[BRussell]

Here's an article in the Washington Post: Tax Burden Shifts to the Middle.

The CBO study, due to be released today, found that the wealthiest 20 percent, whose incomes averaged $182,700 in 2001, saw their share of federal taxes drop from 64.4 percent of total tax payments in 2001 to 63.5 percent this year. The top 1 percent, earning $1.1 million, saw their share fall to 20.1 percent of the total, from 22.2 percent.

Over that same period, taxpayers with incomes from around $51,500 to around $75,600 saw their share of federal tax payments increase. Households earning around $75,600 saw their tax burden jump the most, from 18.7 percent of all taxes to 19.5 percent.

You can bet that this is going to play a role in the campaign. If Kerry can say that Bush has raised the middle class's tax burden, that's pretty devastating.

[SimeyTheLimey]

I think you need to think about those figures, because you aren't comparing apples to apples. Follow me through the steps.

The tax cuts reduced the marginal rates across the board. That means at all income levels, the percentage of income paid as taxes by any individual as a percentage of income must be less.

However, the board is not stationary. People can move between income brackets.

The amount of revenue derived from any particular tax bracket is taxes paid X number of people paying those taxes. That's the key to understanding those figures.

If the taxes paid per person is less, yet revenue derived from that income level is higher, then what must be happening is the number of people at that income level has increased. That is the only way the taxes paid X number of people paying equation can result in an increase in revenue for the government from that income bracket.

More people in that income bracket means fewer people paying taxes in another income bracket. This magnifies the shift in which bracket generates how much revenue.

So what you are looking at is more middle class taxpayers since taxes were cut. This is what supply side economists have always said would happen. Tax cuts produce more revenue, because they produce more people with the incomes that cause people to pay taxes.

There are other factors as well -- including the effect of investment income as the middle class become less salary dependent, and more involved in investment. When the stock market bubble burst, no doubt some people went from higher brackets back down to the middle class. When they did that, they went from being upper income bracket taxpayers to being middle class taxpayers. That will reduce the percentage of the overall tax revenue stream received from the upper bracket, and increase the percentage received from the middle bracket. Others, of course, will have moved up into the middle class. It's an aggregate shift that we are looking at.

But the bottom line is that if you reduce marginal rates overall and any sector of the income scale ends up in the aggregate paying a larger percentage, then it is because there are more people in that income bracket. It isn't that the middle class are individually paying more of there income as taxes. It is that there are more middle class people.

[djohnson]

SimeyTheLimey - Great explination!

[BRussell]

Originally posted by SimeyTheLimey:
I think you need to think about those figures, because you aren't comparing apples to apples. Follow me through the steps.

Everyone's taxes went down. "Tax burden" doesn't mean how much of your income you're paying, it means what percent of the government you're paying for. The top 1% used to pay 22% of the total cost of gov't, but now they're paying 20% of it. The middle class used to pay 18.7% of the total cost of the gov't, and now they're paying 19.5% of it. What happened is that everyone's taxes went down, but the rich's taxes went down a lot more, so now they're paying a smaller percentage of the revenue that the gov't takes in than before.

Bush is still going to say, correctly, that everyone is paying less taxes. But now we're just not paying for what we spend.

[Troll]

"The really rich people figure out how to dodge taxes anyway."

George Bush on why high taxes on the rich don't work. Daily Press, 9 August 2004. Quoted in The Economist 14 - 20 Aug 2004

[BRussell]

Originally posted by Troll:
"The really rich people figure out how to dodge taxes anyway."

George Bush on why high taxes on the rich don't work. Daily Press, 9 August 2004. Quoted in The Economist 14 - 20 Aug 2004

Yeah, like elect leaders who will shift the burden from them to the middle class.

[tie]

Originally posted by SimeyTheLimey:
I think you need to think about those figures, because you aren't comparing apples to apples. Follow me through the steps.

The tax cuts reduced the marginal rates across the board. That means at all income levels, the percentage of income paid as taxes by any individual as a percentage of income must be less.

However, the board is not stationary. People can move between income brackets.

The amount of revenue derived from any particular tax bracket is taxes paid X number of people paying those taxes. That's the key to understanding those figures.

If the taxes paid per person is less, yet revenue derived from that income level is higher, then what must be happening is the number of people at that income level has increased. That is the only way the taxes paid X number of people paying equation can result in an increase in revenue for the government from that income bracket.

More people in that income bracket means fewer people paying taxes in another income bracket. This magnifies the shift in which bracket generates how much revenue.

So what you are looking at is more middle class taxpayers since taxes were cut. This is what supply side economists have always said would happen. Tax cuts produce more revenue, because they produce more people with the incomes that cause people to pay taxes.

There are other factors as well -- including the effect of investment income as the middle class become less salary dependent, and more involved in investment. When the stock market bubble burst, no doubt some people went from higher brackets back down to the middle class. When they did that, they went from being upper income bracket taxpayers to being middle class taxpayers. That will reduce the percentage of the overall tax revenue stream received from the upper bracket, and increase the percentage received from the middle bracket. Others, of course, will have moved up into the middle class. It's an aggregate shift that we are looking at.

But the bottom line is that if you reduce marginal rates overall and any sector of the income scale ends up in the aggregate paying a larger percentage, then it is because there are more people in that income bracket. It isn't that the middle class are individually paying more of there income as taxes. It is that there are more middle class people.

You're bottom line is wrong, if you think about it for a second. You're "other factors" don't affect the statement that tax burden has been shifted onto the middle class, and so are irrelevant. Do you have any numbers to support your claim that the reason the tax burden has increased is because of more people in the bracket? Even if you do, I think it will likely also be irrelevant. Since wealth and income distribution have continued to concentrate at the higher end, any decrease in the proportion of taxes paid by this group means an increased burden on everyone else.

[Krusty]

Simey, your criticism of the the data, as presented, is spot-on (as usual). The CBO is incorrectly mixing a fixed income range ($51.5k -$75k) that has a fluctuating percentage membership with a fixed percentage membership (1% or 20%) that has a fluctuating income range. Apples and Oranges .. like you say.

However, income data shows that the top 1% and top 20% in the US still came out ahead in the tax cuts, even if the CBO presented that information in mixed way. In other words, even if you do compare Apples to Apples (fixed income points to fixed income points or fixed percentage points to fixed percentage points), the results are similar: The wealthiest segments got a larger reduction in effective tax rate, the lowest incomes got the second largest reduction, and middle incomes got the least reduction.

