Hmmmm?

The IRS' Statistics on Income data I linked to give all sorts of interesting info, and would give more when examined over time, for example, stats by sources of income, which shows how many people have wages > $xxx, etc.

Fascinating stuff for those desperately worried that someone else might have too much of their fair share.

After a bit of crunching, it splits up as follows:

(Table 1.4)

Taxable income, people earning >= $10M, =$205.6B. Selected items breakdown:

22.3% Salaries and wages 11.0% ordinary dividends 9.3% qualified dividends 7.1% taxable interest 33.7% long-term capital gains

-- Cheers, James Arthur

which adds up to 83.4% - and James Arthur claims to be numerate ... but the long term capital gains component does explain why the >$10M per year group pays out less of their income in tax. The interesting question is how Warren Buffett and Mitt Romney can contrive to take most of their income as long term capital gains. Warren Buffett is easy enough to explain - his current net worth is supposed to be $37B so he could keep on selling off bits of it to sustain his $60M income for some six centuries.

Mitt Romney is less well off. His nett worth is apparently around $200M. He pays out some $3M on his $21M income because this income comes from "qualified dividends" which are taxed as if they were capital gains. If he was really selling off his capital assets he'd be broke in a decade.

At the moment this deal is supposed to run out at the end of this year. along with a bunch of the other Bush-era tax hand-outs to the rich, but the Tea Party probably has other ideas.

"Qualified Dividends" should - in theory - have been subject to corporate tax before they were paid out; this is central to the concept of "franked dividends" in Australia, but isn't mentioned in the Wikipedia write-up of the US scheme

-- Bill Sloman, Nijmegen

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Well, I think it amounts to the risk involved. I'd be happy paying 80% tax on earnings of 1 million if I had no exposure to market declines, as was the case of Buffet, losing 10 billion and hoping for a market recovery. As for qualified dividends, I believe corporate taxes have already been paid before dividends are paid, so any further tax is just an increase of what was already collected and reflected in the reduced share value. Corporate tax rates look like about 35% on incomes over 18M according to wiki:

-Bill

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Risk is not easily quantifiable, while income is. And you certainly wouldn't be happy paying 80% tax on earnings - nobody is - and as far as I know the main reason that nobody tries to collect that sort of proportion of income these days is that it doesn't work.

Anything much above 45% justifies heroic tax avoidance, and isn't worth the trouble of trying to collect.

The theory behind the reduced rate on qualified dividends is that they've already been hit by corporate tax, but the US corporate tax rate, while nominally one of the highest around, is in practice relatively low by virtue of all the corporate tax loop-holes that have been written into irrelevant legislation over the years, so the US corporate tax collection rate is one of the lowest of the advanced industrial countries.

Warren Buffett's Berkshire Hathaway is reputed never to have made a taxable profit ....

-- Bill Sloman, Nijmegen

Wonderful misinformation. Thanks.

Reputed, evidently, the same know-nothings who rave about "fair share," "excess profits," etc.

Income Tax Expense 2011: $4.568 billion, 2010: $5.607 billion, 2009: $3.538 billion, etc.

It's amazing what ignorant people believe and repeat.

-- Cheers, James Arthur

And you believe that it is misinformation because?

argue otherwise, and differ from you in citing factual data.

This more or less guarantees that they aren't right-wing nitwits, so you won't find the message convincing.

It's apparently never paid a dividend.

I was repeating roughly what I'd read in the newspapers a few months ago, hence the "reputed"

It does pay less than the regular 35% corporate rate on most of it income

News-Release

Apparently "dividends that insurers receive from U.S. companies incur an effective tax rate of 14.175%" and have done since 1993. This looks like a loop-hole to me.

For someone who claims to be numerate, you don't seem to be all that interested in what the numbers actually mean, just as long as they can be presented as if they supported your partisan point of view.

-- Bill Sloman, Nijmegen

Maybe, but they did try it as recently as 1980 when marginal rates were 70% on incomes over 250K. It was even higher in 1944 when top rates were 94%, but I doubt anybody paid it. It sure would be a big problem today if you won the 650 million lottery and had to pay 94% tax. That would only leave 39 million. I would still be happy.

Yes, but Berkshire Hathaway has never paid a dividend. Buffet likes receiving dividends, not paying them.

-Bill

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Last year Berkshire made $15.3 billion profit on $144 billion revenue, and paid $4.57 billion tax, an overall rate of 30%.

It's not that complicated.

-- Cheers, James Arthur

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More than 14.175%, but less than 35%.

As long as you are looking at only what you want to see.

-- Bill Sloman, Nijmegen

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It seems to have taken a while for the penny to drop.

There was a lot of patriotic fervour around at the time. The people involved probably invested any spare cash they had left in liberty bonds.

-- Bill Sloman, Nijmegen

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Let's review: First you said Berkshire was "reputed" to have never made a taxable profit.

Then, that thoroughly debunked, you retreat to some nonsense about dividends and loopholes, insinuating more nefarious wrong-doing / tax- dodging netting Berkshire a 14.175% rate.

Wrong yet again--they pay about 30%--now you quibble that 30% effective rate isn't the 35% max rate, and this means I'm not understanding the big picture somehow?

Is Berkshire paying zero? Or skating by on 14.175%? Is the $300M you linked in BofA dividends at ALL consequential out of Berkshire's $15.3 billion in gross profit? Who exactly is it that isn't understanding the big picture?

This is how the wealth-envy crowd's myths get started. Four legs good, corporations bad.

Who cares? Why give a fig if others make more? I'm doing fine. Other people doing well is good, not bad. If I wanted more, I'd earn it.

-- Cheers, James Arthur

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I cited my source (which you've snipped). It didn't look like nonsense to me, nor nefarious wrong-doing - the law involved was passed in 1986 and slightly amended in 1993. It probably was a law that shouldn't have been passed, but it's the law and thus not criminal, though it may not reflect entirely and totally virtuous behaviour on the part of the legislators.

News-Release

So much is obvious. But you don't want to understand the big picture, because it isn't the picture that you like and want to believe in.

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You, because you don't like the implications of the big picture - which looks all too obvious to people who aren't committed right-wing nitwits...

No one is saying that corporations are bad. What they are saying is that US corporation tax is extracted erratically - and I cited a source for that point of view, which you've also snipped - which doesn't seem to be doing your country any good.

Self-interested lobbying seems to be a little too effective in favouring the people who pay for it to be entirely good for your country as a whole.

The Occupy movement, amongst others.

Probably not. You look to be a little too far out of touch with reality to be able to tap reliable sources of substantial income.

-- Bill Sloman, Nijmegen