Taxes

One issue that has come to my attention that I don't know much about is taxes. I'm still a student so I've never earned enough in a year that I've had to file my own tax report.

This issue was brought to my attention in this particular instance because my honors class just watched a film called Capitalism: A Love Story, directed by Michael Moore. I'd never heard of Michael Moore before watching this film although many others in the class had and presented a fairly negative bias. I liked a lot of the ideas he presented in the film and one thing in particular that caught my attention was he mentioned a 90% tax rate on the richest people that still left them rich. This supposedly occurred during his childhood.

However, when I looked up the information online I found something rather different. Especially by combining the terms "90% tax rate" and "Michael Moore" I was able to quickly find articles that explained that what was actually being referred to was a 90% marginal tax rate. Only the money earned over $300,000 for instance would be taxed at that rate while the first $2,000 income was only taxed at 20%. The article in particular I found said that this occurred around 1952 and that one would have to have made over $2.3 million per year to be taxed at an overall rate of 90% - thus paying approximately 2 million in taxes. Currently, the top marginal tax rate is 35%.

I found a pretty awesome chart on Wikipedia showing the change in top marginal tax rates over time.

Marginal tax rate makes more sense to me now. Another article I found recently though adds yet more aspects to taxes I need to research - deductibles, adjusted gross income, and taxable income. This man pays 102% of his income on taxes; that means that he has use his savings just to pay his taxes. Thankfully the article explains adjusted gross income to me - "total income minus retirement plan contributions, tax-exempt interest and other specified exclusions" - and taxable income - "adjusted gross income minus your personal exemptions and itemized deductions". I am still not entirely sure what this entails. A.M.T (alternative minimum tax) is also mentioned.

Taxes are a big issue and very complicated, at least to me. I still plan to do more research on them before forming my final opinion.

Other statistics or ideas I've heard recently (admittedly largely from Capitalism: a Love Story) that I intend to research because I'd like to know how true they are:

• Airline pilots make approximately $19,000/yr and are unable to join unions. Some make plasma donations just to make extra money.
• There is a bread factory where the CEO makes the same salary as all the other employees and they all make about $60,000/yr.
• There is also a engineering company (Ismsths Engineering) where all employees are equal owners in the company and it is a democratic corporation.
• There is a socialist senator (Bernie Sanders)

I should also mention that for classes I am also reading The Globalization Gap: How the Rich Get Richer and the Poor Get Left Further Behind by Robert A. Isaak and In Defense of Globalization by Jagdish Bhagwati.