effective tax rates

Bernie “Pay your fair share” Sanders had a lower effective tax rate than me in 2015. Does that mean our fair share is a crisp 13.5%
Can the government stop taking 20% of my income?
I’d prefer no income tax but at this point I’d settle for 13.5%.

anonymous asked:

Can you explain the whole taxes trump payed and how it correlates to Bernie and Obama? I'm just honestly confused about all of this

Trump’s 2005 tax returns showed that he, in accordance with tax code, paid $36.5 million dollars in income taxes in 2005. The media is treating this like a huge find, portraying this as though Trump doesn’t pay his taxes. However this is higher than the average effective tax rate of the top 1% of income earners which is 22.8%

By comparison, Senator Sanders effective rate was 13.5% in 2014 and President Obama’s was 18.7% in 2015.  The average effective tax rate for the entire bottom 50% of income earners is 3.3%.

So Trump actually pays more taxes than most everyone in America. I don’t say this to defend Trump or his other policies, but the idea that giving a quarter of your income is too little, is absurd. Suggesting that he’s a dodges his taxes is also dishonest as Obama and Sanders take more deductions than he does. Wanting to pay as little tax as possible is economically rational behavior, and I’d never criticize anyone for it.

It’s not acceptable to me that major corporations stash their profits in the Cayman Islands and other tax havens to avoid paying $100 billion a year in taxes. It is not acceptable that hedge fund managers pay a lower effective tax rate than nurses or truck drivers. It is not acceptable that billionaire families are able to leave virtually all of their wealth to their families without paying a reasonable estate tax. It is not acceptable that Wall Street speculators are able to gamble trillions of dollars in the derivatives market without paying a nickel in taxes on that speculation.
—  Bernie Sanders, at Georgetown University
Warren Buffett’s Involvement Protects Burger King Inversion Deal With Tim Hortons

An inversion deal of epic proportions such as the merger of Tim Hortons Inc. (TSX, NYSE: THI) and Burger King Worldwide Inc. (NYSE: BKW) to create a $23 billion behemoth based in Canada should have been enough to get the protectionists screaming bloody murder.

But the reaction to Burger King becoming a Canadian company has been muted, as compared to the outrage expressed when Walgreen and Pfizer and other such large companies tried their own inversions.

This could be because it’s just a hop north to Canada instead of a long swim across the Atlantic to Europe. There’s also the fact that this merger is not just about saving taxes by merging with a smaller company.

It’s more of a marriage of equals, since the new merged entity with 18,000 restaurants in 100 countries enhances the reach of both parties to the merger and allows them to continue growing their unique brands while leveraging each others’ strengths in the international market.

Secondly, Burger King isn’t going to save billions in taxes by paying $11 billion for coffee and doughnuts and changing their on-paper corporate headquarters to Canada.

In fact, both companies have an effective tax rate of around 27 percent, and the merger isn’t going to make that big a difference in taxes to either of them.

3G Capital, the Brazilian investment company which owns Burger King, will continue to hold a 51 percent majority stake in the merged entity.

The Tim Hortons headquarters in Oakville, Ontario will continue to be the global home of the Tim Hortons business even after it becomes a part of Burger King. And Burger King’s headquarters in Miami, FL will in effect continue to be the operational global home of the Burger King side of the business.

But all the anger towards corporations ditching America can’t be forgotten just because this deal is happening close to home in Canada and it seems more sensible than some of the other recent merger proposals that were purely tax inversions.   

One of the main reasons for the muted criticism is the involvement of Warren Buffett. Berkshire Hathaway is reportedly putting up $3 billion to help finance the merger through preferred shares.

These large corporate mergers usually send the stock of the acquired firm soaring, while the buyer’s share price drops a bit because of concern over the huge outflow of capital and additional debt.

However, in this case, shares of both Burger King and Tim Hortons soared over 20 percent. Some of the credit for investors’ unusual confidence in the value of the deal can be attributed to Buffett’s involvement.

More importantly, Buffett is looked upon as an investor who cares about the American economy more than profits, and if he’s got no problems supporting the Burger King-Tim Hortons deal, then well…this poutine can’t be that bad a whopper.

