Financial News

[Jenksismyhero]

This is of course totally untrue.

 

It is?

 

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

 

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

 

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

Edited July 30, 2010 by Jenksismybitch

[Balta1701]

Only if you don't count Social Security, Medicare, state, and local taxes, sure. I'd love to have back the non-zero tax amounts I paid while in grad school while earning below the poverty line.

 

The reason why the top 10% wind up paying most of the taxes is that they already control a huge slice of the pie. On 2001 data, the top 10% you cite controlled 71% of the wealth in this country, and I'll absolutely guarantee you that number has gone up since then.

Of course, income taxes are only part of the tax burden families face. For most people, Social Security and Medicare payroll taxes are bigger than income taxes. And state and local income, sales and property taxes hit lower-income families hard. The vast majority of Americans are paying taxes in some form.

 

But the 47% statistic also highlights a major change in our tax and transfer system over the past 30 years: Many social programs that would have been provided by program agencies like the Department of Health and Human Services are now delivered by the IRS. Consider that the EITC, the cash-assistance program for working-age families, is about as big as Food Stamps. More families benefit from the child and dependent care tax credit than from Head Start or subsidized child care. More families with children in college are eligible for college tax credits than for subsidized student loans or Pell grants.

 

This is not necessarily a bad thing, but it means that income tax filing really combines two functions: taxes and transfers. The Tax Policy Center estimated that before deducting special tax breaks more than 80% of households owe income tax. The one-fifth of households with no tax liabilities are almost all poor (removing them from the income tax rolls was an explicit policy decision of President Reagan in the 1986 tax reform).

 

That leaves 27% who do not owe income taxes because their subsidies are at least as great as their liability. They are not by any means the greatest beneficiaries of IRS-administered largesse. Tax breaks like the mortgage interest deduction, state and local tax deductions, deduction for charitable contributions and exclusion of contributions to pensions, 401(k) plans and employer-sponsored health insurance are much, much bigger and disproportionately flow to those with higher incomes.

 

Eric Toder, Chris Geissler and I estimated that those tax breaks--sometimes called "tax expenditures"--were worth 7% to 8% of income for low- and middle-income families in 2007. The biggest beneficiaries, though, were those with high incomes. Tax expenditures for the richest 20% were worth 11% of income. For the highest-income 1%, the subsidies amounted to almost 14% of income.

 

Given that low-income tax subsidies are raising the reward to work, helping families support children and pay for childcare, and providing assistance with higher education expenses, it's neither surprising nor disturbing that they are significant relative to income (and tax liability).

 

But I do think there is a problem with the way we account for tax subsidies for people at all income levels. We should break out the tax collection and social program functions of the IRS. It would be a big boost to transparency, might build support for tax reform and might dampen the tiresome rhetoric about tax system freeloaders.

Link

 

Trust us...you don't want to build your infrastructure based on the level of taxation that the lowest 90% of wage earners in this country can afford. It's that concentrated.

[Jenksismyhero]

Only if you don't count Social Security, Medicare, state, and local taxes, sure. I'd love to have back the non-zero tax amounts I paid while in grad school while earning below the poverty line.

 

The reason why the top 10% wind up paying most of the taxes is that they already control a huge slice of the pie. On 2001 data, the top 10% you cite controlled 71% of the wealth in this country, and I'll absolutely guarantee you that number has gone up since then.

 

Here's my gripe - 40% of the country get's paid by the government and recieves more of the "benefits" those taxes go towards than anyone else, 10% pays a ton (and i'm fine with that), but the majority of the remaining 50% are average joes who don't make a lot but still have to spend a decent amount of their income on taxes. People like me and my soon-to-be-fiance. I look at someone who's making slightly less than us, who's about 400k less in debt than we are, who doesn't have to pay s***, and it pisses me off.

 

But I know, it's my "responsibility" to support half the country.

