patrick.net

Bottom 50% need to start paying thier fair share! OMG what a great graph. Instead they want the upper 50% to pay more. Its called freeloading.

PockyClipsNow says

Bottom 50% need to start paying thier fair share! OMG what a great graph. Instead they want the upper 50% to pay more. Its called freeloading.

Hopefully you are being sarcastic. It's hard to tell sometime...
Anyways, the bottom 50% HAVE NO MONEY!!!!!!!!!!!!!!!!!!!!!!!

That's what happens when you have record wealth inequality.

The bottom 50% pay no *federal income tax* (****) because they hardly earn any money at all. I'm sure they'd be glad to pay their "fair share" of taxes if they also received their "fair share" of income and wealth.

**** Obviously they pay sales taxes, FICA, property taxes, etc., but lets not let reality get into a good Soak the Poor argument.

Yes the authors of the report were very careful to specify the words "Percentage of Federal Personal Income Tax Paid". Why not give the percentages of "taxes paid" and include all taxes, local, state, federal, fica, etc.. Wouldn't make nearly as good a headline if you did that would it?

Why is it that "federal income taxes" seems to be the only concern of the poster? Where is the equal concern that fica stops at 106,000?

bob2356 says

Why not give the percentages of "taxes paid" and include all taxes, local, state, federal, fica, etc.

Because some of those taxes can be avoided. Not all states for example tax food. In Mass we don't tax food (unless it is served as a meal), clothing (up to $300..as in a item worth $300 or more not $300 spent.that pretty much nullifies any taxation on clothing unless it is luxury..heck pump sneakers back in '89 were $180..hardly anything comes even close to that now).

Sales taxes can be avoided by shopping online. Tobacco taxes avoided by buying them on military bases and native american reservations. I don't smoke but there's a huge underground market for tobacco. In NYC untaxed tobacco products have a higher profit margin and less of a risk of jail time than selling drugs. Alcohol taxes can be avoided by doing nearly the same.

Certainly taxation can trickle in and be payable by everyone indirectly. In NH there is a statewide property tax so it would factor into anyone renting an apartment.

austrian_man says

How is it that the middle and poor classes are paying more? Does it turn out to be that way, when you include state tax, sales tax, payroll tax?

Here's a fun chart when you include all taxes, showing just how much income the top takes in as well:

http://my.auburnjournal.com/detail/184166.html

But I'm not confident that they really included everything. The poor pay a significant percent of their income in "fees" which are really taxes, and not significant to richer people.

Kevin says

**** Obviously they pay sales taxes, FICA, property taxes, etc., but lets not let reality get into a good Soak the Poor argument.

If federal government spending is increased, it should predominantly come from federal taxes only right? property taxes/sales taxes are all at the local level so they go towards funding public education, county upkeep etc.

bob2356 says

Why is it that "federal income taxes" seems to be the only concern of the poster?

The reason why increased federal government spending would mean that the 51% who don't pay any federal taxes have no skin in the game.

austrian_man says

bob2356 says

Why is it that "federal income taxes" seems to be the only concern of the poster?

The reason why increased federal government spending would mean that the 51% who don't pay any federal taxes have no skin in the game.

A lot of the increase in "federal government spending" has been in Social Security where people earning over 102k don't have any skin in the game but ALL wage earners below that number pay in down to the first dollar earned.

Only 45% of the federal revenue comes from income taxes, what you are calling "federal taxes". Another 36% comes from payroll taxes aka fica that's paid by everyone up to 102k. The rest of the revenue comes from corporate taxes 12% (why are corporations bitching they are so heavily taxed anyway?), excise taxes, and fees.

Nice try but the reality is different from your soundbite trite.

bob2356 says

Another 36% comes from payroll taxes aka fica that's paid by everyone up to 102k.

the govt. collects fica and spends it right away? LOL

bob2356 says

ice try but the reality is different from your soundbite trite.

am really just trying to understand reality here. I'm not saying what I'm stating in my post as the reality.

bob2356 says

Only 45% of the federal revenue comes from income taxes, what you are calling "federal taxes". Another 36% comes from payroll taxes aka fica that's paid by everyone up to 102k. The rest of the revenue comes from corporate taxes 12% (why are corporations bitching they are so heavily taxed anyway?), excise taxes, and fees.

45%+36%+12%=91%. Where are the missing 9%? Are you talking about percentages of the revenue or of the expenses?

