Wednesday, July 18, 2012

The Top 20% Paid 94.1% of Income Taxes in 2009

The chart above is based on data in the recently-released CBO report "Distribution of Household Income and Federal Taxes, 2008 and 2009," showing the share of federal income taxes paid by income group in 2009.  In 2009, almost all (94.1%) federal income taxes collected were paid by just one-fifth of Americans (top quintile) and the top 1% paid almost 39% of all taxes collected.  In contrast, the lowest and second quintiles were net "tax collectors" because that 40% of Americans received more in refundable tax credits than they paid in income taxes.

But all we hear about is how the rich don't pay their fair share of taxes, and proposals for increasing taxes on "the rich," like the one from Warren Buffett discussed here. 

98 Comments:

At 7/18/2012 7:10 PM, Blogger arbitrage789 said...

You know what the libs will say... it's a different story if you include FICA taxes.

^ ^ ^ ^ ^ ^ ^

But if you include FICA taxes, then you've got to look at benefits, not just taxes

 
At 7/18/2012 7:51 PM, Blogger juandos said...

Ahhh yes, the The Huxtable Tax is alive well...

Still it only gets better: A new report just out from the Internal Revenue Service reveals that 36 of President Obama's executive office staff owe the country $833,970 in back taxes. These people working for Mr. Fair Share apparently haven't paid any share, let alone their fair share...

Can I get an Amen!?

 
At 7/18/2012 8:21 PM, Blogger Nathan said...

That figure is misleading. They only pay 94% if you include the "negative" income of payouts to the bottom two quintiles. It is important to note that 40% of the country actually gets money at tax time, but what they get as handouts from the government (really from the wallets of the top quitiles) isn't really a percentage of the taxes paid. If that is the case, the top three quintiles pay 110.2% of the taxes, which is obviously a silly statement.

 
At 7/18/2012 8:24 PM, Blogger Nathan said...

If I did my calculations right, this means that they actually pay about 85% of the tax. (I can't get an accurate figure, because I don't know how much of the middle quintile actually pay taxes).

 
At 7/18/2012 9:11 PM, Blogger Hydra said...

And they probably took more than that in income.

Whatever they paid, it was a bargain for what they got in return.

Like Arbitrage says, you have to look at the benefits.

 
At 7/18/2012 9:26 PM, Blogger Benjamin said...

The total tax picture is different, due to FICA and state and local taxes (sales taxes in particular).

In general, taxes in the USA are neither progressive or regressive.

Interestingly enough, if you read the excellent Calafia Beach blog, you know that federal taxes, as a percent of GDP, have been in long-term decline.

I am disappointed that Dr. Perry would run this post without intelligent caveating.

 
At 7/18/2012 9:31 PM, Blogger Itchy said...

... but they aren't paying their fair share!

... the rich take advantage of all the loopholes and don't pay taxes on most of their income!

I don't actually believe that, but I figured I'd just preempt those statements and get the argument started early

 
At 7/18/2012 9:33 PM, Blogger juandos said...

"In general, taxes in the USA are neither progressive or regressive"...

What an amazingly silly comment...

pseudo benny still taking that big, blind leap into ha! ha! land...

Psst pseudo benny, consider looking up the definition of 'progressive' as applied to the American Extortion System...

 
At 7/18/2012 10:27 PM, Blogger marmico said...

If I did my calculations right, this means that they actually pay about 85% of the tax

That's about right. The IRS says that the lowest three quartiles' income tax share is 12.7% and the top 1% is 36.7%. A little bit of interpolation to the 80th percentile would get one to about an 85% tax share for the upper quintile.

See IRS Table 6.

 
At 7/18/2012 10:57 PM, Blogger VangelV said...

That figure is misleading. They only pay 94% if you include the "negative" income of payouts to the bottom two quintiles. It is important to note that 40% of the country actually gets money at tax time, but what they get as handouts from the government (really from the wallets of the top quitiles) isn't really a percentage of the taxes paid. If that is the case, the top three quintiles pay 110.2% of the taxes, which is obviously a silly statement.

Funny how the data can be used to come to very different conclusions depending on what you want to show. That said, Mark is quite right about the 'rich' carrying a disproportionate amount of the tax burden.

 
At 7/18/2012 11:55 PM, Blogger Che is dead said...

Mankiw: Middle Class Receives More in Government Benefits Than They Pay in Taxes

 
At 7/19/2012 12:00 AM, Blogger Che is dead said...

This year, Americans have to work until July 15 to pay for the burden of government, more than six months.

In a new report, Americans for Tax Reform (ATR) has calculated that Americans will spend a total of 197 days toiling to pay for the cost of government.

“Cost of Government Day is the date of the calendar year on which the average American worker has earned enough gross income to pay off his or her share of the spending and regulatory burden imposed by government at the federal, state and local levels,” reads the report. -- CNS News

_____________


"I believe this government cannot endure permanently half-slave and half-free. I do not expect the Union to be dissolved - I do not expect the house to fall - but I do expect it will cease to be divided. It will become all one thing or all the other." -- Abraham Lincoln

 
At 7/19/2012 12:30 AM, Blogger Benjamin said...

Federal income taxes are used to finance federal agency spending. Payroll taxes (largely) pay for Social Security and Medicare.

