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Author Topic: Who Pays Almost All Federal Income Tax?  (Read 11909 times)
Dos Equis
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« on: February 05, 2007, 07:18:11 PM »

Something we have debated here before.

Who Pays Almost All Federal Income Tax?
House Speaker Nancy Pelosi and fellow Democrats have talked about repealing President Bush’s tax cuts for upper-income Americans. But those who earn the most money – and invest the most in the economy – are already paying almost all federal personal income taxes, a recent report reveals.

Congress’ Joint Economic Committee disclosed that the richer half of the American population pays nearly 97 percent of income taxes. Most of that, 54 percent, is paid by those in the top 5 percent, Investor’s Business Daily (IBD) disclosed.

And the richest of the rich – just the top 1 percent – pay a hefty 34 percent of all personal income taxes collected by the federal government.

Meanwhile, about 14 million lower-income Americans have been removed from the income tax rolls since 2000 due to the earned income tax credit and the per-child tax credit, IBD reports.

Despite Bush’s tax cuts, the overall tax burden has been rising. Americans’ average overall tax burden has risen since 2004 and now stands at 31.6 percent of income, according to the Tax Foundation, due in large part to the alternative minimum tax and increases in property taxes.
"With an already rising tax burden, borne disproportionately by those who are successful, and who invest,” the IBD concludes, "the Democrats’ plans for big tax increases could be more damaging to the U.S. economy than ever before.”

http://newsmax.com/archives/ic/2007/2/5/112446.shtml?s=ic
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« Reply #1 on: March 29, 2008, 09:29:05 AM »

Decker will love this.   Smiley

Guess Who Really Pays the Taxes
By Stephen Moore
From the November/December 2007 Issue

Yes, income in America is skewed toward the rich. But taxes are skewed far, far more. The top 5 percent pay well over half the income taxes. STEPHEN MOORE has the numbers.
1. Are income taxes fair?

That depends on who is offering the opinion. Democratic candidates for president certainly don’t think so. John Edwards has said, “It’s time to restore fairness to a tax code that has been driven badly out of whack.” Hillary Clinton laments that “middle-class and working families are paying a much higher percentage of their income [in taxes].” Over the past seven years, however, Americans in general think taxes have become more fair, not less. The Gallup Organization found in an April poll that 60 percent of respondents believe the income taxes that they themselves pay are fair, com­pared with 37 percent who believe the taxes they pay are unfair. In 1997, the figures were 51 percent fair and 43 percent unfair.

2. What income group pays the most federal income taxes today?

The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.

3. But didn’t the Bush tax cuts favor the rich?

The New York Times reported recently that the average family in America with an income of $10 million or more received a half-million-dollar tax cut, while the middle class got crumbs (less than $100 shaved off their tax bill). If we examine the taxes paid in a static world—that is, if we assume that there was no change in behavior and economic performance as a result of the tax code—then these numbers are meaningful. Most of the tax cuts went to the super wealthy.

But Americans did respond to the tax cuts. There was more investment, more hiring by businesses, and a stronger stock market. When we compare the taxes paid under the old system with those paid after the Bush tax cuts, the rich are now actually paying a higher proportion of income taxes. The latest IRS data show an increase of more than $100 billion in tax payments from the wealthy by 2005 alone. The number of tax filers who claimed taxable income of more than $1 million increased from approximately 180,000 in 2003 to over 300,000 in 2005. The total taxes paid by these millionaire households rose by about 80 percent in two years, from $132 billion to $236 billion.

4. But haven’t the tax cuts put more of the burden on the backs of the middle class and the poor?

No. I examined the Treasury Department analysis of how much the rich would have paid without the Bush tax cuts and how much they actually did pay. The rich are now paying more than they would have paid, not less, after the Bush investment tax cuts. For example, the Treasury’s estimate was that the top 1 percent of earners would pay 31 percent of taxes if the Bush cuts did not go into effect; with the cuts, they actually paid 37 per­cent. Similarly, the share of the top 10 percent of earners was estimated at 63 percent without the cuts; they actually paid 68 percent.

