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Who the REAL Taxpayers Are & Why Income Inequality Isn't Nearly As Much of a Problem As Critics Claim
I'm sick & tired of
politicians, pundits, and "average joe's" invoking the term "Taxpayer"
in their mostly uninformed rhetoric. You know what I'm talking about:
"The Taxpayers are angry about bank bailouts," or better, things like
"The Banksters are getting rich at the expense of The Taxpayers."
First of all, 40% of Americans pay ZERO Federal Income Tax (some even
get net subsidies!), so right off the bat, almost half of Americans
need to seriously shut their traps & do a little research before
whining about fairness of U.S. Tax (etc) policy. The half and
mis-truths propagated by The Ignorati don't stop there, though. Not
even close...
The top 25% of earners pay almost 87% of Federal Income Tax! And
that was in 2007, I doubt that number has gotten any smaller in
subsequent years. Put this another way, the lower 75% of earners only
pay less than 14% of Federal Income Taxes even though they account for
~31% of income. Those in the top 1%, by comparison, earn ~23% of
income but pay over 40% of Federal Income Taxes, an increase in the tax
burden on the top 1% of 57% over the past 20 years.
The top 0.1% accounts for half of the money earned by the top 1%,
i.e. the VERY rich are and have been getting richer faster than the
merely wealthy, who themselves are getting more wealthy, faster, than
those in the top 10 and 25%'s. Income's at the top are increasing
faster than those on lower income rungs of the income ladder(and this
is just looking at the top 25%!) This is not necessarily a surprise,
though, considering the shifts in the U.S. Economy and labor force
adjustments (or lack thereof).
Is it "fair" that the top 0.1% of earners pay over 20% of the
taxes? Is it fair that the 75% of filers making less than $32,095 (the
lowest income in the top 25% in 2007) a year only pay 14% of taxes, yet
are disproportionally the recipients of Government aid programs? I
think the answer to both is probably far closer to "no" rather than
"yes."
For example, wouldn't it make more sense to decreases taxes on "the
poor" so they would be able to keep more of their $ rather than giving
it to the Government to waste on a grossly-inefficient bureaucracy with
a questionable (if not downright poor) track-record of allocating
capital efficiently?
Unless you think the majority of people in the lower 75% are worse
at allocating their money than the Government, I think one would be
hard-pressed to advocate against such a plan (and if you think that,
then you are an even bigger cynical bastard than your humble yet
cynical author, which would be truly sad).
Sure, $32,000/year doesn't go very far in Manhattan or wealthy
suburbs, but I just checked online, and you can get a 2,000+ sqft
3bed/2+bath pretty new construction home in Henderson, NV (right next
to Las Vegas) for less than $200,000, which works out to a monthly
payment of under $1,000, below the "spend less than 50% of your
post-tax income on housing rule." Not a bad way to live without
breaking the bank (assuming conservative other spending, no Partridge
sized family, etc) even on such a low income, eh? People in 2nd/3rd
world countries would seriously KILL to live like that!
$30,000/year may seem like an absolute pittance, especially when
compared to the incomes of those in the top 1% & higher, but unless
you insist on living in Manhattan, Miami Beach, Beverly Hills, etc, you
can still live better than 99.99% of the World's population. The
Bottom half in China lives in a 500 sqft piece of crap shanty where
they're lucky if they have a 20-year old TV let alone a new 42"
flatscreen LCD you got on super-saver-sale from Wal-Mart on Black
Friday. Sure, you can't live in a 5th Ave Penthouse or on the Beach in
Malibu on $30,000/year, but please, unless you have 30 kids and spend
all your money on crap you don't need, you are hardly destitute (and if
you do, that's your own damned fault!).
Moving on...
Our tax code/policy is disgustingly over-complicated and wrought
with all manner of perverse incentive. Should those who make alot of
money be expected to help the plight of those who make very little?
Sure, to a point, but as it stands now, I think the subsidies from the
"rich" to the "poor" are both too many and too much. Of course, we
could similarly criticize the subsidies "the rich" (and businesses) are
granted in the form of generous and plentiful tax deductions, but
that's a much longer discussion for another time.
Here's what's certain: Over the past 20 years (well,
'86-'07), GDP has increased 3.02%/year and has been positive for every
year except once, in 1991, and even then, it was only -0.23%.
Meanwhile, average tax rates for the top 1%, 10%, and 25% have gone
down on average 1.64%, 0.79%, and 0.67% respectively over this period.
Chew on that: When we cut taxes, we experienced significant economic growth, +87% GDP from 1986-2007.
Many have argued that this # would be even higher if "The Rich"
(usually arbitrarily defined as those who make more than $200,000 or
$250,000) were taxed more heavily based on comparisons to prior periods
when taxes and GDP growth were higher. Most of these comparisons are
false, in that they ignore fundamental shifts in reality. Our economy,
population, and relative standing in the world today (to say nothing
of any # of other variables) is NOTHING like it was generations ago, so
any fair comparison would have to somehow adjust for this, and I'm not
entirely sure that's even possible (or how one would go about doing so
if it were).