The conclusions are stark. The effective federal tax rate of the top 1 percent of taxpayers has fallen from 33.4 percent to 26.7 percent, a 20 percent drop. In contrast, the middle 20 percent of taxpayers -- whose incomes averaged $51,500 in 2001 -- saw their tax rates drop 9.3 percent. The poorest taxpayers saw their taxes fall 16 percent.

So ... nice explanation and criticism , but the the "real" numbers still support the assertion that the burden has been shifted toward the middle and away from the top. Even some Republicans are sheepishly admitting this but dismissing the tax cuts for the wealthy as "long overdue" given the fact that Clinton had cut taxes for the poor in the 90s (via expansion of the Earned Income Credit).

[BRussell]

Krusty, I haven't seen the report yet, but I doubt you're right that they mixed percentages with fixed incomes. They were using quintiles (top 20%, middle 20%, etc.) which is what they always use, and which are obviously fixed in terms of the populations in those groups. They were simply comparing the top 20% (incomes averaging $182,700) to the middle quintile (incomes averaging $51,500). That part I quoted didn't spell that out really clearly, but the full article does a better job.

I think Simey was talking about individual effective tax rates, whereas the quote I used was talking about tax burden, i.e., share of total gov't revenue. But by virtue of the fact that they were using quintiles of the population, the middle class couldn't have increased in proportion to any other group - it was 20% of the population, period.

[SimeyTheLimey]

Originally posted by Krusty:
Simey, your criticism of the the data, as presented, is spot-on (as usual). The CBO is incorrectly mixing a fixed income range ($51.5k -$75k) that has a fluctuating percentage membership with a fixed percentage membership (1% or 20%) that has a fluctuating income range. Apples and Oranges .. like you say.

However, income data shows that the top 1% and top 20% in the US still came out ahead in the tax cuts, even if the CBO presented that information in mixed way. In other words, even if you do compare Apples to Apples (fixed income points to fixed income points or fixed percentage points to fixed percentage points), the results are similar: The wealthiest segments got a larger reduction in effective tax rate, the lowest incomes got the second largest reduction, and middle incomes got the least reduction.


So ... nice explanation and criticism , but the the "real" numbers still support the assertion that the burden has been shifted toward the middle and away from the top. Even some Republicans are sheepishly admitting this but dismissing the tax cuts for the wealthy as "long overdue" given the fact that Clinton had cut taxes for the poor in the 90s (via expansion of the Earned Income Credit).

Thanks. The problem isn't just that they are comparing apples and oranges, it's also that the premise is wrong. There is no group "burden" because nobody pays taxes as a group. All we do is pay taxes as an individual. The distribution is interesting, but irrelevant to the question of whether any middle class person individually pays more taxes.

Think of taxes as if it were income to see what I mean. If you and your neighbor each get a raise, you are both better off. But suppose your neighbor gets a $100 raise and you only get a $50 raise. Are you worse off? No. You are still better off by $50. Subjectively you might wish that you were also getting $100, but objectively you aren't poorer.

In the tax world where (as here) there was an across the board marginal tax rate decrease everyone got a tax cut. Everyone is better off. It may be that some people did better than others. But everyone is still better off.

Of course the reason people in the upper brackets did better out of a tax rate cut is because they paid more in the first place. A small percentage decrease in taxes of a large amount of money is likely to be more in cash than a small percentage cut of a smaller amount. The effect in dollars is magnified by the amount of income involved. Plus, there are just a larger number of middle class people than upper class anyway.

In addition, below the middle class lots of people were effectively removed from paying income tax altogether as a result of this tax cut. So the middle class "benefits" less than both people earning more and people earning less. But that's only a statistical artifact. Objectively, the middle class is still better off than it was before the tax cut.

[spacefreak]

The top 20% of income earners pay 80% of the tax burden. Of course they will benefit more in terms of dollars from top-to-bottom tax cuts.

This is like when the left was bitching about the how the very poor in the nation didn't get a $250 refund like everyone else, when the only answer was that they weren't like everyone else - they didn't pay any taxes in the first place.

[MacNStein]

Originally posted by Troll:
"The really rich people figure out how to dodge taxes anyway."

George Bush on why high taxes on the rich don't work. Daily Press, 9 August 2004. Quoted in The Economist 14 - 20 Aug 2004

they wouldn't if they had to pay a flat federal sales tax... *ahem*

[BlackGriffen]

Originally posted by spacefreak:
The top 20% of income earners pay 80% of the tax burden. Of course they will benefit more in terms of dollars from top-to-bottom tax cuts.

This is like when the left was bitching about the how the very poor in the nation didn't get a $250 refund like everyone else, when the only answer was that they weren't like everyone else - they didn't pay any taxes in the first place.

Did you even try to read the first post? The CBO numbers clearly stated that the top 20% pay 63.5% (down from 64.4%) of all taxes.

That's still a vast majority, but not anywhere near the numbers you pulled out of your reasty butt.

What's more important, though, is how much they pay relative to how much they earn. If the top 20% earns 60% of the income, then they'd be paying 60% of the taxes in a flat tax system. In other words, what's important is the effective tax rate after they've taken advantage of loopholes (though the same rate with no loopholes would be better since it would save money in terms of accounting), compared to the effective tax rate of the other brackets.

BlackGriffen

[spacefreak]

Originally posted by BlackGriffen:
Did you even try to read the first post? The CBO numbers clearly stated that the top 20% pay 63.5% (down from 64.4%) of all taxes.

That's still a vast majority, but not anywhere near the numbers you pulled out of your reasty butt.

That's where you and the above-mentioned article are wrong, See, I actually read the damn report.

PDF - page 12...table on the bottom... the highest quintile (20%) of income tax payers paid 78.4% of the federal income tax liabilities. Heck, even the top 10% of taxpayers cover the 63.5% of federal income tax burden.

This sided analysis referenced above goes for the "total federal taxes" shot and conveniently avoids the individual income tax analysis.

I hope nobody is suggesting that the top 20% pay for the bottom 80%'s social security and unemployment insurance, or cover their phone, cable, and utility-based federal taxes.

Should the top 20% also buy us all cars and homes?

[SimeyTheLimey]

Thanks for posting the actual link. It confirms what I suspected. The quintiles are based on 2001 incomes.

These kinds of explanations for what the data actually represents are important. Without that the data is open to misleading interpretations such as the absurd idea that an across the board tax cut has increased anyone's taxes when in fact everyone's taxes went down. But the CBO explains how they present the information and what it represents.

