Local government claim there's no alternative to budget cuts. But their numbers don't add up.

[Hannah Bell]

You won’t find many suburbs in the United States more affluent than the burbs that ring Washington, D.C. In fact, six of the ten wealthiest counties in the entire United States sit just outside our nation’s capital.

But those counties, these days, aren’t seeming so wealthy. All this month local elected officials from these affluent jurisdictions have been announcing deep and unprecedented budget cuts — and hinting at more.

What’s causing this unprecedented pain? County executive Leggett, a former chair of the Maryland Democratic Party, is blaming everything from the “severity of the economic recession” to the heavy cost of “this winter’s historic blizzards” to “out of control” county spending before his election four years ago.

Left conveniently unmentioned: the core fiscal reality of our time. Average Americans are suffering unprecedented pain because politicos like Ike Leggett have been doing their best to keep wealthy Americans pain-free.

If today’s rich — in Montgomery County and out across the United States — were paying as much of their incomes in taxes as America’s rich paid back in the middle of the 20th century, we would be witnessing no public sector meltdown.

Let's look at the numbers...

In 2008, the 6,538 Montgomery County taxpayers who made over $500,000 averaged $1,355,147 in income. Back in 1955, in the middle of those Eisenhower years, high-rollers who made, after adjusting for inflation, this same sum paid — after exploiting every loophole they could find — just over 44 percent of their incomes in federal income tax, according to IRS records.

We don’t have figures yet on how much Montgomery County affluents paid in 2008 federal taxes. But we do know that in 2007, the year before, Americans who made about $1,355,147 paid just over 24 percent of their incomes in federal tax.

In other words, those deep pockets back in 1955 paid almost twice as much of their incomes in federal tax as their high-income counterparts today.

In short, thanks to tax breaks for the rich, staggering sums of extra dollars are now sloshing around inside the pockets of Montgomery County’s wealthiest residents. Local government politicos like Ike Leggett, if they so chose, could try to recapture those lost dollars at the local level. Leggett chooses not to...

“Leadership,” Ike Leggett pronounced last week, “means making the hard choices now that address our current problems, without resorting to quick fixes.”

For pols like Ike Leggett, axing jobs and cutting home care hours for low-income seniors apparently don’t qualify as “quick fixes.” Tax hikes on the rich? They do.

http://toomuchonline.org/tax-cuts-for-the-rich-pay-cuts-for-the-poorer/

[dkf]

1. Shouldn't you add all taxes and try to compare those numbers?

If you are trying to compare overall tax burdens wouldn't this be more relevant? For all we know property taxes plus social security plus medicare plus sales tax plus state taxes might already have been raised to compensate for the lower federal rate. And I think we should start considering health insurance a tax since it will be mandated.

Back in the 50s medical costs were pretty insignificant I imagine.

[Hannah Bell]

2. the top 1% doesn't pay much in the way of sales tax or FICA taxes, since much of their income

comes from things like capital gains, profits, & other non-wage income.

The fact is, the super-rich are making more money & paying less tax on it.

[dkf]

5. Except capital gains have been wiped out.

There probably won't be gains for a couple of years. We are still quite a bit off from the highs after all.

[Hannah Bell]

10. of course they haven't been "wiped out". some things are less profitable, some things more so.

do you have a problem with the top being taxed at eisenhower rates? they did quite well then.

[TalkingDog]

7. You seem to lack a sense of the scale of this issue.

Over the years the top tax rate for the “SuperRich” has dropped from 94% under FDR Depression I to it’s lowest ever under “Trickle Down” Ronnie at a meager 28%

“SuperRich” income averages 344 million per year. A 94% tax forces them to live on a mere 20 million a year. Paying Reagan’s “WealthCare” rate nets them 247 million a year.

Today, the “SuperRich”, using tax loopholes, pay a bit more in tax than the 15% paid by unwashed middle and lower classes; so the “SuperRich” net 300 million a year in income. Each. The merely wealthy top 10%, net more per year than the struggling 80% of Americans combined.

Adults have to make choices. Services mean somebody has to pay for them. The rich used to foot the bill. Which was fair, since the bulk of their wealth was created by the sweat and labor of the poor.

Want services? The old solution is the new solution: Tax the RICH!

[TalkingDog]

8. My computer keeps doing that...apologies. nt

[TreasonousBastard]

3. Federal taxes don't pay for snow removal, schools, or local fire departments....

except to the extent Federal money might subsidize them.

But, years ago I noticed a fascinating thing about rich suburban counties, presumably due to the wealthy living there being able to avoid increased property taxes. After a big snowstorm, I started a short trip from Newark, NJ, and the roads were beautifully plowed, salted and sanded and great to get around on. As I drove north through Montclair, then Upper Montclair, maybe Short Hills, and a few other places increasingly wealthy, the roads became more and more impassible. It was in some estate area where the roads were untouched. It amazed me until someone explained that the residents preferred snow-covered roads to paying the taxes that would hire people and equipment to clear them.

The residents of Newark, otoh, would burn down City Hall if the roads weren't plowed, and didn't care what it cost.

[Gaedel]

4. Local governments

Most local governments operate on ad valorem taxes such as the real estate property taxes and business property taxes. Some may receive a share of sales taxes collected in their jurisdiction. Very few localities (counties, cities, townships, villages, and independent school districts have access to an income tax. As a result, comparison to federal income tax rates is apples and oranges. The fiscal shitstorm through which most local governments are now passing is a result of the collapse of the real estate bubble. During the big run up in real estate prices and consequent rise in property evaluations, many localities figured (as did the rest of us) that the good times would roll on forever and quickly incorporated the "bubble money" into their permanent budgets instead of considering it "pennies from heaven" and using it for one time expenditures. Now that property evaluations have collapsed, limiting the local government's take, they are faced with the choice of cutting the permanent budget, increasing the property tax rate, or trying (if their state constitution allows) to institute a local income tax.

Federal income tax rates are totally outside the scope of the localities' problems.

[blindpig]

6. k&r

Why so many well off around DC?


Only thing they're making there are deals....

[Gaedel]

9. Because...

Not6 too many super-rich in the DC suburbs, but there are a lot of high end government and government support "white collar" jobs there. People making 150-200 kilobucks are very common.

[Hannah Bell]

11. It's *not* gov't workers at $200K MD has the second-largest percentage of millionaires in the U.S.

That's according to a study released Wednesday by Rhinebeck, N.Y.-based market research firm Phoenix Marketing International.

The percentage of millionaires to total households in Maryland was nearly 7.1 percent in 2007, according to the study. That number is up from 6.2 percent in 2006, when Maryland ranked third.

Read more: http://www.city-data.com/forum/maryland/243418-millionaires-call-md-home-study-finds.html#ixzz0iwKYiyhq


the OP is talking about income >$500K.

fyi, three billionaires live in MD.

http://www.forbes.com/lists/2006/10/Maryland_Rank_1.html

[Gaedel]

12. Millionaires

Being a millionaire doesn't mean you make a million dollars a year. It means you have a "net worth" greater than a million bucks. Having a $150-200 thousand income will get you to to millionaire status if you save and invest as opposed to blowing it every month. Upper level government workers (GS-15 and SES)do become millionaires.

[Hannah Bell]

13. the op is about incomes >$500 k/year.

"In 2008, the 6,538 Montgomery County taxpayers who made over $500,000 averaged $1,355,147 in income."

the data about million & billionaires was to point out that md does in fact have some very wealthy residents.