Are tax rates at their optimal point to maximize economic growth?
I'm not sure, nor am I'm sure anyone else knows what that optimal tax
rates would be. Unfortunately, even economists (who should know better
than to let their politics inform their analysis) not to mention
pundits and politicians are really just political ideologues
sputtering-forth nonsense that's seldom anywhere close to well-informed.
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What a fucking clown.
Sure, if you support dictators and slave labor from 3rd world countries, all this has done is made the executive level richer. I think it's known as the trickle up effect. Look what "free trade" has done to our middle class if you want an answer. Uh, free trade suggests everyone plays by the same rules, hardly the case with all the 3 letter agencies we have to conform to.
Stone Street Advisors, get lost.
I have a couple of quotes that come to mind, don't know who came up with them, but they sure fit :
Money runs uphill, shit runs downhill. ( Maybe a plumber?)
A system that takes from Peter to pay Paul can always count on the support of Paul.
Loved it. It's a really unpopular topic, but it's always going to be true. It's almost a mathematical certainty that out of any large set of people who can make an uncapped amount of money, there will be some outliers that make an incredible amount more than other people. People will put a bunch of banal subjective adjectives over and over again to this to demonize these outliers. Claim it's "unfair" or these outliers aren't doing any "real" work or are just "lucky". The only response you can give these speculations is "maybe."
How about sinking your teeth into something a bit more meaty stone street advisors.
The top 1% got to that position by, or in collusion with, banking who create money (bank credit) with the stroke of a pen when the population goes into debt and then charge interest on this made up figure in return, channelling the productive capacity of the borrower back to the lender in the form of interest on a make believe loan.
Get real about finance before discussing economics. Over 95% of 'money' in developed countries is made up by private banks out of thin air and then has interest charged against it. The interest is earned through labour but the principal is pure fantasy.
Who cares about income tax when our whole financial system is designed to push the result of our labour to the banking sector.
“The process by which banks create money is so simple that the mind is repelled.” John Kenneth Galbraith
Bravo, Matto!
Thanks my aussie mate! It's about time everybody learned the truth about our financial system. I am sick to death of 'commentators' who don't even understand money creation or think it important.
PRIVATE BANKS CREATE MONEY OUT OF THIN AIR AND CHARGE US INTEREST ON IT. TELL EVERYONE YOU KNOW.
Stone Street must lie in the Twilight Zone...
What a complete piece of shit this article is.
This faulty reasoning has been debunked over and over again. Tyler, WTF? Why do you allow morons to post shit like this on this site?
People get trapped in their thinking by ignoring the underlying factors. I find the clearest example of this when people bitch about subsidies for oil companies, and say this gives the government the right to tax and regulate the industry more. No dumbass, it means get rid of the damn subsidies!
The rich are paying more in taxes because the Fed blown bubbles are pushing income into the top brackets of finance. They are also the winners in globalized markets, the top product/brand/star now has more reach than ever. But looking to use taxes to fix what taxes didn't cause is a good way to f-up the economy. There are also entrepreneurs and small businesses operating by the same tax code. The solution is to end the bubble blowing, deficit spending, and get the economy back on a sound footing.
This problem will solve itself because it is not sustainable. The question isn't what to do about the rich, the question is, when the bubble pops and the rich become the middle class and poor, who the hell will USG tax then?
"Should those who make alot of money be expected to help the plight of those who make very little? Sure, to a point,..."
Whoa hold on there. Love your state solution. Go hug it and conjure up it's image late at night when no one's around. But to me it's a piece of shit. So don't go running off with the assumption that's where we stand. If stealing money to serve a monopoly at the point of a gun was such a good thing then we should be free to pass on it if we see a better way.
It's too bad this will fall off the top pretty soon. However I have a couple of points. Most of the upper middle class would agree that non work should not be advantaged over work. There is no reason to distort the tax code and financial assets by having lower marginal rates on non-work activities. This solves the carried interest issue for hedge fund managers.
As a small businessman I have broad discretion on deductions and when I recognize income. I will pay about 70,000 per year in taxes this year. Very little of that is from non-work activities. My long term investments are in tax advantaged and lawsuit immune investments. My speculations always pay the highest marginal tax. If you try to raise my taxes in a jealous, class warfare kind of way, then I will get more aggressive with deductions, defer income recognition, change to a corporate status and begin deducting all sorts of things I am too lazy to deduct right now. I will also increase my internet purchases and black market transaction, barter more, and give cash a discount. I guarantee you will get less if you try to raise my taxes. Go ahead you whining socialist fuckers. The one thing that gets me trolling more than anything else is class warfare rhetoric against the upper middle class. I am not a plutocrat. If you whining sniveling class warriors want any help at all against the plutocrats then don't lump me in with them.
The sociopath to heaven is narrow and easy to miss. Now while you're making up elaborate intricate stories about yourself .... why don't you have an aneurism. One minute you're a goddamn acorn worker sucking down shit coffee the next minute your a mysterious small businessman who's business brings him much wealth despite bringing you into contact with out of work food stamp people.