The CBO also includes an explanation of all the types of taxes excluded from the report. Excluded are taxes that only the wealthy pay -- like gift tax, estate tax, and tax credits that only the poor get like the earned income credit. They also present data both with and without the Alternative Minimum Tax, which the poor and middle class don't pay except that income bracket creep is forcing more and more middle class people into a tax system that wasn't designed for them.

In other words, the report is fine for what it is, which isn't much, and isn't simple. It's the spin that is misleading. The problem is that most people will only read the spin, not the report.

[villalobos]

Originally posted by SimeyTheLimey:
Objectively, the middle class is still better off than it was before the tax cut.

On a short term basis probably, because my paycheck is bigger (only marginally so though). On a longer term basis, money will still be needed for services I enjoy, and States and Counties will have to increase taxes to compensate for lower federal funding. All that so that Bush can implement an across the board tax cut which includes these people who really do not need a tax cut to start with. This is very short sighted. Somehow I am not surprised.

[BRussell]

Originally posted by SimeyTheLimey:
Thanks for posting the actual link. It confirms what I suspected. The quintiles are based on 2001 incomes.

These kinds of explanations for what the data actually represents are important. Without that the data is open to misleading interpretations such as the absurd idea that an across the board tax cut has increased anyone's taxes when in fact everyone's taxes went down. But the CBO explains how they present the information and what it represents.

The CBO also includes an explanation of all the types of taxes excluded from the report. Excluded are taxes that only the wealthy pay -- like gift tax, estate tax, and tax credits that only the poor get like the earned income credit. They also present data both with and without the Alternative Minimum Tax, which the poor and middle class don't pay except that income bracket creep is forcing more and more middle class people into a tax system that wasn't designed for them.

In other words, the report is fine for what it is, which isn't much, and isn't simple. It's the spin that is misleading. The problem is that most people will only read the spin, not the report.

Sure, we could cut everyone's taxes by 50%, and then say "see we're all better off." Somehow Republicans think taxes are independent of spending. It's like they can just set taxes lower because they're nice, as if it has no relationship to the budget, or anything else except their benevolent nature. It would be different if Repubs cut gov't, but on average they increase gov't spending more than Democrats, even if you exclude military spending. So what happens is that these tax cuts increase gov't spending, because more money has to go to that slice of the pie devoted to financing the debt. It's directly analogous to me buying stuff on credit cards and telling my wife I got a raise. In fact, the opposite is true - we're going to owe more money than before.

That's why tax burden numbers are important. They tell us about the underlying philosophy of who should pay for government. The WSJ wrote an editorial about the poor and middle class being "lucky duckies" because they didn't have to pay as much federal income tax as the rich. First off, that plays the same trick that spacefreak plays, by ignoring tons of taxes like payroll taxes that the poor and middle class do pay. But more importantly, it shows their strategy - they want the middle class to pay for a higher share of the gov't.

And apart from the philosophical position of who pays for gov't, there's the simple empirical fact of who has money. The WSJ and others wring their hands about the rich paying so much in taxes, but (aside from their trick of excluding lots of taxes) what they don't say is that the reason for this is the massive increase in wealth among the very wealthy. Here's a graph showing the increase in income over the last 20 years or so, from this article.



This is why the rich are paying more taxes - their wealth has increased so much faster than the poor and middle class. Here's another interesting number from that article: In 1979, the top 1% had 8% of the nation's income. In 2000, they had double that - 16%. The bottom 40% had 19% of the nation's income in 1979, but by 2000 that was down to 15%. And that's income, rather than wealth, which I bet would show a much greater disparity. And this isn't a partisan complaint, because much of this occurred during the Clinton years as well as the Reagan years.

So Bush took a troubling trend and exacerbated it. That makes no sense to me.

Also Simey can you prove this statement to me:

The CBO also includes an explanation of all the types of taxes excluded from the report. Excluded are taxes that only the wealthy pay -- like gift tax, estate tax, and tax credits that only the poor get like the earned income credit.

From what I could tell, estate taxes are excluded, but the EITC is not excluded. The few excluded taxes did not appear to favor the wealthy in such a way that it would bias the data.

[Spliffdaddy]

Originally posted by spacefreak:
That's where you and the above-mentioned article are wrong, See, I actually read the damn report.

PDF - page 12...table on the bottom... the highest quintile (20%) of income tax payers paid 78.4% of the federal income tax liabilities. Heck, even the top 10% of taxpayers cover the 63.5% of federal income tax burden.

This sided analysis referenced above goes for the "total federal taxes" shot and conveniently avoids the individual income tax analysis.

I hope nobody is suggesting that the top 20% pay for the bottom 80%'s social security and unemployment insurance, or cover their phone, cable, and utility-based federal taxes.

Should the top 20% also buy us all cars and homes?

heh. Seems the "numbers you pulled out of your reasty butt" were accurate.

I think an apology is in order.

[spacefreak]

Originally posted by Spliffdaddy:
heh. Seems the "numbers you pulled out of your reasty butt" were accurate.

I think an apology is in order.

No apology necessary - I occasionally get numbers worng as well.

The problem I have is with the fundamental thinking. I don't think that my one friend (out of 10 friends) who makes a buttload of money (and ha sworked 70 hours/week for the past decade) should have to pay for everything that the other 9 want or want to consume.

[SimeyTheLimey]

Originally posted by BRussell:
Somehow Republicans think taxes are independent of spending. It's like they can just set taxes lower because they're nice, as if it has no relationship to the budget, or anything else except their benevolent nature.

And Democrats forget their Keynesian economics and that an economy has more more complex dynamic mechanisms than balancing a checkbook. Taxes always affect growth negatively. Tax cuts are stimulative in exactly the same way as direct government investment. Reducing the amount of money taken from the economy in income taxes produces more economic activity in the economy, and more economic activity is activity that is taxed. The net tax effect can, and often does outweigh the revenue forgone through lowered rates.

Balanced budgets aren't always a good thing. It's interesting that people want to always compare government borrowing to credit card debt. Never to forms of productive private debt like business expansion borrowing, mortgage debt, college tuition debt. Much of the economy would collapse if everyone insisted on only spending the money they have now, and in not making intelligent use of debt. The intelligent application of borrowing is one of the hallmarks of a sophisticated economy. Debt is the way you leverage the time value of money to make more productive uses of money than hoarding and delayed spending.