If you want to cut income taxes, you should cut agency spending.

Below is a list of federal employment--parasites, largely---by agency. Start cutting, or shut up.

Federal Employment By Agency

Defense 772,601
VA 304,665
Homeland Security 183,455
Justice 117,916
Treasury 110,099
USDA 106,867
Interior 70,231
H&HS 69,839
Transportation 57,972
Commerce 56,856
State 39,016
Labor 17,592
HUD 9585
Education 4452

 
At 7/19/2012 2:29 AM, Blogger bob said...

Incomes have never been so skewed to the top 20% since the 1930s. They get the huge bulk of the income 'earned' so they can expect to pay the bulk of the tax on income in a modern society. This does not show how much of their total income they pay to the government in all forms of taxes. Are you suggesting that the top income eaners, already living the life, should now pay less of the income tax burden too? A doubll boost. And has already been said, this is just income tax; this story does not apply to other taxes, just as important.

 
At 7/19/2012 7:34 AM, Blogger Jon Murphy said...

This comment has been removed by the author.

 
At 7/19/2012 7:36 AM, Blogger Jet Beagle said...

Nathan: "the top three quintiles pay 110.2% of the taxes, which is obviously a silly statement."

No, it's not a silly statement, Nathan. It's a fact.

I don't know any other way to express earned income tax "credit" than to call it a negative tax. As long as a portion of the "taxpayers" actually pay negative taxes, then the remaining taxpayers must be paying in excess of the total tax collection.

 
At 7/19/2012 7:42 AM, Blogger Jet Beagle said...

benjamin: "Federal income taxes are used to finance federal agency spending. Payroll taxes (largely) pay for Social Security and Medicare."

Well, benjamin, the problem is that Congress has always combined the two revenue sources. When payroll tax receipts exceeded SS and Medicare disbursements, the surplus was used to finance agency spending. Now that payroll taxes are less than SS/Medicare disbursements, federal income taxes will make up the shortfall.

Despite the existence in some minds of the mythical trust funds, the funds are all lumped together and deposited with the U.S. Treasury. And disbursed from the same U.S. Treasury.

 
At 7/19/2012 7:45 AM, Blogger Jon Murphy said...

Whether or not the number is 94% or 85% doesn't matter. This group, as a proportion of national income, only control about 50%. So, their tax burden proportion is 1.5 to 2 times that of their income proportion.

 
At 7/19/2012 8:05 AM, Blogger Jet Beagle said...

jon murphy: "Whether or not the number is 94% or 85% doesn't matter. "

It does matter to me that some "taxpayers" contribute negative taxes. We should always make that clear when showing distribution of contributions. Reducing the contribution of the top quintile from 94% to 85% allows the parasites to remain hidden.

 
At 7/19/2012 8:10 AM, Blogger marmico said...

I don't know any other way to express earned income tax "credit" than to call it a negative tax

Have you ever heard of the $1.3 trillion in annual tax expenditures which are negative taxes primarily benefitting the upper third of households by income?

For the supply-siders, reduce marginal income tax rates by reducing tax expenditures.

 
At 7/19/2012 8:32 AM, Blogger VangelV said...

Incomes have never been so skewed to the top 20% since the 1930s. They get the huge bulk of the income 'earned' so they can expect to pay the bulk of the tax on income in a modern society. This does not show how much of their total income they pay to the government in all forms of taxes. Are you suggesting that the top income eaners, already living the life, should now pay less of the income tax burden too? A doubll boost. And has already been said, this is just income tax; this story does not apply to other taxes, just as important.

I am not saying that everything should be kept the same and top income earners should get a tax break. I am suggesting that we let the markets work. If we stop using taxpayer receipts and newly created money to bail out failing banks the executives who make millions in unearned bonuses would see a deserved pay cut. If we fire 90% of the regulators we will see competition for the protected businesses. That means the opportunity to compete for new small businesses and a decline in profitability for the rent seekers who write the regulations that protect them.

And yes, we have to end the culture of dependency or risk the destruction of whatever is left of our liberty.

 
At 7/19/2012 8:44 AM, Blogger Steve said...

I am in the top 20% and I agree we do not pay enough in taxes. We have almost all of the wealth in this country. The money to run this needs to come those of us who can afford it.

Also this graph is misleading since it does not include payroll taxes, sales taxes and state income taxes.

 
At 7/19/2012 8:50 AM, Blogger Seth said...

Our gov't would be in real trouble if it didn't have rich people.

 
At 7/19/2012 8:54 AM, Blogger Jet Beagle said...

steve: "I am in the top 20% and I agree we do not pay enough in taxes."

Well, Steve, the problem is that few in the 20% agree with you. If you feel guilty about your wealth and want to pay more, please do. But keep your damned hand out of my wallet.

 
At 7/19/2012 9:02 AM, Blogger VangelV said...

I am in the top 20% and I agree we do not pay enough in taxes. We have almost all of the wealth in this country. The money to run this needs to come those of us who can afford it.

If you think that you pay too little why not just pay more as you are permitted to? Feel free to do what you think is right and pay whatever you figure your share should be. But don't expect others, who disagree with you, to do the same thing.

Also this graph is misleading since it does not include payroll taxes, sales taxes and state income taxes.