MarsAttacks! says

So, you decide to talk about apples and switch to oranges because you can't make your case otherwise?

OK I admit I did not know what portions of taxes actually contribute to federal spending other than just federal income tax. I guess FICA contributes to federal spending as well and there may be other components. Is it wrong to admit that I don't know everything and just being open to hear people's take on the matter?

MarsAttacks! says

There are so many credibility holes in your position it might as well be block of Swiss cheese.

Again, I don't see any inconsistencies with what I've stated and I've admitted I don't know everything.

michaelsch says

bob2356 says

Only 45% of the federal revenue comes from income taxes, what you are calling "federal taxes". Another 36% comes from payroll taxes aka fica that's paid by everyone up to 102k. The rest of the revenue comes from corporate taxes 12% (why are corporations bitching they are so heavily taxed anyway?), excise taxes, and fees.

45%+36%+12%=91%. Where are the missing 9%? Are you talking about percentages of the revenue or of the expenses?

45% income tax, 36% payroll taxes, 12% corporate, 9% excise taxes and fees. Satisfied. It's revenue. This is easy to look up, thousands of web sites have the charts.

austrian_man says

bob2356 says

Another 36% comes from payroll taxes aka fica that's paid by everyone up to 102k.

the govt. collects fica and spends it right away? LOL

Of course govenment collects and spends fica right away. What doesn't get spent in the current year budget of Social Security and Medicare gets loaned to the general budget where it is spent. That's the so called "social security trust fund", a bunch of meaningless IOU's from the general budget. The general budget is still short even after that and borrows the rest on the open market by selling tbills.

austrian_man says

The reason why increased federal government spending would mean that the 51% who don't pay any federal taxes have no skin in the game.

We spend money on three things:

- The military
- Social Security
- Medicare

Poor people pay a much larger percentage of income towards SS and Medicare than anybody else. My SS wound up being less than my medicare this year, because I make a shit ton of money. People who earn most of their money from capital gains pay even less. And, of course, since the general fund uses FICA as a piggy bank, it's even worse.

"no skin in the game" my fucking ass.

And as for the military, it's primary purpose is to further the interests of rich people. American military keeps wars from breaking out in Europe, which benefits american traders. American wars in the middle east ensure that the oil flows and the consumer society trudges on.

And, well, lets not even get into who's dying in the wars.

MarsAttacks! says

And the top 50% pay 97.75% of the income taxes. The bottom 50% pay just 2.25%.

So? You state these numbers without any actual arguments other than "fairness". We can't talk about "fairness" without looking at all taxes paid, all income earned, and all wealth owned.

MY tax dollars (and I wager I pay far, far more than you do) are being wasted every time some congressperson spends time talking to a corporate lobbyist, debating legislation to give tax breaks and environmental damage waivers to giant companies, or fighting a war to defend the interests of the very wealthy.

There is no "fairness" in any society where a tiny portion of the population can be born into obscene wealth while a quarter of the people live their lives in poverty.

Government expenditure is not about "fairness", never has, never will be. It's about attempting to do what's best for the country as a whole.

If you want to make economic arguments about tax rates, please go ahead. Back it up with data. If you don't have any data that shows that putting a larger share of the economic burden onto the wealthy is harmful, please shut the hell up.

Discussing the amounts generated by taxes on a per bracket basis is misleading because it obscures the real issue of what people can afford.

I'll happily entertain a ton of discussion points on this subject if we agree to keep it in context and also discuss how much individuals have personally after taxes to spend.

If you set a base tax rate at 30 percent, then a millionaire who pays 30 percent in taxes pays 300 grand while someone who makes 10 grand only pays 3 grand. Sure, you can look at in that context and say theres a gross imbalance there, but the fact is that the millionaire has SEVEN HUNDRED THOUSAND left to spend gloriously, while the other fellow has seven thousand left to live on.

In that context I think you can see the argument that while the rich may pay more in volume the poor pay more of what they can afford.

Or maybe not. Let's do this then: I'll happily entertain all the notions of unfairness of the AMOUNTS paid if those of you advocating looking at the issue from that point agree to discuss indexing the cost of living to a person's income.

Kevin says

"no skin in the game" my fucking ass.

haha, I knew there would be backlash. But I am trying to understand here, so thanks for the informative post.

kentm says

I'll happily entertain a ton of discussion points on this subject if we agree to keep it in context and also discuss how much individuals have personally after taxes to spend.

