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$1 million = about $20,000 per week

It's been difficult to follow all the "fiscal cliff" negotiations, not least because no one besides President Obama and Speaker Boehner really knows what's on the table. If you're just catching up with the various offers and counter-offers, you might find this chart by Dylan Matthews helpful, as I did:[caption id="attachment_22421" align="aligncenter" width="573"] Dylan Matthews, Wonkblog, Washington Post[/caption]The GOP's latest offer, which Boehner is calling "Plan B," focuses on the income threshold of $1,000,000 per year. But in discussions about this income threshold, I note that the misleading term "millionaires" often gets used: a recent Wall Street Journal headine said "GOP Poses Millionaire Tax-Rate Increase." And that's not just shorthand for the purpose of the article's title -- the lede reads:

A fresh proposal from House Speaker John Boehner to raise tax rates on millionaires marked a breakthrough in stalled budget negotiations with President Barack Obama, suggesting a potential framework for avoiding year-end spending cuts and tax increases known as the fiscal cliff.

"Millionaire" is very misleading when used in this way because the word usually refers to wealth or net worth, not annual income. The fact is, lots of people in our country are "millionaires," when the worth of their home, car(s), savings and retirement accounts, etc. are taken into account.But tax returns reporting over $1,000,000 annually are extremely rare -- about 0.1 percent of the returns. To put that level of income in a scale that makes more sense to the rest of the country, we might think of Boehner's plan to be about those who make, on average, more than $20,000 per week. Can you imagine making more than $20,000 per week? Or if each biweekly payday welcomed a direct deposit upwards of $40,000? I actually can't imagine it. But that's the kind of household our elected officials are discussing. Just to be clear.

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You fail to mention that the million dollar income is ADJUSTED INCOME. Those are people are making $1.5 million a year and are taking adjustment deductions. i.e $200,000 mortgage interest.etc.. Phew. It is reported that Oracles Ellison borrows multi-billions for lifestyle, islands, racing yachts. all interest as a write-off .Anyway it failed to get GOP votes tonight and Boehner went home. The TP people will come back next week with a proposal for those making 10 Million [there are some] to chip in 50 extra bucks but they want to call it a contribution to the US treasury because they hate the work tax. .. Boehner is finished as Speaker.

"Can you imagine making more than $20,000 per week?"If you change "making" to "earning" in that sentence, the scales fall from your eyes, don't they?

If you change making to earning ...Is it possible to "earn", meaning "deserve", $20,000 a week in compensation for one's labor? "Make" is more apt in most cases.

That's about 60 minimum wage earnings. One such person earns as much as 60 grocery baggers, child care providers, inexperienced lifeguards, or assistants to the car repairman.I could see a surgeon earning that much. We rarely need the services of a surgeon, but when we do, their work is so critical that I would happily pay them that much.

Those schoolteachers who sacrificed their lives last week trying to protect the schoolchildren in their care, they would "earn" a million dollars. But of course, they didn't "make" anywhere near that. A million dollars a year creates a huge amount of discretionary income, I don't see any compelling reason at all to shelter the amount over $250,000 from reasonable progressive taxes.

@Mark Proska (12/20, 9:43 pm) Would you elaborate on your question? (It's unclear to me what point you're making.)

What is the current weekly amount in taxes paid by this segment? Should we shrink in horror at the fact that they are paying, say, merely $4,000 in taxes every week? Should it be $10,000 on the theory that they can easily afford it? Or should we express gratitude that they already contribute so much more than middle class members unwilling to raise their own rates?And what is the current weekly amount of new government debt incurred on our behalf and that of future generations? Approximate numbers will suffice.

The proposal that was on the table (rejected last night by the GOP House) would only have raised income tax rates about 2 percentage points on only the income over the million dollar mark. One could still make a cool million per year at the current rate. So it wasn't going to bring in much revenue. None of the proposed deals are going to soak the rich, if that's your concern. Anyway, the point of my post was about the misleading use of the term "millionaire" in the discussion of policies concerning annual income. If it's the deficit you're concerned about, then you should be enraged that the House did not accept any of Obama's offers, especially the one labeled "Obama #3" above (with the $400K line for rate increases). This all brings me back to that famous moment in the Republican primary debates when the candidates were offered a "10-to-1" spending cuts to tax increases package, and they all said they wouldn't accept it. It seemed like madness then, and it seems like madness now. But I guess they were serious! Over the cliff we go, and everyone's rates go up...

What is the current weekly amount in taxes paid by this segment? If Mitt Romney is typical, he had an effective tax rate of 14%. That doesn't seem very burdensome.

Regarding the 10-to-1 ratio that House Republicans can't accept, one senior House member makes an effective chess analogy: they won't trade a pawn for a queen. From National Review's Robert Costa's write-up:

I dont want to talk to the people who ruined this, at least right now, a retiring House member told me. They dont get it. Another senior member told me that Boehner was always going to struggle with the whip count since most House conservatives have little interest in seeing the speaker strike any kind of deal. Boehner was trying to play chess and the caucus was playing checkers, he said, sighing. Boehner is willing to lose a pawn for a queen. Im not sure about the rest.

Just so we're clear, this is further evidence that when push comes to shove congressional Republicans' preferred way of dealing with the nation's fiscal challenges is to:*cut taxes for the wealthy;*raise taxes for working-class and middle-class people;*increase defense spending beyond what the Pentagon has requested;*avoid any concrete proposals on Medicare and Social Security;*cut funding for the parts of the federal government that deal most directly with the poor and working-class.Is that about right?

