Re: G & J, in cahoots?

From: Jeff Bone (
Date: Wed Mar 21 2001 - 15:36:30 PST

> > Let's leave aside any discussion of how large
> > the overall tax burden may be. We might be
> > talking about only a 1% overall tax, yet still
> > question whether it should be applied in a
> > regressive, flat, or progressive manner*.

Let's forget about capital gains for a second. Let's add it up for regular income.
Let's assume this is an upper-income earner / homeowner in a state with no state income

39.6% regular income tax
6.5% social security tax
1.5% medicare tax
8.5% local sales tax
~4% of annual income to property tax est.

That's 60.1% right there. Now, true, the sales tax is only triggered on consumption.
The property tax estimate is a WAG --- it's based on the assumption that the value of
upper-income earner's houses is about 3x their annual income, and scaling that to what
things are like here in Austin. Also, this incorrectly assumes that *all* income is
taxed at 39.6%, when in fact it's only that for dollars earned over x, where the first
y dollars are charged at the lowest rate, etc. And lastly, true, there are various
cross-deductions and credits we're not accounting for. This is a guesstimate. Even
so, factoring out some of the hocus here, it's a safe bet that we're at around 50%.

Then let's say there's a state income tax. I have no idea what the average is, but
let's say it's the high bracket in CA --- 9.3%. (BTW, highest in the nation: North
Dakota at 12%, just edging out Montana at 11%.) So now we're at around 60% again.

Then let's add in all the hidden and not-so-hidden things. Tariffs and duties in
imported items; additional taxes on gasoline, tobacco, liquour, etc; tolls for roads,
parking, etc.; bond elections; etc. etc. These are all taxes, people.

2/3 as the aggregate tax rate is a HELL of a lot more accurate an approximation for the
effective tax rate on an individual upper-earner than your crack-smoking 1% number.



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