5. What has happened to tax rates in America over the last several decades?

They’ve fallen. In the early 1960s, the highest marginal income tax rate was a stunning 91 percent. That top rate fell to 70 percent after the Kennedy-Johnson tax cuts and remained there until 1981. Then Ronald Reagan slashed it to 50 percent and ultimately to 28 percent after the 1986 Tax Reform Act. Although the federal tax rate fell by more than half, total tax receipts in the 1980s doubled from $517 billion in 1981 to $1,030 billion in 1990. The top tax rate rose slightly under George H. W. Bush and then moved to 39.6 percent under Bill Clinton. But under George W. Bush it fell again to 35 percent. So what’s striking is that, even as tax rates have fallen by half over the past quarter-century, taxes paid by the wealthy have increased. Lower tax rates have made the tax system more progressive, not less so. In 1980, for example, the top 5 percent of income earners paid only 37 percent of all income taxes. Today, the top 1 percent pay that proportion, and the top 5 percent pay a whopping 57 percent.

6. What is the economic logic behind these lower tax rates?

As legend has it, the famous “Laffer Curve” was first drawn by economist Arthur Laffer in 1974 on a cocktail napkin at a small dinner meeting attended by the late Wall Street Journal editor Robert Bartley and such high-powered policymakers as Richard Cheney and Donald Rumsfeld. Laffer showed how two different rates—one high and one low—could produce the same revenues, since the higher rate would discourage work and investment. The Laffer Curve helped launch Reaganomics here at home and ignited a frenzy of tax cutting around the globe that continues to this day. It’s also one of the simplest concepts in economics: lowering the tax rate on production, work, investment, and risk-taking will spur more of these activities and will often produce more tax revenue rather than less. Since the Reagan tax cuts, the United States has created some 40 million new jobs—more than all of Europe and Japan combined.

7. Are lower tax rates responsi­ble for the big budget deficits of recent decades?

There is no correlation between tax rates and deficits in recent U.S. history. The spike in the federal deficit in the 1980s was caused by massive spending increases.

The Congressional Budget Office reports that, since the 2003 tax cuts, federal revenues have grown by $745 billion—the largest real increase in history over such a short time period. Individual and corporate income tax receipts have jumped by 30 percent in the two years since the tax cuts.

8. Do the rich pay more taxes because they are earning more of the income in America?

Yes. There’s no doubt that the share of total income earned by the wealthy has increased steadily over the past 25 years. Since 1980, the share of income earned by the richest 1 percent has more than doubled, from 9 percent to 19 percent. The share of the income going to the poorest income quintile has declined. Income disparities, in absolute dollars, have grown substantially.

What is significant is that for the top 5 percent and 10 percent of earners, the ratio of taxes paid compared with income earned has risen. For example, in 1980, the top 10 percent earned 32 percent of the income and paid 44 percent of the taxes—a ratio of 1.4. In 2004, this group earned more of the income (44 percent) but paid a lot more of the taxes (68 percent)—a ratio of 1.6. In other words, progressivity—in terms of share of total taxes paid—has risen. On the other hand, for the top 1 percent of earners, progressivity has declined from a ratio of 2.2 in 1980 to 1.9 in 2004.

9. Have gains by the rich come at the expense of a declining living standard for the middle class?

No. If Bill Gates suddenly took his tens of billions of dollars and moved to France, income distribution in America would temporarily appear more equitable, even though no one would be better off. Median family income in America between 1980 and 2004 grew by 17 percent. The middle class (defined as those between the 40th and the 60th percentiles of income) isn’t falling behind or “disappearing.” It is getting richer. The lower income bound for the middle class has risen by about $12,000 (after inflation) since 1967. The upper income bound for the middle class is now roughly $68,000—some $23,000 higher than in 1967. Thus, a family in the 60th percentile has 50 percent more buying power than 30 years ago. To paraphrase John F. Kennedy, this has been a “rising tide” expansion, with most (though not all) boats lifted.