Photo credit – scazon/flickr

Give me five minutes to explain taxes to you:

The top marginal tax rate is currently 39.6 percent, which remember, is an altogether different thing from the effective tax rate that wealthy people end up actually paying after taking advantage of various tax loopholes.

What does that even mean - a ‘marginal tax’ rate of 39.6 percent?

Does it mean the average person pays 39.6% in taxes? No.

Does it mean that the income earners in the top one percent pays 39.6% in taxes? NO!

Here’s what a marginal tax rate of 39.6% means:

First, as of 2013 the top tax rate for individuals currently doesn’t begin unless you earn $406,750 dollars. Actually, that tax rate doesn’t even take effect until you make $406,750 + $1 dollar. Got that part? That’s important.

Here’s the tricky detail that most people miss: the 39.6% tax rate is only applicable on anything OVER $406,750 dollars. So if you made $406,752 dollars, then only two ($2) of those dollars will be taxed at the highest rate of 39.6%…and the other $406,750 is not.

Of course, this does not take into account the numerous tax loopholes that I alluded to earlier. Thus, if the top marginal tax rate is 39.6 percent, then after using any number of tax loopholes, write offs and various other cheats, it’s entirely possible earn over $406,750 dollars per year and still pay even less in taxes than a working class American earning much less.

SN: this applies only to people who do actual work for a paycheck. If, on the other hand, your primary income is from inheritance or stock investments and you pay all your bills off of that interest (aka “capital gains”), then your taxes work differently altogether (hint: they’re even lower). Take multi-billionaire Mitt Romney, for example. In 2010 he only paid an effective (real) tax rate of 13.9 percent, odds are that’s much lower than the tax rate you (or your parents) just paid.

Here’s the last thing you should remember: Only one percent of Americans make $400,750 a year or higher. Stated differently, the top income tax rate effects around 3.5 million —out of 350,000,000 Americans. And that’s only on the dollars ABOVE $400,750.

BOO HOO right? Approximately 3.5 million Americans might, maybe, perhaps *possibly* have to pay the top federal income tax rate…but only on anything above $406,750 dollars…and only if they refuse to take advantage of ridiculously huge tax loopholes so big you could fly a jumbo jet through them.

THAT is what conservatives are crying about when they complain about the top tax rate. That’s it.

—  This is why whining about the top tax rate is a joke and Republicans are the party for the Greedy One Percent (and the deluded suckersfuture millionaires“ who repeatedly vote for them)
wsj.com
Hillary Clinton Releases Tax Return, Pressuring Donald Trump to Follow
Hillary Clinton released her 2015 personal tax return, further pressuring Republican opponent Donald Trump, who has spurned a decades-old tradition by refusing to release any of his returns.
By Nick Timiraos

Clinton campaign releases 2015 federal income tax returns

Hillary and Bill Clinton paid an effective federal income tax rate of 34% in 2015 and donated nearly 10% of their gross income to charity, according to tax returns Clinton’s campaign released Friday. Tim Kaine, Clinton’s running mate, also released tax returns from the last 10 years. - The Wall Street Journal

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I think a lot of the skepticism over Bernie’s proposed programs is rooted in people just not fully understanding the magnitude of wealth/income inequality in America today. I can see how it sounds a little silly or unrealistic to just say “tax the rich” every time a program needs funding, but the reality of the situation is that billionaires effectively pay lower tax rates than many middle class families, which allows them to hoard ridiculous amounts of money. The family that owns Wallmart has more wealth than the bottom 40% of Americans combined. All Bernie is saying is that they should be paying their fair share.

Pfizer Looking for Billions in Tax Inversion Benefits With AstraZeneca Merger

Pfizer Inc. (NYSE:PFE) has a tax inversion pill that will pump huge benefits out of the $106 billion mega-merger it is angling for with AstraZeneca PLC (LSE: AZN).

The company’s executives have publicly talked up the potential benefits of the merger, including more than $1 billion in tax savings per year.

As things stand now, AstraZeneca has once again refused the sweetened $106 billion offer made by Pfizer. But if they were to accept it, Pfizer would then be able to shift its corporate headquarters from New York City to Europe.