[Balta1701]

What you're missing though is that very few of those benefits you're talking about are things that you won't see. For example, you're still going to receive Social Security and Medicare (no matter what the Republican Talking point says). Are you a homeowner/planning to be a homeowner any time soon? The mortage tax credit is an enormous subsidy to homeownership. Etc. It's hard to say exactly what the total numbers are, since you know, how do you count your slide of the defense spending pie and how you "benefit" from that, but it's not nearly as open and shut "they're giving my money to poor people!" as it seems.

 

I could ask just as easily as a renter why it's my responsibility to subsidize homeownership for the people who buy extra-large houses and have their mortgage interest tax deduction (which feeds, of course, into larger houses and can't be a good thing in terms of driving bubbles).

 

The one thing you're not lucky enough to participate in is a genuine bailout, since I'm guessing no one here is wealthy enough.

[StrangeSox]

Here's my gripe - 40% of the country get's paid by the government and recieves more of the "benefits" those taxes go towards than anyone else, 10% pays a ton (and i'm fine with that), but the majority of the remaining 50% are average joes who don't make a lot but still have to spend a decent amount of their income on taxes. People like me and my soon-to-be-fiance. I look at someone who's making slightly less than us, who's about 400k less in debt than we are, who doesn't have to pay s***, and it pisses me off.

 

But I know, it's my "responsibility" to support half the country.

 

Who benefits more from a lawful, controlled society and national and international infrastructure? The Walmart worker or the Walmart owners? Without roads, airports, waterways, police, fire, medical care (for workers), education (for workers), military protection, corporate limited liability, etc. etc. the wealthy would not be able to be as wealthy. They benefit hugely from government services.

[Jenksismyhero]

To me the credits are benefits for applying more of your income to the economic pool. They're incentives to get people to have children (a good thing, if they can be afforded), owning a home (a good thing, if it can be afforded), education (a good thing), etc.

 

And SS, I agree, but i'm still paying more for my "share" of those services than the person that doesn't pay anything towards them. And that doesn't account for services that i'll never benefit from, including things like public health, public housing, food stamps, etc.

 

I just think it's a f***ed up system where a huge chunk of every day people who make an average living are still "responsible" for taxes that account for a decent percent of their income, despite the fact that 47% of the country pays "nothing."

[Balta1701]

I just think it's a f***ed up system where a huge chunk of every day people who make an average living are still "responsible" for taxes that account for a decent percent of their income, despite the fact that 47% of the country pays "nothing."

Again, Nothing =20-25%.

[Jenksismyhero]

Again, Nothing =20-25%.

 

Which equates to how many tens of millions of people? You don't think a quarter of the country's income recieving population is significant?

[Balta1701]

Which equates to how many tens of millions of people? You don't think a quarter of the country's income recieving population is significant?

Not what I was saying. Was saying that the thing you define as "paying nothing in taxes" is equal to "paying 20-25% of their income in taxes that i don't want to count because it undermines my entire point"

[Jenksismyhero]

Not what I was saying. Was saying that the thing you define as "paying nothing in taxes" is equal to "paying 20-25% of their income in taxes that i don't want to count because it undermines my entire point"

 

I don't understand your point.

[Balta1701]

I don't understand your point.

The only people who don't pay anything in taxes are people with no/very very small incomes. You're not even correct in saying they pay no "income tax". They pay no "Federal income tax".

[Jenksismyhero]

The only people who don't pay anything in taxes are people with no/very very small incomes. You're not even correct in saying they pay no "income tax". They pay no "Federal income tax".

 

Which is what people were talking about prior to my comment.

 

Even still, 25% pay little to no income tax, credits or no credits. I get the point that people with higher incomes recieve greater benefits from tax credits (by a few percent), but they're also incurring much more debt to get those credits, making it more difficult to pay the income taxes they owe.

 

 

 

 

[Balta1701]

Which is what people were talking about prior to my comment.