Governments are just like individuals and businesses in that they also have intelligent uses for debt. Debt to keep a recession from deepening, and an economy from collapsing. Debt to even out the ups and downs of the business economy. Debt to fight a necessary war.

I'm all for keeping the government budget reasonably balanced by cutting the federal government budget. But it has to be done intelligently. Cutting stimulative investment in a recession is stupid. You will tank the economy. And a tanked economy won't generate tax revenue. A balanced budget isn't something to be worshiped. The reason the economy produced a surplus in the 90s was because the economy was booming. That's the way to do it, not through class envy and retributional tax increases. And when we get to that boom point again, that's the time to save the surplus, not spend it.

[CreepingDeth]

Middle class end around $100,000. The top 50% pay 96.01% of the taxes. What shift? It's income tax, so it unfairly distributes the **** onto anyone making $150,000.

[BRussell]

Originally posted by BRussell:
You can bet that this is going to play a role in the campaign. If Kerry can say that Bush has raised the middle class's tax burden, that's pretty devastating.

So Kerry has an ad out now:

"Here's the truth about taxes. After nearly 4 years under George Bush, the middle class is paying a bigger share of america's tax burden and the wealthiest are paying less."

[MacNStein]

Originally posted by BRussell:
So Kerry has an ad out now:

"Here's the truth about taxes. After nearly 4 years under George Bush, the middle class is paying a bigger share of america's tax burden and the wealthiest are paying less."

of which comprise the majority of small business owners (the wealthiest), who employ a large portion of the middle class.

But, it's too difficult to explain such common sense issues to a liberal. So... Meh. *shrug*

[RAILhead]

Originally posted by Troll:
"The really rich people figure out how to dodge taxes anyway."

George Bush on why high taxes on the rich don't work. Daily Press, 9 August 2004. Quoted in The Economist 14 - 20 Aug 2004

You're right, and your guys do it best. Here's just two random examples:

Gerard Jackson
BrookesNews.Com
Monday 19 July 2004

Teresa Heinz Kerry likes taxes so much she thinks the little people should pay even more. She doesn't put it like that, of course. But what is one to think when the "sexy" Teresa Heinz Kerry supports increased taxes for others while drastically slashing her own taxes.

Several months ago I was discussing Teresa Heinz Kerry and her fortune with a friend who had personal experience in that particular field. He reckoned that her assets were yielding an annual average return of at least 8 per cent. Well bless my soul, her latest financial reports reveal she is now worth from $1 billion to $3.2 billion.

This means that Mrs Teresa Heinz Kerry has, at the very least, doubled her wealth since 1994, amply confirming my friend's assessment of the return on her capital. Assuming assets of $1 billion, the lowest estimate of her fortune, then an 8 per cent return would yield a cool $80 million for the year.

Yet Teresa Heinz Kerry put her hand on her heart and declared with the kind of sincerity that only a bleeding heart Democrat has the nerve to muster that she only earned $5.1 million for 2003. Of this $5.1 million she paid $750,000 in taxes. This is an effective income tax rate of 14.76 per cent — or is it?

If her actual income for that year was $80 million then her effective tax rate plummets to a ludicrous 0.938 per cent! But is this really possible? It sure as hell is.

The vast majority of Americans are unaware that the Byzantine tax code with its labyrinth of loopholes has made income taxes for the super rich like Teresa Heinz Kerry largely optional.

The two major tax loopholes that Teresa Heinz Kerry could exploit to drastically reduce her taxable income are trusts and 'charities'.

Income can be sheltered in trusts where it remains untouched by taxation until it is spent. In the meantime the value of the trusts continues to rise. 'Charities' are also a favourite dodge of the leftist elite.

When most people think of charities they imagine orphanages, school grants, medical foundations, etc. However, in the leftist world of the likes of Teresa Heinz Kerry leftwing political organisations also count as charities. For example, using the Heinz Family Philanthropies and the infamous Tides Foundation, she has been able to channel tax-free funds into anti-American, anti-Israel and even pro-terrorist groups. (One of the beneficiaries of her largess, the Ruckus Society, is planning to disrupt the GOP's New York convention).

That Teresa Heinz Kerry has deliberately circumvented the law in the name of charity in order to finance these vicious groups is in itself an immoral act, and one that bears investigating by the IRS.

However, what we are dealing with here is her attitude toward paying taxes. I am not going to argue that by minimising her taxes she behaved immorally. What is immoral about her actions is her support for higher taxes for the little people while she drastically reduces her own tax liabilities.

Critics will claim that her tax shenanigans have nothing to do with her husband. Balderdash. She is not only helping to fund his campaign she also shares his views on taxes, especially when it comes to not paying them.

Massachusetts residents are given a limited choice every year on how much to pay in income taxes. The state's top rate was 5.8 per cent before being lowered to 5.3 per cent. Since 2001 residents have been able to choose between the old rate and the lower one. John Kerry chose the low rate.

Additionally, it has been reported that last year John Kerry proposed tax legislation that created a loophole specifically designed to benefit Heinz Foods Co. and therefore his wife.

Yet Teresa Heinz Kerry and her hubby have got the nerve to categorise those who reach the $200,000 earnings bracket as rich. So rich, in fact, that Kerry would raise their taxes. Now consider the morality of a woman who has used loopholes to enjoy an effective tax rate of 14.76 per cent, or maybe even 0.938 per cent, rooting for a 30 per or more effective tax rate for people whose net worth is a tiny fraction of one per cent of her own fortune.

Bear in mind that these potential victims of political spite are also denied the tax loopholes that this woman has shrewdly exploited, despite the fact that it takes them a year to earn what her investments probably yield in a day.

The taxes that Teresa Heinz Kerry supports are taxes on capital, which amounts to taxes on economic growth. Without growth high-paying jobs will gradually disappear, social mobility will shrink and poverty will spread. What Teresa Heinz Kerry is attempting to do is strike at Americans' aspirations and future prosperity.

Any wonder I now believe that wealthy persons should not be allowed any say in raising taxes unless they themselves are prepared to reduce their own standard of living to the same level as those upon whom they propose to increase the tax burden.

Theresa Teresa Kerry is not alone in her hypocrisy: Teddy Kennedy, Corzine, Frank Lautenberg, etc., are right up there with her. Theresa reminds me of the moronic and filthy rich Edwin Janss, founder of the leftwing Janss Foundation, who said that "when the revolution came, the houses of his neighbours would be people's palaces". Naturally, his house would be the exception.

