Ex-IRS whistleblower says middle class targeted under inflation bill

Capital gains huh?

N. Gregory Mankiw, former chair of the current President Bush’s Council of Economic Advisers, calculated that the growth spurred by capital gains tax cuts pays for about half of lost revenue over a number of years and that payroll tax cuts generate enough growth to pay for about 17 percent of what is lost.
https://www.factcheck.org/2008/01/the-impact-of-tax-cuts/

Capital gains rate cuts, like other tax cuts, lower revenue in the long run. Especially when a capital gains cut is temporary, like the 2003 cut, investors have a strong incentive to realize their capital gains before the old, higher rate returns. This can cause a short-term increase in revenues, as happened after 2003. (Capital gains realizations also went up after 2003 because of the increase in the U.S. stock market. The capital gains tax cut cannot take credit for the stock market recovery, though, since European stocks performed just as well as U.S. stocks during this period.


Over the long run, however, there is virtually no evidence that cutting capital gains taxes spurs nearly enough economic growth to pay for itself. As the Congressional Budget Office recently stated, the “best estimates of taxpayers’ response to changes in the capital gains tax rates do not suggest a large revenue increase from additional realizations of capital gains — and certainly not an increase large enough to offset the losses from lower rates.”

https://www.cbpp.org/research/evidence-shows-that-tax-cuts-lose-revenue

IT'S WHY EVERYTIME THE GOP HAS CUT TAXES, THEY HAVE TO SHOW HOW MUCH IT COSTS VIA CBO, TREASURY, ETC ESTIMATES

 

Sure the EFFECTIVE rates were MUCH higher then too

Weird how Ronnie had a top rate of 50% the first 6 years but ANY increase the Dems push to get anywhere near it, they are called communists, lol

 

No they weren't in fact some years lower, I posted the charts.

 

Yes lower capital gains spurs economic activity spurring growth............that's how it works.






https://www.taxpolicycenter.org/statistics/historical-capital-gains-and-taxes

Reagan cut the rate to 20% and you see the $12B to $52B increase. Then the Dems just had to increase those rates because it's not fair and all their other garbage liberal nonsense and revenues dropped and languished for years. Clinton came in on a strong recovery and the dot.com boom but overall he slowed the rate of tax revenue growth with over all tax increase. Then the Reps took back the Congress and Gingrich and Kasich forced him to sign tax rate cuts and we see the results capgain revenue hit $127B and the not only brought down the deficit they produced surpluses. The 2001 recession hit, Bush43 and the Reps further cut tax rates and CapGains hit $137B and with the increase in wages and income taxes they hit a 15% overall revenue growth, there go the claims the didn't "pay for themselves" and the Rep's 2007 budget ended with a measly $161B deficit heading to surplus again.

Then the Dems took back the Congress, a years before the 2008 recession began and the the WH and with Obama and Biden we had the worst recovery in modern history as noted taking that paltry $161B deficit to a whooping $1,400B in two years and keeping it over $1,000B for the next three.

And Biden wants to do the same NOW and throw almost historical inflation on top of it.


The Dems bega

 

Year Rev. Chg
1990 1,032.0 4.1% <- Democrats tax increase agreed to by Bush for spending cuts the Dems never passed
1991 1,055.0 2.2%
1992 1,091.2 3.4%
1993 1,154.3 5.8% <- Clinton tax increase signed AUGUST 1993 however
"Taxpayers who owed additional 1993 taxes due to the
OBRA93 tax rate increases were given the option of
deferring payment of two-thirds of the tax that was in
excess of the tax that would have been owed at the 31
percent rate. Half of the deferral taxes were to be paid in
1995 and the remaining half in 1996 [2].
http://www.irs.gov/pub/irs-soi/93inintrts.pdf
1994 1,258.6 9.0%
1995 1,351.8 7.4% <- Even with the differed tax revenues revenue growth slow
1996 1,453.1 7.5%
1997 1,579.2 8.7% -> Gingrich/Kasich tax rate cuts
1998 1,721.7 9.0%
1999 1,827.5 6.1%
2000 2,025.2 10.8%
2001 1,991.1 -2%
2002 1,853.1 -7%
2003 1,782.3 -4% Bush tax rate cuts begin implementation
2004 1,880.1 5% Bush tax rate cuts fully implemented
2005 2,153.6 15%
2006 2,406.9 12%
2007 2,568.0 7% <- Dems take back the Congress
2008 2,524.0 -2%
2009 2,105.0 -17%
2010 2,162.7 3%
2011 2,303.5 7% <- Republicans take back the house
2012 2,445.0 6%
2013 2,775.1 13%
2014 3,021.5 9% Obama Capital Gains tax increase and surcharge
2015 3,249.9 8%
OMB Historical Tables

