News How much the rich are being taxed

[Mentalist]

I have been hearing talks about this along the aisle where one person says that the rich need to pay their fair share and another saying, no the rich do pay their fair share as it is. I am grossly oversimplifying the situation as the talks go much more in depth than what I've stated, but that essentially, from my own hearing and internalizations, is what it sounds like.

To foster possibly a debate or discussion I wanted to know how much the rich are being taxed and that led me to a few google searches and under the new health care law, it would seem that the rich would be taxed a percentage and under these new rates that have been enacted to avoid the fiscal cliff, they are seemingly set at the Clinton rates of prior years.

My sources from what I have stated so far:

(3.8% surtax on investment income due to the new health care law or Obamacare)

Fiscal Cliff Deal

http://www.reuters.com/article/2012/12/03/us-usa-tax-irs-idUSBRE8B21HA20121203

http://www.cnn.com/2013/01/02/politics/fiscal-cliff/index.html

My only concern is why are people saying Obama compromised severely and that he should have stuck with his election pitch? From those two links and a bit of other research, it seems to me that the tax rates are high as it is. Am I not getting something?

 

[turbo]

My only concern is why are people saying Obama compromised severely and that he should have stuck with his election pitch? From those two links and a bit of other research, it seems to me that the tax rates are high as it is. Am I not getting something?

It depends (to a great deal) on who you are and how your income is derived. If you can classify much of your income as carried interest or capital gains, you will pay a much lower rate than people that pay taxes on regular income. In this case the tax laws are severely regressive.

Obama did nothing to address this inequality, which is not surprising. He can't reform the tax code all by himself (no authority) and Congress is unlikely to cooperate with him, since they are beholden to the wealthy for their campaign cash. It's a messy situation.

 

[russ_watters]

It depends (to a great deal) on who you are and how your income is derived. If you can classify much of your income as carried interest or capital gains, you will pay a much lower rate than people that pay taxes on regular income. In this case the tax laws are severely regressive.

Clarification: since those two loopholes only affect the very-rich (of income-generating age), income taxes/rates only become "severely regressive" when comparing the tax rates of the almost-rich to very-rich to the tax rates of the very-rich. The vast majority of Americans (estimate 80-90%) still pay lower rates and taxes than those affected by those loopholes.

 

[russ_watters]

[Edit]
All debt ceiling posts (most of the thread) moved to the debt ceiling thread.

 

[jduster]

Here's my take on taxing the rich, as a non-partisan independent.

1. Higher taxes on the rich really do no harm (unless the increases are astronomical). The economy was doing well during the Clinton era.

2. Republicans are ideologically defending tax cuts for the rich because they perceive taxing the wealthy as a slippery slope to increasing the size of the government. Seeing how big the government has gotten over the past few decades, if I were in their position, I would be scared of it too.

3. Increasing the taxes of the wealthy back to Clinton-era rates is barely going to affect the budget. Yeah, it's going to reduce the deficit by 10% (if we rake in 100 billion in extra taxes for the wealthy a year), but other 90% is spending. Even if the government took ALL of Bill Gates and Warren Buffet's money combined, the government would still only pay it's bills for one month.

4. I think we should raise taxes on the wealthy just to prove that they won't be a cure-all problem. Liberals in Congress keep saying a tax increase on the wealthy will fix the country without having to make serious spending cuts. Call their bluff.

4. People aren't factoring in deductions. Deductions favor wealthy people. Conservatives have been using this as a form of welfare. Yes, people do get to keep more of what that made, but some people get to keep more of what they make than others, and that's not fair in my eyes.

 

[telecomguy]

1. Higher taxes on jduster really do no harm (to me).
2. Republicans are ideologically defending tax cuts for the rich because they believe in everyones freedom to strive for success and don't want to be penalized when they work their butts off and finally do succeed.
3. Not even going to read the rest of that post.