Sure, that's what I'm hoping for.

By base tax rate, regardless of the level of income earned? Or does that vary?

See if it varies with income earned, then the person earning more does not have the incentive to work harder because he'd jump into the higher tax bracket which he wants to avoid.

A flat tax regardless of income earned makes sense. If we eliminate income tax totally, then may be following Henry George's advice on taxing possession of land makes sense.

bob2356 says

Of course govenment collects and spends fica right away. What doesn't get spent in the current year budget of Social Security and Medicare gets loaned to the general budget where it is spent

Why on earth would the fixed income earners want Social Security, if the Govt. is acting irresponsible and spends it off immediately? Isn't this pay-as-you-go scheme really then a ponzi?

austrian_man says

See if it varies with income earned, then the person earning more does not have the incentive to work harder because he'd jump into the higher tax bracket which he wants to avoid.

That is ridiculous. You would stop working because you have to pay 31% instead of 28% on the additional income only? You're still keeping 69%! Nobody behaves this way. NOBODY.

austrian_man says

A flat tax regardless of income earned makes sense.

It makes no sense at all. It's regressive and will create a society of haves (few) and have nots (many), eventually destroying the economy.

austrian_man says

Isn't this pay-as-you-go scheme really then a ponzi?

Where would you suggest the surplus get invested? Under your mattress?

tatupu70 says

You would stop working because you have to pay 31% instead of 28% on the additional income only? You're still keeping 69%! Nobody behaves this way. NOBODY.

It all depends on how much of what you earn, you get to keep. If I get to keep much lesser than what I earn at a higher bracket, there is no incentive to work harder. So it is not ridiculous at all. Makes sense.

tatupu70 says

Where would you suggest the surplus get invested? Under your mattress?

well Govt. spending is not really efficient, if you don't realize it already. See the chart posted on the home page today of Fannie/Freddie.

austrian_man says

If I get to keep much lesser than what I earn at a higher bracket, there is no incentive to work harder.

Doesn't actually work that way in the US though. The upper middle class pays the highest rates, because they're actually working and getting high incomes (doctors, lawyers). So they are the ones that pay the highest marginal rates.

Once you become of the non-productive rent-seeking overlords though, your tax rate falls dramatically in spite of your higher income, because most of your income is capital gains and dividends. Or just unrealized capital gains, and can compound without any taxes at all. It's like 401k's for the ultra-rich.

Once you become of the non-productive rent-seeking overlords though, your tax rate falls dramatically in spite of your higher income, because most of your income is capital gains and dividends.

This rent seeking overlord pays taxes on his rental income as ordinary income at ordinary income tax rates. Where exactly in the tax code do you find rental income taxed at capital gains rates? I want to get into that.

Patrick, do you even know what capital gains are? Where does it say that capital gains is all rents or even close. The bulk of capital gains taxes paid are from the stock and bond markets. Care to explain how unrealized capital gains never pay taxes? If you want the money then you have to sell the asset and take the capital gains. That's just silly. It would be like saying you never have to pay income taxes as long as your employer doesn't actually pay you. Sooner or later you have to take the money.

Why don't you and bellingham silly give it a rest. It just sounds like massive sour grapes after a while.

austrian_man says

Isn't this pay-as-you-go scheme really then a ponzi?

Not really, no, since pay-as-you go means the working generations pay the pensions of the retired generations.

Being worried about social security's ownership of treasury bonds is literally UNAMERICAN.

“The validity of the public debt of the United States, authorized by law . . . shall not be questioned.”

bob2356 says

Where exactly in the tax code do you find rental income taxed at capital gains rates? I want to get into that.

http://www.google.com/finance?q=NYSE%3AAVB

Patrick was speaking of rent-seeking in general though, so you can look here too:

https://www.google.com/finance?client=ob&q=NYSE:XOM
http://www.google.com/finance?gcx=c&q=humana

Why don't you and bellingham silly give it a rest. It just sounds like massive sour grapes after a while.

LOL.

http://www.nizkor.org/features/fallacies/ad-hominem.html

The argumentation always go there when one side's arguments are destroyed.

Reading my hero's (some Georgist guy up in Canada) old arguments on usenet, the pro-property people always eventually wheeled out the 'sour grapes' thing.

(here's an example: http://groups.google.com/group/alt.fan.rush-limbaugh/msg/dfa7d28c028fc913?hl=en)

It's not sour grapes to want to remove one of the major wealth sucks on the middle quintiles right now.

