Teresa Heinz's 12.3% EFFECTIVE tax rate

[Fmr. Gov. NickG]

Doesn't Teresa's low tax rate just show how much more important it is to raise taxes on the wealthy?  Why should we have a tax system where billionaires pay a much lower rate than the middle class?  Why should capital gains be taxed at a much lower rate than wages?   

The highest possible tax rate on capital gains is 15%, so it is not suprising that Teresa's rate is just under that.   You don't have to use tax shelters of any sort to get this low rate, you just have to make your income off of wealth rather than labor.  If you think the income tax rate for the wealthy should be at least 20%, then you have to raise the capital gains tax rate to at least this amount.  Plus, you don't even have to pay payroll taxes on capital gains!

Or are you saying Teresa should volutarily pay a higher tax rate just to show that she is a good person?  By this standard, almost everyone in America is "not a good man".

[Fmr. Gov. NickG]

Doesn't Teresa's low tax rate just show how much more important it is to raise taxes on the wealthy?  Why should we have a tax system where billionaires pay a much lower rate than the middle class?  Why should capital gains be taxed at a much lower rate than wages?   

The highest possible tax rate on capital gains is 15%, so it is not suprising that Teresa's rate is just under that.   You don't have to use tax shelters of any sort to get this low rate, you just have to make your income off of wealth rather than labor.  If you think the income tax rate for the wealthy should be at least 20%, then you have to raise the capital gains tax rate to at least this amount.  Plus, you don't even have to pay payroll taxes on capital gains!

Or are you saying Teresa should volutarily pay a higher tax rate just to show that she is a good person?  By this standard, almost everyone in America is "not a good man".

Did you calculate your own effective tax rate? 

So you think it would be a good idea for a potential President Kerry to be paying one of the lowest effective tax rates in the country as a multi-millionare( some say a billionaire)?

Then for him, to push legislation for others to pay more while he avoids the same taxes? 
 

I don't understand...do you object to the current capital gains tax rates, or to the fact that Teresa is not voluntarily paying more in taxes than she is supposed to?

Again, she is not utilizing any tax shelters...it just that the tax rate for capital gains is extraordinarily low.  And Kerry wants to increase it...and has many times said people in his situation should be paying more in taxes.

[Fmr. Gov. NickG]

Doesn't Teresa's low tax rate just show how much more important it is to raise taxes on the wealthy?  Why should we have a tax system where billionaires pay a much lower rate than the middle class?  Why should capital gains be taxed at a much lower rate than wages?   

No, Teresa's low tax rate shows how pointless it is to raise the tax rate on the top bracket.  As you demonstrated, her tax rate, like so many of the ultra-rich, is not determined by the income tax rate, but by the capital gains rate.  But isn't Kerry's core plan for revenue increases based on raising the income tax rate?  Hasn't he repeated that part of his plan over and over when asked how he will pay for all his proposed spending?  As you point out, Kerry’s plan cannot possibly have the effect he claims.

Bush's tax cuts not only reduced the top-rate bracket on wages, but they drastically reduced the top rate bracket on capital gains (much more so than income, IIRC).  I hope Kerry wants to raise this rate as part of his rollback of the tax cuts on the wealthy.  It was basically what John Edwards centered his whole campaign around.

[Fmr. Gov. NickG]

Doesn't Teresa's low tax rate just show how much more important it is to raise taxes on the wealthy?  Why should we have a tax system where billionaires pay a much lower rate than the middle class?  Why should capital gains be taxed at a much lower rate than wages?   

The highest possible tax rate on capital gains is 15%, so it is not suprising that Teresa's rate is just under that.   You don't have to use tax shelters of any sort to get this low rate, you just have to make your income off of wealth rather than labor.  If you think the income tax rate for the wealthy should be at least 20%, then you have to raise the capital gains tax rate to at least this amount.  Plus, you don't even have to pay payroll taxes on capital gains!