 

[jduster]

Republicans are ideologically defending tax cuts for the rich because they believe in everyones freedom to strive for success and don't want to be penalized when they work their butts off and finally do succeed.

I didn't know people worked their butts off by earning massive inheritances, kicking back on government subsidies and trading derivatives.

And please prove (with empirical evidence) that the Clinton era tax cuts have created disincentives for people to be financially successful.

 

[D H]

I have been hearing talks about this along the aisle where one person says that the rich need to pay their fair share and another saying, no the rich do pay their fair share as it is.

Am I not getting something?

What you're not getting is that "fairness" is an elusive concept. A couple of questions to which I don't quite have the answers:

- What, exactly, makes one tax system more "fair" than another? I have a bit of a hard time seeing any tax system as being fair. Taxes, while absolutely essential, are inherently unfair. Taxation is essentially legalized robbery.

- What is it with "fairness" that makes it a good metric? Minimizing unfairness is, to me, a better metric than is maximizing fairness.

 

[telecomguy]

I didn't know people worked their butts off by earning massive inheritances, kicking back on government subsidies and trading derivatives.

And please prove (with empirical evidence) that the Clinton era tax cuts have created disincentives for people to be financially successful.

If I choose to work my butt off and leave the fruits of my work to my children, what makes you think you deserve to be mentioned in my will? You already got your part when I paid my taxes.

I'm not saying tax cuts are disincentives so I'm good with that.. I believe that capital gains rate reduction was from 28% to 20%. I say we do it again and take it to 12%...

 

[D H]

If I choose to work my butt off and leave the fruits of my work to my children, what makes you think you deserve to be mentioned in my will? You already got your part when I paid my taxes.

To the left, the government obviously did not get enough. That's why we have estate taxes.

I'm not saying tax cuts are disincentives so I'm good with that.. I believe that capital gains rate reduction was from 28% to 20%. I say we do it again and take it to 12%...

To the left again, that cut was quite "unfair". What say we undo it, and then undo it again and take it to 56%?If you think I'm picking on you, you're right. I am picking on you. I'll pick on anyone who says that the tax system should be so and so without any justification for why they should be that way. It's bad enough when opposing sides take radically different points of view on how the tax system should be structured based on some weakly defined concept of fairness. A fiat "let's take it to 12%" (or my 56%) with no justification whatsoever is far worse.

 

[telecomguy]

Thanks for clarifying. I honestly had no idea you were picking on me. Thought you were agreeing that the left just wants something for nothing and that raising taxes to rival France is absurd and self-destructive.

 

[Highspeed]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

 

[russ_watters]

Absolute taxes (for example, $5000 a person would be equal) must be progressive otherwise there would never be enough money to run the government. Tax rates don't necessarily need to be, but most people are of the opinion that the rates should be progressive to reduce inequality/allow for redistribution.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

As I said in the first part, it isn't possible for people to pay equal tax $ because the poor don't have enough money to do that. You wouldn't be able to fund the government that way. I suppose you could have a separate bracket for the poor and a flat $ tax for everyone else, though. But whether one likes it or not, a lot of our tax dollars go to paying social programs which by design are re-distributive. And if you're going to re-distribute the easiest way is simply via progressive tax rates.

 

[Locrian]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

So, you're asking people to explain why taxes depend on a person's financial means without referencing their financial means?

You can't even repeat your question and do that.

 

[Locrian]

The answer, by the way, is marginal utility.

 

[Evo]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

You are making the false assumption that being in a higher tax bracket means that they actually pay those taxes and don't have deducations/shelters that reduce their tax rate significantly, many rich people pay very low taxes, lower than many "lower middle class" that can't itemize, IMO. I'm going by personal experience, family members, etc... I know what everyone makes and the taxes we pay.

