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  •  Our federal income tax system has lost much of its (0+ / 0-)

    progressivity over the past thirty plus years.

    Don't take my word for it.

    Here's a link to David Cay Johnston's Reuters blog.

    Mark my word--the lower and middle classes will take a major 'haircut' unless they wake up.

    Please read the President's Fiscal Commission's recommendations called The Moment Of Truth, beginning with Section II, Tax Reform, Page 28.

    Bowles-Simpson's proposals are not intended to mostly hit the wealthy or corporations.  

    The proposed 'reform' is  intended to "broaden the base, and lower marginal tax rates on the wealthy and the corporations."

    Wake up, before it's too late!


    "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


    by musiccitymollie on Mon Apr 15, 2013 at 09:01:13 PM PDT

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    •  US Income tax system is one of the most (0+ / 0-)

      progressive tax systems in the world as measured by share of total taxes paid by household income group.  It is also more progressive today than when Carter was president.

      Just looking at marginal tax rates is not useful as the calculations are not fully reflected by just marginal rates.

      The most important way to protect the environment is not to have more than one child.

      by nextstep on Tue Apr 16, 2013 at 09:07:37 AM PDT

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      •  Respectfully, you really need to read some of (0+ / 0-)

        Johnston's investigative tax reporting.  And The Moment Or Truth.

        If the proposed tax 'overhaul' goes through, my household will lose thousands of dollars of deductions.  And that doesn't even count the change in tax law that I describe below.  

        Check out Box 12b on your W-2 Form (if you receive one, and if you participate in a Group Health Insurance Plan).

        This "new" W-2 Item (under this Administration) reflects 'the Cost of Employer-Sponsored Health Coverage.'

        If Bowles-Simpson's recommendations are followed, decades of tax code which benefit primarily working folks (Group Health Insurance benefits) will be thrown under the bus, raising future tax bills for many working- and middle-class folks.

        And this, at a time that the Chained CPI (if passed and enacted) is slated to hit low income folks the hardest in regard to their tax bill. [See Schakowsky's 'words' on this matter, below.]

        I believe that the Cadillac Health Plan surcharge starts in 2017 or 2018.  It will hike taxes for many union folks, especially.  [You can Google for the exact year--it is readily available, just too pressed for time to double check at this time.  Sorry.]  

        This is a grossly unfair tax hike since they traded-off this excellent benefit, in lieu of higher wages.

        I will be posting more on this topic as the tax 'overhaul' progresses.

        Again, don't take my word for it.  Read some of Johnston's writings.  Here's a blurb below about two of his books.

        Johnston is the author of best-selling books on tax and economic policy. Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You With The Bill, is about hidden subsidies, rigged markets, and corporate socialism. It follows his earlier book Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich—and Cheat Everybody Else, a New York Times bestseller[13] on the U.S. tax system that won the Investigative Reporters and Editors 2003 Book of the Year award.
        He also has several other books on related topics which I haven't read.

        And even IL Rep Jan Schakowsky agrees.  Here's an excerpt from her Reuter's Op-Ed:

        The Sham Of Simpson-Bowles

        By Rep. Jan Schakowsky, October 24, 2012

        . . . Have Simpson-Bowles’ champions read it? Given any real scrutiny, this plan falls far short of being a serious, workable or reasonable proposal – from either an economic or political analysis.

        In one of its few specific points, for example, Simpson-Bowles mandates a top individual tax rate of 29 percent “or less.”

        Much like the vague Romney proposals, the Simpson-Bowles plan would make up the shortfall by eliminating tax loopholes, suggesting options such as having employees pay taxes on their health benefits.

        Not only is this likely to increase costs to middle-income families, it could threaten coverage altogether.

        The proposal for corporate tax reform would eliminate taxes on profits earned overseas, rewarding companies that move jobs offshore.

        [Apologize in advance for typos.  Pushed for time.]


        "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


        by musiccitymollie on Tue Apr 16, 2013 at 10:10:37 AM PDT

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        •  I generally avoid popular press analysis of (0+ / 0-)

          economics and favor knowledgable economists.

          The big burdens of the tax code on the 99% is how it depresses employment, GDP, private sector growth and wage growth.   Your tax burden is not what you "pay" but the difference in the purchasing power you have from the total impact of the tax policy.  The common approach of your tax burden is what you pay results in absurdities such as a tax policy that results in a person being unemployed is recorded as a tax reduction for that unemployed worker.

          We have an economy with growth little above the growth in population and never had a real recovery from the recession.  This terrible performance is happening even after 5 years of Keynesian stimulus of over $1 trillion/yr Federal Deficits and the lowest interest rates in 100 years.

          The priority in tax reform needs to be #1 strong private sector growth, #2 meeting government revenue needs, #3 improved fairness.

