Obamacare and Cedar Point

That logic only applies so long as businesses across the board aren't downgrading pay and benefits. The whole "if you don't like it you can quit" argument doesn't hold water when the rest of the job market goes to hell.

People still need to eat and pay rent, so when the only jobs available are crappy jobs, then that's what they'll have to take to get by.

Ralph Wiggum said:
Even though taxes currently are at a historical low?

You are missing the point. Just because the taxes you know about (like federal or property taxes) have gone up or down doesn't take into account the other taxes that didn't exist in 1950 as the article indicates. For example, Ohio didn't have a state income tax until the 70's.

My point is we have taxes that we don't even know we are paying everyday. If we were to take that amount in addition to the taxes we know about and add it up and look at it as a percentage, I'd wager we are being taxed at close to half of our income.

~Rob

Well said, Rob. I've been trying to make this point to some liberal friends of mine for years. Except I'd wager to say the taxes we pay are OVER half of our income. Because remember, most of those taxes are paid for with our AFTER tax dollars!

I'll add to your list of taxes, what I would call indirect taxes which affect the prices of goods and services, such as taxes on businesses. For example if you go to a restaurant, they are paying property taxes, local city taxes, licensing costs, payroll taxes for their employees (unemployment, business share) and many others. Those costs are certainly factored into the price of the food you're eating, which you then get to pay sales tax on.

HeyIsntThatRob? said:

Ralph Wiggum said:
Even though taxes currently are at a historical low?

You are missing the point. Just because the taxes you know about (like federal or property taxes) have gone up or down doesn't take into account the other taxes that didn't exist in 1950 as the article indicates. For example, Ohio didn't have a state income tax until the 70's.

My point is we have taxes that we don't even know we are paying everyday. If we were to take that amount in addition to the taxes we know about and add it up and look at it as a percentage, I'd wager we are being taxed at close to half of our income.

~Rob

Plus that article is talking about tax year 2010. It was written Feb, 2011. Seems untimely as much has changed. Businesses cannot expect to succeed if its employees themselves can't afford to buy the products they produce or the services they offer. I'm a union worker in a dying industry, but if I can't afford the vehicles I manufacture, how does that "job creator" survive?

MaverickLaunch said:
...indirect taxes which affect the prices of goods and services, such as taxes on businesses. For example if you go to a restaurant, they are paying property taxes, local city taxes, licensing costs, payroll taxes...

Yeah, and all we get to show for it is potable water, sanitary sewers, a reliable power grid, safety from fire and crime, roads that allow customer access to the product and other stupid stuff like that. What a ripoff!

Nobody is debating those services come at a cost an add value to society. I was just making the point that one's "tax rate" is a whole lot higher than you think, and given the complete lack of government efficiency, probably much higher than it needs to be.

And my point is that the benefit of that taxation is higher than you think, and we take for granted far too much in the US, especially in recent years. A symptom of the tea party morons, perhaps.

You couldn't let it go without name calling, as usual.

You're right. A group whose #1 core belief is "illegal aliens are here illegally" (and throw in the encouragement of "traditional family values" for good measure) is totally a really smart bunch of people.

:)

Just because you don't agree with their values does not make them "morons". For someone who is always pointing out the use of ad hominem, I find this ironic.

Correct. It's their moronic views that make them morons. ;)

HeyIsntThatRob? said:
How did they survive? Less taxes. Same way my grandparents' generation did it.

Except that income tax rates were higher in the 60's across the board, especially for high earners.

But in the 60's, there were a ton of tax shelters. No one was paying those rates. What we did in the 80's was reduce the rates but eliminate those tax shelters at the same time. So comparing marginal rates pre and post 80s is apples to oranges.

Again, I'm not talking about INCOME tax rates. I'm talking about our nominal tax bill. Meaning Income Tax + Taxes that you don't know about = Nominal Tax Bill.

My opinion: our income taxes are lower because we are paying taxes elsewhere in different forms. For example if you smoke, you could be paying more taxes than a non-smoker because cigarettes have a tax built right into the cost of the product. For how much people smoked in the 60's the government missed out on a cash cow!

~Rob

Don Draper's sin taxes would go a long way toward balancing the budget.

GoBucks89 said:
But in the 60's, there were a ton of tax shelters.