Or are you saying Teresa should volutarily pay a higher tax rate just to show that she is a good person?  By this standard, almost everyone in America is "not a good man".

Did you calculate your own effective tax rate? 

So you think it would be a good idea for a potential President Kerry to be paying one of the lowest effective tax rates in the country as a multi-millionare( some say a billionaire)?

Then for him, to push legislation for others to pay more while he avoids the same taxes? 
 

I don't understand...do you object to the current capital gains tax rates, or to the fact that Teresa is not voluntarily paying more in taxes than she is supposed to?

Again, she is not utilizing any tax shelters...it just that the tax rate for capital gains is extraordinarily low.  And Kerry wants to increase it...and has many times said people in his situation should be paying more in taxes.

I think you've assummed it's the capital gain rate reduction which reduced her marginal tax rate.  Wrong guess.  But let's talk about capital gains tax changes.  50% of America is an investor class.  That change just doesn't effect 1% of America.  More Kerry double talk.

Teresa low effective rate is primarily investments in tax free bonds.  Whether the shelter should exist or not is open for discussion.

My point is that a potential future President using tax shelters to pay one of the lowest rates in the country is wrong.  You can try to debate the "fine" point but on the big picture, that dog doesn't hunt.

I assume if the bonds are tax-free then they are government-issued bonds.  You pay an imputed tax on these by accepting a lower rate of interest on such bond than on other, conventionally-taxable investments.  So by buying such bonds you are effectively paying a tax to which ever government issued the bonds.

Almost all wealthy people pay a lower tax rate than the middle class because they tend to have much higher capital gains and they don't pay payroll taxes.  A person who makes millions a year in capital gains pays only 15%, while a middle-class wage earner pays triple that (28% tax bracket plus 16% in payroll taxes)!

Don't you think that Bush and Cheney took advantage of the tax breaks they could get while they were in the private sector?  There is nothing wrong with doing this.  If we find a tax loophole that we don't think is right, we should repeal it...we shouldn't just expect each individual to refuse to use it in order to prove their morality.

[Fmr. Gov. NickG]

Doesn't Teresa's low tax rate just show how much more important it is to raise taxes on the wealthy?  Why should we have a tax system where billionaires pay a much lower rate than the middle class?  Why should capital gains be taxed at a much lower rate than wages?   

The highest possible tax rate on capital gains is 15%, so it is not suprising that Teresa's rate is just under that.   You don't have to use tax shelters of any sort to get this low rate, you just have to make your income off of wealth rather than labor.  If you think the income tax rate for the wealthy should be at least 20%, then you have to raise the capital gains tax rate to at least this amount.  Plus, you don't even have to pay payroll taxes on capital gains!

Or are you saying Teresa should volutarily pay a higher tax rate just to show that she is a good person?  By this standard, almost everyone in America is "not a good man".

Did you calculate your own effective tax rate? 

So you think it would be a good idea for a potential President Kerry to be paying one of the lowest effective tax rates in the country as a multi-millionare( some say a billionaire)?

Then for him, to push legislation for others to pay more while he avoids the same taxes? 
 

I don't understand...do you object to the current capital gains tax rates, or to the fact that Teresa is not voluntarily paying more in taxes than she is supposed to?

Again, she is not utilizing any tax shelters...it just that the tax rate for capital gains is extraordinarily low.  And Kerry wants to increase it...and has many times said people in his situation should be paying more in taxes.

I think you've assummed it's the capital gain rate reduction which reduced her marginal tax rate.  Wrong guess.  But let's talk about capital gains tax changes.  50% of America is an investor class.  That change just doesn't effect 1% of America.  More Kerry double talk.

Teresa low effective rate is primarily investments in tax free bonds.  Whether the shelter should exist or not is open for discussion.

My point is that a potential future President using tax shelters to pay one of the lowest rates in the country is wrong.  You can try to debate the "fine" point but on the big picture, that dog doesn't hunt.

