Tax rates

After Obama proposed the Buffett rule, there were a slew of articles and blogs claiming that the rich actually pay higher rates than the rest of us. Some of the numbers were obviously just plain made up. So I decided to see if the statistics were available. Turns out they're pretty easy to get. Here's a start: IRS stats.

I used the data set labeled Table 1.1 for 2009. Now the tax codes are pretty complicated, so it's useless to compare published rates. But it's easy to see what people are actually paying. I took the total income taxes paid in each bracket. I added the total FICA (employee and employer, they're easy to compute) and divided by the total Adjusted Gross Income in each bracket to get an effective tax rate. Here's a graph:



Notes:

• Not included are sales taxes, property taxes, estate taxes, etc. None of which are tied directly to income.


• The rates max out somewhere under $1M a year. A millionaire does not have that much income, so Obama's description is not exactly accurate, but the principle is dead on.


• I repeat, the income tax part of this data is what people are actually paying, not derived by any tax rules. No loophole shenanigans here.


• This entire post is public domain. Use it to your heart's content.

Fair tax for the wealthy

It's no secret that the wealthy pay lower taxes as a percent of their income than the middle class. The wealthiest' incomes come from dividends and capital gains, taxed at 15%, while income tax plus the double payroll tax on workers adds up to a 50% marginal rate. No wonder the last few recessions saw jobless recoveries. Does congress not understand the Laffer curve?

Warren Buffett wants to fix this, and he drew the standard illogical responses from Republicans. Donald Trump said he would be willing to see his tax rates increased from 17 percent to 25 percent, but others wouldn't. "A lot of people would leave the country ... I'm talking about big people, job-producing people ... A lot of people will say, 'No thank you, I'm going to Switzerland. I'm going to Germany. I'm going to here, I'm going to there.' "

Holy cow. So without the 'big' people, I suppose us little people will wander around not knowing what to do.

1967 borders

Netanyahu claims that the internationally recognized 1967 borders of Israel are "indefensible". That may or may not be the case. But that is no reason to refuse to use them as the basis of land swap negotiations.

Lets just take him at face value. If he (or his predecessors) took something that didn't belong to him for whatever reason, the victim is entitled to compensation. Since his security depends on this particular land, he should return comparable land elsewhere. The problem is the magnitude of the land he has taken. How many Israelis would have to move to achieve fairness?

They've really gotten themselves in a bind.

1. A fair settlement is unacceptable to Israel.
2. Without US support they cannot survive.
3. Where will US support be in 100 years?

It is no wonder Hamas takes a long term strategy. Time is on their side.

If the US was born with the original sin of slavery as Obama has said, then Israel was born with the original sin of ethnic cleansing. They need to come to terms with this fact. The sooner the better.