Long term investments are not only taxed, they are taxed twice. Once at the corporation's tax rate and again at the capital gains tax rate. Without looking up the specific rate structure, I believe the current U.S. corporate tax rate is typically 35% for anything much more than fairly small companies. The capital gains tax rate is 15%.

If you run the numbers (and I have), the marginal federal tax rate, even including the full payroll tax rate for "low" income workers and the Medicare-only tax rate for "high" income earners, the federal government is getting about 25% of the fruit of your labors and investments if you are around the median income level but well over 40% if you are in the top tax bracket. Now who is it that isn't paying their fair share?

 

I wish we would just switch to a continuous function on taxes, rather than brackets.
Make one dollar more, and suddenly you make less than you did before.
much less.

It is a continuous function, specifically a piecewise linear continuous function.

You may suddenly make less from the new dollar than you did from the last dollar, but you do not make less total than before. Look at how the brackets work. It is based on a fixed amount that matches what was paid by someone at the top of the prior bracket plus a fraction (namely the marginal rate of the new bracket) times the amount made over what was made by someone at the top of the prior bracket.

 

Here's an interesting graph, I've found on the web and saved .....

 

Here's an interesting graph, I've found on the web and saved .....

That's not an accurate map, it omits those who make no money, they get an $1,800 "Refund" somehow from what I've read on other forums. Those are often the type of people who say the "rich" need to pay more.

 

That's not an accurate map, it omits those who make no money, they get an $1,800 "Refund" somehow from what I've read on other forums. Those are often the type of people who say the "rich" need to pay more.

+1
And I end up with some of them as students, with books, tuition, and everything else paid for. If they attend over 60% of the classes, they don't have to bother with the rest of them. Of course they DO NOT get a diploma, which in turn enables them to sign up for another class..

 

Umm......guys, I think we're getting a little off-topic here...........

 

we got to the topic of taxes DerStrom, don't even try, just grab some popcorn...

 

Umm......guys, I think we're getting a little off-topic here...........

But, hey, this is the Off-Topic forum, so it's okay!

 

But, hey, this is the Off-Topic forum, so it's okay!

I'm pretty sure "Off-Topic" refers to the thread topics themselves, not the topics within the thread

 

The tax code, but...there always a but or except.....don't apply to....

If I only knew that before....I could have used that deduction.

 

+1
And I end up with some of them as students, with books, tuition, and everything else paid for. If they attend over 60% of the classes, they don't have to bother with the rest of them. Of course they DO NOT get a diploma, which in turn enables them to sign up for another class..

And after they have racked $50,000 in student loan debt to, perhaps, get their degree in far eastern basket marketing and discover that the market for far easter baskets is not as vibrant as they had expected, they can take that $10/hr job at Bobco and have their $400+/mo student loan payments capped at 10% of their disposable income, which is figured by taking their gross income and subtracting 150% of the poverty line income. So for a single person the first $17k of income doesn't count. So someone making $10/hr has a gross of right about $20k/yr, meaning that their monthly student loan debt payment is capped at $35/month, or right at 1/10 of the monthly interest on their loan. Since they aren't paying even the interest, the loan balance grows at an ever increasing pace. After 20 years of only paying a fraction of what they owe in interest (an none of the principle), their entire student loan debt will be forgiven, meaning that the people that do pay taxes get to pay off their loan.

Let's look at some of the actual numbers we are talking about.

Say two people go to college each racks up the current average student loan debt of $27,000. They then get married (perhaps they already were) and have a couple of kids making them the standard "family of four". The median income for a family of four is $50,881. The poverty line for a family of four is $23,050, making the 150% level equal to $34,575. So their disposable income is $16,306 and their total, for both of them, payments on student loans is capped at $1,631/year, or $136. Their loans are at the already highly, highly taxpayer subsidized rate of 3.4%, making their combined monthly payment for their 20-year notes $310/mo, of which $153 is interest. So, under the caps, they are not even paying the interest on their loans. But that's okay, because it 20 years, the taxpayers will bail them out.

And this situation has been set up in advance - policy has been made knowing that the result is that average people with average student loan debt making average income will not be required to repay their debt. How is that sustainable?