To lead America and serve in the Oval Office, you must be willing to live with the spirit of the laws not just the letter of them.  A President must be willing to pay a reasonable effective tax rate and offer no excuses or they should not be given the highest office in our land.

It is well within the spirit of the laws to buy tax-free government bonds; that is the only way our governments can even run deficits.  If you don't think that's right, then work to change the law.  Don't criticize people for following it.

[Fmr. Gov. NickG]

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It is well within the spirit of the laws to buy tax-free government bonds; that is the only way our governments can even run deficits.  If you don't think that's right, then work to change the law.  Don't criticize people for following it.

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I criticize nobody for taking advantage of tax breaks.  I specifically criticize Kerry for wanting to lead this country while paying one of the lowest effective tax rates in the country. 

So you're basically saying our tax system is fine, but politicians have a moral obligation to pay more in taxes than they legally owe?

[Fmr. Gov. NickG]

This moron is paying a 12% tax rate while we pay 30%.

But what's more is that he b*tches about Bush's tax cuts. This is what we call outright immorality.

What do you pay in taxes? A dollar?

Even if you're paying in the top income tax bracket, (35% or 36% right now), you have a lower marginal tax rate than people in the middle clase, who are paying around 45%.

So do Republican here think it is right for billionaires to pay only 12% in taxes?  Or are they only upset about Democrats paying 12% in taxes?

[Fmr. Gov. NickG]

The top income bracket pays a higher percentage than anyone else.

I'm upset about people complaining that we need to raise taxes on the upper class paying 12% in taxes when it just so happens they're billionares.

The top bracket doesn't pay a higher percentage because they don't pay payroll taxes. 

Most people pay more in payroll taxes than income taxes.  You can't just ignore them because they don't affect the rich!

[Fmr. Gov. NickG]

The top income bracket pays a higher percentage than anyone else.

I'm upset about people complaining that we need to raise taxes on the upper class paying 12% in taxes when it just so happens they're billionares!

Do you believe that 15% should be the maximum tax rate on capital gains?

[Fmr. Gov. NickG]

I'm talking about income tax. I would abolish the payroll tax.

OK....so why wasn't this included as part of Bush's tax cuts?  Why?  Because it doesn't help the rich!

[Fmr. Gov. NickG]

I just said I don't care that she's paying 12%. I care that she's paying 12% and at the same time her husband is trying to raise taxes on people like my family.

If you're family is making more than $200K per year, they should be paying more in taxes.  I think my parents should be paying more in taxes, and they agree with me (I don't think they make more than 200K either).  Expenditures like the current war should be paid for by those who can afford to do so, not left to our grandchildren who will have to pay the cost ten times over because of compounded interest on our national debt.

[Fmr. Gov. NickG]

I just said I don't care that she's paying 12%. I care that she's paying 12% and at the same time her husband is trying to raise taxes on people like my family.

If you're family is making more than $200K per year, they should be paying more in taxes.  I think my parents should be paying more in taxes, and they agree with me (I don't think they make more than 200K either).  Expenditures like the current war should be paid for by those who can afford to do so, not left to our grandchildren who will have to pay the cost ten times over because of compounded interest on our national debt.

If Kerry wants Americans who earn more than 200K to pay more taxes, let him start with Teresa.  An American President paying the lowest effective tax rates would be a national disgrace.  He couldn't stand up to Dean in the debates, he cannot stand up to Teresa, and he doesn't deserve the right to be our President until he is willing to live with the spirit of the tax code.  We are not interested in excuses, he needs to be accountable for his personal actions.

Kerry is absolutely living within the spirit of the current tax code...although he wants to change that, both in spirit and in letter. 

The current spirit of the tax code, as amendment by the current administration, is that the uber-wealthy should pay a very low rate of tax on their invesment income, while the working class pays a very high rate.  You seem to think this is wrong, as evidenced by your outrage over a billionaire only paying 12.3% in taxes.  If so, George Bush is the one to blame.

