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Michael Moore’s preferred 95.6 % Income Tax Rate
I saw Michael Moore on Hannity the other night and maybe some of you did as well, but I decided to put his (Moore’s) demeaning comments to Hannity down on paper mathematically. If you watched the show you know that he was talking down his nose to Hannity all night suggesting that he didn’t care about the “poor” at all. When Hannity asked Moore to define what his tax plan would be he said the following below. Please bear with me as I transcribe his comments into real values. Also my assumptions are not assumptions at all, but based on “taxing the rich” as Moore prefers.
Since we are talking about the rich and both Hannity and Moore could be described as “rich” with each making income in the million’s I am going to make this analysis based on the Maximum tax bracket in both the Federal and State model and I am going to ignore the slight impact of the lower brackets since it is insignificant within the class of the rich. I am also going to “assume” for the purposes of this analysis that the “rich” in question here are “self employed” people since most of them are such as Moore himself, Hollywood Stars, Rock Stars, etc. These are the rates effective for 2009.
Mr. Moore said that both he and Hannity could afford to have their tax rate “doubled” and that this should happen and would be disappointed if Obama didn’t do this. Although Hannity took him to mean doubling ALL their tax rates I believe that there was a disconnect between Hannity and Moore on this point. I am going to assume the conservative approach and say that Moore was only referring to the Federal Income Tax Rate (if I am wrong and he is suggesting what Hannity thought he heard, watch out, that is a combined tax burden exceeding 100% of income). Since the maximum Federal Tax Rate (effective on income above $372,200 for Married Filing Joint) is 35% Moore’s “doubling” of the Federal Tax Rate would bring his practical “Federal” tax rate to 70%. He went on to state that it was a scandal that “high earners” paid Social Security Retirement tax only on the first $106,800 of earnings with the rest being untaxed. He thought that this was an abuse of the lower earners and a shame on the higher. (He didn’t mention that through the IRS taxation of Social Security Earnings that by far that most of the Social Security payments are made to the lower income earners.) So adding this tax to not only the first dollar but the last dollar of earnings as well brings this component of tax up to 15.3% on all income.
In addition to this we can assume (though Moore didn’t state) that the State Income Tax is still part of the “overall” tax package as it affects the tax payer. States vary in such rates, but since most of the noise on the matter is coming from California, I’ll use their tax rate as the example in this model. That “maximum” tax bracket is 10.3%.
Adding this all up you will get a combined 95.6 % (70.0 % Federal Income Tax, 15.3 % Combined Social Security & Medicare Tax, and 10.3 % State Income Tax-CA).
This 95.6% is simply those taxes based on income and do not recognize Real Estate nor Sales Tax. (Of Course in addition to “income taxes” the Democrats through the voice of Nancy Pelosi are now considering a “National Sales Tax” (VAT) on top of it all.
So, lets take a great income of $10,000,000 for these “filthy rich” celebrities, stars, Entrepreneurs, business owners, etc. So here you have a Gross Income is $10 million and after deducting the taxes that Michael Moore and his ilk have in store for you, your “take home pay” (i.e. after tax income) is $440,000 and you may say “gee that is a good income and so right you may be, but this the amount before further reduction due to sales taxes and Real Estate taxes on those expensive houses, and with that you will probably be in the S300’s take home range. If you are not so talented and only making $5 million per year you can count on a take home pay before sales and real estate taxes more in the low $200,000 range and this is before putting anything aside for Retirement or children’s education (assuming we ignore the VAT tax on top of this all being considered by the Democrats right now). I have to believe that the Jet Fuel for this class of liberal is more than $200,000 per year alone.
None of this analysis begins to approach the element of “risk” that the “rich” must confront in order to develop a business that will earn them a profit of $10 million, $5million or even less. When you take this into consideration you have a situation where nobody would take the risk to develop the jobs that the country needs. At the 10 million level of pre tax profit you might have a Gross business of $100,000,000 with a 10% pre-tax profit (which would be great) and if you were fortunate enough to obtain a rate of return on your invested capital of the lofty number of 20% this would mean that you had “at risk” capital of $50,000,000 to fund this type of operation. In short you are risking $50 million with the hopes in a good year of making maybe $300,000 take home pay. Not me……..and I doubt you would either. I’ll just keep the $50 million risk free and you can look for your jobs elswhere.