10. Does the tax distribu­tion look a lot different if we factor in other federal taxes, such as the payroll tax?

It’s true that the distribution of taxes is somewhat more equally divided when payroll taxes are accounted for—but the change is surprisingly small. Payroll taxes of 15 percent are charged on the first dollar of income earned by a worker, and most of the tax is capped at an income of just below $100,000. The Tax Policy Center, run by the Urban Institute and the Brookings Institution, recently studied payroll and income taxes paid by each income group. The richest 1 percent pay 27.5 percent of the combined burden, the top 20 percent pay 72 percent, and the bottom 20 percent pay just 0.4 percent. One reason that the disparity in tax shares is so large is that Americans in the bottom quintile who have jobs get reimbursed for some or all of their 15 percent payroll tax through the earned-income tax credit (EITC), a fairly efficient poverty-abatement program.

11. How do tax rates in the United States compare with tax rates abroad?

Overall, taxes are between 10 percent and 20 percent lower in the United States than they are in most other industrial nations. This gives America a competitive edge in world markets. But America’s lead in low tax rates is shrinking. For example, the United States now has the second-highest corporate income tax in the developed world, after Japan. Our personal income tax rate is still low by historical standards. But in recent years many European and Pacific Rim nations have been slashing income taxes—there are now ten Eastern European nations with flat-tax rates between 12 percent and 25 percent—while the political pressure in Washington, D.C., is to raise them.

12. Do tax cuts on investment income, such as George W. Bush’s reductions in tax rates on capital gains and dividends, pri­marily benefit wealthy stockowners?

The New York Times reported that America’s millionaires raked in 43 percent of the investment tax cut benefits in 2003. It’s true that lower tax rates have been a huge boon to shareholders—but most of them are not rich. The latest polls show that 52 percent of Americans own stock and thus benefit directly from lower capital gains and dividend taxes. Reduced tax rates on dividends also triggered a huge jump in the number of companies paying out dividends. As the National Bureau of Economic Research put it, “The surge in regular dividend payments after the 2003 reform is unprecedented in recent years.” Dividend income is up nearly 50 percent since the 2003 tax cut.

The same phenomenon occurred with the capital gains tax, which is essentially a voluntary tax because asset owners can avoid it by simply holding onto their stock, home, or business. This “lock-in” effect, as it is called, can be economically inefficient, since owners have a tax incentive to keep poor investments, rather than drawing out the cash and putting it into assets that are more productive. When the capital gains tax is cut, people unlock their assets and reinvest in other enterprises.

The 1997 tax reform, passed under President Clinton, reduced the capital gains tax rate from 28 percent to 20 percent, and taxable capital gains nearly doubled over the next three years. The 2003 reform brought the rate down to 15 percent, and between 2002 and 2005 there was a 154 percent increase in capital gains reported as income.

This explosion in realized gains cannot be explained only by the rise in the stock market, which averaged just 13 percent annually between 2003 and 2005. Capital gains tax receipts also far outpaced the revenues that the government’s static models predicted. Between 2003 and 2007, actual tax receipts exceeded expectations by $207 billion.

Stephen Moore is senior economics writer for the Wall Street Journal editorial board and a contrib­utor to CNBC TV. He was the founder of the Club for Growth and has served as a fiscal policy analyst at the Cato Institute and the Heritage Foundation. His latest book is “Bullish on Bush: How George Bush’s Ownership Society Will Make America Stronger” (Madison Books).
 
http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes
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« Reply #2 on: March 29, 2008, 10:04:26 AM »

You won't hear an intelligent liberal retort... there is none.

The silence is deafening.. Grin  Excellent post BB.
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« Reply #3 on: March 29, 2008, 10:20:32 AM »

You won't hear an intelligent liberal retort... there is none.

The silence is deafening.. Grin  Excellent post BB.

 Smiley
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« Reply #4 on: March 29, 2008, 10:29:37 AM »

I'll be interested to see Decker's response.
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« Reply #5 on: March 29, 2008, 11:19:37 AM »




* meltdown.jpg (48.45 KB, 350x278 - viewed 405 times.)
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« Reply #6 on: March 29, 2008, 12:00:19 PM »



lol.  He's right Hugo.  Triple post meltdown.   Cheesy  I think the gist is in the first line:  "Yes, income in America is skewed toward the rich. But taxes are skewed far, far more. The top 5 percent pay well over half the income taxes." 