[Fmr. Gov. NickG]

If Teresa paid a "reasonable" effective tax rate of say 20%, we are talking about a deficit reduction of about a half a million dollars. I believe the deficit is 413MM.  Gee, find 825 more of these people and we have no deficit.  I hope the democrats are still proud of Teresa.

How did you decide on the "reasonable" rate?  The current GOP administration obviously doesn't believe this rate is "reasonable" because they capped capital gains tax rates at 15%! 

If you saying this rate is too low, then I absolutely agree!  It is the people in your party who believe that people like Teresa shouldn't have to pay much in taxes, because they will stimulate the economy and thereby increase revenues.

[Fmr. Gov. NickG]

A person who makes millions a year in capital gains pays only 15%, while a middle-class wage earner pays triple that (28% tax bracket plus 16% in payroll taxes)!

Middle-class wage earners do NOT pay higher than 15% on their capital gains.  15% is the MAX capital gains tax rate, regardless of your income level.

In fact, many middle-class wage earners pay less than 15% on their capital gains.

I was distinguishing between very rich people who make all their income in capital gains (who pay 15%) and middle class wage earners who make their income in wages, which are taxed at around 45% at the margins. 

[Fmr. Gov. NickG]

I was distinguishing between very rich people who make all their income in capital gains (who pay 15%) and middle class wage earners who make their income in wages, which are taxed at around 45% at the margins. 

Well, comparing investing (risk of losing 100%) with wage earning (ZERO risk) is kinda like comparing apples to coconuts, isn't it?

No, I think all kinds of income should be subject to the same tax structure.

But in any case, the original poster in this thread was complaining that Teresa paid a lower tax rate than most wage earners.  I was simply pointing out that wages were taxed at a much higher rate than capital gains (thanks to Republicans), and thus there is nothing underhanded about very rich people paying a lower rate than middle class people.   The system may be morally wrong, but there is nothing wrong with an individual paying their taxes according to the appropriate rates.

[Fmr. Gov. NickG]

I was distinguishing between very rich people who make all their income in capital gains (who pay 15%) and middle class wage earners who make their income in wages, which are taxed at around 45% at the margins. 

Well, comparing investing (risk of losing 100%) with wage earning (ZERO risk) is kinda like comparing apples to coconuts, isn't it?

No, I think all kinds of income should be subject to the same tax structure.

But in any case, the original poster in this thread was complaining that Teresa paid a lower tax rate than most wage earners.  I was simply pointing out that wages were taxed at a much higher rate than capital gains (thanks to Republicans), and thus there is nothing underhanded about very rich people paying a lower rate than middle class people.   The system may be morally wrong, but there is nothing wrong with an individual paying their taxes according to the appropriate rates.

It was actually President Clinton who signed a large reduction of the capital gains tax, to 20%, in 1997.  So it isn't just a Republican policy.

Kerry's wife doesn't work, and therefore her income is passive, or unearned.  Kerry seeks to more heavily tax high income wage-earners, so I don't see how his plan addresses the huge tax gap between wage earners and those wealthy enough not to work.

While I am not a fan of Kerry or his wife, I think these low effective tax rates for people who live off investment income are a necessary evil, so to speak.  To raise those rates to ordinary income rates would discourage investment, depress the economy, and hurt wage earners as a whole through economic contraction.

But politically, these low rates of taxation for his loud-mouthed wife do create political problems for Kerry, given his (falsely) populist rhetoric.

I believe you're right that Kerry's plan would not tax capital gains at the same rate as wage income.  This was John Edwards's proposal, and was a major reason why I think he would have made a better candidate and president.

[Fmr. Gov. NickG]

No, I think all kinds of income should be subject to the same tax structure.

Then let investors write-off 100% of their losses, instead of just $3k/year.  A person can make $100k/year salary, lose $20k in the stock market, and still have to pay taxes on $97k.  If you want to make everything even, then make it even.

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The system may be morally wrong....

Oh please!

I would agree that if capital gains are taxed at the same level as other kinds of income, then one should be able to use capital losses to offset any kind of income.