Now this is change you can not only believe in, but that you are going to get………………….
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3 Responses to “Michael Moore’s preferred 95.6 % Income Tax Rate”
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how this slob became famous is beyond me..wht does this say about the masses eh!..ARG!
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Wow! could you clowns get any more clueless? Here are the actual numbers from the Congressional Budget Office: http://cbo.gov/publications/collections/tax/2009/effective_rates.pdf
Let’s use the 2006 number which should be close to what it was when Micheal Moore made that statement.
2006 Total Effective Federal Tax Rate for the top 1% was 31.2%
This sounds really bad, right, since doubling this would be 62.4%. Unfortunately, that isn’t what these people actually paid.
2006 Effective Individual Income Tax Rate for the top 1% was 19%. Doubling this would only be 38% which is one hell of a lot lower than your ridiculous claim of 95.6%.
When you don’t differentiate between Top Tax Rate and Effective Tax Rate and Effective Income Tax Rate you end making the mistakes that you just made. This works the other way around too. For example, Politifact points out that while it is technically true (as Michael Moore stated) that the top tax rate was cut in half under Reagan, the actual tax paid was NOT cut in half. Reagan drastically cut the top rate but also got rid of some tax deductions so that the actual tax paid was cut much less. This is born out in the same chart.
1979 Total Effective Federal Tax Rate for the top 1% was 37%
Notice that even this number is far less than the 70% apparent top rate. However, again this is not the actual tax paid.
1979 Effective Individual Income Tax Rate for the top 1% was only 21.8%
This reached its low point under Reagan in 1986 at 18.3% for a total drop of 16% rather than 50% as Michael Moore implied. Now, you know.
Brent…………Where to begin. It is clear that you are neither a tax accountant nor economist. First let me set the record straight. This was taken from Moore’s statement on 10/12/2009 not 2006 as you claim. How do I know? I watched the “live” program myself. It is clear that you didn’t really read the post. Second I stated and here re-state that I was basing my analysis on the maximium tax rate which firmly included Hannity and Moore for the vast majority of their respective incomes and neither of them have an effective tax rate anywhere near the 31% you seem to be suggesting. It is clear you are simply passing talking points here, because everyone that is a serious student of these matters knows that “effective” tax rates are irrelevant and simply reflect a casual relationship between income and taxes. It means nothing more than saying that the average American family has 2.3 children. Well it isn’t true for any American family. But what is true that how ever you percieve “effective” tax rates, that once you pass the threshold for the maximum bracket, which is $372,000 for Married Filing Joint you lose all impact of lower brackets that you believe create an “effective” tax rate much lower. The premise of this article stipulated that the maximum bracket would only be used because it impacts large earners like Hannity and Moore and that the impact of the lower brackets forming “effictive” tax rates is diminimus. If you barely stuck your head in the maximum bracket of $372,100 you would be the the highest bracket but only for $100. This would create a smaller “effective” tax rate than a marginal analysis but that doesn’t impact policy. This is irrelevant and everyone knows that dynamics of the impact of tax increases and decreases comes from the concept of Marginal Rates which are “real” in tax preparation and not “effective” tax rates which have zero to do with tax compliance. Every single dollar of taxable income over the $372,000 would be actually taxed at the higher rate which is what Moore was calling for which is 35% times 2. (go to your tax tables not the Democrat spin doctors) Finiancial, Investment and Hiring decisions are made and predicated on Marginal Rates, not Effective Rates or Average Rates. I’ll say it again, effective rates are merely a statistical anomaly and have very little to do with the creation of incentive or disincentive as it impacts the economy including GDP, employment or federal revenue. You need to read deeper. If you have any mathematical or theoretical economic aptitude google Arthur Laffer and do some homework.
Since you raised the point, it could be said that Obama took advantage of the foreign tax exclusions he ran against and managed to avoid paying US taxes on $1.7 million in 2009 income yet created a $59,000 credit against his U.S. Income taxes from it. Your case would be that this lowered his “effective” income tax to a very low number. It was a good campaign point for Obama, but it was also the smart tax route for his own dollars. He published his tax returns and since you are such an expert, down load it and read his form 1116……….sc