The fortunate 400 people with the highest adjusted gross incomes still made, on average, $202 million each in 2009, according to Internal Revenue Service data. And this doesn?t even count income that doesn?t show up as adjusted gross income, such as tax-exempt interest.
Yet the top 400 paid an average federal income tax rate of less than 20 percent, far lower than the top rate of 35 percent then in effect.
They also paid a lower rate than the top 1 percent, which were people with adjusted gross incomes in 2009 of at least $344,000. These affluent but hardly superrich taxpayers paid on average just over 24 percent of their adjusted gross income in federal income tax. Even the top 0.01 percent, people earning at least $1.4 million, paid 24 percent.
?The top 400 have enormously high incomes even after the dip,? said Leonard E. Burman, director of the nonpartisan Tax Policy Center and a professor of public policy at the Maxwell School at Syracuse University. ?It?s still over $200 million each. And yet they?re still paying at a lower rate.?
Even in a bad year like 2009, the federal tax code at the very top is regressive, not progressive.
The "tax rate" is that set by the Congress and is administered by the Internal Revenue Service of the Department of the Treasury. *Everyone* pays their Federal Income Taxes based upon those rates -- EVERYONE.
The falsity of this whole posting of your -- despite its source -- is your claiming "tax rate" instead of "percent of income" -- that amount payable to the IRS after all legislatively-created deductions and allowances are incorporated into the taxpayers' Form 1040s, et al. Continuing Leroy's falsification of facts:
When I went into business in 1978, I went to the library to find books on the subject. I found many. One in particular, was 101 ways to pay less taxes. It had many ideas that the "common man" could use that would end up with a lower tax bill at the end of the year. At first, I pressed some into use, like the one where you pay your children a wage for work done. Their jobs were to sweep the shop, wash the vehicles, clean the bathrooms, etc. They were allowed to keep 20% of the money, the rest was confiscated, and at first I banked it. Then, when the business took off, the financial planner took the money, and made it grow handsomely. They both ended up graduating from college, and having money for post-graduate education, and some left over. No student loans, just some from Mom and Dad for extras.
Point is, there is so much bellyaching and kvetching about the way the "rich" pay less taxes, and the "poor" are too stupid or lazy to go check out a free library book or books, or learn how they can avail themselves of things available to every man. Now, most of them are spending that time getting HIGHLY educated in the art of food stamps, free cheese, and other free money items provided by the leftist liberal government, and paid for by you know who.
Crap yes, the rich pay less taxes. Hellooooooooooooo. And if a lot of poor people got rich tomorrow, they would not do as well in the handling of their own money, as it is something that requires thought and education. Rich people hire people to watch their money. Then they hire another guy to watch the first one. Then they hire a third to watch the other two.
I never, ever hire anyone to manage my money. I also never listen to any financial advisors. They range from clueless to crooks, as far as what I have seen. I am glad that you were more lucky.
There must be some good financial advisors, but how do you know who is goo d and who wants to manage your money because he can not manage his own. S o I am with you, iggy. It takes less effort to manage your own money , tha n to figure out who would do a good job of managing your money.
I do listen to financial advisors. But do not rely on them for what to do.
I should have clarified that. It all depends on the amount of money we are talking about here. Most Average Joe's can do quite well with some common sense and a little publicly available tutorage. If one were ever to get into a Lotto situation, or happen on to some REAL money, that would be when financial managers would be helpful.
I have a fair amount of money to manage (I mean liquid investments outside of business), and realistically do not think that it would be much harder to manage, say, 10 times the amount. I certainly would not consider any exotic vehicles or "hedge funds".
You would be amazed at the amount of people who do have sizeable amounts of money, yet are taken to the cleaners by every snake oil salesman on the block. Why? Because they are not content to take the lower risk, lower yeild, guaranteed long term investment, but want the unrealistic % returns guaranteed by most slicksters. Know more than one person who ended up losing a wad, who should be in good shape today, had they just taken the low road.
The problem is not the amount of risk they wanted to take, but their vulnerability to slicksters. The "risk equation" was not in their favor, because of who your friends dealt with. You cannot make a good deal with a bad person.
I figured, long ago, that if I avoid all financial salesmen and planners, I will automatically stay away from slicksters also.
Many dogmas of financial planning, such as the asset allocation theory, dollar cost averaging, etc, are badly flawed. I do not think that I would benefit much from a typical financial planner. However, I hold my accountant in high regard.
Now, why would any sane person think that governmental forcing of lending institutions to give money to people who had no intention or ability to pay it back would be a bad thing?
So, beginning with the Carter administration enacting the relating laws, it was all fantasy? I think you are a fantasy. And you live in a fantasy world. Because you have no idea about history. And you must not be up on current events, because you missed the story so far starting with the Carter administration legislation. If you don't have any facts, or can't answer in context with the thread, just STFU, and go watch Kojack reruns in the basement.
What law forced lenders to give money to people who had no intention or ability to pay it back?
It is nothing but a story. The story is based on made up facts.
The facts are all on record. There is no reason to rely on internet stories. If you can find a single piece of legislation or court action that forced lenders to make bad loans. I would like to see it.
No you are wrong. Subprime lenders and the private financing that supported them were in the business of making bad loans for profit. Nobody had their arm twisted. They were doing it solely for the profits.
You are just making up a story based on your unsupported belief that businesses would not want to make bad loans. You don't need to make up a story about govt forcing lenders to explain why they did it.
Here is how huge profits were made on loans that were designed to fail:
First of all, interest rates were much higher for subprime loans. The high cost made those loans profitable even if the loan didn't fail. The US didn't end up with a surplus of 40 million houses that people can't afford to live in by making affordable housing loans in low income neighborhoods.
