OMG! It's the Fiscal Cliff!

[Undertoad]

Just sacrifice one of them, like in a volcano. They won't be missed. Of course we'll have to sacrifice one per year, but that's four centuries of purging... unless they figure it out first.

Two-thirds of millionaires left Britain to avoid 50p tax rate

[Ibby]

[BigV]

Originally Posted by Undertoad

Just sacrifice one of them, like in a volcano. They won't be missed. Of course we'll have to sacrifice one per year, but that's four centuries of purging... unless they figure it out first.

Two-thirds of millionaires left Britain to avoid 50p tax rate

ha ha.

From your link:

In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election. (me--too bad we don't have a date for this event)

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

Since the announcement, the number of people declaring annual incomes of more than £1 million has risen to 10,000.

Some observations.

There definitely were more dollars and pounds floating around in 2009-2010 than there were afterward, so the direct cause of the change in the number of rich people and the change in the tax law is unknown, but certainly not complete.

There's a big difference between driving rich people out of the country and people manipulating their income so that they're under some threshold. I don't recall the name (jimmy somebody), some acerbic comedian who paid minimal taxes by such manipulations and had a public mea culpa on the subject. Once again, saying the tax rate change caused the number of millionaires to drop from 16000 to 6000 isn't easy to support without a lot more evidence.

Then the last bolded section, I find interesting. The tax rate is still 50p, it won't change until next year, but the number of millionaires has risen to 10000. Why? Surely it isn't the tax rate, since it's unchanged. Claiming, suggesting that the change in the tax rate drives millionaires out of the country is not believable.

[DanaC]

Jimmy Carr

[Undertoad]

Whatever. Just purge one of them, man, and see how many are left in the country a year later to play that lottery.

[DanaC]

Why purge them? Why not just expect them to pay a fair rate of tax?

[Undertoad]

Ask biggie, he put the idea up.

[BigV]

I put the idea up?

I don't think so. You might have mistaken a fart for a trial balloon.

[xoxoxoBruce]

What is "50p", 50%?

[BigV]

yes

[SamIam]

I'll tell you what. The taxes paid by those poor babies in the $250,000 plus gang DO make a major difference. Why do you think the Tea Party members in the House have been so intransigent and refused even the most reasonable of compromises - keep the tax cuts for 98% of the people in the country and fight over the upper 2% tax rate come January? Surely, that would be simple common sense to the Right and the Left both.

The Tea Party wants small government, and they don't care what they do to the country in order to achieve this goal. Choke government revenues by keeping the tax rates for the wealthy artificially low. Tah dah! Small government. Put our disabled vets out on the streets, send the country back into an economic tail spin, let unemployment rise to 9% or more, etc., etc., etc. Who cares? We will have SMALL GOVERNMENT at last.

The Tea Party LOST some seats in Congress. The DEMOCRAT nominee for President won. The Tea Party does not represent the will of the majority of the people in the U.S. And just what office was Grover Norquist elected to again? Don't everybody all answer at once.

[Lamplighter]

Originally Posted by Lamplighter

OK, I have not thought this through, so maybe someone else can improve on my question...

Elsewhere I posted about a few Republicans changing their attitude
towards Grover Norquist's pledge to never raise taxes.
Those Republicans, and a few others, are saying that they are not willing to raise the tax rates,
but instead want to "raise revenues" by closing loopholes and "capping the deductibles".
One of them said that capping deductions at (maybe) $30K - $40K
might be acceptable, but only if the Democrats would cut entitlements.

So, my question is this:
Why are Republicans pushing the idea of capping deductions ?
<snip>
Why is that OK with Republicans ?
<snip>
I like xoB's current signature: "Everything is interesting... look closer"

Today the Republicans have made public their budget proposal...

L.A. Times
Lisa Mascaro and Michael A. Memoli
12/12/03
Republicans counter with their own 'fiscal cliff' plan

<snip>
Obama seeks $1.6 trillion in new revenue over a decade with a tax
increase on the wealthy and a broader overhaul of the tax code,
while Boehner's proposal would raise half that amount.

At the same time, Boehner proposed $1.4 trillion in spending cuts to
Medicare, Social Security and other programs favored by Democrats.
Obama has offered $400 billion in cuts.

Obama is also seeking new investments to stimulate the economy and
wants to continue long-term unemployment insurance and the temporary reduction
in the payroll tax. Republicans did not address them.
<snip>
Studies have shown that almost as much revenue, about $800 billion,
could be generated by the GOP plan to limit deductions as by
Obama's proposal to raise rates on the wealthiest 2% of Americans.

But that revenue might never be realized if next year's
tax code overhaul results in lower rates, as the GOP proposes.
Democrats appear unwilling to take that risk.
<snip>

So is this last bit the real answer to my questions ?

[piercehawkeye45]

They consider lower tax rates and closing loopholes pro-growth revenue increases. I don't know any details of why.

[glatt]

The closing loopholes thing is a mixed bag, but overall, I think it would hurt Democrats the most. So that's part of the reason Republicans are pushing for it.

What are the biggest itemized deductions? There are three. State and local taxes, mortgage interest, and charities. And they are pretty much in that order of importance for most people.

If you can't deduct state and local taxes any more, who is going to be hurt the most? People in the states and localities that have the highest taxes. Typically, tax rates are higher in liberal leaning states like Massachusetts and California, and lower in conservative states like Texas. Also, taxes in urban areas are generally higher than in rural areas because property values are greater in urban areas. Urban areas are also generally more liberal. So eliminating the deductions for these taxes will hurt Democrats much more than Republicans.

For mortgage interest, it is pretty mixed. You're hitting much of the middle class if you eliminate this deduction. At the two extreme ends of the spectrum you have rich Republicans in mansions losing pretty nice deductions, and poor Democrats in apartments not being touched at all, but in the middle, it's completely mixed.

And finally, for charitable giving, it's also pretty mixed, but Republicans give slightly more to charity, so this would hurt Republicans a little bit more. Really, though, eliminating charitable deductions would decimate the work charities do, and that would be terrible at a time when the government is cutting back the work they do for the needy. The people hurt most by eliminating charitable deductions would overwhelmingly be the needy.

[Happy Monkey]

My dad was on CSPAN talking about the AMT portion of the fiscal cliff. It's the only part of the cliff that actually takes effect immediately, because it's the AMT adjustment for tax year 2012, not 2013, and you really don't want to be changing 2012 tax policy while people are filling out their returns. All the rest can be fixed retroactively later in the year.

What I found most interesting was that the AMT actually kept lots of people in the $200,000-$500,000 from getting the Bush tax cuts, so letting them expire for people making over $250,000 may only actually raise taxes on people making over half a million.