Doesn't work in stock, patched Safari on Lion (no extensions.) Doesn't work in Chrome on Lion, AdBlock Plus and Ghostery. Doesn't work in stock, patched IE7 on XP.
Does work in Chrome on XP. Wish it didn't; I regret seeing the results.
muzz, don't be obtuse. This means hundreds of dollars a month gone from your paychecks. The less you earn the bigger the percentage increase in taxes, never mind the greater relative value of each $100 to you.
If you can afford to ignore the loss of a few hundred bucks every month then more power to you. Me and my family can't.
Hmm, but it seems to work in Safari for iOS6. There's no hover, of course, so one has to touch the bar that corresponds to income. I wonder what shenanigans are going on that it doesn't work on so many desktop browsers.
I like this a lot, it is a really nice way of seeing the data. I would also be interested to see:
- A version with the income on a logarithmic scale to make it extend past $300k in a sensible way. (Not because I need it, I just want to know how the changes affect taxes in the higher ranges).
- A plot of % increase in taxes vs. income. There are some poor sods on the left hand side of the graph who seem to be getting an almost 50% tax increase. Is that really true?
Essentially. At the lower end of the scale the majority of tax paid is FICA, which is almost increasing by 50%. I don't know how tax credits will affect the refund situation at the end of the year, but this will be the actual effect on paychecks.
FICA is not going up by almost 50%. It's 5.65% vs 7.65%. That's 35%. FICA also has no deductions or credits: The rate you see is what you pay (and your employer pays the same amount).
The rest of the hit is the expiration of the 10% bracket from the Bush tax cuts. That saved 5% of the first $8400 of taxable income (from the old, larger 15% bracket).
Here's a series of charts that show what percentage of income taxes are paid by each group (top 1%, 5%, 10%, etc) and their overall share of total income. As you can see the top 1% earn about 20% of total income but pay 40% of all income taxes.
The total tax burden is pretty flat in the top 40%, and actually goes down marginally from top 5% to top 1% (and probably to top 0.1% if that were shown on the chart). The burden on the middle 20% at 25.2% isn't dramatically lower than the burden on the top 1% at 29.0%, but the burden on the bottom 20% is lower at 17.4%.
Regarding your 2nd question: A 50% increase in taxes sounds accurate. This is only because those on the left hand side of the graph pay little to no personal income tax. The largest tax they pay is the Social Security Tax, which is set to increase from 4.2% to 6.2% -- nearly a 50% increase.
I realize their starting tax was low, but I still feel much sadder about the $1000 tax increase for a married couple earning $25k combined than my (cough) times greater tax increase.
The Congressional Budget Office reported an increased risk of recession during 2013 if the deficit is reduced suddenly.
The Budget Control Act of 2011 was passed under the political environment of a partisan stalemate, in which Democrats and Republicans could not agree on how to reduce the deficit. It was thought that the blunt cuts of budget sequestration and sharp revenue increases would be mutually undesirable to both parties and provide an impetus and deadline to bring the sides together to solve the deficit problem [1].
Note that the debt ceiling is about to be hit again, which adds to the cliff and the US Credit rating will almost assuredly fall again if we go over it [2].
It's very hard for the CBO to accurately calculate expected revenues with a looming recession, so good it is not.
> US Credit rating will almost assuredly fall again if we go over the cliff [2].
The cited article indicates the opposite -- that simply reducing the deficit by doing nothing would encourage the ratings agencies not to cut the US credit rating, while passing "temporary measures" that allow us to keep our high deficit and are very unlikely to be temporary would give us better odds of a downgrade.
"Ultimately, if Congress and the president can't reach a deal to stabilize and eventually reduce the debt, now at $16 trillion, Moody's will probably cut the United States' current Aaa rating."
Doing nothing is much closer to this sort of deal than any measure that reduces the amount of tax increases or spending cuts.
The following sentence:
"Temporary measures to stave off the budget shock without a credible strategy for the years beyond could earn the country a downgrade, said David Riley, managing director for sovereign ratings at Fitch."
As a rule of thumb, any time the government is going to tax you more (even if it is $0.01 more) people will freak. Hence I am not surprised by creative names.
I don't necessarily support the changes to taxation that this thread is about- just a general observation.
No, it's supposed to raise taxes and cut spending, which will send us into another recession. The recession will drastically lower tax revenues, creating the need to further cut spending and further raise taxes.
Cliff simply illustrates the discontinuous change in tax rates that occurs on January 1st. In this particular case there are several different tax rates that are all scheduled to change on January first so that the discontinuity is not just a 'bump' but instead is a 'cliff'.