 

[D H]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

First let's look at the non-welfare aspects of government. Almost everyone benefits from a properly functioning government. Public roads, public schools, the rule of law, etc. return a net benefit to society. Who benefits more? Is the benefit proportional / disproportional to income? To wealth? I have my suspicions, but to be honest I don't know. I've yet to see one dispassionate study that analyzes taxation and benefits properly. What I have seen bogus studies by partisan authors (from the left and right) that somewhere along the line assume the very point they are trying to make.

Next let's look at the welfare aspects of government. The intent is redistributive, so a progressive tax goes right along with the concept of welfare.I'm going to turn your question around on you. What makes you think that a flat tax on income is "fair"? Don't make an a priori assumption that a flat tax is obviously fair to prove your point. Why not, for example, a flat tax on accumulated wealth (which would be quite progressive), or a flat tax on consumer spending (which would be somewhat regressive)?

 

[Ryan_m_b]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

Two points:

1) marginal decrease in utility of money means that taking 10% of Alice's $100,000 matters far less than taking 10% of Bob's $1000

2) even if an individual doesn't directly use a government service they can still benefit indirectly. Simple example but a privately educated businessman still benefits from a social education service by having an educated population to hire from.

 

[russ_watters]

You are making the false assumption that being in a higher tax bracket means that they actually pay those taxes and don't have deducations/shelters that reduce their tax rate significantly, many rich people pay very low taxes, lower than many "lower middle class" that can't itemize, IMO. I'm going by personal experience, family members, etc... I know what everyone makes and the taxes we pay.

The way you put that is odd: EVERYONE has deductions that reduce their effective tax rate, but overall/on average the effective rates are fairly smoothly progressive until you hit about the top 1%. And every bracket also includes "many" people who deviate substantially from the average.

 

[russ_watters]

2) even if an individual doesn't directly use a government service they can still benefit indirectly. Simple example but a privately educated businessman still benefits from a social education service by having an educated population to hire from.

That's very tough to quantify and even perhaps contrary to point 1: A business owner gets a benefit from a better educated workforce, but the workers themselves also have a personal benefit. I would argue that it is a much bigger deal for the worker than the owner because of marginal utility.

 

[nitsuj]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

Absolutely laws and those who enforce them.

& public education. Not directly as Ryan_m_b mentioned.

what ever the gov' does with respect to improving our economy via international trade agreements.

Oh and roads / rail.

 

[russ_watters]

Roads and rail are tough because their use does not correlate well with income. For example, I make a lot more than a truck driver despite getting only a tiny fraction of the road use benefit.

And for business, compare Netflix and Blockbuster!

 

[mheslep]

...

2) even if an individual doesn't directly use a government service they can still benefit indirectly. Simple example but a privately educated businessman still benefits from a social education service by having an educated population to hire from.

That's very tough to quantify and even perhaps contrary to point 1: A business owner gets a benefit from a better educated workforce, but the workers themselves also have a personal benefit. I would argue that it is a much bigger deal for the worker than the owner because of marginal utility.

I'll add that many in the US, perhaps most, have some opportunity to start or run a business and take advantage of societal aspects already in place such as education, infrastructure, etc. But only a relative few manage to even try and take on that risk. Whatever the reason or motivation for doing so, starting/running the business, it should be encouraged. To single them out because of the greater income earned from that risk (which may well be short term BTW) is to punish that which should be encouraged.

 

[russ_watters]

Well, sure, that's just a restatement/specific example of the primary downside to progressive taxation and more generally, redistribution.

 

[nitsuj]

Roads and rail are tough because their use does not correlate well with income.

I work for a mill. So for sure we rely on roads & rail (single sale transactions are in tons). Our road use would correlate very well to our income, in fact a direct cause/effect.

And that's for a business that supplies food inputs.

 

[russ_watters]

Right: one business. Not the entire country.

 

[nitsuj]

Right: one business. Not the entire country.

Oh!

 

[nitsuj]

And for business, compare Netflix and Blockbuster!

Right, one example, not the entire economy.


(what a fantastic point)

 

[russ_watters]

Right, one example, not the entire economy.