And those don't still exist today? How do people like Mittens avoid paying taxes by putting their money in the Cayman Islands? Or how does a company like GE avoid paying taxes by playing accounting tricks with their overseas conglomerates? They still very much exist, and they still very much benefit the same groups they did back when tax rates were much higher?

djDaemon said:
Don Draper's sin taxes would go a long way toward balancing the budget.

Sterling Cooper could have probably funded the entire Federal government!

Ralph, reading your comments is just like reading the comments after an MSNBC.com article. "Mittens"?? Ugh. This has drifted so far off topic I can't even remember what we were talking about.

Somehow we've managed a few political threads here lately. I think the topic here was Cedar Point but this thread was doomed from the start.

Ralph Wiggum said:

GoBucks89 said:
But in the 60's, there were a ton of tax shelters.

And those don't still exist today? How do people like Mittens avoid paying taxes by putting their money in the Cayman Islands? Or how does a company like GE avoid paying taxes by playing accounting tricks with their overseas conglomerates? They still very much exist, and they still very much benefit the same groups they did back when tax rates were much higher?

Again, apples to oranges. Romney paid the effective federal income tax rate that he did because the vast majority of his income was from capital gains. Not sure how much an impact any Cayman Islands accounts may have had. Though under US tax law (last time I looked at the issue anyway), US citizens are taxed at the federal level on worldwide income (unless there is a tax treaty between the US and the country at issue which provides otherwise). So I cannot invest money in a Cayman Island bank account and exclude the income from that account on my federal tax return (at least not without being guilty of tax evasion). I suspect Romney has invested in companies in the Cayman Islands and there is no income to him until money is distributed to him by the companies. Though again, from what I have seen, the effects of that in terms of the overall effective federal income tax rate he paid was small.

That is very much different than what was happening in the 50s/60s in terms of tax shelters. With a top marginal federal tax rate of 70+%, people were looking to shelter ordinary income from those high tax rates. To do that, they bought into tax shelters (which unlike depositing money into a Cayman Islands bank account and failing to report the received interest income on a federal tax return, were perfectly legal) which reduced their income for federal tax purposes. There was a cottage industry that created and sold such tax shelters.

I have not reviewed the GE tax returns. Back in my auditing days, reviewing the tax accruals of public company clients (which ultimately were reduced to one line item in the financial statements) took multiple auditors several weeks. And those were accountants with training in tax laws. I am somewhat skeptical that journalists are able to make enough sense of tax accruals to get it right. Though maybe they did.

But to your point about overseas affiliates of GE, it is true that subsidiaries of US companies do not pay US federal income taxes on income of foreign subsidiaries unless the money from the income is paid to (repatriated) the US parent company. There is a lot of talk in politics about changing those provisions though I am not sure how it could be done in a way that doesn't hurt our economy while at the same time getting us essentially to the same place as we are now (if not worse). GE US does not pay US federal income taxes on the income of its subsidiary, GE China, unless and until GE China distributed that money to GE US. IF we change our tax laws such that GE US will pay US federal income taxes on GE China income even if that income is not repatriated to the US, GE will form GE Cayman Islands which will own GE US and GE China as brother sister subs. Only GE US will owe US federal income taxes on its income (not GE China). And when money is distributed by GE China to GE Cayman Islands to be distributed to its shareholders, no US federal income taxes will be due on GE China's income. By taking that approach we may collect less tax revenues and lose US based headquarters in the process.

In addition to being apples to oranges in terms of marginal rates from the 50s/60s to today, looking to go back to 50s'/60s rates also doesn't make sense from a economics stand point. After WWII, much of Europe (especially Germany) and Japan were rebuilding. China and India were just poor countries with large populations and little industry. Non-skilled labor was still in high demand. Capital was much less mobile than it is today. Competing in a very different global market is very different than it was back then. Not to mention that one of the things that people talk a lot about in terms of tax laws are loopholes and how we need to close various loopholes (at one point loopholes were intended deductions/credits that were used for unintended purposes to reduce tax liability but now loophole is used to describe any deduction/credit which reduces tax liability even if it is being used for its inteded purpose). Jacking up marginal rates will make people more likely to find ways to reduce tax liabilities which is the opposite of what we say we want.

We reduced marginal rates and removed deductions/tax shelters in the 80s. Have some tax preferences been brought back into the Code? Yes. Its the nature of politicians and lobbyists. And some marginal rates have gone up as well which brings more calls for more tax preferences. But nowhere near all of the preferences/deductions have returned which would make returning to the marginal tax rates of the 50s/60s a massive tax increase.