Those go to pay for benefits that are linked to mandatory programs designed by Congress. Since the benefits are capped, so are contributions. And let us note that because of the structure of the tax system the 'rich' get far less for their contributions than the poor or middle class.

 
At 7/19/2012 9:28 AM, Blogger Steve said...

Well you see VangelV and Jet Beagle I am working to change the law so all us top 20%ers will be required to pay more.

It is only a matter of time before you join me.

Your Welcome.

 
At 7/19/2012 9:54 AM, Blogger VangelV said...

Well you see VangelV and Jet Beagle I am working to change the law so all us top 20%ers will be required to pay more.

Good luck. The 'top 20%ers' have options not available to the rest and as such will not pay any more than they do now. The only thing that you can do is decrease the amount of tax that they wind up paying by destroying the economy.

It is only a matter of time before you join me.

That will never happen.

Your Welcome.

I wish you luck my friend. If the stupidity that you support was ever implemented it will ensure that my grandchildren will not have to work a day in their lives. Thanks again for destroying your nation and your currency.

 
At 7/19/2012 9:57 AM, Blogger Kevin Carter said...

How does this percentage play out if the calculation is made based on disposable income, not total income?

The median household income in 2009 (US Census data) was approximately $50,000. Does anyone honestly believe that a household earning only $50,000 should be paying more taxes?

 
At 7/19/2012 9:57 AM, Blogger Dana B said...

Jdet Besagle ,Simple solution ...send in more .

 
At 7/19/2012 9:58 AM, Blogger Dana B said...

http://www.youtube-nocookie.com/embed/EW5IdwltaAc?rel=0

 
At 7/19/2012 9:58 AM, Blogger Dana B said...

We have a spending problem...not a taxing problem. dolts.

 
At 7/19/2012 10:11 AM, Blogger Jet Beagle said...

kevin carter: " Does anyone honestly believe that a household earning only $50,000 should be paying more taxes?"

Well, I believe that if 1 household in the U.S. is paying income taxes, then every household in the U.S. should be paying income taxes.

My guess is that most households earning $50,000 are not paying any income taxes at all.

 
At 7/19/2012 10:12 AM, Blogger Jet Beagle said...

Dana B: "We have a spending problem...not a taxing problem. dolts"

Well, Dana, I believe we have both. As long as some voters are not paying taxes to support the spending, they will always be more inclined to continue the spending.

 
At 7/19/2012 10:34 AM, Blogger Mayfield said...

Stop speculating about FICA taxes.

Do some research guys. The info is available.

http://www.cbo.gov/sites/default/files/cbofiles/attachments/all_tables2010.pdf

2007 CBO Data
Average Federal Tax Rates for All Households (includes income tax, corporate income tax, FICA, and excise taxes)

Lowest Quintile: 4%
2nd Quintile: 10.6%
Middle Quintile 14.3%
Fourth Quintile: 17.4%
Highest Quintile: 25.1%

Top 10 Percent: 26.7%
Top 5 Percent: 27.9%
Top 1 Percent: 29.5%

Overall, total federal taxes are progressive.

 
At 7/19/2012 10:49 AM, Blogger morganovich said...

benji-

"
In general, taxes in the USA are neither progressive or regressive. "

nonsense.

even including fica, the us has the most progressive taxes in the oecd.

http://mjperry.blogspot.com/2011/03/us-has-most-progressive-tax-system-for.html

the top 10% pay 45% of tax on 33% of income.

the oecd average is far lower.

we have already been over this benji.

you were even on the thread of the piece to which i linked.

so, presumably, you already knew that.

so why make such a statement when you have already seen that it is not so?

 
At 7/19/2012 10:59 AM, Blogger Michael said...

throw in property taxes, estate taxes and the upper income pays in a disproportionate share of taxes regardless of how anyone terms it.

Govt better be careful what it says and does cause all it needs is a revolt from the remaining taxpayers who are subsidizing folks in lower classes to end the charade. Which is going to end anyway, so what th eheck.

 
At 7/19/2012 11:28 AM, Blogger morganovich said...

also:

am i the only one who find the definition of "progressive and regressive" highly misleading around taxes?

if bob makes $50k a year and dan makes $100k, they would expect to pay the same amount for a big mac.

we would call that fair and flat.

but under a "flat" tax dan will pay twice as much.

if bob pays 10k in taxes and dan pays $19k (90% more) that is suddenly "regressive"?

the terms themselves have been twisted into an orwellian doubspeak to push redistribution.

 
At 7/19/2012 11:29 AM, Blogger Paul said...

"Start cutting, or shut up."

Sure, start cutting. But also, yes, get rid of the Bush tax cuts on the lowest incomes, for starters. Everyone should have some skin in the game.

 
At 7/19/2012 11:31 AM, Blogger mike k said...

"Have you ever heard of the $1.3 trillion in annual tax expenditures which are negative taxes primarily benefitting the upper third of households by income?"

Marmico,the top 20% are still paying nearly all federal income taxes AFTER those federal tax expenditures. So, what's your point?

 
At 7/19/2012 11:34 AM, Blogger mike k said...

"I am in the top 20% and I agree we do not pay enough in taxes. We have almost all of the wealth in this country. The money to run this needs to come those of us who can afford it."