(what a fantastic point)

Um...I don't think you followed the discussion very well:

1. First, you claimed that the rich use roads and rail more than the poor.

2. I provided three examples (that should also help you think of lots more along the same lines...), including two companies with similar services which have vastly different transportation needs, that show that your claimed correlation fits fairly poorly.

3. Then you provided an example where the claimed correlation fits. The problem is, when two things don't have any correlation, you will find lots of examples that do and lots that don't appear to fit. That's what you would expect with something that's random and not correlated. All that proves is that there is no negative correlation (the poor use roads and rail more)...

4. ...which I never claimed. I claimed there was little or no(poor) correlation.

So you see, your example doesn't really help any and your shot at mine misses the point.

 

[ParticleGrl]

Roads and rail are tough because their use does not correlate well with income. For example, I make a lot more than a truck driver despite getting only a tiny fraction of the road use benefit.

This statement is actually really hard to quantify, and (to me at least) doesn't seem likely to be true- sure, the trucker spends a lot of time driving, but presumably, your higher income means you purchase more goods that have to be shipped. Also, I'm not sure to task with "use-of-the-road" for a trucker driver- it seems like the owner of the trucking company derives more benefit from the roads than his employees, despite never driving the routes.

Since consumption of goods scales with income, and more exotic goods will often be shipped farther, I might suggest that roads enable more consumption for the higher end of the income distribution than the lower end, thus creating a fairly strong correlation between income and road-use.

 

[mathwonk]

I think anyone who makes more than I do should have to pay a tax to physics forum to post.

 

[russ_watters]

This statement is actually really hard to quantify, and (to me at least) doesn't seem likely to be true- sure, the trucker spends a lot of time driving, but presumably, your higher income means you purchase more goods that have to be shipped.

You're mixing up earning and spending.

Also, I'm not sure to task with "use-of-the-road" for a trucker driver- it seems like the owner of the trucking company derives more benefit from the roads than his employees, despite never driving the routes.

Many truck drivers are sole proprietors/contractors, but regardless, Ryan's marginal utility concept applies here too: even if the company takes more $ profit from the shipment than the driver (I doubt it, but we'll go with it*), the driver gets a much bigger benefit for what they get paid.

*You're assuming the company's profit is a larger number than the driver's pay, which is almost certainly wrong.

Since consumption of goods scales with income, and more exotic goods will often be shipped farther, I might suggest that roads enable more consumption for the higher end of the income distribution than the lower end, thus creating a fairly strong correlation between income and road-use.

Again, looking at the consumption is backwards. If I buy something off the internet and get it shipped via UPS, I'm the one paying the shipping cost, not getting paid by the shipping cost.

Pulling guestimates out of the air: Perhaps 1% of my income gets spent on shipping, but for someone who works at UPS, 100% of their income is earned from shipping. Other side of the coin: 1% of their income is spent on shipping while only 5% of my income is earned from "shipping" (myself to meetings).

I wanted to look at earnings only, but even if you include the spending, the earnings are so much larger of an issue that the spending really is irrelevant.

You also appear to be trying to have it both ways here, considering both sides of the coin (earning and spending) to benefit the richer, then flip-flopping them it when the direction is reversed. (If I earn money from shipping, I get the benefit, but if I spend money on shipping the benefit is still attributed to me).

[edit] And still I think this is all irrelevant anyway. We don't have to compare rich to not so rich, we can compare rich to rich and not so rich to not so rich. We'll find examples abound that show no correlation. I gave an example of two identical service companies that get vastly different benefits from shipping. On the other end, if we take a truck driver and trash collector at low-middle income and compare them to, say, janitors and food service workers who spend none of their time on the roads, we see vast differences there as well.

 

[ParticleGrl]

You're mixing up earning and spending.

No, I'm suggesting that both producers and consumers BENEFIT from the existence of the road network. In fact, consumption is a more direct measure of utility than production- and utility is what we really want to measure when we say someone benefits from something.