I wish it would break down the added tax based on the following scenarios:
1) Cliff jumped off with a parachute - middle-class cuts preserved
2) Stephan Feck'd - no agreement = full increase
Also does reflect the cap gains tax increase (15% vs, 25%) which, for entrepreneurs seems more relevant?
Finally there is a much bigger impact to government spending and jobs as the budget cuts would cause furloghs or layoffs until the budget is restored (if at all).
Thanks, recalcitrant GOP, for your willingness to take the nation hostage for your idealism!
Thanks, recalcitrant GOP, for your willingness to take the nation hostage for your idealism!
Isn't that rhetoric a little inflammatory for HN? We're not talking about a huge dollar value on those high income rates, particularly if we're only talking about the 2001 cuts. One could equally say that President Obama is "willing to take the nation hostage" over $50B in a $3.7T budget.
The budget deficit in 2007 was something like $163B with all these tax cuts in effect and two wars in full swing. Tax rates are not the problem. Spending and the still faltering economy are.
It's clear they are seeking this confrontation, damn the consequences to the majority of the populace... just like their debt-ceiling brinkmanship in 2011.
The Senate hasn't proposed a budget in almost 4 years. The Senate is controlled by the Democrats. Is that responsible in the least?
Obama refused to cut any of the extra Trillion dollars per year that the stimulus added to the baseline budget, but instead chooses to point to "the rich" as scapegoats for our national woes.
Spending bills originate in the House. The Senate passes budget resolutions as part of the overall spending process, though. The lack of budget resolutions is a symptom of the Senate's lack of any ability to work with the House and show some Leadership.
Spending proposals that originate in the House, like the one(s) that included Paul Ryan's plan, are equally DOA as budget resolutions from the Senate when both houses can't agree... but at least the House is making some effort to show leadership.
Overall, they're both not functioning properly (which may be a good thing), but I was responding to the original poster's accusation that one side is to blame for this mess.
So the 100% figure includes US government debt owed to the Social Security trust fund (and other intra-governmental debt). Excluding that amount it's about 70%. Now it's a matter of choice in how you portray it, but you have to be consistent. You can either say we have 100% debt-to-GDP as well as $4.8 trillion sitting in the social security trust, or you can say we have 70% debt-to-GDP and nothing in the bank. You cannot say we have 100% debt-to-GDP and nothing in the bank--that's just incorrect.
I think the social security trust fund accounting gimmick is silly, so I consider us as having a 70% debt-to-GDP ($10.9 trillion in real debt). This is the same view the CBO takes. That's set to rise to 100% of GDP by 2022 under current policies, but fall to under 60% of GDP by 2022 if the fiscal cliff is allowed to happen.
They seem to have less than $3T [1]. $4.8T seems to be the right figure for intra-governmental debt, which is probably the right thing to be subracting out anyway. Thanks for educating me about this!
The USA Today article is a bunch of scare-mongering for the innumerate. It's easy to make numbers look big and scary when you add them up over a 75 year time horizon without accounting for GDP and population growth. It's also a load of crock to call medicare/social security "unfunded liabilities" and add them to the debt, because they are not binding obligations. The government can cancel medicare tomorrow and there would be no recourse. Medicare/Social Security liability over 75 years is not like the federal debt--it's simply a projected expenditure on some particular entitlement program.
The sensible comparison is the cost of these programs relative to GDP. That's the only relevant way to present the data. Social Security is projected to rise in cost from 4.8% of GDP to 6.2% of GDP by 2035. That's the impact of your "$63 trillion unfunded liability" on the budget over that time frame.
Medicare is a bigger problem, but too much of the debate revolves around scare-mongering projecting rising healthcare costs out to infinity. See: http://xkcd.com/605/
>So sad. Before Y2K we were prejecting that the big debt landmark for around that time would be paying it off.
You could also add 9/11, two expensive wars (because the US can't stomach losing soldiers the way it used to, and protecting soldiers cost a fortune) and a huge recession that we are still not out of.
The projections assumed that everything would be running the way it was in the late 1990's. It didn't.
People have lots of deductions, exemptions and credits (think 401(k), home mortgage interest, and health plans). It's impossible to make a simple calculator based purely on top line paycheck income for that reason.
No, as pointed out it's basically never right for anyone[1]. It doesn't cover huge deductions like mortgage interest, it doesn't include the EITC at all, which means that it's wildly overestimating tax liability at the bottom of the chart (where it's routinely negative for families with children).
Tax analysis is hard (and yes, that's a bug not a feature) and not well served by charts like this, nor by ridiculous labels like "fiscal cliff".