Steve, the money is coming from the top 20%. That was the point of the post!

 
At 7/19/2012 12:00 PM, Blogger James Kubon said...

Wake up America!!

The Federal Income tax is a scam, designed to enrich the banking elite..
100% of the personal income tax is used to pay the interest on the National Debt.
Which is collected by the Federal reserve (a private corporation) and goes directly into the banksters pockets. The money is created out of thin air and loaned to the government at interest, in violation of the constitution, under the fraudulent Federal Reserve act of 1914, the congress abdicated their responsibility to control the money supply to the banksters.

 
At 7/19/2012 12:34 PM, Blogger Jon Murphy said...

It does matter to me that some "taxpayers" contribute negative taxes.

Sorry, Jet. What I was referring to was the proportion. There is complaint the rich do not pay high taxes compared to their share of wealth. Well, as we see, they do. That was my point.

 
At 7/19/2012 1:09 PM, Blogger morganovich said...

james-

us net federal interest is $227bn.

personal income tax generates about $1100bn.

you seem to be drawing conclusions on the basis of same very bad data.

 
At 7/19/2012 1:40 PM, Blogger juandos said...

"Are you suggesting that the top income eaners, already living the life, should now pay less of the income tax burden too?"...

Well bob why should the wealthy pay your share of the total costs of running this socialist nightmare that American government has devolved into?

 
At 7/19/2012 3:00 PM, Blogger Jeff said...

How about everybody above the poverty level pays some income tax. Everything that I have read indicates that somewhere close to 50% of Americans pay no income tax. Yes, they may pay FICA. No matter what, the tax system needs to be overhauled, and made less complex. But I am not one who is convinced that the "top 1%" needs to pay more taxes, and I am not one of the "1 percenters" either.

 
At 7/19/2012 3:18 PM, Blogger Jon Murphy said...

the tax system needs to be overhauled, and made less complex.

We could go with a VAT.

 
At 7/19/2012 4:49 PM, Blogger juandos said...

"How about everybody above the poverty level pays some income tax"...

How about NO jm?

How about everyone regardless of what the government foists off as the so called poverty line pay the same exact amount (to the penny) and adjust government spending instead?

 
At 7/19/2012 5:45 PM, Blogger Steve said...

The share of the nation's wealth held by the less affluent half of American households dropped precipitously after the financial crisis, to 1.1 percent, according to new calculations by Congress's nonpartisan research service.

By contrast, the share of total net worth held by the weathiest 1 percent of American households continued rising, hitting 34.5 percent in 2010. The top 10 percent's share was 74.5 percent.


http://www.huffingtonpost.com/2012/07/19/households-wealth-american-1-percent_n_1687015.html

 
At 7/19/2012 5:46 PM, Blogger Jon Murphy said...

How about NO jm?

I think you mean "Jeff?"

 
At 7/19/2012 6:59 PM, Blogger Itchy said...

@Steve

Funny that you (and huffpo) bring up wealth inequality, but fail to bring up the fact that is mostly in the hands of OLD PEOPLE

Those greedy wealth hoarders!

 
At 7/19/2012 7:12 PM, Blogger Unknown said...

Where is the corresponding graph of the percentage of income earned, vs how much tax paid? They pay most of the taxes, yes, but they make almost all the money too. What are you gonna do, tax people who have no money?

 
At 7/19/2012 8:15 PM, Blogger VangelV said...

We could go with a VAT.

That might be a disaster.

In the long run, of course, and that run is not very long, the retail firms will not be able to absorb a sales tax; they are not unlimited pools of wealth ready to be confiscated. As the retail firms suffer losses, their demand curves for all intermediate goods, and then for all factors of production, will shift sharply downward, and these declines in demand schedules will be rapidly transmitted to all the ultimate factors of production: labor, land, and interest income. And since all firms tend to earn a uniform interest return determined by social time preference, the incidence of the fall in demand curves will rest rather quickly on the two ultimate factors of production: land and labor.

Hence, the seemingly common-sense view that a retail sales tax will readily be shifted forward to the consumer is totally incorrect. In contrast, the initial impact of the tax will be on the net incomes of retail firms. Their severe losses will lead to a rapid downward shift in demand curves, backward to land and labor, i.e., to wage rates and ground rents. Hence, instead of the retail sales tax being quickly and painlessly shifted forward, it will, in a longer run, be painfully shifted backward to the incomes of labor and landowners. Once again, an alleged tax on consumption, has been transmuted by the processes of the market into a tax on incomes.

The general stress on forward shifting, and neglect of backward shifting, in economics is due to the disregard of the Austrian theory of value, and its insight that market price is determined only by the interaction of an already-produced stock, with the subjective utilities and demand schedules of consumers for that stock. The market supply curve, therefore, should be vertical in the usual supply-demand diagram. The standard Marshallian forward-sloping supply curve illegitimately incorporates a time dimension within it, and it therefore cannot interact with an instantaneous, or freeze-frame, market-demand curve. The Marshallian curve sustains the illusion that higher cost can directly raise prices, and not only indirectly by reducing supply. And while we may arrive at the same conclusion as Marshallian supply-curve analysis for a particular excise tax, where partial equilibrium can be used, this standard method breaks down for general sales taxation.

