Sep 12, 2017|
Ben Steverman (Bloomberg, Taxes) by The Financial Exchange
Transcript - Not for consumer use. Robot overlords only. Will not be accurate.
Why do American workers pay twice as much in taxes as wealthy investors bought a terrific question and we're joined by the reporter on this story then Steve Herman. From Bloomberg I don't today Ben. So take history detail of two taxpayers. One is the wealthy investor Macon 300000 bucks a year in the other is the emergency room doctor making 300000 dollars a year. Yes fifty compare them side by side. And he emergency room Doctor Who gets. Got 300000 dollars in we just. It's basically paying about twice as much in federal income tax that if they're paid about eighty. That would let's say they're paying the maximum width no deductions both of these scenarios. That the doctors pay about 80000 dollars in taxes and it did did somebody who inherited that money in his living off capital gains and dividend. Is paying about 40000 dollars in federal income taxes and that's before payroll taxes which are sort of a different category but. But those are also taken a big bite out of that doctor's salary. And it also did doctors employers in the hospital is actually about whereas if you just living off of investments you don't. It was a good statement to a different perspective the other 300000 dollar earning doctor he gave 104 dollars tax the wealthy investor the guy who inherited his money. Paid 41000 dollars in taxes the difference in rape folks is 14%. Vs 34% right. Right on to what degree have these low rates helped wealthy investors how much richer had the gotten. Well we had this. Explosion inequality. In this country especially since the eighty's and ninety's. And I think he can partly. But it's hard to know if there's a lot of factors go into that but BBC had the top please 01% tripling its share of the national wealth. In that time. So it. I think. These tax fraud are probably part of it they're paying a lot less on those capital gains and until a big business or Keeneland. When Zuckerberg filled with Facebook's stock you know he's paying a much lower read. That you would. Back in the seven. Well speaking on behalf of the 1%. Dude do higher tax rates discourage savings in other words. If if my tax rates were like the doctor at 34%. Wouldn't that discourage me from saving money. Well economists argue about this a lot. But unfortunately a lot of their arguments are based on theoretical models and they really disagreed so if you look at the real world evidence. It's hard to see. That actually have that much of an affect you conceded. And in short term factor though if you know your taxes are gonna go down next year. You might lead to sell that businesses so that stock as a keen on it city and get the lower tax rate but over the long term it's really hard to see. It is. Rich people seating more more capital being created more as the economy growing more because of low tax rates. You know do what you're saving all the wealthy receiving right now up sixty part of the top of the top top point 1% to head of state came out. Just their city about 50% of their income. And not a top anymore. Rate to top 1% saving about 30% entering. Exactly and that's been pretty consistent though since at least. Seventies and it's possible that was posted a little bit by the low but lower taxes. But that's also that creation of wealth of building could you know. If contributing Q inequality because. Those folks are stating more and then they're keeping the money and they're saving more on those gains so pay it's sort of self fulfilling cycle. Where is the bottom 99%. Aren't so even much at all. Now know that there what was going down along with their wages. At least the wages are stagnant mean. And yet books in the middle class are having a hard time skating. What do you Donald Trump when he is on the campaign trail. Said he was gonna go after that he he admonished them said they should be paying the same rate as a doctor or lawyer. What's tax reform gonna look like. It's possible that they'll close that loophole which is called the carried interest Whipple justice. Basically says somebody. In a completely different they know what we're talking about a set seeing somebody who manages to hedge funds and go to work everyday on those folks. Can basically get paid as if they were. Passive investors do they get to pay a lower rate even though they're making the wages. That really seen the back in 1986 the last time they did tax reform he basically narrow that gap between workers and investors and expect. Okay everybody pays the same rate on dividend candidate in wages. That we really have no aside that that's gonna happen in fact he might widening gap a little bit because. Republicans don't want to go after these Obama care taxes. And one of good. And tonight it let me under their bed and here are you talking about the net investment income tax exactly around. I thought they're leaving that alone I thought played the I thought the Republicans are gonna leave that does need it. Well. I think that. Might be what they decide to do you they're still people in the Republican caucus it's such an house who are still trying to kill that. I think is proud you're probably right that is the drug administration has other priorities and his estate tax the Alternative Minimum Tax. And corporate income tax cuts so those probably will come first. What about the estate tax you that you you'd think they're gonna go after the estate tax and try to repeal that I I don't see them. That answer. I eat I I don't know you know based in new York at night on Capitol Hill every day but. And the thing is that you Republicans pretty much agree on that one at least two they they disagree on a lot of other things up by they agreed that. It's as a caucus and I think I know trump this is something he's talked about a lot and they've really added this estate tax to tackle the debt that. Okay all right Ben thank you very much free time we do appreciate it. That's been Steve Herman explaining. How 300000. Dollar wage earner. Pace more than double almost triple the rate of income tax as opposed to the 300000 dollar lucky sperm. You know what. Good way to put it what are my which I was expert like every and a full owner rally. It would be nice to just be like born rich. Sure. Maybe it isn't made me maybe it's. He's just discouraging isn't which part of the 34%. Tax verses fourteen. Well it it is and one of my biggest complaints with the tax code is that it treats income drastically different way and in reality. We are returned isn't necessarily quite as important is okay you're still utilizing a lot of the same services. Wire you not paying the same as someone else would. You know it would if you make this money through investment income are you not you know going on roads are you not you know taking advantage of our healthcare system.