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70% of subprime originations were refinances of ex- isting mortgages. Those loans had nothing to do with politicians wanting to expand home ownership. Most of the bad loans were designed to profit from taking away existing home ownership. If the loan failed the lender got the owner's equity.
80% of subprime the borrowers started out with low monthly payments with huge increases after 1 or 2 years. This meant the only way most borrowers could afford to keep the house was to refinance every one or 2 years. The refinance fee structure meant the lender could harvest all the equity gains in the house every 1 to 2 years.
All subprime loans had huge prepayment penalties. This meant that if the lender sold the house to get out from under the loan the lender made more than if borrower kept the loan and continued to pay.
The high default rate of subprime loans was hidden from the investors that were the source of subprime financing. All the investors could see was that the loans were producing excellent rate of returns. The investors didn't understand that the profits would disappear when the price of houses started to drop. And even the few that understood didn't believe it was possible for house prices to drop.
Correct. And the facts show that was an effective method to get high quality loans that were unlikely to fail. If a loan applicant had a very high credit score they could get a lower down payment. Or if the down payment was large the borrower could be approved with a below average credit score. Those are just an aspect of prudent lending standards.
The data on loan performance shows that the GSE standards were the very best in the entire mortgage industry. GSE backed loans had a lower concentration of delinquencies and foreclosures than than any other segment of the mortgage industry. That excellent performance record held for all the years before and after the
2008 financial meltdown.
How do you explain that GSE loans are much less likely to default or be delinquent than non-GSE loans?
Cuomo is a putz like you. What Cuomo said wasn't the truth. And there is no physical evidence to support Cuomo's statement. The Accubanc settlement had no provision for lowering the lender's standards. Nor did it require the lender to make loans that were more likely to fail. Cuomo's statement about what the settlement contained was false.
How does Cuomo's statement support the story that the GSEs were financing the bad loans?
When we discuss the role of the Community Reinvestment Act and other fair lending rules in contributing to lax lending standards, people bent on exonerating the CRA often point out that many of the questionable loans were made by non-depository mortgage companies not covered by the CRA.
Barry Ritholtz has been a prominent critic of the theory that the CRA has some culpability for lax lending. He has pointed out that 50% of subprime loans were made by mortgage service companies not subject comprehensive federal supervision. ?How was this caused by either CRA or GSEs?? Barry asked.
As much as I respect Barry?s formidable analytical powers, I?m afraid he?s taken too narrow of the view of the matter. His question is far easier to answer than he suspects. Regulations often touch those who are not directly regulated. Indeed, the regulation of one group in a marketplace will almost always wind up affecting other groups.
More concretely, there are three very specific ways in which the CRA nudged Countrywide and other mortgage companies to adopt lax lending standards.
The Creation Of Artificial Demand For Low-Income Mortgages. Banks that were regulated by the CRA often found it difficult to meet their obligations under the CRA directly. Long standing lending practices by local loan officers were a big problem. But as banks expanded their deposit bases and other businesses, they often found that they were at risk of regulators discovering they had fallen behind in making CRA loans.
One way of addressing this problem was buying the loans in the secondary market. Mortgage companies like Countrywide began to serve this entirely artificial demand for CRA loans. Countrywide marketed its loans directly to banks as a way for them to meet CRA obligations. "The result of these efforts is an enormous pipeline of mortgages to low- and moderate-income buyers. With this pipeline, Countrywide Securities Corporation (CSC) can potentially help you meet your Community Reinvestment Act (CRA) goals by offering both whole loan and mortgage-backed securities that are eligible for CRA credit,? a Countrywide advertisement on its website read.
The Threat Of Regulation Is Often As Good As Regulation. It is highly misleading to claim that just because mortgage companies were not technically under the CRA that they were not required by regulators to meet similar tests. In fact, regulators threatened that if the mortgage companies didn?t step up to the plate by relaxing lending standards they would be brought under the CRA umbrella and required to do so.
Here?s how City Journal explains the dynamic:
To meet their goals, the two mortgage giants enlisted large lenders?including nonbanks, which weren?t covered by the CRA?into the effort. Freddie Mac began an ?alternative qualifying? program with the Sears Mortgage Corporation that let a borrower qualify for a loan with a monthly payment as high as 50 percent of his income, at a time when most private mortgage companies wouldn?t exceed 33 percent. The program also allowed borrowers with bad credit to get mortgages if they took credit-counseling classes administered by Acorn and other nonprofits. Subsequent research would show that such classes have little impact on default rates.
Pressuring nonbank lenders to make more loans to poor minorities didn?t stop with Sears. If it didn?t happen, Clinton officials warned, they?d seek to extend CRA regulations to all mortgage makers. In Congress, Representative Maxine Waters called financial firms not covered by the CRA ?among the most egregious redliners.? To rebuff the criticism, the Mortgage Bankers Association (MBA) shocked the financial world by signing a 1994 agreement with the Department of Housing and Urban Development (HUD), pledging to increase lending to minorities and join in new efforts to rewrite lending standards. The first MBA member to sign up: Countrywide Financial, the mortgage firm that would be at the core of the subprime meltdown.
The CRA Distorted the Mortgage Market. With banks offering mortgages with high loan to value, delayed payment schedules and other enticing features, the mortgage companies would have quickly found themselves unable to compete if they didn?t offer similar loans. The requirement to offer risky loans from banks created a situation where other lenders found they had to offer similar products if they wanted to expand their business.
Of course, Angelo Mozillo didn't need very much prompting on this score. He believed exactly what the CRA regulators believed: that these lax lending practices were the wave of the future, democratizing the glories of home ownership.
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