 
At 7/19/2012 9:13 PM, Blogger juandos said...

"I think you mean "Jeff?""...

No sir jm, I most definitely meant you amigo...

I've seen the VAT in action and trust me when I say that is the very last thing you want to see...

 
At 7/19/2012 9:30 PM, Blogger VangelV said...

By contrast, the share of total net worth held by the weathiest 1 percent of American households continued rising, hitting 34.5 percent in 2010. The top 10 percent's share was 74.5 percent.

You can thank the Fed, which did all it could to artificially boost the net worth of stockholders and financial companies through its counterfeiting operations.

 
At 7/20/2012 8:06 AM, Blogger Jet Beagle said...

Elected officials will love VAT, jon murphy. The electorate never sees how much they are being taxed. They only see the higher end prices they pay.

Wouldn't a national sales tax be more visible to voters?

 
At 7/20/2012 8:14 AM, Blogger Jet Beagle said...

unknown: "What are you gonna do, tax people who have no money?"

Everyone should pay for services they receive. Everyone has to pay for national defense. If some cannot pay their share, they should be drafted into military or required to perform public service to make up for their shortfall.

Airline passengers pay for airports and for airport security.

Truck and auto drivers pay for highways through gasoline taxes.

Train and bus passengers should pay for the full cost of their commute.

National park users should pay for maintenance of parks.

Everyone should pay for the government services they consume. If they cannot pay, they don't get the service.

 
At 7/20/2012 8:16 AM, Blogger Jet Beagle said...

Oh, I forgot an important one. Prisoners have to grow their own food, plus enough surplus to pay the other costs of their incarceration.

 
At 7/20/2012 6:51 PM, OpenID Sprewell said...

Jet, good point about usage taxes, I'll add another simple one: only people who pay tax can vote and your vote is worth what you pay in. So if Charles Koch pays $5 million in taxes and I pay $10k, he gets 500 times the votes I do because he paid 500 times the taxes. That goes back to the original Constitution that the founders wrote, when only property owners could vote, only you change it from property to taxes paid in, as property isn't as important as it used to be. Do that and watch how quickly things shape up.

 
At 7/20/2012 8:48 PM, Blogger VangelV said...

Everyone should pay for services they receive. Everyone has to pay for national defense. If some cannot pay their share, they should be drafted into military or required to perform public service to make up for their shortfall.

The government has no ownership over someone's body so there is no way to justify conscription or any kind of involuntary servitude. National defence is simply a matter of insurance and not everyone has to have it just as not everyone has to purchase home insurance against fire or flood.

 
At 7/20/2012 8:57 PM, Blogger VangelV said...

Airline passengers pay for airports and for airport security.

No, they do not. Money is taken from them so that the government can hire morons and pedophiles to molest passengers while terrorists get on board. Passengers get little 'security' for the money that they have to shell out. In a competitive market system the airports and airlines would be responsible for security and passengers would have choices about how much risk they want to take.

Truck and auto drivers pay for highways through gasoline taxes.

They pay more than they get back because the government can overcharge and not provide the level of service.

Train and bus passengers should pay for the full cost of their commute.

That would only happen in a market environment where investors offer the service to consumers who pay for it.

National park users should pay for maintenance of parks.

There should be no national parks. The land should be sold to private individuals who will choose how to use it and what to charge consumers.

Everyone should pay for the government services they consume. If they cannot pay, they don't get the service.

Government should not offer services. If it competes with private sector consumers would overwhelmingly choose the private companies as they did with package delivery services.

 
At 7/20/2012 8:58 PM, Blogger VangelV said...

Oh, I forgot an important one. Prisoners have to grow their own food, plus enough surplus to pay the other costs of their incarceration.

Shouldn't they compensate victims first? And if they do why should they be in prison? And why should there be prisoners who commit 'crimes' that have no victims?

 
At 7/20/2012 9:00 PM, Blogger VangelV said...

Jet, good point about usage taxes, I'll add another simple one: only people who pay tax can vote and your vote is worth what you pay in. So if Charles Koch pays $5 million in taxes and I pay $10k, he gets 500 times the votes I do because he paid 500 times the taxes. That goes back to the original Constitution that the founders wrote, when only property owners could vote, only you change it from property to taxes paid in, as property isn't as important as it used to be. Do that and watch how quickly things shape up.

As long as government can't steal from some to reward others or trample on social or economic freedoms it does not matter who votes.

 
At 7/21/2012 11:34 AM, Blogger Zachriel said...

This comment has been removed by the author.

 
At 7/21/2012 11:37 AM, Blogger Zachriel said...

Only showing income taxes doesn't provide a good picture of the tax burden. This chart from the CBO report includes all federal taxes and transfers, including Social Security and Medicare.

Shares of Before- and After-Tax Income, by Income Group, 2009

 
At 7/21/2012 11:47 AM, Blogger Zachriel said...

Here's another interesting chart. Notice that taxation doesn't shift the distribution by much.

Shares of Before- and After-Tax Income, by Income Group, 2009

 
At 7/21/2012 1:29 PM, Blogger VangelV said...

Only showing income taxes doesn't provide a good picture of the tax burden. This chart from the CBO report includes all federal taxes and transfers, including Social Security and Medicare.