I could have just posted the link, but I thought the entire commentary was interesting. 
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« Reply #7 on: March 29, 2008, 12:06:24 PM »

I know you, it's the only fucking line you read right?

Nope.   I read this too:

2. What income group pays the most federal income taxes today?

The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.
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« Reply #8 on: March 29, 2008, 12:11:07 PM »

so what you're saying is that if you expect me to read this thing, you'll do me the courtesy of the same when I post lengthy articles?  I kinda think it hasn't gone that way in the past Wink

No.  If you think it's too long, don't read it.  That's what I do, unless it grabs my attention from start to finish. 
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« Reply #9 on: March 29, 2008, 12:38:53 PM »

The mistake here is to assume the middle class is dissapearing because of only one reason.

Taxing distributions is only one factor.   A larger factor is the jobs leaving the country and the economy being forced to deal with imported materials and products that cannot be made by americans......Thus you must accept wages less than the cost of living...thus you are forced to downsize to make ends meet....which again hurts the economy.

This is forcing the distributions to richer americans at the expense of middle income and low income people.......of course they pay more taxes.  They go food shopping with a million dollars in the bank while the hard working carpenter looks for a sale on bread and a cheaper gas station in town.....

Its going to get alot worse as the naftas and unions of americas take over.
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« Reply #10 on: March 29, 2008, 12:43:49 PM »


This is forcing the distributions to richer americans at the expense of middle income and low income people.......of course they pay more taxes.  They go food shopping with a million dollars in the bank while the hard working carpenter looks for a sale on bread and a cheaper gas station in town.....



"the hard working carpenter" give me a fucking break. making millions is easy i guess Roll Eyes

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« Reply #11 on: March 29, 2008, 12:56:56 PM »

"the hard working carpenter" give me a fucking break. making millions is easy i guess Roll Eyes




You must have lacked comprehension dumbass.
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« Reply #12 on: March 29, 2008, 01:04:08 PM »

ok, what did i miss? i saw hard working carpentor. i didn't see hard working millionair
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« Reply #13 on: March 29, 2008, 01:12:37 PM »

I was using the millionaires comfort at the store versus the carpenter working his ass off to save money for bread and gas.    Im oppposed to this craziness...the carpenter has nothing left to give.........so of course the fat comfy millionaire better step up.. Cool
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« Reply #14 on: March 29, 2008, 01:22:04 PM »

tit for tat, I won't Smiley

I'm crushed. 
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« Reply #15 on: March 29, 2008, 01:24:45 PM »

I was using the millionaires comfort at the store versus the carpenter working his ass off to save money for bread and gas.    Im oppposed to this craziness...the carpenter has nothing left to give.........so of course the fat comfy millionaire better step up.. Cool

The carpenter doesn't work any harder than the "millionaire."  The person with a net worth of a million in all likelihood worked extremely hard to make their money and increase assets/eliminate debt.  There are millionaire carpenters too. 
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« Reply #16 on: March 29, 2008, 01:34:15 PM »

The carpenter doesn't work any harder than the "millionaire."  The person with a net worth of a million in all likelihood worked extremely hard to make their money and increase assets/eliminate debt.  There are millionaire carpenters too. 


Highly un-lilely.  I think very few millionaires are self-made.    Exceptions in each case but the jest of the thread is that it very well is likley that upper incomes are going to be hit very hard with new regulations because of the need for revenue of economy or to bail out the fed treasury..(since its a mortgage company now)

Every one gets downsized...rThe rich are next.
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« Reply #17 on: March 29, 2008, 01:40:30 PM »

* About two-thirds of us work between forty-five and fifty-five hours per week.

http://www.washingtonpost.com/wp-srv/style/longterm/books/chap1/millionairenextdoor.htm
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« Reply #18 on: March 29, 2008, 01:43:03 PM »

People defend the millionaires because they believe any day now, they'll be one of them.

In the meantime, they'll support any flat-tax (introduced by millionaires, oddly) which will crash their buying power and of course, greatly shrink the buying power of the lowest 20% - the same 20% that keeps the portfolios of the top 20% loaded.

