes this op-ed piece Minnesota taxes: More blessed to give? had me griping for a few days.
According to this... It looks like Minnesota is the "Rich"...
I guess I'd rather be the Rich paying more taxes than the Poor relying on the expenditures.
For Mitt Romney with his fourteen percent tax rate, tax freedom date was Feb. 20th. When is yours?
--Hiram
If we include Gov. Romney's appreciated assets in his tax protected accounts, his tax freedom day might have occurred during the Rose Bowl, somewhere around halftime.
==Hiram
I am thinking that your fixation with Romney probably isn't good for your health. Especially since there is a ~50% chance that he will be our next president.
As for your points, you need to look closer at the Tax Foundation link. Since it includes more than just Federal Income tax, I am guessing Romney's tax free day at or later than the average.
As for his tax deferred investments, that is the same benefit we all have. He just has better investment options.
Well, the CBPP is lying with numbers, again. The Obama government will spend close to $4Trillion this year; State and local governments combined will spend about half that. We're roughly a $16Trillion economy, so the government is taxing and spending roughly 3/8 or 37% of it. That money comes out of the economy, somewhere. Do the rich carry most of the burden? Perhaps. But the only thing progressive about our tax system is the income tax, as our friends at the MN AFL-CIO and DFL Party love to say with their "tax incidence study." The working poor pay 12% of their income in Social Security taxes, right off the top. In MN they pay 6.875% on everything they buy (and spend most of their income). What they buy carries the "hidden tax" of every supplier's income and other taxes (~23%), so add that all up and you probably get a higher real tax rate than what the Romneys or Obamas pay. It's not fair. What's worse, if you raise taxes on the Romneys and Obamas, it "trickles down" to the poor who buy their "products" or are employed by them. No, the Tax Foundation has it about right. If you don't like high taxes, try to get government to cut taxes (and spending!)
J. Ewing
All of us do have the ability to have retirement accounts. Unfortunately, not all of us have the ability to buy the assets Mitt Romney has. Free markets come up a little short on that one, it seems. So the question is more general. Do tax freedom days take into account the appreciation of untaxed assets?
--Hiram
I expect I am fixated on Mitt. I think his career encapsulates in fundamental and important ways how our economy has gone wrong, how we have somehow created a system of incentives that rewards the wrong things; that hurts our economy instead of helps it. I don't think it's any accident that the decline of our economy as a whole roughly corresponds to the rise of the Mitt Romney's of the world. That's one of the things the election is going to be about.
--Hiram
you shouldn't need all the assets Mitt Romney has to create a retirement account, even an adequate one. Of course, if you had the 12% now paid to Social Security, for which you may get nothing, you could do a LOT better.
J. Ewing
you shouldn't need all the assets Mitt Romney has to create a retirement account,
Something with which, I am totally in agreement. But it would certainly be nice if we had the same choices he does.
--Hiram
Here is a hypothetical question: Let's say your employer puts twenty dollars in the form of gold coin in your retirement account. As it happens, the gold coin not only has a face amount, it has a collectible value many times greater than that face amount. What are the tax consequences? What does the employer get to deduct as a business expense, the face value of the coin, or it's market value? What is the value of the coin for tax purposes to the employee? Again, it's face value or it's collectible value?
--Hiram
I believe the answer is "fair market value" at the time of the transaction.
If the coin is already 100 yrs old and therefore worth $100, it would be recorded as a $100 transfer. If it is freshly minted and worth $20, that is its value.
I believe the answer is "fair market value" at the time of the transaction.
What happens if there isn't a market, at least at the time of the transaction? As was the case with the securities assigned to Bain retirement accounts?
--Hiram
Per my understanding of what you have said. Bain and employees contributed cash into the 401k accounts. (Ie known value)
Then employees could invest in on going projects. Just like I can invest in my company'stock. The market value of the project would be known because Bain would have recently bought the struggling company.
Then the risk and appreciation would be based on if Bain could make the company more valueable by improving it or breaking it apart. Many times they won and sometimes they lost.
It sounds like they were using the employees as the "Bank". The employees were probably willing to accept more risk than a typical Bank would since they were actively engaged in the projects. Having their personal cash on the line would sure keep them motivated and engaged at work.
The tax consequences of retirement accounts and the insolvency of Social Security, as well as the highly regressive Social Security tax and the number of "options" you have for retirement savings, are all eliminated by adopting the FAIR tax. Just thought you should know.
J. Ewing
"Then employees could invest in on going projects."
But how much are they worth?
"Just like I can invest in my company'stock."
If stock in your company is publicly traded, everyone has a fair market value they can supply to the IRS. But what if there isn't a public market as was the case with the Bain Securities? You can look at the old purchase price, but there isn't any reason at all to think that purchase price has any relevance at all to new classes of securities Bain created. Isn't interesting that someone who thinks we should be less government centered owes a huge part of his wealth to manipulation of the tax code? As opposed to something as banal as working for a living?
--Hiram
How about getting rid of all that ridiculous complexity to the tax code and let economic and investment decisions be driven by whether they have value or not? How many people invested in cattle ranches when those became tax-advantage, or quit buying boats when the tax on those was raised?
J. Ewing
How about getting rid of all that ridiculous complexity to the tax code and let economic and investment decisions be driven by whether they have value or not?
In this case, what complexity would you get rid of? The idea is that when you sell something for more than you paid for it, you have income which we tax. Seems pretty simple to me. The complexity here comes not from the tax code, but from the way Mitt tries to get around it, by among other things, making it impossible to fairly price the thing he is buying. The problem doesn't happen when free markets are allowed to work, and where in this case a price would be established. That's the case with John's purchase of company stock.
Am I the only believer in the wonders of free markets around here?
--Hiram
Hiram,
Apparently the IRS has found that Bain's practice complied with the law and they were setting their transfers at fair market value, or the Democrats would be all over it.
Most of the companies were a bargain because no one wanted to take the risk of buying them. It definitely was not an investment for the risk averse.
"Apparently the IRS has found that Bain's practice complied with the law and they were setting their transfers at fair market value, or the Democrats would be all over it."
The issue isn't the legality, necessarily. And at this stage, they aren't very closely tied to Mitt Romney himself. Rather it's a question of seemliness, of what's appropriate. Here we have a guy who claims his business expertise qualifies him for the presidency who we now find out owes much of his wealth to a tax strategy about which the best we can say is that it isn't illegal.
It is true that the Democrats aren't all over this. The Wall Street Journal only published the article last Thursday, and the story is a very complicated one to tell, even at these early stages. And quite frankly, there aren't that many Democrats who understand what's going, or may have gone on. But I wouldn't be surprised if this played at least a small part of a larger narrative which will begin to surround Mitt Romney. That what his business career supposedly so ungovernment centric was in fact little more than paper mache construction of tax avoidance tax avoidance measures all of which were "legal" if not much more.
--Hiram
Again, it's the problem with the tax code. There's no such thing as a "loophole." Because of the complexity, all manner of incentives and disincentives get written into the tax code, DELIBERATELY, by Congress, to accomplish some desirable goal (up to and often including big bucks from lobbyists). Why is it unseemly for an enterprising enterprise to FOLLOW the law and the incentives as written? If Congress hadn't intended for their to be more cattle ranches, it wouldn't have written in rules advantaging such investments. Why was it wrong for people to invest in cattle ranches, given those incentives? It's a perfect free market, if you ignore the massive market distortions introduced by Congress through the tax code.
J. Ewing
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