Tuesday, September 30, 2008

Dear top 1%: deal.

This graph is pretty striking. Okay, it's nothing new; it says that the democrat's tax plan will help poor people more, and the republican's tax plan will help rich people more.

Maybe there are economic reasons to favor the republican's tax plan. Trickle-down economics, blah blah. Read those books, draw those supply and demand curves. But listen: I am almost in that top quintile. (source: Wikipedia, shut up.) Suppose I were. Suppose I got a surprise raise, and I was making $88k.

Eighty eight thousand dollars! I am now in the real world, so I know how far that goes.
Right now, my budget includes enough for me to live in a swank apartment in a big city, travel wherever I want, max out my 401k, spend $100/week on entertainment/fun/whatever, and still have thousands left over at the end of the year. And I'm not even making $88k.

At this point, even if a severely progressive tax were passed, I would not be whining about disincentives, or slacking off because "my raise wouldn't be as big." Living as a single man in the top 20% means you're living large.

Okay, okay, at this point you're saying "but what if you had kids to feed???" Fine, throw in a wife and two kids, and bump me up to the top 5%. $157k. I might have to scrimp and save a little. Say, move a few blocks out of the trendiest part of town. Maybe take two transoceanic trips instead of three. Buy note pads instead of scrawling shopping lists in Sharpie marker on Andrew Jackson's noggin.

So you folks in the top 1%, don't give me this nonsense about how "I deserve most of the tax cuts, because I pay most of the taxes." Suck it up a little bit. And take off your Ivy League sweatshirt before you tell me "I'm a self-made man, and I got here because of my own hard work." Because I'm a self-made man who got here because of my parents' support, the right interests (CS) at the right time, and only a tiny bit because of my own hard work; I will soon be one of those paying most of the taxes; and I'm willing to sacrifice a bit to help our country solve its huge huge problems.

(vote Obama, and vote progressive taxes!)

7 comments:

yincrash said...

Is there a graph that shows what percentage of income each group would pay? Rather than the change in the percentage of income?

Dan said...

Good question! This is more relevant, really. I mean, if the rich were currently paying 90% of their post-$500k money, or whatever, and Obama's plan raised it to 100%, yeah, I'd be against that too.

But such a graph is frustratingly hard to find! Here's something I found.
I think the right-hand column is the relevant one, the "average federal tax rate". If that means what I think it means, then the money you make between $500k and $1m is taxed 2.8% more, to 29.7%, and the post-$1m money is taxed 5.5% more, to 35.8%.

Wow. So any money you make up to $500k would be taxed less. And you rich rich people, even if you make $1b per year, your tax rate jumps by at most 5.5%. If you can't live on $500k, you won't find any sympathy from me.

(unless I interpreted that chart wrong, or it's not the right chart.)

(side note: if that chart and my analysis are correct, wholly cow, we need to raise taxes more than that! We have a multi-trillion-dollar debt (that's teradollar, and most computer geeks don't even use "tera-" much) that's not going away with a wimpy tax plan like this. And McCain's doesn't raise taxes for anyone!)

Anonymous said...

I would point out that there are multiple angles to attacking the deficit. One involves increasing taxes, but the other is decreasing spending. If someone making $50k/year spent $100k/year, would you say, "wholly cow, you need to earn more," or "wholly cow, you need to spend less?"

I don't believe anyone is trying to make out that the rich are "suffering," because that argument is silly. The question is more philosophical: is it ethical for the government to take money from some for transfer to others? Also, does it create perverse and unavoidable incentives in the economy?

Dan said...

Right. We could wax philosophical for days about how much should the government tax. And I'd agree with you that reducing spending is generally a better call than raising income.

(for example... reducing military spending.)

But we are in a big hole right now, thanks in part to our prodigious military spending, and it seems to me like we ought to climb out of that hole, the sooner the better. And I'd rather have rich people take more of the hit than middle-class and poor people.

Does it create weird incentives? That's what I'm saying: as someone who might someday hit these weird incentives or disincentives, I don't think so. If my taxes are going to be 35% instead of 25%, I'm not going to work less hard or get all angry at the government, because 65% of a lot of money is still a lot of money.

yincrash said...

According to the National Priorities Project, the war has currently cost us $559 billion.

We're about to spend more than that much money in a one bill that we tried to rush through.

Both are probably bad. We too easily spend money. I think we need more fiscal conservatives.

I also need hurry up and walk down the street and register to vote. Maybe I'll do that right now.

yincrash said...

http://www.nationalpriorities.org/costofwar_home

Dan said...

Yeah. I don't know much about the whole bailout bill. $700 billion is so much. But everything I read says that we need this bill, or else the whole economy will collapse, like Great Depression type stuff. I can buy that argument. But how can we keep this up? What are we borrowing from? Is this going to lead to Weimar Republic wheelbarrow-full-of-dollars-for-a-loaf-of-bread nonsense? Are we going to have to pay 75% taxes for the next 30 years to make up for our huge debt now?