It’s a nice twofer that gives Pfizer the advantage of the enhanced European reach while at the same time giving it a readymade tax inversion strategy to hightail it out of Uncle Sam’s tax reach.

Pfizer, one of the world’s largest pharmaceutical companies, has been headquartered in NYC since it was founded in 1849 in Brooklyn.

A relocation of the company’s headquarters to Europe would result in the loss of billions of dollars in local, state and federal tax revenues.

Not to mention the loss of jobs and other spending that would follow the company’s headquarters across the Atlantic.

Note that an inversion doesn’t necessarily mean the company would move its operational headquarters. That would still be in NYC, but the official headquarters would be in Europe.

This would allow the company to bring in vast cash hoards that are currently being kept outside the U.S. in order to avoid the hefty tax bill it would attract. Pfizer currently keeps more than 70 percent of its cash reserves out of the U.S. to avoid being taxed on it as income.

In a conference call with investors, Pfizer CFO Frank D'Amelio said that if the holding company which would be the parent of Pfizer and AstraZeneca was located in the U.K., it would lower the company’s effective tax rate going forward.

Pfizer currently pays an effective tax rate of27.4 percent, while AstraZeneca’s effective tax rate is much lower at 21.3 percent. It is estimated that a single percentage point drop in Pfizer’s effective tax rate would mean annual tax savings of up to $200 million.

The U.K. additionally offers more tax benefits, including R&D tax credits and a lower tax rate on income from patents.   

Be that as it may, any move by Pfizer to retain operational headquarters in NYC while avoiding paying corporate income tax would be seen by lawmakers and the powers-that-be in Albany and Washington D.C. as anotherinversion tax law fail. It would make federal approval for the merger more difficult, if not impossible.

Photo credit - Norbert Nagel/wikipedia 

“The top 400 wealthiest people in this country earn $345 million a year, and they pay an effective tax rate of 16.6 percent. They do not need an extension of tax breaks.

By the way, for the United States of America, this effective tax rate of 16.6 percent, on average, is the lowest tax rate for the very rich in America that there has ever been on record. So we have already given the wealthiest people in this country the lowest effective tax rates in the history of our country, at least since they have been keeping records. That is what we have done. So the idea of giving these guys–who are doing phenomenally well, who already own more wealth than the bottom 90 percent–more tax breaks is totally absurd.” – Senator Bernie Sanders, The Speech

anonymous asked:

Why is it bad to tax the rich more?

Well…

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I don’t want to tax them at a higher rate, but a higher quantity. You’ll find that there is no one who’s being honest who thinks the rich should pay less than or the same as the poor. The disagreement is to how taxation is calculated and to what degree people are taxed if at all.

What most liberals, progressives, and leftists suggest is that as of right now, the rich don’t pay enough. As it is, the rich pay (top 10% of income earners) pay 70.6% of all income taxes collected. The top 1% paid 35% of all income taxes. That means the lower 90%, most Americans only account for the remaining 29.4%. To make this easier to understand. Imagine you have a town with 100 people. The town wants to buy a new baseball field. The field will cost $160,000. The richest 10 people in town pay $112,000 while the rest of the town pays $48,000. The richest guy in town, would pay $56,000, more than the 90 poorer people in the town. Is that fair?

But let’s not talk about what’s fair. What does fair mean anyway? Who judges what’s fair and what is not. Let’s talk effectiveness. The top tax rate for the highest income earners is roughly 35% if you account for state, local and federal income tax. Many people want it higher in efforts to raise more government revenue. This is contrary to a study by two of the most liberal economists, Christina Romer, one of The Presidents economic advisors and her husband. The study suggested that The Laffer curve tends to bend around 33%. Now more conservative economists have suggested the bend is lower, but what this tells us is that if we want to maximize government revenue, taxing the at a high rate is not an effective method. This has been proven over the years.

“But Warren Buffet and Bill Gates want higher taxes”

Warren Buffet and Bill Gates take their income through dividends, so they pay capital gains tax, not income tax. Thus their effective tax rate is much lower.