Shares of Before- and After-Tax Income, by Income Group, 2009


The CBO still shows the top quintile and top 1% pay a disproportionate amount even though they get few of the benefits that flow to the bottom half.

 
At 7/21/2012 1:41 PM, Blogger Mogumbo Gono said...

I always ask this question, but I never get an answer:

What should the top 1% pay, as a percentage. HOW MUCH is enough??

Give me a number! How much is enough? 70% of their income?

85%?

95%?

ALL of it?

GIVE ME A NUMBER.

 
At 7/21/2012 2:56 PM, Blogger Nik Martin said...

This if false information. The Congressional Budget has no Federal Tax data, that data comes from tjhe IRS, and here is is:http://taxfoundation.org/article/summary-latest-federal-individual-income-tax-data-0#table1

Guess what? Your 1% didn't pay squat compared to the largest group of wag earners, those making < 66k AGI.

 
At 7/21/2012 3:32 PM, Blogger Itchy said...

@Nik Martin

Guess what? Your 1% didn't pay squat compared to the largest group of wag earners, those making < 66k AGI.

That table says that the people making less than $66k bottom 75%) paid 12.3% of the taxes and the top 1% paid 36.7%.

Fair Share?

 
At 7/21/2012 5:05 PM, Blogger Zachriel said...

VangelV: The CBO still shows the top quintile and top 1% pay a disproportionate amount even though they get few of the benefits that flow to the bottom half.

Well, just somewhat more. It's not as if taxes are making them poor.
http://www.zachriel.com/images/ShareBeforeAfter.jpg

And there are intangible benefits to being rich in a stable society.

 
At 7/21/2012 5:22 PM, Blogger VangelV said...

Well, just somewhat more. It's not as if taxes are making them poor.
http://www.zachriel.com/images/ShareBeforeAfter.jpg

And there are intangible benefits to being rich in a stable society.


First of all, using the power of government to make some people rich while harming the rest is not a good idea and does not make society stable. The idiots on the left don't understand that the same system that redistributes from the productive to the less productive allows some to steal from all consumers and taxpayers. The reason they refuse to acknowledge the real problem is because they would have to admit that their favoured programs are illogical and immoral.

 
At 7/21/2012 5:39 PM, Blogger Zachriel said...

VangelV: First of all, using the power of government to make some people rich while harming the rest is not a good idea and does not make society stable.

No, but some degree of corruption is inherent in all societies. Open, democratic societies are not immune to corruption, but they tend to have less of it than other forms of government.

VangelV: The idiots on the left don't understand that the same system that redistributes from the productive to the less productive allows some to steal from all consumers and taxpayers.

Not sure about the "idiots on the left", but an open system with power distributed at all levels tends to be the most stable, with the least corruption, while maintaining civil liberties.

 
At 7/21/2012 6:10 PM, Blogger Itchy said...

The most "unfair" aspect of current tax laws (given that we had a Constitutional Amendment which allowed income taxation) is that the current system taxes income unequally for two tax payers with the exact same income.

For all the whining about the "fair share," no one complains about the fact that the government subsidizes one tax payer over another by steering our behavior with the tax code. UN fact, most people find it completely acceptable.

 
At 7/21/2012 6:26 PM, Blogger Mogumbo Gono said...

Once again, no one has answered my question:

"What percentage must the 1% pay? Give me a specific number." But Leftists refuse to name a number.

Next, be aware that no poor person has ever created a single job. The rich are absolutely essential to job creation, yet they are demonized by the very same people who would instantly take their place if they possibly could. The Left is motivated by green-eyed envy.

Finally, the West has been through these same arguments before. Economist Frederick Bastiat thoroughly destroyed the current Socialist arguments back during the French Revolution:

http://bastiat.org/en/the_law.html

 
At 7/21/2012 6:44 PM, Blogger VangelV said...

No, but some degree of corruption is inherent in all societies. Open, democratic societies are not immune to corruption, but they tend to have less of it than other forms of government.

I see no evidence of this. The current government steals more than any that you can imagine. Where do you think that the trillions for bailouts came from?

Not sure about the "idiots on the left", but an open system with power distributed at all levels tends to be the most stable, with the least corruption, while maintaining civil liberties.

No. The most stable system is one in which nobody is trusted with much power. Look at your own system. The people in Congress come and go but the bureaucrats that write most of the regulations and enforce them are set in stone.

You really should look at the bigger picture and think more rationally.

 
At 7/21/2012 8:26 PM, Blogger Zachriel said...

VangelV: The current government steals more than any that you can imagine.

If you mean the U.S. government, it's a democratic republic, so the people tax themselves through an elected legislature.

VangelV: The most stable system is one in which nobody is trusted with much power.

That's right. That's why power is divided, not only between branches of government, but between all levels of society.

 
At 7/21/2012 9:17 PM, Blogger VangelV said...

If you mean the U.S. government, it's a democratic republic, so the people tax themselves through an elected legislature.

No. They don't want to be taxed but have no say so because they do not have control of anything. Most people do not vote and most do not support any particular tax increase or subsidy. But as the GM people are fond of showing, stuff gets passed because of logrolling.