[1] With the exception that probably explains your comment: a single mid-income individual without dependents living in rental housing is going to pay pretty much what this chart shows. Obviously that covers a lot of the demographic here, but it's terrible advice for everyone else.
You're right. I confused AGI (line 37 on the 1040) with taxable income (line 43). And of course even that doesn't account for a variety of credits including EITC.
But everyone should have some idea what their taxable income is, and what credits they're eligible for. If the former is X and the latter is Y, you can take Chart(X) - Y and it will be fairly accurate for you.
The standard deduction is the minimum deduction. A simple calculator indeed should take this into account since it will affect everyone's tax liability. A recent study showed only about 1/3 of tax returns used itemized deductions [1].
It bothers me that this is being called "the fiscal cliff." Language matters, and I hope I'm not being a conspiracy theorist when I wonder if this term was propagated specifically to scare people.
The positive aspect of the fiscal cliff is getting no air time. From Wikipedia: "The deficit for 2013 is projected to be reduced by roughly half, with the cumulative deficit over the next ten years to be lowered by as much as $7.1 trillion or about 70%."
Not to get too political on HN, but why increase taxes by nearly 3k on someone making 70k a year? Given the way the apples and googles of the world hoard money offshore, and the wealthiest people in the country sitting on billions of dollars (rightfully earned or not) it seems to me like it would make more sense to make them bear a little more of the burden.
For example, if you make 300k your taxes are going up only 11%. IF you make 80k, your taxes are going up 16.5%. Just doesn't feel right.
The marginal tax rate cuts were signed by Obama in 2010 and the "cliff" includes things like the Payroll Tax Holiday-- the largest of tax cuts [1]-- which only came about in 2010.
Not to get too political on HN, but the top 10% of earners in the United States already pay ~45% of the taxes, which is a greater share of the burden than anywhere else in the industrialized world. In Germany, for example, the top 10% of earners pay 31% of taxes. In France, they pay 28%, and in Switzerland, only 21%.
If the United States wants to have a European level of both social services and spending (a legitimate choice, although not one I'd make), the wealthy can't possibly carry the tax burden alone - it needs to be spread around more equitably, over all tax brackets.
The top 10% of earners pay that much in taxes because they already make more income than the bottom 90% combined.
If having a national defense and an infrastructure that has enabled a person to build that kind of income, don't you think that person should be paying more than a 1/(population of the United States) share of the taxes?
If having a national defense and an infrastructure that has enabled a person to build that kind of income
I don't understand this argument. The infrastructure benefits everyone. The opportunity to succeed from that infrastructure is available to everyone. The road that leads to the grocery store benefits the grocer and the countless consumers who use it. Who gets the better side of the bargain and how do you determine the magnitude of that inequality?
If anything, public infrastructure tends to help the little guy. Historically, when public services weren't provided, the rich paid for their own needed infrastructure, protective services, etc. Those services were geared exclusively to help the wealthy land owners. If you got protection from the watch patrolling the nearby keep, you were lucky because they weren't really there for you.
This is a mindlessly stupid comparison, because in those countries the top 10% of earners also make a much smaller share of the income.
If you look at total taxes, instead of just federal income taxes like the Heritage Foundation likes to do (intellectually bankrupt think tank whores that they are), you'll see that the total US tax burden is pretty flat from median up to the top 1%: http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....
I don't comprehend your information or intuition on where money is in the economy and how it works. No one with billions is sitting on a big mattress of it. The money is in the economy working in a fairly efficient fashion. That money is capital for business enterprises, personal loans, etc.
That money has "momentum" within the economy and value because of the people who are controlling it who have a vested self interest in using it as wisely as possible to keep their companies running.
When you take away chunks from these people, you aren't siphoning it out of the swimming pools of the rich. You're destroying the momentum of that money and the value it provides to people working in corporations, in factories, on roads, in restaurants, on and on.
Taking away money from the rich to help the economic welfare of society is like taking your best football players off the field and sitting them on the bench for the benefit of your football team.
> Taking away money from the rich to help the economic welfare of society is like taking your best football players off the field and sitting them on the bench for the benefit of your football team.
By that logic, tax brackets should be regressive so that the "best" players pay 0% or, better yet, negative.
I don't comprehend your "intuition" on granparent's post about cash. You imply all of it is being invested, which is absolutely not true.
60 comments
[ 3.1 ms ] story [ 95.4 ms ] threadDoes work in Chrome on XP. Wish it didn't; I regret seeing the results.
If you can afford to ignore the loss of a few hundred bucks every month then more power to you. Me and my family can't.