Now you’re probably saying to yourself 

“Alright buddy, you hate the poor and love the rich”

No. I still want the rich to pay more than the poor, I want them to pay the same rate. The key to our tax solution is a flat tax rate. One number. A small percentage that everyone pays. 10% would be a good place to start. Of course loopholes have to be closed. 10% no if ands or buts. 

The issues is that it’s difficult to get people to vote for this. Most voters fall in the zone of paying little to nothing in taxes. The tax burden is spread out more evenly to most Americans and they don’t want to vote for a tax increase. So it’s easier for voters to raise taxes on the rich and hope our problems go away. Even taxed at 100% the top 10% couldn’t solve our issues. 

More on the flat tax here.

I Don’t Want a Government Job

My current tax rate is about half of my income when you add up all of the various taxes. I don’t have many deductions. Clinton proposes an estate tax that would take about half of what is left. In effect, Clinton wants my tax rate to be around 75% for every dollar I earn today.

Keep reading

If you’re on the left and considering voting for Gary Johnson, you just need to stop. Just stop. He’s a Republican who switched parties because he started smoking weed. Every other position he has is ridiculous. Like

  • Good: Wants to end the war on drugs, which would reduce violent crime and lower incarceration rates.
  • Bad: Wants to increase the use of private prisons, which would negate that by adding more of a financial incentive to incarcerate more people.
  • Good: Wants to institute what essentially amounts to a universal basic income.
  • Bad: His reason for this is to replace all currently existing forms of public welfare and the social safety net. This means that programs currently being funded and regulated by the federal government will be subject to profit incentives, and there is a strong likelihood that the poor would find themselves just as poor but for different reasons (or, at best, in a better day-to-day financial situation but without, for example, the health care benefits of Medicare and Medicaid).
  • Good: Wants to reduce the tax burden on the working class.
  • Bad: Has a regressive tax plan that absolutely does not do that in any way whatsoever and flies in the face of said desires. I can want to live forever, but smoking a pack a day isn’t going to make that happen, even if I truly in my heart believe Mike Pence’s essay on the subject. Likewise, Gary Johnson can want and desire and wish to reduce the tax burden on the working class, but his plan–a 20% flat federal consumption tax to replace federal income tax entirely–means that the working class, who typically spends 97.4% of their income (i.e. an effective 19.48% tax rate, way higher than the current federal income tax rate paid by the poor), pays more taxes. The upper class spends 84.1% of their income, making their effective rate 16.82% (and this is an average based on anyone making $150k or more a year, so the rate would go down and down and down as income increases).

And I could go on all day. Gary Johnson and his running mate, Bill Weld, are by far the most reasonable Libertarians that could have ended up at the top of that ticket. They support the Civil Rights Act, driver’s licenses and seatbelts being mandatory, and a handful of other positions that completely break with the mainstream of their batshit party. Still, if you’re not a middle-class-or-higher straight white man (remember, the Libertarians’ position on many social issues is one of personal support but leaving the actual policy decision to the states, which has never in the history of the United States been a good idea for civil rights issues), voting for them is just an awful idea.

anonymous asked:

How many hours do you work to pay off the government so that you can work? *at a wage they deem acceptable if you work below that wage your employer and possibly you will go to jail

Let’s assume you work full-time for an entire year (52 weeks) at $10.00 per hour.

That’s 2080 hours worked per year (40 per week) times $10.00/hr = $20,800.

At that rate, you’re paying the 15% federal income tax bracket, then you’re paying state income taxes (assume Pennsylvania) at 3.07%, then local income taxes (usually 1%), then you’re paying 12.4% Social Security taxes (half of which is actually paid by your employer and is not reflected in your paycheck), and then 2.9% in Medicare (same thing with Social Security, half by your employer).

That doesn’t include flat “Occupational” taxes/fees, nor does it include unemployment compensation taxes. Even still, that’s an effective tax rate of 25.72%. So we’ll multiple that by our annual wages ($20,800) to get $5,349.76.

To figure out how many hours that translates to, let’s divide by our hourly wage of $10.00 to get 534.976 hours worked to pay your “fair share.”

That is, every single [work] day from January through March and the first week of April — all of that labor is paid directly to the State. This does not reflect, of course, the taxes you pay at the checkout for goods and services.