They didn't the spurred revenue growth

 

A flat tax is regressive. Let's assume two people, both have ordinary income, no capital gains, no investment income, no rental income, and no flow-through income. All income is ordinary. A person's taxable income of $20000 at 20% is far more costly to that taxpayer than a person whose taxable income is $20 million at 20%. As income grows, the burden is less and less to the taxpayer, not the rate that is charged, but the ability to pay the tax, assuming other things are equal.


"From the Tax Foundation, "A regressive tax is one where the average tax burden decreases with income. Low-income taxpayers pay a disproportionate share of the tax burden, while middle- and high-income taxpayers shoulder a relatively small tax burden.

"The burden of a tax results from both the design of a tax and the true economic burden of a tax. A regressive tax is often flat in nature, meaning that the same rate of tax applies (generally) regardless of income. These taxes include most sales taxes, payroll taxes, excise taxes, and property taxes.

Because the same rate of tax applies regardless of one’s income, a lower-income individual may face a higher tax burden than a higher-income individual with the same amount of consumption. The person on the lower end would have a far bigger burden to pay the tax than someone on the upper end.
"

https://taxfoundation.org/tax-basics/regressive-tax/

https://www.investopedia.com/terms/f/flattax.asp#:~:text=The tax is seen as,to offset this tax load.

 

Lower capital gains do not spur economic activity, they spur investment activity on each individual or corporate tax return, that's it. And nothing you cited there proves your claim. For starters, there is a lot of other factors involved when it comes to economic activity, investment activity, and consumer spending, but it does not correlate with how high or low tax on capital gains are.

From this publication, it says, "They find that there is little theoretical or empirical basis for the view that lowering the capital gains tax rate would have a substantial effect on economic growth or level of economic activity."

https://www.levyinstitute.org/publi...d that there is,or level of economic activity.

With overall taxes, there is some empirical evidence on the correlation between the tax rate and economic activity. However, that should come with an asterisk depending on which peer review study you look at.

 

Except you are quoted saying the highest income brackets have an average tax rate based on taxable income of 7.8%. and if you had a taxable income of $30000, your tax rate would be close to 10%. Get it now?

 

Well no I didn't, feel free to point where I did, and at $30,000 your effective rate would be about zero for the average taxpayer.

 

They can interpret their data anyway they want, I cite the actual results. Compare the reconciliations, Bush's were 3.5 times Clinton's and Clintons was during the dot.com boom, that is economic activity, that is investors looking at the lower rate and taking their gains and moving it to more growth potential investments. That reallocates that capital into more economic activity and job growth. What do you think happens to those capital gains and the original capital when it's taken out of a slower growth opportunity? Same with stock buybacks, what do you think happens with the capital the company used to purchase their stock, it doesn't go under the mattress, those investors seeing a good time to sell and move to a high potential do so, that helps to grow the economy.

 

I'm going to come full circle with this conversation: What the federal government makes in revenue, or doesn't make in revenue has no impact on the actual live economy. Nor on the lives of middle class or lower individuals. Let me repeat that in simple terms: Uncle Sam being fat, doesn't change anything for anyone.