Patrick =The 1M earners owe more takes because they make 60 times what the lowest level earners do. They therefore get 60 times more protection and services for their assets than the lowest do. Oops -- make that protection for their money and *other* assets -- people with those sorts of earnings generally make it from investments == which are also protected by the government, as is non-productive stuff like land and cars and jewelry. The notion that the rich don't get more from the government than the rest of us do is patent nonsense. 25% in taxes for guarding and servicing such assets looks cheap to me.

Patrick: What's a "natural" tax rate for the rich? My catechism children, after discussion, agreed on the natural answer: 50%. Much more and the rich might find themselves no longer rich, much less and that would be "stingy". There's your answer!

LukeI appreciate your request for clarification. I think the original question (Can you imagine making more than) betrays an unhelpful un-appreciation of the fact that, prima facie, those who earn more produce more of what other people consider to be valuable. In that sense, they get only what they truly deserve. The alternative is to believe that Person A can tell Person B how much he is allowed to value the contributions of Person C. Can you think of anything more unfair, more undeserving, more uncharitable, than that?I am somewhat open to the idea that a good teacher is more valuable than, say, a good investment banker. (As an aside, I think the far left is not sufficiently sophisticated in economics to comprehend all the good that a truly good investment bank does for others, but thats a topic for another day) Heres the problem with the teacher/investment banker dichotomy: Those who think teachers are underpaid base that on what they see as the value teachers provide to society--things that cant be quantified or measured--things that are more important than mere dollars. Fine. But then they insist that the compensation to the teacher for her value must come in the form of those mere dollars. See the inconsistency?

Over the cliff we go, and everyones rates go up [emphasis added]Hold on here, if its wrong/bad/to be avoided that tax rates go up, why is it ok/good/to be supported that they go up for people who happen to be extremely rare in number?Dont tax her, dont tax me, tax the woman behind that tree?Commonweal, anyone?

Claire,Interesting result. I believe some MIT economists are recommending rates above 75%. So the filthy rich among us might find solace in your class's proposal. Are they open to an alternative - lower rates with a broader tax base? And do they have a plan to reduce entitlement growth? And how do they feel about inheriting a substantial tax bill from the older generations?

"But then they insist that the compensation to the teacher for her value must come in the form of those mere dollars. See the inconsistency?"No, I don't see any inconsistency at all.

Mark Proska- Hold on here, if its wrong/bad/to be avoided that tax rates go up, why is it ok/good/to be supported that they go up for people who happen to be extremely rare in number?I believe the Jesuit Conference issued a statement on the fiscal cliff that provides an excellent answer to your question. http://www.jesuit.org/2012/11/28/jesuit-conference-statement-on-taxes-an...

Patrick, I am afraid that they are not so sophisticated. But for them "rich" means probably something quite different than it does for you, given that several will apparently not get presents for Christmas, that their first reaction when I mentioned Christmas cards was "they're expensive", and that some unknown number won't be able to participate in the end-of-year weekend pilgrimage because of the cost. So I bet that "rich" for them means some small (< 10) multiple of minimum wage, and their proposed tax rate already has a broad base.

@Mark Proska (12/22, 10:07 am) Thanks for clarifying. I would only note that the possibility exists that investment bankers have used their power to create rules and laws that unfairly benefit them.

Hi JeffThanks for the link, but Im afraid I did not find the answer provided as excellent as you did. For example, it reads, in part:...but revenues will not rise if the government continues to provide tax cuts and exemptions...That is far removed from the reality of the situation, based on my understanding. Just like lowering the price of a good can increase overall revenue because of an increase in the number of units sold, lowering marginal tax rates has consistently yielded an increase in tax revenue, because of the economic growth it creates. I fear that the desire to increase tax rates of the rich comes not from the honourable intention of reducing the deficit but rather from, well, a darker place. Hope Im wrong about that.LukeNo doubt, just as teacher unions have.

Mark Proska- Just like lowering the price of a good can increase overall revenue because of an increase in the number of units sold, lowering marginal tax rates has consistently yielded an increase in tax revenue, because of the economic growth it creates.Would you really say that lower tax rates have consistently yielded increases in revenue? I have heard many argue that the Reagan tax cuts caused an increase in revenue, and I have heard some argue that that the Kennedy tax cuts caused an increase in revenue. However, I haven't heard anyone argue that the Bush tax cuts caused an increase in revenue, nor have I heard anyone argue that the Clinton tax increase on the top tax rate caused a loss in revenue, or economic growth.

JeffYes, I would. When Bush came into office he inherited the Clinton recession (you didnt hear Bush whine about that because thats not his styleunlike other presidents). He lowered tax rates which helped foster a relatively strong economy during his terms in office. The real estate bubble popping tightened credit and slowed things down drastically, indicating a need for stimulus-inducing lower tax rates. Unfortunately, they've not been enacted yet, which is why the economic "recovery" has been so pathetically anemic.At least, that's my take on things.

Mark ProskaI didn't say that I haven't heard anyone argue that the Bush tax cuts fostered growth. I have heard that beeper. I said that I haven't heard anyone argue that the Bush tax cuts created an increase in federal revenue. You stated previously that tax cuts have consistently created revenue gains. Most of what I have read points to the revenue lost due to the Bush tax cuts, despite what economic growth followed them.

" I fear that the desire to increase tax rates of the rich comes not from the honourable intention of reducing the deficit but rather from, well, a darker place."Oh,boo hoo.I don't think anyone is saying just tax the rich. I suspect most of us on this blog are willing to pay higher taxes on our annual income over a million dollars. I promise, I will be happy to pay that additional tatx in the years my income exceeds $1 million; you can count me in, for the good of the nation.

Correction. heard that beeper - heard that before