 
At 7/21/2012 9:18 PM, Blogger VangelV said...

That's right. That's why power is divided, not only between branches of government, but between all levels of society.

When a government agency can close down the coal generation industry or force everyone to use low pressure shower heads the evidence shows that power is not divided very well and that too much power is wielded by too many unelected bureaucrats.

 
At 7/22/2012 8:16 AM, Blogger Zachriel said...

VangelV: No. They don't want to be taxed but have no say so because they do not have control of anything.

The vast majority of people understand that taxes are necessary. While most people generally want lower taxes, a majority of millionaires in the U.S. actually support higher taxes on themselves.
http://blogs.wsj.com/wealth/2011/10/27/most-millionaires-support-warren-buffetts-tax-on-the-rich/

VangelV: When a government agency can close down the coal generation industry or force everyone to use low pressure shower heads the evidence shows that power is not divided very well and that too much power is wielded by too many unelected bureaucrats.

Of course power isn't divided well. It's a dynamical system that is always being stressed. Optimals probably don't exist, at least not for any length of time.

It's the worst of all systems...

 
At 7/22/2012 2:18 PM, Blogger VangelV said...

The vast majority of people understand that taxes are necessary. While most people generally want lower taxes, a majority of millionaires in the U.S. actually support higher taxes on themselves.
http://blogs.wsj.com/wealth/2011/10/27/most-millionaires-support-warren-buffetts-tax-on-the-rich/


If some millionaires want to pay more income tax they should just write a cheque to the federal government. The fact that they do not shows that the story is not right.

Of course power isn't divided well. It's a dynamical system that is always being stressed. Optimals probably don't exist, at least not for any length of time.

It's the worst of all systems...


It certainly is a terrible system. Which is why it needs to be eliminated and replaced with the limited government republic that the Constitution was calling for. While that is still far too much government it is a step in the right direction.

 
At 7/22/2012 2:42 PM, Blogger Zachriel said...

VangelV: If some millionaires want to pay more income tax they should just write a cheque to the federal government. The fact that they do not shows that the story is not right.

What do you mean by "not right"? It's a survey result.

VangelV: It certainly is a terrible system.

Yeah, the worst ...

 
At 7/22/2012 2:46 PM, Blogger VangelV said...

What do you mean by "not right"? It's a survey result.

That is my point. If they really felt that way they would have paid more taxes voluntarily as they are capable of doing. The fact that they did not means that they don't really want to pay more.

 
At 7/22/2012 3:06 PM, Blogger Zachriel said...

VangelV: If they really felt that way they would have paid more taxes voluntarily as they are capable of doing.

Um, no. People can advocate for higher taxes without voluntarily paying more. You're apparently not very attuned to the democracy thingy.

 
At 7/22/2012 3:59 PM, Blogger VangelV said...

Um, no. People can advocate for higher taxes without voluntarily paying more. You're apparently not very attuned to the democracy thingy.

That is sheer hypocrisy or posturing. If all these millionaires really felt that they should pay more to the government they are free to do so.

 
At 7/22/2012 7:40 PM, Blogger Zachriel said...

VangelV: That is sheer hypocrisy or posturing. If all these millionaires really felt that they should pay more to the government they are free to do so.

And yet the fact is that people discuss whether tax rates should be higher without volunteering to pay more. Whether you agree or not, it seems that it is your understanding that is in error. Perhaps you should revisit your assumptions.

 
At 7/22/2012 9:31 PM, Blogger VangelV said...

And yet the fact is that people discuss whether tax rates should be higher without volunteering to pay more. Whether you agree or not, it seems that it is your understanding that is in error. Perhaps you should revisit your assumptions.

It has to be an error because they are free to pay as much as they wish but refuse to pay a penny more than they do. People say many things. It is what they do that counts.

 
At 7/23/2012 6:22 AM, Blogger Zachriel said...

VangelV: People say many things. It is what they do that counts.

That's right. For instance, in the U.S., the founders wrote a constitution that gave the power to raise taxes to the legislature. Since then, the people of the United States have voted for representatives who understood that taxation was necessary. For the vast majority of people, it's the level of taxation that's the issue.

 
At 7/23/2012 8:08 AM, Blogger VangelV said...

For instance, in the U.S., the founders wrote a constitution that gave the power to raise taxes to the legislature.

They gave the government a very limited power to raise taxes. It took more than a century for Congress to get around that restriction and begin to tax incomes.

 
At 7/25/2012 7:55 AM, Blogger Quanuck said...

The rich have to pay mo for the po people to get mo. The "gimme gimme" clan of 0bamanites.. brainwashed and defeated souls who are nurtured to be dependent of a system of entitlements and non-accountability. There are more people living below poverty levels and on food stamps than ever before. 0bama took us to a new level of defeatism. After his comment "you didn't build that" proving he is anti-accomplishment, it goes to show his jealousy of people who actually took self initiative to be successful. Our country is being led by that genius spoiled child you knew in middle school who didn't know how to throw a football or skate and who loved to put down the jocks in class who "could".

 
At 7/25/2012 1:59 PM, Blogger Nancy E. Vinal said...