This is because government, by and large is not a recognized participant in the economy. The government does *not* create jobs, it pays people to do it on its behalf.(And they're strictly federal, so the couple of thousand federal employees or so, out of MILLIONS of citizens). Not only does the government not create jobs, it's not a consumer of goods. Any spending the government does, is largely circular and stays within Washington. A brilliant example is medicaid and social security. Those provide 'benefits' to people on those programs, but there's no real wealth creation going on there.

So you are not fighting for the little man when you argue for 'bigger government revenues'(which could be more attainable via increased production, rather than trying to tax more out of a lemon like Democrats are trying to do today.). You are arguing in effect for uncle sam to get fatter out of a misguided belief that it helps the middle class. But it doesn't help anyone of the sort. All it is, is make government expensive again. That's all the far left is doing.

 

No it isn't. Let's review:

• A Progressive Tax is progressive.
• A Flat tax is Flat.
• A Regressive tax is regressive,

 

Once more

top 0.01 percent of the income distribution, the effective tax rate was 71.4 percent in 1960, 74.6 percent in 1970, 59.3 percent in 1980,

NOT THE TOP 1%, not even the top 1/10th of 1%

So to you IRS income is static? Not the way economists look at it, which is via percentage of GDP, which is how they account for population growth, inflation, etc


“Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data…do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today.”

The truth is that no serious Republican economist has ever said that a tax rate reduction would recoup more than about a third of the static revenue loss. The following studies represent their generally accepted view.
https://www.thefiscaltimes.com/Columns/2011/06/17/No-Gov-Pawlenty-Tax-Cuts-Dont-Pay-for-Themselves


Treasury Department Study Finds the Bush Tax Cuts Will Pay For Less Than 10 Percent of Their Cost

Tax Cuts Have Not Paid for Themselves in the Past

The Administration Itself Does Not Project that the Tax Cuts Will Pay for Themselves

Economists Across the Political Spectrum Reject Claims that Tax Cuts Pay for Themselves
https://www.cbpp.org/research/claim-that-tax-cuts-pay-for-themselves-is-too-good-to-be-true

 

Now show me the policies they changed under Dubya? OOPS

Try your three card Monty elsewhere

 

50 inventions you might not know were funded by the US government

1925: The civilian aviation industry
Powered flight began in the early 20th century, but the American aviation industry didn't make major advancements until World War I, when the military solicited aircraft from private manufacturers. However, the modern-day civilian aviation industry began in earnest when private companies were allowed to contract out mail routes, and the U.S. Navy and Army funded advances in aeronautical design.

1946: MRIs
These days, magnetic resonance imaging (MRI) is used to detect many potential health problems, from tumors to multiple sclerosis. But magnetic resonance was originally used to study atomic nuclei in 1946, and with the help of grants from the NSF from 1955 to 1990, the technology soon became a regular medical tool.

1953: Supercomputers
1958: Microchips
1962: LED lights
1963: Vela satellites
1965: The cell sorter
1966: Autonomous robots

https://stacker.com/stories/5483/50-inventions-you-might-not-know-were-funded-us-government

YOUR PREMISE IS GARBAGE THE GOV'T ISN'T INVOLVED IN THE ECONOMY

 

You said it yourself, provided funding. The actual layman ground work was from private enterprise. And it'd be all good and well if the government funds went to such private projects, but increasingly it doesn't. So for example, in the Trump Administration the Civics for an Ethics government became the left's friend. Is it still your friend? Because that group is still tracking government waste.

 

Until they weren't

Dubya, like Ronnie Reagan and Harding, Coolidge, and Hoover had a bubble driven economy. The US had trillions flowing into the US after 9/11 for "safety", which created the bubble.

Dubya cheered it on, fought all 50 states trying to regulate "subprimes" and then the bubble ended.


33.8m jobs - 16 years of Clinton, Obama
9m jobs - 17 months of Biden
1.9m jobs - 16 years of Bush, Bush and Trump

Biden's 9m jobs is 4 and a half times as many jobs as were created in the 16 years of the last 3 Republican Presidencies, combined.

