Via TaxProf comes this news: 51% of income “tax filing units” now pay no federal income tax. While that does not necessarily translate into 51% of the population, it still shows that there is a strong political incentive to pander to those who pay no federal income taxes and to wail against the “rich.”
Being “rich” now means you pay federal income taxes.
In fact, as detailed in this letter from the CBO linked by TaxProf, 30% of “tax filing units” actually get a “refundable credit” from the federal government, meaning they get money from the government.
Quite possibly, your money.
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Comments
Speaking as one who receives a "refundable credit", when Social Security and Medicare are taken into account, I am still a taxPAYER.
If 10% is good enough for God, it should be more than enough for Government…
I wouldn't be in a hurry to tell the bottom fifth they're not paying enough. The Democrats would love for the Republicans to start saying that.
the rich still pay a much smaller % of their wealth as tax than their wealth as a % of total wealth (i.e. they own say 90% of the wealth but pay just 50% of the taxes). In other words their tax burden is too low. You can skew the issue by choosing to look only at income tax which is fairly progressive but that misses the boat. We have lots of other taxes, most of which are regressive and the rich by and large do not make their money as income but as capital gains (which are taxed at about half the rate of the top income bracket).
We get a refund, so technically, I guess we're one of those who don't pay. Does that mean I want you, your peers or the wealthy to pay more? No. Don't automatically assume that we leeches are also stupid and selfish. Some of us are paying attention and we want what's best for the economy and our country. Let's face it, if the economy improves, we will be better able to improve our circumstances and rail against the income tax system like everyone else. Yay! Goals!
Tlaloc, on what moral or economic pretext do you make your claim that wealthy individuals are not paying enough in taxes? Are you aware that the top 5% of wage earners in the US pay 50% of the load of Federal Taxes. Are you aware that this is also the group that does the most hiring? Have you ever been hired by a poor person?
And by conflating stock with flow (wealth vs. income) makes your argument difficult to follow and obscures the fact that this federal government is being paid for by those with the most income. Interesting adverb selection 'fairly progressive', when you include the 'tax rebates' that lower income earners are entitled to, our federal income tax is beyond 'entirely progressive'. The other taxes make up a token amount compared with income taxes, especially at higher levels. At lower levels of income, payroll taxes do indeed constitute a larger percentage but I'm told constantly by leftists that this is money I'm "paying in to an account" so it's basically my money anyway so it really doesn't factor into your analysis at all.
Your contention that the 'rich' make most of their income from the stock market is incorrect also. The majority of tax payers in the top bracket in the US are small business owners, with business income mixed in with their personal income. Regardless, there are very few people making any money in the US stock markets now.
You tax a behavior to mitigate it, you subsidize a behavior to get more of it. This is basic econ 101, bud. If you want more investment, you lower capital gains taxation. If you want more economic activity, you lower business taxes, and we could surely use more investment and business activity about now. If you want more unemployment, you subsidize leisure (unemployment tax, welfare). I defy you to tell me any truly regressive taxes beyond some sin taxes and state lotteries (which works like a tax, so economists analyze it as if it were a tax).
http://www.allegromedia.com/sugi/taxes/
Edited so it made sense.
The top 5% of americans own 72% of the wealth as of 2007 (http://sociology.ucsc.edu/whorulesamerica/power/wealth.html). So if you own 72% of the wealth and only pay 50% of the taxes doesn't that perforce mean you are under paying? You are paying a smaller share than everyone else. Another way of stating this is that the 95% of people who aren't the richest own only 28% of the wealth but from that have to pay 50% of the taxes anyway.
"Are you aware that this is also the group that does the most hiring? Have you ever been hired by a poor person?"
This is a canard, and a pretty lame one. I've never been hired by either a rich or a poor person. I've been hired by corporations. Besides which there's essentially no correlation between hiring and taxation. During the 2000s we drastically cut taxes on the wealthy and corporations and the result was not more hiring, rather the first group hoarded resources and the second group drastically inflated executive salaries while leaving the regular workers with, at best, income adjustments (but often not even that).
"The majority of tax payers in the top bracket in the US are small business owners,"
Site please. Last time I checked the fortune list half of the members on it inherited wealth. They may own small businesses but that's not where they get their wealth from.
"You tax a behavior to mitigate it, you subsidize a behavior to get more of it. This is basic econ 101, bud."
Yes it is and like the rest of econ 101 it works really nicely in the classroom and not at all in real life. Much like the laffer curve which has absolutely no bearing on real world taxation(i.e.: http://onethousanddoors.com/?tag=laffer-curve). Any argument predicated on the tenets of an incredibly immature science like economics in the face of contradictory facts is a losing position.
