At 102%, His Tax Rate Takes the Cake

[MachineGhost]

Meet Mr. 102%.

James Ross, 58, is a founder and managing member of Rossrock, a Manhattan-based private investment firm that focuses on commercial real estate and distressed commercial mortgages. “I realize I am very fortunate, and in fact I am a member of the 1 percent,”? Mr. Ross wrote in an e-mail. His résumé is studded with elite institutions: Yale, Columbia Law School and stints at the law firms Cravath, Swaine & Moore in New York and Holland & Hart in Denver. Since his company fits the category of private equity, he even has carried interest, the kind of incentive compensation that enabled Mitt Romney to pay such a low tax rate.

Yet Mr. Ross told me that he paid 102 percent of his taxable income in federal, state and local taxes for 2010. “My entire taxable income, plus some, went to the payment of taxes,”? Mr. Ross said. “This does not include real estate taxes, sales taxes and other taxes I paid for 2010.”? When he told friends and family, they were “astounded,”? he said.

Source: http://finance.yahoo.com/news/102-tax-r ... 10322.html

[Reub]

His 102% tax rate is not enough! The left demands more!!

[MediumTex]

I assume that as a real estate investor he has enjoyed many years of juicy tax breaks.

Perhaps he is just including items in income now that he took corresponding deductions on in prior years.

If he really paid 102% in taxes and there is no explanation tied to past real estate tax shelters he should probably find a new accountant.

Reub, do you really believe that the left is demanding more than a 102% tax rate?

[TripleB]

Funny - as I read the article I thought "it's his own fault for choosing to live in NYC with very high state tax, city tax, real estate tax, and high cost of living. If he just moved to Florida his tax rate would be much lower."

Then in the article it says his accountant recommended he fire his employees and move to Florida.

[moda0306]

Piss poor tax planning... on its face... combined with probably being leveraged out the @ss.

I am a tax accountant, and something doesn't add up here... rental mortgage interest should be deductible, but investment interest has limitations... mainly being how much ordinary investment income you have.  This is usually interest

Somehow I doubt this guy is pulling in hundreds of thousands in taxable interest.

[Reub]

MT, I'm suggesting that the left is using this false argument that the 1% are not paying enough as a ruse to gain and retain power.

[stone]

Reub, do you mean that the 1% are being villified so as to create an "us against them" sort of tribalism as a political ruse? I totally agree that it is important to be vigilent against any such ploy if it occurs. Personally I do think wealth concentration does cause severe problems but I do agree that any form of "us against them" politics is very ugly and destructive.

[Reub]

Yes, that is what I am saying.

[stone]

Reub, if someone such as myself does worry about the economic and societal effects of wealth concentration, is there a way I could voice that concern that would not smack of devisive tribalism rabble rousing? I'm just wondering whether merely saying that wealth concentration is a problem inevitably in your eyes is a devisive thing to say?
I know you think I'm totally misguided in thinking that wealth concentration is a problem. But there is a massive difference between on the one hand having a genuine difference of opinion about that or on the other hand "the left" merely using it as a bogus spring board for a generalized agitation as a cynical political tool.

Perhaps "the 1%" phrase is very dodgy. I think my worries about "money manager capitalism" are as much about the disconnect between the financial system and the real economy as about anything else. Even considering just people of a certain level of wealth, it might be possible to imagine scenarios where money circulated and lubricated real economic activity and scenarios where it constricted real economic activity.
To be honest personally I think entities such as Goldman Sachs etc would be doing even more harm than they do now if no one involved was getting and spending mega bucks. Imagine Goldman Sachs was actually a not for profit endowment fund run by a religious order who had taken a vow of poverty. They would gather up money using money as fast as they do now and simply compound it. The harm would be greater than had they distributed it as bonus payments to the staff.

[stone]

TennPaGa, it did say that he got compensation in the form of "carried interest" didn't it?

Personally, I think Reub's warning has a certain amount of wisdom in it even if only for people like me to scrutinize our own views. 

[Jan Van]

This whole us 99% against them 1% is something I haven't quite figured out yet for myself. For sure, it's easy to say for example that mr. Romney was in a way too low taxe rate at 15%~ish. And poor me paid 20something %! Boohoohoo! But then again, he did pay some $3million in 2010 which unfortunately for me (but also fortunately) is way WAY more than I paid. And of course he didn't have income as such but mainly capital gains. So should the rate for capital gains go up? Not sure, what about the double taxing argument, there might be some credit to that? And this:

Taxes and the rich: How much do they pay now?
[quote=CSM]To put it in numbers, according to the analysis, the top 1 percent of earners account for 20.3 percent of total personal income in the United States and pay 21.5 percent of all federal and state taxes. The middle 20 percent of households earn 11.6 percent of US income and pay 10.3 percent of taxes. The lowest 20 percent account for just 3.5 percent of income, and pay 2 percent of all taxes.[/quote]

The top 1% pays 1/5 of all taxes. Enough? Not enough?

[Reub]

"Reub, if someone such as myself does worry about the economic and societal effects of wealth concentration, is there a way I could voice that concern that would not smack of devisive tribalism rabble rousing?"

Yes. By being consistent in your criticisms. The problem with the occupy wall street types is that they march on the homes of the rich bankers as they avoid George Soros' home. They also rail against the greedy capitalists while at the same time giving a pass to many of those that bailed them out with taxpayers money in the first place. They castigate greedy businessmen while not uttering a peep about greedy universities.

When I see this kind of behavior I begin to smell a rat.

[MachineGhost]

Perhaps "the 1%" phrase is very dodgy. I think my worries about "money manager capitalism" are as much about the disconnect between the financial system and the real economy as about anything else. Even considering just people of a certain level of wealth, it might be possible to imagine scenarios where money circulated and lubricated real economic activity and scenarios where it constricted real economic activity.
To be honest personally I think entities such as Goldman Sachs etc would be doing even more harm than they do now if no one involved was getting and spending mega bucks. Imagine Goldman Sachs was actually a not for profit endowment fund run by a religious order who had taken a vow of poverty. They would gather up money using money as fast as they do now and simply compound it. The harm would be greater than had they distributed it as bonus payments to the staff.

Have you seen "Inside Job"?  http://www.sonyclassics.com/insidejob/

Wealth is just a claim on available goods/services.  Nothing wrong with that.  It's only when it co-opts and corrupts the political process -- which is about the application of win-lose coercion over society instead of a voluntary win-win exchange, that it becomes an issue.  Weakness corrupts and what is more weak than the endless masculine desire to be a Big Swinging Dick?

MG

[MachineGhost]

way WAY more than I paid. And of course he didn't have income as such but mainly capital gains. So should the rate for capital gains go up? Not sure, what about the double taxing argument, there might be some credit to that? And

Wanniski's solution was to have aggressive progressive taxation on wages only and leave capital gains alone as that is involved in business formation.  The problem with the current system is it makes no distinction between capital formation, speculative trading profits and wage-type income.  And 1% taxpayers is a misnomer when talking about pass-through entities such as S-Chapters and LLC's where the owner pays at a high income personal rate for all of the gross business revenues.  The US itself is a 0% tax haven for capital gains earned by foreign entities (with restrictions on real estate).

Lets just do a flat tax on all sources of income, wherever derived, and be done with it.  But, that would throw millions of accountants, lawyers and tax preparation firms out of a job.

MG