- A version with the income on a logarithmic scale to make it extend past $300k in a sensible way. (Not because I need it, I just want to know how the changes affect taxes in the higher ranges).
- A plot of % increase in taxes vs. income. There are some poor sods on the left hand side of the graph who seem to be getting an almost 50% tax increase. Is that really true?
The rest of the hit is the expiration of the 10% bracket from the Bush tax cuts. That saved 5% of the first $8400 of taxable income (from the old, larger 15% bracket).
http://www.heritage.org/federalbudget/top10-percent-income-e...
See: http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....
The total tax burden is pretty flat in the top 40%, and actually goes down marginally from top 5% to top 1% (and probably to top 0.1% if that were shown on the chart). The burden on the middle 20% at 25.2% isn't dramatically lower than the burden on the top 1% at 29.0%, but the burden on the bottom 20% is lower at 17.4%.
In all it's pretty fair if you ask me.
The Budget Control Act of 2011 was passed under the political environment of a partisan stalemate, in which Democrats and Republicans could not agree on how to reduce the deficit. It was thought that the blunt cuts of budget sequestration and sharp revenue increases would be mutually undesirable to both parties and provide an impetus and deadline to bring the sides together to solve the deficit problem [1].
Note that the debt ceiling is about to be hit again, which adds to the cliff and the US Credit rating will almost assuredly fall again if we go over it [2].
It's very hard for the CBO to accurately calculate expected revenues with a looming recession, so good it is not.
[1]: http://en.wikipedia.org/wiki/United_States_fiscal_cliff
[2]: http://articles.chicagotribune.com/2012-11-14/business/sns-r...
The cited article indicates the opposite -- that simply reducing the deficit by doing nothing would encourage the ratings agencies not to cut the US credit rating, while passing "temporary measures" that allow us to keep our high deficit and are very unlikely to be temporary would give us better odds of a downgrade.
"Fitch, meanwhile, said even a deal to avert the cliff might not be enough to save the country's AAA rating."
"Ultimately, if Congress and the president can't reach a deal to stabilize and eventually reduce the debt, now at $16 trillion, Moody's will probably cut the United States' current Aaa rating."
Doing nothing is much closer to this sort of deal than any measure that reduces the amount of tax increases or spending cuts.
The following sentence:
"Temporary measures to stave off the budget shock without a credible strategy for the years beyond could earn the country a downgrade, said David Riley, managing director for sovereign ratings at Fitch."
I don't necessarily support the changes to taxation that this thread is about- just a general observation.
1) Cliff jumped off with a parachute - middle-class cuts preserved 2) Stephan Feck'd - no agreement = full increase
Also does reflect the cap gains tax increase (15% vs, 25%) which, for entrepreneurs seems more relevant?
Finally there is a much bigger impact to government spending and jobs as the budget cuts would cause furloghs or layoffs until the budget is restored (if at all).
Thanks, recalcitrant GOP, for your willingness to take the nation hostage for your idealism!
Isn't that rhetoric a little inflammatory for HN? We're not talking about a huge dollar value on those high income rates, particularly if we're only talking about the 2001 cuts. One could equally say that President Obama is "willing to take the nation hostage" over $50B in a $3.7T budget.
The budget deficit in 2007 was something like $163B with all these tax cuts in effect and two wars in full swing. Tax rates are not the problem. Spending and the still faltering economy are.
It's clear they are seeking this confrontation, damn the consequences to the majority of the populace... just like their debt-ceiling brinkmanship in 2011.
When the housing bubble burst, the deficit ballooned to $1.4T.
Thank you.
1: http://news.ycombinator.com/item?id=4787360
The Senate hasn't proposed a budget in almost 4 years. The Senate is controlled by the Democrats. Is that responsible in the least?
Obama refused to cut any of the extra Trillion dollars per year that the stimulus added to the baseline budget, but instead chooses to point to "the rich" as scapegoats for our national woes.
Why this piece of the Constitution is followed, but practically nothing else, is beyond me.
Spending proposals that originate in the House, like the one(s) that included Paul Ryan's plan, are equally DOA as budget resolutions from the Senate when both houses can't agree... but at least the House is making some effort to show leadership.
Overall, they're both not functioning properly (which may be a good thing), but I was responding to the original poster's accusation that one side is to blame for this mess.
I think the social security trust fund accounting gimmick is silly, so I consider us as having a 70% debt-to-GDP ($10.9 trillion in real debt). This is the same view the CBO takes. That's set to rise to 100% of GDP by 2022 under current policies, but fall to under 60% of GDP by 2022 if the fiscal cliff is allowed to happen.