Link

Heinz Kerry's Wealth Glimpsed
Release Stops Short of Full Disclosure; GOP Seeks Broader Look

By Jonathan Weisman
Washington Post Staff Writer
Wednesday, May 12, 2004; Page A06

Under pressure from Republicans, Teresa Heinz Kerry provided a glimpse of her considerable wealth yesterday, disclosing a 2003 income of $5.1 million, on which she has paid at least $587,000 in federal income taxes so far.

The wife of likely Democratic presidential nominee John F. Kerry, Heinz Kerry inherited a $500 million fortune when her first husband, Sen. H. John Heinz III (R-Pa.), died in a plane crash. Last month, Sen. Kerry (Mass.) released his tax return, which he files separately from his wife, disclosing a $395,000 income that Republicans said belied the family's vast wealth.

The Kerry campaign responded yesterday with a news release that stopped short of full disclosure. The campaign said Heinz Kerry had received an extension of the deadline for filing her 2003 federal income tax return, and would release the first two pages when it is ready in October.

"Today I am making additional public disclosures by releasing my personal tax information," she said in a statement. "John and I believe this strikes a balance between my family's privacy and the media's request for more financial information."

Heinz Kerry reported a taxable income of $2.3 million, primarily from dividends and interest on savings and investments. She earned an additional $2.8 million from tax-exempt bonds. So far, she has paid $587,000 in estimated federal taxes, an effective tax rate of 11.5 percent, compared with the top federal income tax rate of 35 percent.

In April, she paid an additional $280,000 for her 2003 and 2004 federal tax liabilities. Kerry campaign spokesman Michael Meehan said he did not know how much of that payment was for 2003, so he could not say what her total tax liability will be.

In addition, Heinz Kerry disclosed that she distributed more than $4.6 million in charitable contributions through the Heinz Family Foundation, which she and her late husband established.

The disclosure is not likely to quell Republican calls for a broader look at Heinz Kerry's finances. Christine Iverson, a spokeswoman for the Republican National Committee, said the GOP will wait to see what comes out in October.

"On many important occasions, the Kerry campaign has said one thing and done another," she said. "We'll see if this is another one of those occasions."

But Meehan said Heinz Kerry has revealed more than can be expected of a private citizen with no designs on public office. George W. Bush also released a summary of his 1999 income and taxes when he was running for president, followed by a truncated tax release in October 2000, he said.

"She's not a candidate for any office," he said. "He was running for president."

Even from the information released, it is clear that Heinz Kerry was a major benefactor of the tax cut President Bush pushed through last year, which effectively lowered the tax rate on dividends -- her primary source of income -- from 38.6 percent to 15 percent.

Heinz Kerry's effective tax rate is similar to Vice President Cheney's. He and his wife, Lynne V. Cheney, reported an income of $1.9 million in taxable and nontaxable income for 2003 and paid $253,067 in taxes, an effective tax rate of 13.3 percent.

Link

Google is your friend.
Maury

[BRussell]

But Teresa was a Republican when she was doing those things.

[finboy]

Originally posted by SimeyTheLimey:
like the earned income credit.

Or, the "negative tax."

[tie]

Originally posted by RAILhead:
You're right, and your guys do it best. Here's just two random examples:

Except there's not really any information in those examples (that I could find). The first one is largely speculation, and claims that liberal charities shouldn't count. The second one says that Heinz Kerry's tax rate is like Cheney's, and explains a large part of the income as coming from tax-exempt bonds.

Neither article provides any support for Bush's argument that we shouldn't tax the rich because they'll just find ways around the taxes.

[MATTRESS]

Originally posted by BRussell:
You can bet that this is going to play a role in the campaign. If Kerry can say that Bush has raised the middle class's tax burden, that's pretty devastating.

Isn't the middle class the largest one and the largest burden on the government?

Let's punish success!

[Dakar]

Originally posted by BRussell:
Here's an article in the Washington Post: Tax Burden Shifts to the Middle.


You can bet that this is going to play a role in the campaign. If Kerry can say that Bush has raised the middle class's tax burden, that's pretty devastating.

Personally, I don't think this'll will mean anything. Tax talk has been cheap and over-manipulated, and ever since Gore and fuzzy-math, I think the nation has been turned off by the talk of numbers and figures regarding incomes, taxes, and percentages.

[RAILhead]

Originally posted by tie:
Except there's not really any information in those examples (that I could find).

What's your tax bracket?

Maury

[Krusty]

Originally posted by MacNStein:
of which comprise the majority of small business owners (the wealthiest), who employ a large portion of the middle class.

But, it's too difficult to explain such common sense issues to a liberal. So... Meh. *shrug*

Any actual stats to back up your claim, or is this just anecdotal stuff ? .... sorry "common sense".

Also .. very simple to look at historical tax rates at at bls.gov, irs.gov, and the US treasury. Corporate rates and personal tax rates on the wealthy are the lowest they've been in 60 years. Under Clinton, they were the 2nd lowest in 60 years. Kerry is talking about bumping back up to (the already extremely low) Clinton-era rates. NOT the 50+ % corporate and 70+% personal rates on the wealthiest that prevailed for 4 decades prior to the mid eighties. Your post implies that the Kerry rates are unduly high and will somehow dampen hiring. The outrageous hiring spree in the 90s would say otherwise. The great hiring in the 40s, 50s, and 60s when the rates were MUCH MUCH higher makes your insinuation even less convincing.

Think about it ... the higher the tax rates, the more sense hiring, raises, and new investment makes ... every dollar spent avoids taxation, so it becomes a bigger incentive to spend than to hoard. Prohibitively high tax rates can be a disincentive to do business but the Clinton-era rates that Kerry wants to return to clearly aren't high enough to be such a disincentive.

Take an extreme example:
If I made 250k/yr profit as a small businessman and tax rates spiked to 70% over 200k, I'd be highly inclined to spend the 50k above 200k on something beneficial to my business (raises ? a new hire ? new equipment ?) rather than take it as profit and piss 70% of if away in taxes. If anything, extremely high taxes might cause a huge boost in hiring as companies try to find value-adding ways to spend their money rather than letting it be taxed.

Fortunately, we're not talking about the extreme example. We're talking about a very mild raise back to a rate at which small businesses were clearly able to thrive..

[RAILhead]

Originally posted by Krusty:
We're talking about a very mild raise back to a rate at which small businesses were clearly able to thrive..