          The most important way to protect the environment is not to have more than one child.

          by nextstep on Tue Apr 16, 2013 at 10:42:48 AM PDT

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          •  Respectfully, it is interesting that the (0+ / 0-)

            'knowledgeable' economists have a better understanding of the President's own Fiscal Commission's recommendations, than a sitting member of the Commission, IL Rep Jan Schakowsky.  

            I stand by my assertion that many middle income folks will see their tax bills increased substantially, IF the Bowles-Simpson recommendations are adopted as a result of a 'tax overhaul.'

            And, for those who believe the Administration 'hype' that they will raise taxes only on the wealthy and/or corporations, there will be a rude awakening come tax time, next year.

            BTW, it appears that it is the Dems who are pressing the elimination of the 'tax-free status' of employer-provided health insurance.

            Here's an excerpt from NBC Politics:

            Senate Budget Committee chairman Sen. Patty Murray, D-Wash., will unveil, probably next week, a budget resolution that will set revenue and spending targets for the coming fiscal year.

            The order of the day for Democrats is: find more revenue. The target of Murray and some other Democrats: provisions in the tax code that benefit specific groups -- known as “tax expenditures.”

            Economists say that these tax preferences, which include the tax-free status of employer-provided health insurance, are in effect a form of federal spending going to favored groups.

            At a hearing of Murray’s committee Tuesday, one Democratic witness, economist Jared Bernstein, a former aide to Vice President Joe Biden, said, “If you believe we have a spending problem, you should also believe we have a tax expenditure problem.”

            I KNOW that our tax bill will rise substantially with the elimination of most tax expenditures--whether or not we lose the tax-free status of employer-provided health insurance, or not.  Sure, that loss would add at least $12,000 to our overall taxable income, and it would defnitely 'cost us,' but it would be a 'drop in the bucket' compared to the loss of some of our other tax expenditures.

            I will write about proposed specific tax 'changes' or 'reform' as more specifics become available (from the Committees, etc.).

            A lot of folks here will be in for a real surprise.  That, I'm sure of.  ;-)


            "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


            by musiccitymollie on Tue Apr 16, 2013 at 11:34:26 AM PDT

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            •  If private sector growth does not increase (0+ / 0-)

              substantially,middle class taxes go up substantially, while wages stay flat and unemployment stays high.  

              The share of GDP taken by government spending continues to rise mainly due to low private sector growth, healthcare costs, an aging population and soon rapidly rising interest on the debt.  Meanwhile federal government needs to close the deficits - the net is much higher middle class taxes - directly or indirectly.

              Having unlimited tax free income in the form of health insurance was a terrible tax policy that further increased healthcare costs.  ACA is doing the right thing in caping this.

              Jan Schakowsky, while well meaning, has no education or experience in economics or finance.

              The most important way to protect the environment is not to have more than one child.

              by nextstep on Tue Apr 16, 2013 at 12:31:56 PM PDT

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              •  I disagree that we need to raise taxes on the (0+ / 0-)

                working or middle classes.  

                Especially, if 'demand' is one thing holding back the recovery.

                Here's a "Tweet" with a video clip [0:51] of Dean Baker stating that a couple making $500,000, only got a recent 'tax hike' of approximately 6/10 's of One Percent.

                If the Administration were to propose a serious or substantial tax hike on these folks [making over $500,000, or even $250,000], I'd have no problem with that.  What we saw at the first of the year, was pretty much a joke, IMO.

                Guess we'll have 'to agree to disagree' about the 'tax-free status of employer-provided group health insurance.'  

                Again, this was 'a benefit' that was negotiated as part of a larger benefit package [and in lieu of wages] for many folks of modest income.

                So good luck trying to sell the closing of that 'tax loophole.'

                I will continue to update the news on this front.


                "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


                by musiccitymollie on Tue Apr 16, 2013 at 02:02:38 PM PDT

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                •  The tax loophole (regarding Group Health Ins) was (1+ / 0-)
                  Recommended by:

                  established by Congress.  [My apology.]  I meant to add that I have a similar problem with the "Cadillac Health Insurance Plan' surtax, because THAT benefit was negotiated between employee and employer, in lieu of higher wages.

                  And aside from a hike in federal income taxes, I have
                  a feeling that there may be a significant amount of 'blowback' from the ACA.  

                  Our household has already been hit with negative consequences, resulting from the ACA.

                  Our health insurance policy choices narrowed--from three plans, to one.  Therefore, we had no real choice in our health insurance plan coverage for 2013.

                  And, Mr. M was 'threatened with' the loss of any group coverage for 2014 during his company's insurance Open Enrollment period for Plan Year 2013.  So, we may not even have to worry about losing the tax 'shelter' (so-to-speak) for Group Health Insurance.

                  That's another matter that I'll be blogging about extensively, in the near future.

                  That, and I'm also researching now, to see if I can find other corporations who've enacted a change that we had implemented for 2013.

                  That is making an employee pay BOTH the in- and out-of-network deductibles for a plan year.  [IF they have even a single expense, out-of-network.]

                  It made our potential out-of-pocket expenses soar from $8,000 annually to over $20,000 annually.