*You're assuming the company's profit is a larger number than the driver's pay, which is almost certainly wrong.

No, I'm assuming the salary of the manager/owner of a large trucking company is larger than the salary of the driver (which is almost certainly true). Neither would have their job without the road network.

You also appear to be trying to have it both ways here, considering both sides of the coin (earning and spending) to benefit the richer, then flip-flopping them it when the direction is reversed. (If I earn money from shipping, I get the benefit, but if I spend money on shipping the benefit is still attributed to me).

Yes, both producers and consumers derive utility from the existence of roads. Economics/utility is not necessarily a 0 sum game. In a competitive market, all transactions increase (or at least don't decrease) utility for both parties- its the backbone of the welfare theorems.

 

[nitsuj]

Um...I don't think you followed the discussion very well:

1. First, you claimed that the rich use roads and rail more than the poor.

No I haven't followed this discussion very well.

Here I thought we were discussing benefit, not use.

 

[nitsuj]

You're mixing up earning and spending. Many truck drivers are sole proprietors/contractors, but regardless, Ryan's marginal utility concept applies here too: even if the company takes more $ profit from the shipment than the driver (I doubt it, but we'll go with it*), the driver gets a much bigger benefit for what they get paid.

*You're assuming the company's profit is a larger number than the driver's pay, which is almost certainly wrong.
Again, looking at the consumption is backwards. If I buy something off the internet and get it shipped via UPS, I'm the one paying the shipping cost, not getting paid by the shipping cost.

Pulling guestimates out of the air: Perhaps 1% of my income gets spent on shipping, but for someone who works at UPS, 100% of their income is earned from shipping. Other side of the coin: 1% of their income is spent on shipping while only 5% of my income is earned from "shipping" (myself to meetings).

I wanted to look at earnings only, but even if you include the spending, the earnings are so much larger of an issue that the spending really is irrelevant.

You also appear to be trying to have it both ways here, considering both sides of the coin (earning and spending) to benefit the richer, then flip-flopping them it when the direction is reversed. (If I earn money from shipping, I get the benefit, but if I spend money on shipping the benefit is still attributed to me).

[edit] And still I think this is all irrelevant anyway. We don't have to compare rich to not so rich, we can compare rich to rich and not so rich to not so rich. We'll find examples abound that show no correlation. I gave an example of two identical service companies that get vastly different benefits from shipping. On the other end, if we take a truck driver and trash collector at low-middle income and compare them to, say, janitors and food service workers who spend none of their time on the roads, we see vast differences there as well.

purely by this "utility concept" the poorer benefit more than the rich. Don't need all that other "thought".

 

[nitsuj]

I'm assuming the salary of the manager/owner of a large trucking company is larger than the salary of the driver (which is almost certainly true). Neither would have their job without the road network.

Exactly my thinking, however you may be countered with, "but the manager/owner doesn't need "that" money as much as the truck driver."

My logic is the rich are richer than the poorer, I measure "benefit" by richness.

Russ says the benefit of richness is diminishing, to an exactness that the poorer are the ones who benefit most from...I guess road / rail in this example.

I find it impossible to conceive how the poorer benefit more from road / rail than the richer. "More to lose" comes to mind...oh right utility of money..shoots .

 

[Johninch]

I have been hearing talks about this along the aisle where one person says that the rich need to pay their fair share and another saying, no the rich do pay their fair share as it is.

It’s difficult to measure fairness. Most people would like to reduce their taxes, although many make voluntary contributions to good causes.

Basically I see paying taxes as part of the agreement between the state and the citizen, in the community or country where he lives and/or operates.

Most of us have the benefit of growing up in a country without paying any taxes. Then when we start working and earning we find out how much we have to contribute.

Since no individual has much influence over the tax rates, it is (or should be) a case of paying up or going elsewhere. There are legal tax avoidance schemes but these are considered unfair and are challenged by the IRS.