[1] - http://www.ssa.gov/oact/progdata/assets.html
http://usatoday30.usatoday.com/news/washington/2011-06-06-us...
http://www.usdebtclock.org/
The sensible comparison is the cost of these programs relative to GDP. That's the only relevant way to present the data. Social Security is projected to rise in cost from 4.8% of GDP to 6.2% of GDP by 2035. That's the impact of your "$63 trillion unfunded liability" on the budget over that time frame.
Medicare is a bigger problem, but too much of the debate revolves around scare-mongering projecting rising healthcare costs out to infinity. See: http://xkcd.com/605/
You could also add 9/11, two expensive wars (because the US can't stomach losing soldiers the way it used to, and protecting soldiers cost a fortune) and a huge recession that we are still not out of.
The projections assumed that everything would be running the way it was in the late 1990's. It didn't.
Just estimate your AGI, and it'll be about right.
Tax analysis is hard (and yes, that's a bug not a feature) and not well served by charts like this, nor by ridiculous labels like "fiscal cliff".
[1] With the exception that probably explains your comment: a single mid-income individual without dependents living in rental housing is going to pay pretty much what this chart shows. Obviously that covers a lot of the demographic here, but it's terrible advice for everyone else.
But everyone should have some idea what their taxable income is, and what credits they're eligible for. If the former is X and the latter is Y, you can take Chart(X) - Y and it will be fairly accurate for you.
[1]: http://taxfoundation.org/article/most-americans-dont-itemize...
edit: good point on the EITC as well. This also severely affects the bottom of the scale and you don't need to itemize to take advantage of it.
The positive aspect of the fiscal cliff is getting no air time. From Wikipedia: "The deficit for 2013 is projected to be reduced by roughly half, with the cumulative deficit over the next ten years to be lowered by as much as $7.1 trillion or about 70%."
For example, if you make 300k your taxes are going up only 11%. IF you make 80k, your taxes are going up 16.5%. Just doesn't feel right.
But don't worry. As others have pointed out, it's extremely unlikely that all of GWB's tax cuts will be rolled back.
The marginal tax rate cuts were signed by Obama in 2010 and the "cliff" includes things like the Payroll Tax Holiday-- the largest of tax cuts [1]-- which only came about in 2010.
[1] http://www.businessinsider.com/chart-of-the-day-deutsche-ban...
If the United States wants to have a European level of both social services and spending (a legitimate choice, although not one I'd make), the wealthy can't possibly carry the tax burden alone - it needs to be spread around more equitably, over all tax brackets.
If having a national defense and an infrastructure that has enabled a person to build that kind of income, don't you think that person should be paying more than a 1/(population of the United States) share of the taxes?
Wat.
Top 10% — $87,334
http://blogs.wsj.com/wealth/2007/02/01/the-rich-o-meter/
I don't understand this argument. The infrastructure benefits everyone. The opportunity to succeed from that infrastructure is available to everyone. The road that leads to the grocery store benefits the grocer and the countless consumers who use it. Who gets the better side of the bargain and how do you determine the magnitude of that inequality?
If anything, public infrastructure tends to help the little guy. Historically, when public services weren't provided, the rich paid for their own needed infrastructure, protective services, etc. Those services were geared exclusively to help the wealthy land owners. If you got protection from the watch patrolling the nearby keep, you were lucky because they weren't really there for you.
If you look at total taxes, instead of just federal income taxes like the Heritage Foundation likes to do (intellectually bankrupt think tank whores that they are), you'll see that the total US tax burden is pretty flat from median up to the top 1%: http://ctj.org/ctjreports/2012/04/who_pays_taxes_in_america....
I don't comprehend your information or intuition on where money is in the economy and how it works. No one with billions is sitting on a big mattress of it. The money is in the economy working in a fairly efficient fashion. That money is capital for business enterprises, personal loans, etc.
That money has "momentum" within the economy and value because of the people who are controlling it who have a vested self interest in using it as wisely as possible to keep their companies running.
When you take away chunks from these people, you aren't siphoning it out of the swimming pools of the rich. You're destroying the momentum of that money and the value it provides to people working in corporations, in factories, on roads, in restaurants, on and on.
Taking away money from the rich to help the economic welfare of society is like taking your best football players off the field and sitting them on the bench for the benefit of your football team.
By that logic, tax brackets should be regressive so that the "best" players pay 0% or, better yet, negative.
I don't comprehend your "intuition" on granparent's post about cash. You imply all of it is being invested, which is absolutely not true.