What will the new top tax rate

[veritas]

be for the rich If the dems get in control? And who are the rich?

I don't know how to do a poll but it would be interesting to know what income level is considered rich?

I have a client who says 60k is the number(he makes about 30k). I have another client who makes 500k plus who says he isn't rich.

[jainen]

pay for it

It is hard to give a meaningful answer about rates. When the Democrats left office they were running a budget surplus. The Republicans quickly turned that upside down, so the tax "rate" has not actually covered expenses for many years. Nevertheless, those bills must be paid. The money to retire that growing debt, with interest, has to be reflected in tax rate accounting in some way. Or perhaps Iraqi oil money will pay for it.

[Snaggletooth]

Taxing the Rich

is the doctrine of choice by many of us knowledgeable of taxation. Being a macro-economist, I am a Democrat, although my lifestyle is extremely conservative.

Jainen is right with his observation. If the government cannot cover its spending, the money gets drained out of the federal reserve system. Instead of higher taxes, you get higher interest rates. The effect on the economy is just as debilitating with deficit spending as it is with taxes.

Kennedy said of his own macro-economic theory: "A rising tide raises all ships." My observation coming through decades of watching employment figures, workers' take-home pay, small business, etc. is that when the American worker does well, the American businessman does well too.

A contractor I know is making some $50,000 and paying $5,000 in income taxes in a poor economy. Under Clinton he was averaging making $180,000 and paying $35,000 in taxes. But in those days, all he could do was gripe about the $35,000 in taxes and how he wished the Republicans could win in the 2000 election and cut his taxes.

He got his wish.

[Bees Knees]

There is always a balance between tax rates and balancing the budget. If the tax rates are too low, but the politicians won’t reduce spending accordingly, then you run deficits. If the tax rates are too high, it can cause economic activity to slow down as more revenue flows to the government rather than being invested in the economy. A typical example of this is Ronal Regan’s famous quote where he said back in his movie making days, he calculated how many movies he could make before 95% of his income went to taxes. Then he would stop making movies for that year.

Obviously a 95% tax rate is a little high. What is too low? Even when you find the perfect balance, you are only addressing half the issue. I remember when I first graduated from college that my income was below the poverty level. As the years went by, my income grew, but I never seemed to get ahead. That is because the more money I made, the more money I spent.

It would be foolish to blame deficits on the level of taxation while ignoring the level of spending. Having said all that, I kind of do hope for a change in government. Messing with the tax code always brings in more business for me.

[veritas]

It is hard to give a meaningful answer about rates. When the Democrats left office they were running a budget surplus. The Republicans quickly turned that upside down, so the tax "rate" has not actually covered expenses for many years. Nevertheless, those bills must be paid. The money to retire that growing debt, with interest, has to be reflected in tax rate accounting in some way. Or perhaps Iraqi oil money will pay for it.

You mean when the President left who was a democrat and the congress was republican. Congress makes the budget.

Tax revenues are at record amounts. Why can't dems say cut spending then if that doesn't work increase rates? If economists were running a business when things started slowing they would increase prices (except for Uncle Miltie). That would be just the ticket.

Speaking of economists I looked at the tax committee for the pension reform act. Lots of economists hardly any accountants.