It is also millions more than were created in the entirety of any of their three individual Presidencies. Many millions more. Since 1989 and the end of the Cold War, the US has seen 44 million new jobs created.

Remarkably 43 million of those 45 million were created under Democratic Presidents, 96%.

https://www.ndn.org/biden-more-jobs-than-GOP

 

Stock buybacks, illegal until 1982 change under Reagan, don't help anyone except the Exec's getting stock options (also not allowed until 1982 under Ronnie) and hedge funders gambling short term

, “Stock buybacks enrich the bosses even when business sags.”
https://www.forbes.com/sites/aalsin...ed-to-vote-on-stock-buybacks/?sh=feb83cc6b1ef

Why Stock Buybacks Are Dangerous for the Economy
https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

Profits Without Prosperity

Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings. That left very little for investments in productive capabilities or higher incomes for employees.
https://hbr.org/2014/09/profits-without-prosperity

 

Never done without Gov't funding, period

Trump and his admin had none

 

Are Capital Gains Tax Cuts Different?
In its most recent Budget and Economic Outlook report issued in late January, 2006, CBO revised upward its estimates of capital-gains revenues over the 2003-2005 period. Some have cited this CBO reestimate as evidence that capital-gains tax cuts, if not other tax cuts, pay for themselves. More careful scrutiny shows, however, that this narrower claim is seriously flawed as well.

• CBO noted that it has raised its estimate of capital-gains revenues based on information showing higher-than-expected capital-gains realizations. Describing this reestimate as a “technical revision,” CBO explained that capital-gains realizations have been above historical levels (relative to GDP and the capital-gains tax rate) over the past few years, but that it does not expect this trend to continue. The effect of the lower capital gains tax rates on CBO’s reestimates of capital-gains realizations was minor.
  
  
• The higher capital-gains revenues could not have resulted from higher-than projected economic growth, because actual growth in 2004 and 2005 was slightly lower than CBO had projected in January 2004.
  
  
• The higher capital-gains realizations do reflect, in part, the rise in the stock market in 2003, which rebounded after three consecutive down years. Capital-gains realizations and revenues tend to go up and down with the market. But a recent study by three Federal Reserve economists demonstrates that the capital-gains and dividend tax cuts of 2003 were not the reason that the market went up that year.
  https://www.cbpp.org/research/claim-that-tax-cuts-pay-for-themselves-is-too-good-to-be-true

I'll ask you what I've asked a few others, anyone is welcome to answer too:

Give me 3 policies, just 3 that worked as promised since Reagan from the GOP that has helped the bottom 90% of US?

 

Gawd, stop conflating the top 1% with the top 1/100th of 1%

Finally, for those in the top 0.01 percent of the income distribution, the effective tax rate was 71.4 percent in 1960, 74.6 percent in 1970, 59.3 percent in 1980, 35.4 percent in 1990, 40.8 percent in 2000 and 34.7 percent in 2004.


https://www.politifact.com/factchec...-obama-says-tax-rates-are-lowest-1950s-ceos-/

 

Government is a recognized participant in GDP, C plus I plus G plus net exports. But GDP is not a true reflection of the economy either. So in essence I agree with you, at least directly. But the salaries it pays to the employees and soldiers have then used that money to spend, invest, and save. In essence, the government does create jobs, just not private sector jobs per se, and affects industries based on what the government does and does not do. For instance, the number of accountants, tax preparers, and other persons involved outside of the IRS to deal with taxes has increased over the years, especially since TRA 86 was passed and signed. That was an accounting boom and how H&R Block got into the business, for the most part. That is the only industry taxes affect directly. But again, those accountants, tax preparers, etc will still be there no matter which tax system is used. Another sector the government affects is the military-industrial complex. Bigger the military budget wanting new gadgets, new weapons, new types of aircraft, etc, the military-industrial complex is there. Otherwise, they won't have the economic incentive to create such weapons. You could make the argument they could sell to the highest bidder, but we don't live in that type of reality. In essence, no direct involvement with the private sector, but indirect involvement. And indirect involvement is just as effective or ineffective as direct involvement.