That comment alone makes it plainly visible you have no idea what it's like in the Real World™ when you are responsible for hundreds of employees, seven days a week.

Maury

[Krusty]

Originally posted by RAILhead:
That comment alone makes it plainly visible you have no idea what it's like in the Real World™ when you are responsible for hundreds of employees, seven days a week.

Maury

And your comment is, as usual, unsupported by any actual facts, figures, data, or even anecdotal evidence. The economy was better in the 90s. Businesses, on the whole, hired more in the 90s. Please connect the dots for us, RailHead. How have the different tax rates since 2001 made it easier for you to be responsible for hundreds of employees, 7 days a week ?? **


**note: having "hundreds of employees" definitely takes you out of the category of "small business" in the first place. If your company is that big, you should seriously consider incorporating and paying corporate tax rates which are... oh yeah, unchanged since 1993.

[constrictor]

Originally posted by Krusty:
And your comment is, as usual, unsupported by any actual facts, figures, data, or even anecdotal evidence. The economy was better in the 90s. Businesses, on the whole, hired more in the 90s. Please connect the dots for us, RailHead. How have the different tax rates since 2001 made it easier for you to be responsible for hundreds of employees, 7 days a week ?? **


**note: having "hundreds of employees" definitely takes you out of the category of "small business" in the first place. If your company is that big, you should seriously consider incorporating and paying corporate tax rates which are... oh yeah, unchanged since 1993.

You'll have to excuse RAILHead. Authoring so many crap fonts makes you go craaaaaazy.

[MacNStein]

Originally posted by constrictor:
You'll have to excuse RAILHead. Authoring so many crap fonts makes you go craaaaaazy.

Wow. You Dems are becoming nasty little buggers, aren't ya? Not doing much for your cause with that silliness.

[RAILhead]

Originally posted by Krusty:
And your comment is, as usual, unsupported by any actual facts, figures, data, or even anecdotal evidence. The economy was better in the 90s. Businesses, on the whole, hired more in the 90s. Please connect the dots for us, RailHead. How have the different tax rates since 2001 made it easier for you to be responsible for hundreds of employees, 7 days a week ?? **


**note: having "hundreds of employees" definitely takes you out of the category of "small business" in the first place. If your company is that big, you should seriously consider incorporating and paying corporate tax rates which are... oh yeah, unchanged since 1993.

Wrong, grasshopper. I'm not about to divulge the info in our books, but here are some comments about how Bush's tax cut helped us...

1) Our company is a limited partnership and we pay our taxes under that specification. And yes, we are considered a small business by the Feds -- I think we'd know.

2) As I've said before, the tax cuts Bush implemented allowed us to upgrade our benefit packages for our field employees, greatly reducing their costs.

3) Less is being held out of everyone's -- EVERYONE'S -- paycheck so our rate of hire increased and our turn over decreased.

3) We were able to give more employees bonuses than we had in previous years.

4) We were able to give employees larger bonuses than we had in previous years.

Those are just a few things off the top of my head.
Maury

[BRussell]

Originally posted by MacNStein:
of which comprise the majority of small business owners (the wealthiest), who employ a large portion of the middle class.

But, it's too difficult to explain such common sense issues to a liberal. So... Meh. *shrug*

You're right, I couldn't possibly understand such common sense issues. For example, I foolishly believe that Kerry has proposed to cut taxes on small businesses. I'm also stupid enough to believe that referring to the majority of "small business owners" is different from the small businesses themselves. Small business owners themselves might be rich and some of them may have their taxes raised, but Kerry has proposed tax cuts to that part of their income responsible for employing individuals in their small business. That was the point of Kerry's comment about Bush making $84 from lumber. Bush's taxes would be raised, but it would effect absolutely no small business employees, despite the fact that he would fit into your category of "small business owners." But of course that would all be over my silly liberal head and only conservatives could understand such tough concepts.

So "meh" back at ya.

[SimeyTheLimey]

Originally posted by BRussell:
You're right, I couldn't possibly understand such common sense issues. For example, I foolishly believe that Kerry has proposed to cut taxes on small businesses.

I looked through that campaign site but it doesn't address the question. Do you understand that many small businesses are organized as pass through entities? Pass through entities pay their taxes in the form of individual income taxes. They don't report separately.

If a small business pays income tax as a pass through entity -- that is, the owners of a close corporation organized under subchapter S, or a partnership, or a Limited Liability Company, or sole proprietorship -- and the individual tax rates are increased, how does that lower the small businesses' tax rates? Surely increasing the income tax rates that the small business has to pay increases its income tax burden?

That site seemed to promise some limited credits and deductions that might help out specific businesses that do specific things. That's just more clutter and loopholes in the tax code. It doesn't alter the fact that as a general proposition, Kerry is promising to increase income taxes actually paid by many small businesses and self-employed people.

[MacNStein]

Originally posted by BRussell:
You're right, I couldn't possibly understand such common sense issues. For example, I foolishly believe that Kerry has proposed to cut taxes on small businesses. I'm also stupid enough to believe that referring to the majority of "small business owners" is different from the small businesses themselves. Small business owners themselves might be rich and some of them may have their taxes raised, but Kerry has proposed tax cuts to that part of their income responsible for employing individuals in their small business. That was the point of Kerry's comment about Bush making $84 from lumber. Bush's taxes would be raised, but it would effect absolutely no small business employees, despite the fact that he would fit into your category of "small business owners." But of course that would all be over my silly liberal head and only conservatives could understand such tough concepts.

So "meh" back at ya.

So, Kerry says he's going to cut taxes for small businesses but stick it to the upper class? Doesn't surprise me that he still doesn't realize that those are one in the same. I'm not talking about corporations here, I'm talking about sole proprietorships and partnerships, what they make IS their bottom line. Their income is what they use to pay their employees... you can't cut one without hurting the other. I've seen it happen far too often.

Nice try though.

[BRussell]

Originally posted by SimeyTheLimey:
If a small business pays income tax as a pass through entity -- that is, the owners of a close corporation organized under subchapter S, or a partnership, or a Limited Liability Company, or sole proprietorship -- and the individual tax rates are increased, how does that lower the small businesses' tax rates? Surely increasing the income tax rates that the small business has to pay increases its income tax burden?