The problem for citizens of the USA is that it’s difficult to leave the country and its tax system by emigrating. I think this is a source of unfairness.

Apparently, the US does not agree to bring up citizens for 20 years and then let them go elsewhere without paying back the cost to the state.

Then when he dies after making a lot of money overseas, the family of the deceased ex-US citizen has to pay the very high US estate duties.

In Europe you are taxed where you live and operate. (The new French government has threatened to start taxing its emigrants, but this would be an exception).

There is the question of protection of passport holders, but this costs very little. In my 30 years outside of the UK I have never cost the state anything. Sometimes I go and spend money there.

Is it the opinion here that the US system of taxing ex-US citizens is unfair? Or do you consider that your ex-citizens ‘belong’ to the country?

.

 

[Galteeth]

One of the problems with trying to get into a discussion about "fairness" in terms of taxes is that there is a hidden underlying assumption that money earned is relatively equivalent to value added. Not only is this not the case, but the notion of value is one that depends on subjective judgments.
I don't think the "utility" concept mentioned is useful since it focuses only on the most obvious use of government funds. All society runs on government funds. A hypothetical financier in a city who never uses roads or has anyone else use roads still benefits from them, as they surely at least benefit companies he is invested in, help ship products, etc. Let's also not forget since part of the government contract involves defense of property, the greater the value of the property defended, the higher the cost of its defense would be if such costs weren't socialized.

 

[ramsey2879]

Here's a question for all...
Why should the rich pay more than anyone else in taxes?
BUT, before you answer, there is a catch...your answer cannot in any way mention that they 'can afford it', 'have more', or in any way imply that it's strictly because of their financial status.

Think about it, and enlighten me; at the federal level, what services do the rich use more than those with less, that would justify them being charged more to live and prosper in the same country?

That question ignores the early history of of government funding where funds for running the government were paid only by the rich and the rich considered that to be their duty to the country. Before the present tax system 100 percent of the revenues came from tariffs on imports and exports. Only the rich paid tariffs. Also, during the period from 1920 to 1950 taxes on the rich were as much as three times higher than the current tax rate. I say let's go back to the idea of viewing support for running this country as being a necessary response to the privilege of living in a free society. I do agree, however, that the present system of redistributing the wealth does almost as much harm as good because it fails to insure that each American does a fair share of a days labor. America, as a whole, needs to get back to the work effort.

 

[Claude Bile]

Taxation is about wealth redistribution. At present wealth distribution is far too skewed toward the wealthy - Off the top of my head the top 1% own something like 20% of the wealth, while the bottom 50% own 0.5%. Increased taxation on the top 1% can redress this wealth imbalance. Addressing this wealth imbalance is a good thing, as it means a greater % of people can afford the basics and live above the poverty line.

IMO, it's not so much a matter of fairness as it is social stability. Having 20-30% of citizens living below the poverty line (which the US is rapidly belting toward) is a seriously destabilising economic influence. Ergo, a gross wealth imbalance costs everyone in the long run, both the rich and the poor.

Claude.

 

[telecomguy]

Taxation is about wealth redistribution.
Claude.

I missed that the last few times I read the US Constitution. I guess I got the impression taxes were intended to fund the responsibilities of the federal government, namely "to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity"

 

[russ_watters]

Taxation is about wealth redistribution. At present wealth distribution is far too skewed toward the wealthy - Off the top of my head the top 1% own something like 20% of the wealth, while the bottom 50% own 0.5%. Increased taxation on the top 1% can redress this wealth imbalance. Addressing this wealth imbalance is a good thing, as it means a greater % of people can afford the basics and live above the poverty line.

IMO, it's not so much a matter of fairness as it is social stability. Having 20-30% of citizens living below the poverty line (which the US is rapidly belting toward) is a seriously destabilising economic influence. Ergo, a gross wealth imbalance costs everyone in the long run, both the rich and the poor.

Claude.