However, my argument for the IRS is that it is now understaffed so much it cannot meet its basic function. If you had to file a paper return, even with a refund by the original due date, chances are that you will not see that refund till the end of this year or early next year. If you had to file an amended return, chances are that the amended return will not be processed within 90 days, more like 180 days plus. If you are dealing with a correspondence audit and you replied, chances are that the response time is greater than 180 days and any refund is on hold I have not yet begun with the in-person audits which is another thread entirely. The bottom line is that the IRS not only issues refunds, collects taxes, or audits persons who skirt the law outright, that transcript is used for student aid, loans, personal or business, and a whole host of other financial and legal initiatives.

No one likes to pay taxes, whether it is sales tax, property tax, or even an income tax But to meet even basic governmental expenditures, taxes have to be collected, analyzed, projected, etc no matter which tax system is used. Thus, it is not for greater or less revenue, it is for the mission statement assigned by Congress via the 16th amendment. And "basic expenditures" is another topic altogether.

 

And you only get there with cherry picked conflated numbers such as

" the effective tax rate for individual, corporate, payroll and estate"

You can't conflate all those into some overall effective tax rate they are entirely different systems of taxation. I gave you the income tax effective rates and there are NOT what you are claiming.

You citing estimates from 2006. I gave you the ACTUAL historical numbers. And CBO is horrible at making estimates they are routinely wrong.

You tell me why did we get 4 times the economic activity, and double the tax revenues at the 15% than the Clinton 29% rate?

His tax policy, his domestic policy, his energy policy.

 

YES when a company needs to build a new plant it will raise the capital for it through a variety of means including issue new stock. Investors see the plan for a new plant and estimate that the stock will increase in value when that plant comes online and starts to turn a profit. The plant gets built and starts to make a profit and money comes rolling in. The plant does not need to expand anymore now and they have the money so they pay off the debt used to build the plant and buy back some to the stock that was issued bring that back to the shareholders. Investors looking for a better opportunity sell their stock back to the company and find another investment opportunity. Some who are happy with the return they are getting and not looking for a more risker investments stay with the company. They serve a purpose to reallocate capital in the market.

Tell me what do you think happens to the money the people sold their stock to the company is used for?

4 Reasons Investors Like Buybacks

Ultimately, highly successful companies reach a position where they are generating more cash than they can reasonably reinvest in the business. The financial crisis has caused investors to pressure companies to distribute the accumulated wealth back to shareholders.


Typically, companies can return wealth to shareholders through stock price appreciations, dividends, or stock buybacks. In the past, dividends were the most common form of wealth distribution. However, as Corporate America becomes more progressive and flexible, a fundamental shift has occurred in the way companies deploy capital.


Instead of traditional dividend payments, buybacks have been viewed as a flexible practice of returning excess cash flow. Buybacks can be seen as an efficient way to put money back into its shareholders' pockets, as demonstrated by Apple’s (AAPL) capital return programs.

https://www.investopedia.com/articl...g/123115/4-reasons-why-investors-buybacks.asp
The Basics of Buybacks
In recent history, leading companies have adopted a regular buyback strategy to return all excess cash to shareholders. By definition, stock repurchasing allows companies to reinvest in themselves by reducing the number of outstanding shares on the market. Typically, buybacks are carried out on the open market, similarly to how investors purchase stocks. While there has been a clear shift in wealth distribution of dividends to stock repurchasing, this doesn’t mean a company cannot pursue both.


Apple investors have grown to prefer buybacks since they have the choice of whether or not to partake in the repurchase program. By not participating in a share buyback, investors can defer taxes and turn their shares into future gains. Buybacks benefit investors by increasing share prices, effectively returning money to shareholders in a tax-efficient manner.