Sure, if a small business is in the top bracket, and that bracket is raised, their taxes are going to be higher (assuming that Kerry's other tax cuts targeted at small businesses don't make up the difference). The question is, how many small business are in that top bracket. This report suggests that it's not many. And again, let's distinguish between business themselves and people reporting income from small businesses. That's how Bush gets his "900,000" number that he will undoubtedly use tonight to argue that Kerry's tax increase will hit small businesses. If you want to play that game, then you have to include the fact that many small business owners are in lower brackets - people for which Kerry has proposed tax cuts. Bush leaves them out.

That site seemed to promise some limited credits and deductions that might help out specific businesses that do specific things. That's just more clutter and loopholes in the tax code. It doesn't alter the fact that as a general proposition, Kerry is promising to increase income taxes actually paid by many small businesses and self-employed people.

I don't disagree that lots of loopholes is probably not a good idea. But it doesn't change the fact that he has several tax cuts targeted at small businesses. I haven't seen an analysis of how many small businesses would get tax cuts vs. increases under Kerry's proposals, but I would bet many more would get net tax cuts than tax increases.

[edit - I found this link which a liberal blog says proves some of the points I make above, but I honestly can't make much sense of it.

[BRussell]

Originally posted by MacNStein:
So, Kerry says he's going to cut taxes for small businesses but stick it to the upper class? Doesn't surprise me that he still doesn't realize that those are one in the same. I'm not talking about corporations here, I'm talking about sole proprietorships and partnerships, what they make IS their bottom line. Their income is what they use to pay their employees... you can't cut one without hurting the other. I've seen it happen far too often.

Nice try though.

They're not necessarily the same. Many rich people may have small business income but have no involvement whatsoever in providing jobs (like Bush's $84 income from a small business involved in lumber), and most actual small businesses are not in the upper tax bracket. It still comes down to the basic question of the distribution of taxes. Bush's tax cuts have unnecessarily favored the wealthy who IMO didn't need it, and the result is a shift in the burden of who pays for government. And of course Bush has dramatically increased government spending - domestic, discretionary, however you want to count it - and he has done so more than any recent president, lineral or conservative. So we have huge and increasing deficits. But I'm just a liberal so I don't understand that deficits don't matter.

[Chinasaur]

Only Bush is delusional enough to think you can cut taxes and fund the multi-hundred billion dollar giveaway to GOP donors (aka The Iraq War) and balance the budget...let alone have a surplus like Clinton would have had.

That's what you get for being somebody who lied about his drunk driving arrest/conviction i gues..the brain cells get scrambled.

[BRussell]

Here's a source that confirms what I was saying about individuals with small business income vs. small businesses themselves.

Bush said Kerry's tax-cut rollback would raise taxes on 900,000 small businesses. This is misleading. Under Bush's definition, a small business is any taxpayer who reports some income from investments, partnerships or trusts. By that definition, every partner at a huge accounting firm or at the largest law firm would represent a small business.

Although Bush expressed surprise at Kerry's assertion that the president earned $84 from his investment in a timber company and, thus, qualified as a small business -- "I own a timber company? That's news to me. Need some wood?" -- the Web site www.factcheck.org backed up Kerry's assertion.

"President Bush himself would have qualified as a 'small business owner' under the Republican definition, based on his 2001 federal income tax returns," the Web site's analysis said. "He reported $84 of business income from his part ownership of a timber-growing enterprise. However, 99.99% of Bush's total income came from other sources that year."

[edit]
OK, here's an even better analysis from Cheney's favorite website factcheck.org.

Bush's own Treasury Department estimates that a total of 33 million "small businesses"_benefited_from the Bush tax cuts on individuals, but most of them are in lower tax brackets._ So -- even accepting the_900,000 figure used in the Bush ad --_that leaves_more than 32 million "small businesses" not affected by_an increase in the top rates on individuals.

It should also be noted that Kerry is proposing several tax cuts specifically targeted to small businesses, including a refundable tax credit aimed at reducing the cost of health-care benefits, eliminating capital-gains taxes for_"long-term investments" held for five or more years in small businesses, and a "new jobs tax credit" for small businesses that add new jobs in 2005 and 2006. What Kerry is proposing for small business can be found on his_website.

[BlackGriffen]

Originally posted by Chinasaur:
Only Bush is delusional enough to think you can cut taxes and fund the multi-hundred billion dollar giveaway to GOP donors (aka The Iraq War) and balance the budget...let alone have a surplus like Clinton would have had.

That's what you get for being somebody who lied about his drunk driving arrest/conviction i gues..the brain cells get scrambled.

It's not delusion, it's deliberate. Ending social programs is the wet dream of extremists like Bush adviser Grover Norquist, and they've figured out a way to do it. It would be political suicide to just cut them, so their intention is to back the government into a fiscal corner so that it has to either cut programs, or face an economic meltdown in which the programs would have to be cut anyway.

That's one theory, anyway.

BlackGriffen

[MATTRESS]

Could we possibly just eliminate all these loopholes, credits, etc. and just have a flat tax? Then we'll see where the chips really fall.

If you give one person a tax credit then someone else ends up getting stuck with the bill.

[MATTRESS]

Originally posted by Chinasaur:
Only Bush is delusional enough to think you can cut taxes and fund the multi-hundred billion dollar giveaway to GOP donors (aka The Iraq War) and balance the budget...let alone have a surplus like Clinton would have had.

That's what you get for being somebody who lied about his drunk driving arrest/conviction i gues..the brain cells get scrambled.

The larger problem is out of control entitlement spending. The Iraq war is a drop in the bucket compared to the growing entitlement nightmare which is estimated to reach 20% of the nation's total economic output if not brought under control.

Nobody is willing to drop entitlements so bascially we're ****ed no thanks to the prior generations sticking us with their bill.

[Krusty]

Originally posted by RAILhead:
Wrong, grasshopper. I'm not about to divulge the info in our books, but here are some comments about how Bush's tax cut helped us...
<SNIP>

Hey .... OK ... at least you're giving actual reasons now. Obviously, I know nothing about your business ... all I can say is that your company seems to have used its tax cuts in more beneficent ways than other companies during the same time period.

Originally posted by MATTRESS:

Could we possibly just eliminate all these loopholes, credits, etc. and just have a flat tax? Then we'll see where the chips really fall.

If you give one person a tax credit then someone else ends up getting stuck with the bill.

That's an interesting idea. However, if you wanna see where the chips fall you can see that already by the irs's info on revenues by source:
In the 40s corporate and personal revenues were approximately equal portions of total tax revenue
By the 60s, it was about 2 to 1 -- personal taxes accounted for twice as much revenue as corporate taxes.
Today (and in the 90s under Clinton as well, to be fair), the ratio is 5:1 personal to corporate.