"I defy you to tell me any truly regressive taxes beyond some sin taxes and state lotteries (which works like a tax, so economists analyze it as if it were a tax)."
Challenge accepted:
Excise taxes, sales taxes, social security taxes, and property taxes are all regressive (ase.tufts.edu/gdae/pubs/wp/03-10-tax_incidence.pdf).
I'm just a poor schlub who worked all her life and paid taxes all her life. But for the life of me, I don't get the war on the "rich." We used to all want to be rich, some of us were better at it than others. But if every rich person lost their wealth tomorrow, I wouldn't be one red cent richer and would probably be much poorer. Why the war on the rich? Why would anyone want to be "taken care of" by a government who can only take from the rich and give to their version of the "poor?" (Which is usually themselves first as they always seem to leave office much richer than when they started).
This is why I think we need a part-time government and a flat or consumption tax. I don't know which one would work better but we all need some skin in the game.
"I don't get the war on the "rich." "
The rich are warring on us constantly, but when we fight back they call it class warfare.
"But if every rich person lost their wealth tomorrow, I wouldn't be one red cent richer"
Where exactly is it you think all that wealth will go that won't help you at all? There are ways to destroy wealth (crashing the stock market for instance) that won't help the poor much but taxation isn't even remotely like that. It isn't turning wealth into nothing, it's moving wealth around. The term wealth transfer is accurate (if the ridiculous stigma attached to the term is not). If the rich are taxed more in order to build better roads, provide better health care to all, better handle criminals and the insane, that all helps you very much. Even if it doesn't put a penny in your pocket (and it will by promoting an environment primed for economic growth) it still benefits you.
Massive inequality is a huge threat to the health of any democracy for reasons ranging from sociological to economical. The rich being vastly richer than they were 40 years ago does actively and negatively impact you. It impacts america.
This is not to say we'll have or even necessarily want a society with everyone having the same wealth. There's something to be said for incentivizing hard work but:
A) our current system does not reward hard work, quite the opposite, those working the hardest are working poor and middle class while the rich make money off of doing nothing (see Paris Hilton as a prime example of america's rich), AND
B) even in a system allowing for the harder working to get ahead there's no reason to allow such huge disparities in wealth. CEO compensation has exploded hugely and they are usually the absolutely least productive employees of a company. They're far more disposable than the janitors. But they get paid unbelievably well at any major company because they're part of a privileged class. That's it. It doesn't matter if they do well or poorly (see Golden Parachute for reference) because they aren't being paid to be productive, like the feudal lords of old they are being paid simply to be them, elite members of a class.
@Tlaloc TL;DR take your wealth-redistribution trolling elsewhere, your propaganda won't sell here.
@Tlaloc
"Excise taxes, sales taxes, social security taxes, and property taxes are all regressive"
AFAIK, there are no federal sales taxes. I already addressed payroll taxes and since you clearly have no understanding of the difference between wealth and income, there goes property taxes.
"@Tlaloc TL;DR take your wealth-redistribution trolling elsewhere, your propaganda won't sell here. "
Oh well. In consolation it seems to be selling to the masses which I suppose matters more than the opinion of a random internet poster. I guess I'll just have to live with that.
Also you probably should know that replying once with "take a hike" and then with an attempt at supporting your argument doesn't work too well. It tends to give the impression that maybe, just maybe you're not arguing in good faith.
But since this is also probably too long for your attention span I don't really have to worry about you learning anything, which is ultimately a win for 'my' side.
"The top 5% of americans own 72% of the wealth as of 2007"
Income tax doesn't tax wealth, it taxes income. Apples and oranges.
I kind of see your point there. Geithner, Rangel, Solis, Daschle, Kerry, McCaskill… clearly, many of the rich ARE underpaying. The IRS should just thoroughly audit anyone registered Democrat.
"Income tax doesn't tax wealth, it taxes income. "
Obviously but the comment I responded to was about the rich paying 50% of the total federal tax burden. In that regard having 72% of the wealth and only paying 50% of the total taxes is absolutely apples to apples.
"Oh well. In consolation it seems to be selling to the masses which I suppose matters more than the opinion of a random internet poster."
You left out "unwashed."
You know, envy is really petty. You want to be rich – go do something.
*shrug*
I can give you the facts but I can't make you deal with reality.
"In that regard having 72% of the wealth and only paying 50% of the total taxes is absolutely apples to apples."
Only if you're talking fruit and computers.
But tell you what… why don't you go over and tell those self-styled "patriotic millionaires" that they need to surrender their property? I'm sure you'll get a much warmer welcome there… after all, they're the rich you want to tax, and they want to pay more in taxes themselves.