1. Improved Shareholder Value
There are many ways profitable companies can measure the success of its stocks. However, the most common measurement is earnings per share (EPS). Earnings per share are typically viewed as the single most important variable in determining share prices. It is the portion of a company’s profit allocated to each outstanding share of common stock.


When companies pursue share buyback, they will essentially reduce the assets on their balance sheets and increase their return on assets. Likewise, by reducing the number of outstanding shares and maintaining the same level of profitability, EPS will increase. For shareholders who do not sell their shares, they now have a higher percent of ownership of the company’s shares and a higher price per share. Those who do choose to sell have done so at a price they were willing to sell at.


2. Boost in Share Prices
When the economy is faltering, share prices can plummet as a result of weaker than expected earnings among other factors. In this event, a company will pursue a buyback program since it believes that company shares are undervalued.


Companies will choose to repurchase shares and then resell them in the open market once the price increase to accurately reflect the value of the company. When earnings per share increases, the market will perceive this positively and share prices will increase after buybacks are announced. This often comes down to simple supply and demand. When there is a less available supply of shares, then an upward demand will boost share prices.


3. Tax Benefits
When excess cash is used to repurchase company stock, instead of increasing dividend payments, shareholders have the opportunity to defer capital gains if share prices increase. Traditionally, buybacks are taxed at a capital gains tax rate, whereas dividends are subject to ordinary income tax.1 If the stock has been held for more than one year, the gains would be subject to a lower capital gains rate.


4. Utilize Excess Cash
When companies pursue buyback programs, this demonstrates to investors that the company has additional cash on hand. If a company has excess cash, then at worst the investors do not need to worry about cash flow problems. More importantly, it signals to investors that the company feels cash is better used to reimburse shareholders than reinvest alternative assets. In essence, this supports the price of the stock and provides long-term security for investors....
https://www.investopedia.com/articles/investing/123115/4-reasons-why-investors-buybacks.asp

 

More noise not addressing the post. Got it

And they didn't have much payroll, but did rely on estate


" Because capital income is very concentrated, it generated a substantial burden on top income groups. The estate tax has also decreased from 0.8 percent of total personal income in 1960 to about 0.35 percent of total income today. As a result, the burden of the estate tax relative to income has declined very sharply since 1960 in the top income groups."

Once more Piketty and Saez

A 2007 study by economists Thomas Piketty and Emmanuel Saez calculated effective tax rates for various income groups.

https://eml.berkeley.edu/~saez/piketty-saezJEP07taxprog.pdf

A good read for you to slap away Anti Foundation's propaganda


"It’s not a coincidence that the rich are so much richer now than they were in the 50s: it’s precisely because effective tax rates on the rich have gone down so much that it’s worthwhile to become rich in the first place. After all, when the government was going to tax away 91% of your income, what’s the point in bargaining for so large a slice of the pie?"


...."Greenberg’s mistake is a basic example of the bias that comes from mishandling a selected dataset. There aren’t any households earning $30 million, or $300 million for that matter, in the tax records of the 1950s, so they don’t enter into Greenberg’s analysis. From his selected sample, he draws erroneous conclusions about what their effective tax rate would have been had they been present in the data—that it would have been equal to the effective tax rate of the richest households he does observe. In fact, if they had been in the data, he would have observed a much higher effective tax rate than the one he inferred for them."
https://rooseveltinstitute.org/2017/08/08/effective-progressive-tax-rates-in-the-1950s/

...When John D. Rockefeller Sr. died in 1937, the estate tax was nearly 70%, yet complaints from his family would not be publicly heard. Two years earlier his son earned more than $5 million; this gave him the distinction of being the only person in America’s highest tax bracket (at a rate of 63%). No editorials were written by John Jr. to suggest class warfare, or that the rich were being unfairly singled out.
https://ideas.time.com/2012/09/18/the-rich-havent-always-hated-taxes/#:~:text=Rockefeller Sr.,a rate of 63%).

Got it you'll stick to talking points