Fairness is a matter of opinion, but your poverty rate stat/prediction is nonsense. The rate was 15% in 2011 and that was very likely its cyclical peak. http://www.census.gov/hhes/www/poverty/data/incpovhlth/2011/highlights.html

 

[russ_watters]

I said in another thread recently it would be nice if the media would occasionally present the other side of the coin for balanced treatment of the issue. To my shock, CNN recently published this:

The top 10 percent of taxpayers paid over 70% of the total amount collected in federal income taxes in 2010, the latest year figures are available, according to the Tax Foundation, a think tank that advocates for lower taxes. That's up from 55% in 1986.
The remaining 90% bore just under 30% of the tax burden. And 47% of all Americans pay hardly anything at all...

http://money.cnn.com/2013/03/12/news/economy/rich-taxes/index.html

Actually, that last part isn't quite right: it isn't "hardly anything at all", the lower 47% pay nothing or less than nothing. And note, yes, this is just the federal income tax. It doesn't include the payroll (SS/Medicare) tax or state and local taxes. Still, it is quite striking how much the imbalance has grown in the past 20 years.

My concern is the opposite of Claude's. My concern is that because this is a democracy, we have the potential for a tyranny of the majority whereby the majority votes themselves the minority's money.

 

[Jimmy Snyder]

70.6% of the income taxes. What percentage of the income do they receive?

 

[Vanadium 50]

70.6% of the income taxes. What percentage of the income do they receive?

40% on the left side of the plot, 50% on the right side.

 

[russ_watters]

30%.

Not sure of the source, it was the first I could find: http://rwer.wordpress.com/2012/08/2...d-by-richest-10-the-usa-ranks-26th-out-of-28/

 

[russ_watters]

40% on the left side of the plot, 50% on the right side.

You mean in 1986 the top 10% received 40% of the income and in 2010 they received 50%?

...wonder why that conflicts with what I found...Does mine include government subsidy?

[edit] That's probably it. In normal income only, your numbers look right. See:

The top 5 percent earned 31.7 percent of the nation's adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.

http://taxfoundation.org/article/summary-latest-federal-individual-income-tax-data-0

That's the top 5% not 10%, but the numbers seem to line up better with what you said.
[edit2] Should have read further. That has for the the 10% as well: it was 43.2% of adjusted gross income. I don't like that metric though because it doesn't count all income.

 

[russ_watters]

This is an eye-opener:

social welfare benefits make up 35 percent of wages and salaries this year [2011], up from 21 percent in 2000 and 10 percent in 1960...

http://www.cnbc.com/id/41969508/Welfare_State_Handouts_Make_Up_OneThird_of_US_Wages

Hopefully that will drop with the economy recovering, but still that's an alarmingly high number.

 

[Number Nine]

Your plot isn't particularly surprising; a large percentage of the population doesn't have have enough income to pay any income tax, let alone a substantial amount. Of course, income tax is not the same as "tax"; the payroll tax, for instance, is a far greater tax burden on most of the country than is the income tax, and is disproportionately payed by those with lower incomes.

 

[russ_watters]

...the payroll tax, for instance, is a far greater tax burden on most of the country than is the income tax, and is disproportionately payed by those with lower incomes.

The way you worded that is not correct in the context of what we've been discussing. The CNN article is talking about the percentage of total dollars for the entire country paid in tax by each group whereas your statement is about taxes paid as a percentage of income. And even for what it is, it is still pretty misleading because:

1. For anyone under about $105k in income it is basically flat (slightly progressive).
2. SS was set up to look like a retirement savings plan, where what you get paid back is related to what you paid in. It wasn't supposed to be re-distributory.
3. And the sum of #1 and #2 is that for people above $105k, they don't pay additional into it, but by the same token won't be getting paid SS based on that either.
4. For the medicare part, it is re-distributory since it is basically charging different people different amounts of money for the same health insurance.

I wonder if we get a nationalized healthcare system that is paid via a flat tax rate, liberals will complain that it makes our tax system less progressive.