Think about what will happen to your WMT stock when a lot of its shoppers see their buying power decrease by 23% (or whatever number Steve Forbes is telling us this week)
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« Reply #19 on: March 29, 2008, 01:46:06 PM »

Every one gets downsized...rThe rich are next.

When the poor get downsized, they stop buying.

The ripple effect is that the portfolios of the upper middle and upper class are hit shortly thereafter.

Many rich people say "fuck the poor" but dont consider the consequences.  You take their welfare, they will rob you for $ to eat.  You take their healthcare, they will spread diseases that your kid will catch.  You tax them 23% at Walmart and they spend 23% less.  The awesome gains you make in Q1 (having your own taxes cut by 13%) are quickly negated when WMT discovers their sales are down by 20% and their stock suddenly drops 20%.  Your $1.5M investment in WMT stock is now worth 1.2 million.  Now do that to every stock you own.
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« Reply #20 on: March 29, 2008, 03:50:53 PM »

The carpenter doesn't work any harder than the "millionaire."  The person with a net worth of a million in all likelihood worked extremely hard to make their money and increase assets/eliminate debt.  There are millionaire carpenters too. 

 You've never worked construction for a living , have you?
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« Reply #21 on: March 29, 2008, 03:53:53 PM »

When the poor get downsized, they stop buying.

The ripple effect is that the portfolios of the upper middle and upper class are hit shortly thereafter.

Many rich people say "fuck the poor" but dont consider the consequences.  You take their welfare, they will rob you for $ to eat.  You take their healthcare, they will spread diseases that your kid will catch.  You tax them 23% at Walmart and they spend 23% less.  The awesome gains you make in Q1 (having your own taxes cut by 13%) are quickly negated when WMT discovers their sales are down by 20% and their stock suddenly drops 20%.  Your $1.5M investment in WMT stock is now worth 1.2 million.  Now do that to every stock you own.

This is what Obama was referring to when he said "The pain trickled up". It still gives me the giggles.  Grin
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« Reply #22 on: March 29, 2008, 04:35:17 PM »

 Grin



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« Reply #23 on: March 29, 2008, 06:31:51 PM »

<MELTDOWN>

I just finished my taxes for 2007.

I OWE $6222 (FVCK YOU very much AMT). If I didn't switch companies last year and pay more to social security (which I'll never ever fvcking get back) I'd owe around $10,000 (another MIDDLE CLASS family I know owes $20,000).

I claim married ZERO on my W-4 as does my wife. I've maxed out my 401k contributions. There is only so much you can (legally) do to make your taxable income smaller.

I am, by no fvcking means, a rich man. Even though my taxable income (between my wife and I) almost hits 300k a year I am like every other middle class schmuck that gets up early and goes to work every day to support his family and try to give his children a better life than the one he had a kid.

I'm so fvcking mad I could punch a kitten.  Angry

So help me God it's going to take every ounce of self control to not punch the next fvcking liberal in the neck that tells me because I make "too much" I can afford to pay more fvcking taxes.

This is why I will NEVER vote for ANY politician that thinks it's okay to fuck us by raising our taxes. I don't care if your poor, middle class, or rich. If you work for it and earn it it's YOURS.

I'm so goddamn sick and tired of the government pissing away our tax dollars on stupid fucking bullshit. What the fvck are we paying for?

</MELTDOWN>




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« Reply #24 on: March 29, 2008, 06:39:55 PM »


Highly un-lilely.  I think very few millionaires are self-made.    Exceptions in each case but the jest of the thread is that it very well is likley that upper incomes are going to be hit very hard with new regulations because of the need for revenue of economy or to bail out the fed treasury..(since its a mortgage company now)

Every one gets downsized...rThe rich are next.

Wrong.  The majority of American millionaires are self-made.  Go check out The Millionaire Next Door and its sequel The Millionaire Mind.  A twenty-year study of American millionaires (people with a net worth of least a million).  What you'll find is most of them did not inherit their wealth.  They work hard, own their businesses, live below their means, invest conservatively, go to church, get and stay married, clip coupons, shop at thrift stores, do not spend a lot of money on cars, and their home is often their biggest investment. 
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