Its a marginal tax, so it won't even affect engineers making $500k, unless they cash in on a windfall.
What do you get for your taxes? You get to be living in the one place on earth where you CAN make that much money. Nothing is stopping you from moving elsewhere on this earth and renouncing your US citizenship. Then you can stop paying those taxes (and likely pay higher taxes).
You get access to a massive highway system funded by the feds, you get access to multiple international airports in the Bay Area, you get access to a collection of some of the smartest people in the world at some of the best institutions in the country that suck in an absurd amount of federal funding.
Let's not even get into the fact that Capital gains tax is at its lowest ever, and at one point capital gains for top earners was 40%, and income tax was even higher.
The federal government publishes its spending data[1], and that is simply not what the money is spent on.
Transportation in totality was 7% of discretionary spending, itself 24% of total spending in 2019 [1].
2020 was an unusual year with enhanced unemployment and the paycheck protection program, but depending on whether you want to count the interest on debt, 35% to 40% of federal spending was on Medicaid, Social Security, and Medicare, the latter net of premiums (so gross spending was higher).
In 2018, a more normal year, these categories represented 55% of spending, interest being 8%.
In short, most federal tax dollars represent a redistribution of income from the young and working to the old, nonworking population. That’s what the plurality of the dollars do. Whether or not that’s a “good” thing is outside the scope of this comment, but we should at least be able to be honest about it.
[1]: https://en.wikipedia.org/wiki/Government_spending_in_the_Uni...
> In short, most federal tax dollars represent a redistribution of income from the young and working to the old, nonworking population.
People paid into social security and medicare to get it. If they get more than they paid in for (sans interest earned on what they put in), then you have a case for a "wealth transfer". Otherwise, it is just like a 401K, which is also save now and use later.
But if you’re implying from it that benefits programs don’t matter because the payroll taxes pay for them, that’s not correct.
In 2020, the cost of the programs I mentioned above was approximately 2.3 trillion dollars. Payroll tax revenue was 1.3 trillion, income tax revenue was about 1.6, everything else is half a trillion.
So if you waved a magic wand and poofed these programs out of the budget, you could get rid of the payroll taxes and 2/3 of the receipts of the income tax without changing the deficit. Or, you could get rid of payroll taxes, all the other taxes, and still reduce the income tax receipts by about 1/3.
> People paid into social security and medicare to get it. If they get more than they paid in for (sans interest earned on what they put in), then you have a case for a "wealth transfer". Otherwise, it is just like a 401K, which is also save now and use later.
The problem with this line of argumentation is that people have gotten (and are promised to get) more out of these programs than they pay in.
The CBO provides projections for the solvency of the assets of these programs, which it calls trust funds [1]. The projections show the bulk insolvent by 2026. So clearly people are receiving more than their contributions are capable of sustaining.
Sure but the programs ran surpluses for many years, all of that money being lent to the government. You can’t double count paying that debt down as new debt if you counted it as debt when it was lent to the general fund (if debt was used to pay down debt, then it just remains). Likewise, interest payments on that debt also go back into the programs (since they were debtees), so if you get to only count that interest once even if it is being transferred inside what you are taking as the budget (so interest the government pays to SS shouldn’t be counted as additional debt either). The point where previous surpluses no longer cover current outlays (2035 for social security, 2026 for Medicare) is when we can start counting extra money put in as new debt.
No it is not. The lowest capital gains rates were 12.5% and even 10 years ago it was 15%.
>...and at one point capital gains for top earners was 40%
When was it ever 40%? 50 years ago, it was 35%, but that was the highest.
https://www.wolterskluwer.com/en/expert-insights/whole-ball-...
>....and income tax was even higher.
Talking about marginal rates without discussing effective rates (due to deductions that were available, etc.) is quite misleading. That high 70% rate in the 70's brought in a tiny amount of tax revenue:
>...Of the $517 billion the Treasury collected in 1980, only $3 billion to $5 billion came from the 70 percent bracket — less than 1 percent of total tax revenue.
https://www.politico.com/agenda/story/2019/02/05/democrats-7...
(One reason that democrats suggested lowering the top rate in 1981.)
Those high marginal rates encouraged all kinds of unproductive investments to take advantage of loopholes built into the law. Where people couldn't get around the rates, there were deadweight losses from economic activity that didn't occur. Even if someone thinks it is morally ok to take that much of someone's income, those kinds of high rates simply hurt the economy.
A huge tax bill is a dream cause it means your take home pay is likely several multiples of that number. I wish I paid a million a year in tax personally.
That's not the case here in the US. Historically we've had capital gains brackets that maxed out at 7%. Even looking at more recent rates, the top brackets were lower a decade ago.
Arguing this point is apparently a lost cause. It's how taxes have always worked in the US, but despite that you still have clearly educated high earners flipping out when they see a bracket start at nearly $500k as if the new marginal rate is going to gut them.
People love their money and always want more of it. Just admit it, people. I like mine too!
It is simply "you won't die without less money. Therefore, you must pay more".
Oh yeah. Gay right is also better than ever. Minority right is also better than ever.
Woman actually can get a degree from Harvard now.
Should we all just shut up?
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You also ignore that salaried employees already pay fair share of tax.
Why don't we tax billionaires more like Dems advertise for years?
You got to occupy Afghanistan for 20 years!
> Yet they never make law that targets this particular group. What is up with that?
Targeting lower brackets brings in more revenue for less costs.
$480k puts you more than $100k into the top 1%...
I thought we would target billionaires, no?
> Dems shout about billionaires and hundred-millionaires for years. Yet they never make law that targets this particular group. What is up with that?
That's an excellent point. The IRS is chronically underfunded and the added funding for it was removed in the latest bill. They can afford to sneak around the tax code because of hired help and loopholes (like taking out loans rather than paying from money you 'own').
I do think focus is much too powerful on 'moderately wealthy' people.
Relevant: https://www.reuters.com/article/us-usa-treasury-irs/irs-chie...
I know audits are random, but I really think if you make over a million or something, you should be automatically audited. But then...that would require funding the IRS adequately.
Edit: typo
Those sound like complaints for the local government. The federal government doesn’t generally have control over local schools or state/local law enforcement.
I also think you’re grossly over estimating the number of Silicon Valley engineers making >$500k/yr and that it’s a stretch to call it a SV engineer tax.
I have a (cynical) theory about that: once some means of getting ahead trickles down to the likes of you and I, it's too prevalent and has to be pushed up the ladder a bit.
It will keep working as long as Democrats voters are dumb enough to fall for their "we're for the working man!" schtick.
The problem is just passed on "oh it's the state, oh it's the city"
As a taxpayer, I don't give a shit.
Federal and state and city should work together to come up with a holistic solution.
My city/state/country are all democrats. How come they can't work together??
I doubt this is true for silicon valley engineers who earn more 500k.
I pay +100k in tax a year. I pay for my own healthcare on top of that. Yet public safety is rather low. Public school is bad. And etc. If anything, it doesn't feel I get much out of it.
Apart from that, any proposed tax plan almost always hurts the most the high-end salaried employees who already pay their fair share of tax (RSU is taxed immediately). Might as well just call it yet-another-silicon-valley-engineer tax.
Meanwhile the billionaires or hundred-millionaires will still be able to find a way to reduce their tax because they have enough capital to hire an army of tax accountants.
Dems shout about billionaires and hundred-millionaires for years. Yet they never make law that targets this particular group. What is up with that?