The vast majority of the tax burden is carried by individuals these days.

Re: Simey's point about pass-thru "S" corporations.
Isn't this exactly the stink that Cheney was raising about Edwards income tax filings when he was a lawyer ? Aren't "S" corporations specifically designed to interrupt pass-thru by allowing a small business owner to declare a personal salary that is much lower than actual profits and allow the rest of it to be declared "capital gains" on which taxes are levied at the puny rates of 15% or 5%. ? Please correct me if I'm wrong (and I may be), but isn't the whole purpose of pass-thru "S" corporations to allow a person who makes, say, a million dollars to declare $100k as "salary" on which normal personal rates apply but then only pay 15% (or less) on the other 900k ... effectively lowering this person's overall tax rate to a level lower than a middle income wage earner would pay ?

[SimeyTheLimey]

Originally posted by Krusty:
Re: Simey's point about pass-thru "S" corporations.
Isn't this exactly the stink that Cheney was raising about Edwards income tax filings when he was a lawyer ? Aren't "S" corporations specifically designed to interrupt pass-thru by allowing a small business owner to declare a personal salary that is much lower than actual profits and allow the rest of it to be declared "capital gains" on which taxes are levied at the puny rates of 15% or 5%. ? Please correct me if I'm wrong (and I may be), but isn't the whole purpose of pass-thru "S" corporations to allow a person who makes, say, a million dollars to declare $100k as "salary" on which normal personal rates apply but then only pay 15% (or less) on the other 900k ... effectively lowering this person's overall tax rate to a level lower than a middle income wage earner would pay ?

I haven't checked the regs but there are dollar and firm size limits for subchapter S qualification. I am not sure if a person making a million could qualify for Subchapter S.

The purpose of subchapter S is twofold. First, and most importantly, it is designed to be simple to operate. A subchapter S corporation is taxed exactly like an unincorporated sole proprietorship or partnership. All net income or net losses are reported directly on the shareholder(s) personal income tax forms. That's much easier than filing a corporate return as a C corporation must do and a separate individual income return. It also reflects better the reality that small closely held corporations tend to pay their owners the profits rather than fixed salaries.

The second idea is to nevertheless give the owner some protection from personal liability for the corporation's losses similar to the default C corporation. As I am sure you know, the basic difference between a sole proprietorship and a corporation is the corporation has separate personhood and therefore the owner isn't generally liable personally for the corporation's debts and liabilities. There are exceptions and gray areas (like a one man show), but that's the basic idea. The purpose is to encourage entrepreneurs -- especially small entrepreneours and family businesses by allowing them to start busnesses without risking family ruin.

[Krusty]

Originally posted by SimeyTheLimey:
<Thanks for the post>

So, I guess I don't understand fully then. Does an "S" corp allow separate categorization of income (personal @ personal rates and CG @ CG rates) or no ? In other words, is limited liability the sole advantange ?? I understand where you say "most" filers treat the full amount of profit as equivalent to personal salary .. but it that a requirement or just common practice ??

[SimeyTheLimey]

Originally posted by Krusty:
So, I guess I don't understand fully then. Does an "S" corp allow separate categorization of income (personal @ personal rates and CG @ CG rates) or no ? In other words, is limited liability the sole advantange ?? I understand where you say "most" filers treat the full amount of profit as equivalent to personal salary .. but it that a requirement or just common practice ??

Bear in mind I am not a tax lawyer. I have taken income tax and I have taken corporatons, but neither recently. And I am not about to research this separately.

As far as I know, capital gains rates are the same regardless of how a business is organized. I also don't think how you organize would change whether income is categorized as ordinary or capital gains.

Maybe you are thinking about this: If a corporation is taxed at the corporate level, then the corporation would pay ordinary income tax on income classified as ordinary, but capital gains on any income classified as capital; but any income paid as salary to the owner would be ordinary income to the owner on his personal return. On the other hand, if the income is pass through, the corporation would pay no taxes. The owner (or owners) would pay taxes on the corporation's earnings as ordinary income tax on income classified as ordinary income, but as capital gains on income classified as capital gains.

There are three reasons I can think of why I don't think this is in any way the reason for Subchapter-S and why I don't think that people choose Subchapter-S for this reason. First, Subchapter-S has been an option for small businesses who qualify much longer than the recent tax cut. The capital gains rate used to be more nearly similar to the upper tax brackets. So there was no significant potential for tax savings through changing the way a corporation is classified.

Second, Subchapter-S usually reduces the overall tax rate primarily by preventing double taxation of income. That is quite a large impact. Any other effects are minor by comparison.

Third: I don't think that corporations, especially small corporations who can qualify for Subchapter-S status, usually derive all that much income from capital assets. Most corporate assets are depreciable. The main tax benefit they derive is depreciation offset against income. Capital assets that appreciate (and thus could generate capital gains) tend to be things like real estate, but owners of that kindo of property tend to try to avoid realization through like kind exchanges and the like. Realization is the point at which a gain is taxable. A like kind exchange allows you to defer realization if you exchange one asset for another of the same general type. Because you can defer realization indefinitely in this way, there is no incentive to pay capital gains when you could avoid (or at least defer) paying taxes altogether.

On the other hand, individuals tend to own capital assets for investment purposes. For them, realization is pretty much inevitable sooner or later as they call in those assets to live off of them. Also: an owner of a corporation would have to have those assets in his name personally regardless of whether his corporation is Subchapter-S or not. If he bought them through his corporation and then used them for personal reasons, that could be grounds for piercing his corporate veil. Comingling personal and business assets is the number one way owners of corporations lose their protection against personal liability, and that is potentially far more expensive than a little more in taxes.

There are also some fairly complex issues called recapture and quasi capital assets that can change whether gains are paid at the capital rate or the ordinary income rate. I don't think those affect the basic analyis, although I would have to go back to the code to be sure.

Anyway, when we discussed capital gains treatment in tax class, I recall no mention of Subchapter-S. I don't think that capital gains has much to do with Subchapter-S. Believe me, I had a pretty liberal/progressive tax professor who was very interested in policy matters affecting tax equity. If this were the reason for subchapter-S and it really was used significantly to reduce taxes paid by the wealthy, I am pretty sure he would have talked about it. To the extent he and my corporations did talk about Subchapter-S status, they just talked about simplicity and liability, and they seemed to treat it as non-controversial, and frankly, not very interesting from an academic point of view.