It's not sour grapes to want to prevent this country from falling further into the neofeudalism of Brazil or Mexico.

It's not sour grapes to want to mitigate if not eliminate a primary locus of ongoing economic injustice in this country.

bob2356 says

Patrick, do you even know what capital gains are? Where does it say that capital gains is all rents or even close. The bulk of capital gains taxes paid are from the stock and bond markets. Care to explain how unrealized capital gains never pay taxes?

Silly Bob doesn't even know that rent seeking means more than actually acting as a landlord collecting rent from a tenant.

Think about this for one second here Bobby - Patrick created this site - it has been going strong for 5+ years and has been a tremendous resource from the beginning on some fairly complex economic and financial topics. It is pretty safe to say that Patrick has an understanding of capital gains.

By the way, unrealized capital gains never pay taxes through the estate tax exemption for one. This is currently $10 million for married couples. There is a step up in basis upon transfer to heirs.

They are also untaxed through rent seeking. You see, when one purchases an asset (lets just say a house so you don't get confused by the term rent seeking) in 1940 for $15,000, then passes it to his heirs who rent it out for $15,000 (net) per year, they are reaping the benefit of the unrealized capital gain without ever having to pay taxes on it.

There is a step up in basis upon transfer to heirs.
Thankfully, there is no free lunch (no estate tax means that heirs don't get total tax avoidance through a stepped up basis on large estates). There is, however, an exemption that allows you to step up to $1.3million on the estate. Okay, maybe I should have said REALLY large estates as surviving spouses can also step up to $3million.

EBGuy says

Thankfully, there is no free lunch (no estate tax means that heirs don't get total tax avoidance through a stepped up basis on large estates).

This is the 2010 rule I think. In 2011, there is no limit to how much basis can be stepped up. All falls under the 5 million (10 million for a married couple) exemption rule though. That is, the estate owes tax based upon 35 percent of its value in excess of 5/10 million.

1st, I don't believe any graph, poll or information for which I cannot see the data used to create it

I have been demanding for years that all city, county, school, state and Federal budgets and actual revenue and expenses be posted on the internet in laymans terms with no aggregates over $100.00

My FOIA requests have been denied.

That's a great idea. If we taxpayers are paying for something, we should have the right to see exactly where the money is going.

uomo_senza_nome says

well Govt. spending is not really efficient, if you don't realize it already. See the chart posted on the home page today of Fannie/Freddie.

Government's ability to be efficient has been under attack for four decades. Regulatory departments have their workloads increased at the same time their budgets are slashed. Lobbists write laws then bribe with campaign contributions to get them passed, so that government agencies have their hands tied in doing their jobs. The revolving door between public and private service has errodes the idea of being accountable to the people who elected you to serve them, and all this mischief doesn't even include the hard core anti-government idealogues who just plain sabotage government to further their world view. If American government is inefficient it's because it was deliberately made to be that way, not because it is inherently that way. If it always had been so badly functioning, our country would not have survived one century, much less well into its second.

I wonder what the situation looks like when you compare share of National WEALTH to share of Taxes paid.

The problem is Math. The simplest solution is to either 1) stop teaching math to the underclass or 2) redefine the basic rules of mathematics based on religious faith.

I favor option 1 but if history is a guide we should do 2. Rather than toil at meaningless labor, the dim-witted American underclass prefers to have their children in "school". So let's make Jesus Math.

Example: if a worker puts in 100 hours of work in a week, and the boss keeps 99 hours as pure profit, then the worker is entitled to five minutes of pay, minus taxes.

(100 - 99 - 7/8ths)/75 = full pay + God loves you

thunderlips11 says

I wonder what the situation looks like when you compare share of National WEALTH to share of Taxes paid.

Homo Economicus. Like Bigfoot, reported to exist in fantasy books, but never seen in the wild.

Good point. The distribution of wealth is way more unequal than the distribution of income.

The right thing to do is to tax assets and not income or sales.

A 2% tax on asset could replace all other taxes:

http://patrick.net/?p=1133205

In fact, if we don't tax assets, we will definitely soon have a heretitary aristocracy, and then eventually a violent revolution.

So if we tax assests, doen't that mean the same money is getting taxed year after year? If I inherit a sh*t load of money from a rich relative, will I have to pay the 2% tax year after year even if my net worth does not increase during those years?