 

Even still, 25% pay little to no income tax, credits or no credits. I get the point that people with higher incomes recieve greater benefits from tax credits (by a few percent), but they're also incurring much more debt to get those credits, making it more difficult to pay the income taxes they owe.

Again, you said "income tax" and not "Taxes", continuing the farce.

[Rex Kickass]

Which is what people were talking about prior to my comment.

 

Even still, 25% pay little to no income tax, credits or no credits. I get the point that people with higher incomes recieve greater benefits from tax credits (by a few percent), but they're also incurring much more debt to get those credits, making it more difficult to pay the income taxes they owe.

 

But they do pay state income taxes in most situations. They pay sales tax. They pay into Social Security, they pay into Medicare, etc. To say that people that pay no income tax pay no taxes at all is disingenuous.

 

They just pay less taxes. And in some cases, that isn't even true.

[southsider2k5]

And yet the same people get all uptight about the rich not paying their "fair share".

[StrangeSox]

The superwealthy have a lower percentage tax burden than just about everyone else.

[StrangeSox]

And SS, I agree, but i'm still paying more for my "share" of those services than the person that doesn't pay anything towards them. And that doesn't account for services that i'll never benefit from, including things like public health, public housing, food stamps, etc.

 

But you do benefit from those things, just not directly. And the business owners benefit greatly from a healthy, well-fed, educated populace that can get to and from work and purchase goods shipped on public roads. You can't just say "I don't get a check for $xxx, therefore I do not benefit from this program".

 

I just think it's a f***ed up system where a huge chunk of every day people who make an average living are still "responsible" for taxes that account for a decent percent of their income, despite the fact that 47% of the country pays "nothing."

 

47% pays for a lot, as others have indicated. Gas tax. Food tax. Sales tax. State income tax. Property tax. Medicare. Social Security. Car registrations/ licensing. Utility taxes. Etc. etc. etc. You're focusing only on Federal income taxes.

[Balta1701]

The superwealthy have a lower percentage tax burden than just about everyone else.

BP can take a $10 billion tax credit on its oil spill related losses so far.

[southsider2k5]

The superwealthy have a lower percentage tax burden than just about everyone else.

 

That is garbage propaganda.

[Balta1701]

That is garbage propaganda.

Here's the classic bit of it.

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.

Lilnk

 

It is 100% true that there are gigantic tax advantages to making money through certain types of market transactions (i.e. hedge fund managers) compared with working for a normal job.

[StrangeSox]

That is garbage propaganda.

 

No, it is true. When most of your earnings come from capital gains, you pay significantly less taxes than you would if your earnings were from wages. When you have the ability to structure investments and holdings to minimize tax burdens around the world, you pay less. When you make more than $106k or so (definitely not "superwealthy" range) and you stop being taxed for SS, your percentage goes down.

 

On the whole, the tax percentage for the superwealthy is lower than for at least mid-america and the somewhat-wealthy. I'd assume it's true for the poor as well since just about every cent they earn and spend is taxed.

[kapkomet]

 

Nice try guys. You don't understand the tax system at all except the propaganda you're fed.

 

[KipWellsFan]

 

Nice try guys. You don't understand the tax system at all except the propaganda you're fed.

 

Who made this clown shoe an admin?

Edited July 30, 2010 by KipWellsFan

[StrangeSox]

 

Nice try guys. You don't understand the tax system at all except the propaganda you're fed.

 

[kapkomet]

Who made this clown shoe an admin?

 

Whatever, dude. A Canadian telling me how our tax system works? I clearly don't understand it... considering that's what I do for a living. But okay, tell me all about it, mmmkay?

 

You guys want to always come up with the talking points that are fed to you every day. Fact after fact is posted about the system, and then because we don't support raising taxes up the wazoo to buy all these entitlement programs you want force fed up our ass, we're stupid and don't understand who pays what. And then, you want to bend the goalposts and nitpick so that facts are twisted every way but Sunday to make it fit your "debates". Ridiculous.

 

Yea, I'm an assclown. Whatever.