                  We've been told that these policy 'reforms' are due to the additional costs of the ACA.

                  Obviously, that may or may not be the true reason.  Clearly, we'll never really know the truth.  

                  Another concern is 'spousal' coverage, since I am covered through Mr. M's employer's health insurance plan.

                  Ran across 'this gem' recently.

                  Employers Dropping Spousal Coverage to Avoid ObamaCare Fees

                  . . . The healthcare law [ACA] requires them to offer coverage to all full-time employees and their dependent children aged 25 and younger.

                  The one person whose coverage it does not mandate, however, is the employee’s spouse; spousal coverage, therefore, is increasingly on employers’ chopping blocks. . . .

                  Beginning this year, ObamaCare only makes spousal coverage even more expensive for employers. The law mandaes that companies pay a fee of $1 or $2 for every individual they cover in 2013. Next year the fee shoots up to a whopping $65 per covered person. Employers would be crazy not to try to shed covered persons any way they can, and spouses — especially those who can obtain coverage through their own employers — are a prime target.

                  “But experts say more firms are likely to drop spouses altogether, whether they work or not — especially when the new federal health-care exchanges open in 2014, providing an alternative for spouses left out in the cold,” Wieczner observes. “‘When there’s a place for people to go, employers won’t feel as beholden or compelled to cover the spouse,’ says Joan Smyth, an employee benefits consultant with Mercer.”

                  In other words, ObamaCare not only makes spousal coverage considerably less affordable but also makes the decision to drop it vastly easier — for employers.

                  I sure hope that this report is wrong.  If it isn't, I sure wouldn't want to be a Democrat running for office, at any level.

                  The Administration needs to change this 'quirk' in the law ASAP.

                  Here's the White House Comment Line (live and recording):  


                  Grand Bargain Watch - Save Social Security
                  Photo Credit: Grand Bargain Watch--Save Social Security, DonkeyHotey's photostream, flickr,


                  "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


                  by musiccitymollie on Tue Apr 16, 2013 at 03:10:07 PM PDT

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                  •  Agree with most of your comment except (0+ / 0-)
                    I meant to add that I have a similar problem with the "Cadillac Health Insurance Plan' surtax, because THAT benefit was negotiated between employee and employer, in lieu of higher wages.
                    The reason the Cadillac Health Insurance Plan was chosen was that taking compensation in this form is not subject to FICA, Medicare and Income taxes.  Doing this drives up prices for healthcare by throwing more money into that market  and causes people to otherwise spend more on healthcare than they would otherwise choose without the tax factor.

                    The ACA law does not remove the tax preference for employer paid health insurance it just caps it at a generous level.

                    The most important way to protect the environment is not to have more than one child.

                    by nextstep on Wed Apr 17, 2013 at 08:51:34 AM PDT

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                    •  Good, nextstep--glad we've found some common (0+ / 0-)

                      ground.  ;-)

                      You know, the design of the ACA was to primarily target, or benefit, two groups:

                      1)  alleviate government spending on health care--federal, state, local (county hospitlas, etc)--by shifting more costs to the health care user [or insurance beneficiary], which is the reason for the 'individual mandate,'


                      2)  lower the cost of health insurance for entrepreneurs/small business folks.

                      [Many of those folks (entrepreneurs/small business) don't have health insurance because preexisting medical conditions completely precludes them from coverage.  Or, in other instances, they were 'priced out of coverage,' unable to bear the cost of a 'highly rated' health care premium.]

                      I still don't agree that when it comes to 'saving a buck,' we should throw away the hard bargained for benefits of our rank and file union folks.  To me that's unacceptable, regardless of the rationale.  (If anything, we need to push for everyone to have the same level of coverage that many folks in unions enjoy.)

                      As a matter of fact, that sounds much like the rationale for the new Medicare Surcharge that I'll be blogging about soon.  The idea that this Administration is going to impose an additional Medicare premium (approximately a third higher premium, from the most recent brief that I've read) on those who are simply trying to carry comprehensive Medigap Insurance coverage, is also unacceptable.

                      I think when this new policy proposal is fully understood by the public in general, we'll possibly have another 'Rostenkowski Moment.'
                      One has to wonder if the impetus for this hideous new surcharge is to 'stifle folks ability to be able to afford health care services, especially expensive procedures.' Because that is exactly what it is likely to achieve.  

                      The idea that seniors routinely opt for unnecessary treatments, surgeries, etc., is ridiculous, IMO.

                      This type of policy clearly hurts more modest income seniors, who won't likely have the resources to afford many health care services if it requires high out-of-pocket expenses [copays or deductibles].

                      I hope that we can get this toxic policy proposal eliminated.  And we've got to push back against its passage and implementation.


                      "Only he who can see the invisible, can do the impossible."-- Frank L. Gaines


                      by musiccitymollie on Wed Apr 17, 2013 at 11:18:41 AM PDT

                      [ Parent ]

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