Quit playing musical chairs with statistics...
The bottom line is: the wealthy pay the largest portion of the taxes, direct and indirect.
And THEY ARE LEAVING and renouncing citizenship.. (after they liquidate their real properties and holdings that cannot be transferred off shore.)
That is fact... so the people left holding the big ugly bag are going to shoulder the massive burden for every wealthy man/woman who expatriates.
... The "laws" and mandates that the stupid politicians are putting into place only motivates the wealthy to LEAVE sooner.
Wake up.

 
At 7/26/2012 2:22 PM, OpenID 3e347fd8-d757-11e1-8020-000bcdcb5194 said...

The super-rich don't make their money from wages. They make from dividends and capital gains where they are taxed far below the 39%-46% the middle class pay at the top of their income bracket when you combine their 28%-35% tax rate with an 11% social security tax.

 
At 7/26/2012 3:36 PM, Blogger VangelV said...

The super-rich don't make their money from wages. They make from dividends and capital gains where they are taxed far below the 39%-46% the middle class pay at the top of their income bracket when you combine their 28%-35% tax rate with an 11% social security tax.

So what? If you tax capital at a higher rate you will get less of it. That will mean fewer jobs for the middle and low classes and less production. Why exactly is that a good thing?

 
At 7/26/2012 4:09 PM, Blogger Itchy said...

The super-rich don't make their money from wages. They make from dividends and capital gains where they are taxed far below the 39%-46% the middle class pay at the top of their income bracket when you combine their 28%-35% tax rate with an 11% social security tax.

Who are the "Super Rich"? People making over $10M / year.  In 2009 there were only 8,225 income tax returns reporting more than $10M of income.  This is the 0.008%

As a group they pay the majority of their income at the top marginal rate.  Sure there are some who pay only capital gains, but many pay at the top marginal rate.

These people are also paying taxes on almost 90% of their AGI.  

The myths that the Rich only pay capital gains tax and use the loopholes to avoid paying taxes are perpetuated by people who want you to believe there is some boogieman out there.

 
At 7/30/2012 7:01 PM, Blogger dsimon said...

VangelIV: "If you tax capital at a higher rate you will get less of it. That will mean fewer jobs for the middle and low classes and less production."

That depends on the demand curve for investing capital. It may be relatively inelastic. Warren Buffett said he never had a client turn down an investment because the capital gains rate was too high.

Itchy: "The myths that the Rich only pay capital gains tax and use the loopholes to avoid paying taxes are perpetuated by people who want you to believe there is some boogieman out there."

It's no myth that the effective tax rate on the wealthy has been dropping over the past 10-20 years. http://www.theatlantic.com/daily-dish/archive/2009/07/yet-more-bad-arguments-against-taxes/198731/# A likely cause is a greater proportion of that income from dividends and capital gains.

 
At 7/30/2012 7:53 PM, Blogger VangelV said...

That depends on the demand curve for investing capital. It may be relatively inelastic. Warren Buffett said he never had a client turn down an investment because the capital gains rate was too high.

Warren forgets the point made by Howard, the good Buffett, who understood that the Depression only turned out to be the Great Depression because businessmen feared to invest in an uncertain tax regime. He, and you need to read Bob Higgs.

 
At 7/30/2012 8:16 PM, Blogger Itchy said...

It's no myth that the effective tax rate on the wealthy has been dropping over the past 10-20 years

Everyone's effective tax rate has been going down over the last 10-20 years. Many people have a negative tax rate now.

A likely cause is a greater proportion of that income from dividends and capital gains.

If you had bothered to look at the IRS tax data for the 1% (people with income < $500,000, so really less than the 1%) you'd have noticed that almost 2/3rds of them claim < 10% of their income from at the 15% capital gains rate.

By the time we look at the people making over $10M (as I said before the top 0.008%) they still pay the top marginal rate on 60% of their income. They still (as a group) pay taxes on a larger percentage of their AGI than everyone else does.

In addition, the graph in your link is a prime example of dishonest graphical presentation. The Y-axis goes from 28-36 percent, thus making the decline look like a large drop. The graph makes it look like a 50% decline, when in reality it is only a 12.5% decline.

 
At 8/27/2012 6:01 PM, Blogger Unknown said...

The super-rich don't make their money from wages. They make from dividends and capital gains where they are taxed far below the 39%-46% the middle class pay at the top of their income bracket when you combine their 28%-35% tax rate with an 11% social security tax.

So what? If you tax capital at a higher rate you will get less of it. That will mean fewer jobs for the middle and low classes and less production. Why exactly is that a good thing?
-

All those capital gains were already taxed at the 30-35% corporate rate before they were then again taxed at the capital gains rate the individuals pay on their personal returns. That's like 45% or so overall. It's real money and it's real tax, just split up in ways that cloud the issue and make it appear to those who don't know any better that rich people pay less tax than they actually do.

 
At 8/29/2012 7:38 AM, Blogger VangelV said...

The super-rich don't make their money from wages. They make from dividends and capital gains where they are taxed far below the 39%-46% the middle class pay at the top of their income bracket when you combine their 28%-35% tax rate with an 11% social security tax.

But the dividends and capital gains come from 'income' that has been taxed already. And let us note that the corporations pay taxes and pay their share of the SS taxes already. It is clear that the rich pay most of the taxes and no amount of spin will change the facts as they are.

 

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