I don't really give a crap how much you make overseeing or managing the JP Morgan Food Stamp scam or what your job description is in that program. What I do want you to know is you are being judged. And the survey says......
http://www.youtube.com/watch?v=dTeEQuaNz2g
That kind of attitude will only make it worse off for you. But don't let that stop you from helping the very people that you don't want to help.
The government usually goes "all in" on your kind. For good reason.
You obviously are no "help" against the plutocrats. Nice bluff . . . in your mind, at least.
Bail me out with a trillion and I am more than happy to pay 99% of the money back as tax!
Stone street advisors have been a little selective in how they have selected the data. From the highlights in the latest report you can see some anomalies like the following.
This very top income group actually has a lower average effective income tax rate than the rest of the top 1 percent of returns because these extremely high-income returns are more likely to have income from capital gains and dividends, which are typically taxed at lower rates.
During 2008 the percentage of tax paid by the 5-50% earners increased whilts the percentage paid by the top 1% decreased. The bottom 50% paid 2.59% taxes. The 10-25% income earners paid 9.29% in taxes.
What I would take from these numbers is firstly the top 0.1 percent don't pay a lot of tax percentage wise. The biggest burden compared to income is probably on the middle to upper middle class. The most obvious point though is that everybody in the US is paying considerably less tax than workers in any other country.Where there is inbalance of this magnitude then it probably will not last long term.
have to admit did not read the article, but income inequality is a serious problem...maybe in USA it is not yet on the levels of some countries, but it is going in wrong direction fast. So while the article may have some good things in it, I dont think it is worth reading.
It's too bad you think that way. You might have come to some conclusions that might actually help the poor. Like I said previously when you start redistributing more of my income is the time that I work less and take more vacation plus get more aggressive on deductions and black market/tax avoiding transactions. You will get less from me with higher rates.
Paulson used much the same "argument." For my part, I'm glad to hear it. You working less will open opportunities for others. Much as the "haves" like to pretend they're indispensable, each and every one, in ways the rest of humanity cannot begin to fathom, I don't buy it.
If you want to cut off your nose to spite the collective face, get to it.
Yeah dude. What we need is a society that rewards the idiots. We're almost there with the banker bailouts.
If someone sacrifices, works hard, and makes something of themselves they of course should pay more than the people who spend their high-school years partying and not giving a damn, are lazy and end up as losers
What a great society that will make! Penalize success and reward failure! Idiocracy here we come!
I knew alot of those high school partiers who have now hit it big. Hustling seems to be the critical element that is common to all.
It's charming to hear the "winners" in a corrupt system scream that armageddon that will befall us all if they have to pay their bills. Trickle up is the only thing that works!
Most people know better. Too bad it makes no difference since the "virtuous and deserving" have bought the lawmakers.
LOL! It is obvious that facts are of little consequence to you.
Over 40% of the population pays NO INCOME TAX. I guess they are paying their "fair share of the bill". It's not like they use our roads, schools, cops, firemen etc.
And what are these "shares of the bill" you keep referring to? Blowing up bridges in Iraq and rebuilding them? Forcing the private sector to lend to people who aren't credit worthy? Subsidies for corn syrup so an already obesce nation can have more sugar? Paying 40 years worth of monies to the Department of Energy to help wean us off foreign oil yet we consume twice as much of it today? Or bailing out rich bankers?
Are you so blind that you can't see that the moment you give a central authority the right to redistribute PRIVATE PROPERTY it will only use it in the worst of cases. You decry the system as corrupt but on the other hand you want to give it more resources to redistribute!
In any system there is the top and the bottom. It is IMPOSSIBLE to have over 50% of the population be ABOVE AVERAGE. 49.9% of the people in any nation will be below average in some way and 49.9% will be above average in some way. Whether that's athletic ability, reading comprehension, or income. It is unavoidable!
You're right, I'm becoming unreasonable on this subject to the extent that I have no heart for arguing it.
Those who pay no income tax (though they pay plenty of other taxes) serve as a ready army of laborers to feed the great economic engine. Viewed in that way, you may not be at war, but you still expect to pay your army. Consider it a cost of doing business. Impoverishing people to meet a ridiculous standard of "equality" that protects the relatively wealthy from "theft" is absurd, however eloquently it might be argued.
The entire problem of our country today is that the idea of "making money" has been replaced with "taking money". Everyone wants to put their hands into someone else's pocket.
There is no difference between the bail-outs, overpayed civil servants, or freeloaders living off of government handouts. They are all the same; each one is trying to get something for nothing.
You identify the problem in your post saying this is a corrupt system. You are 100% correct. Yet your solution is to give more to the system instead of change it.
What do you think will happen if the government gets 50% more revenues? Do you think equality will sproot up everywhere, the streets will be made of gold, and unicorns will wak the land?
It'll be more of the same. The only way to deal with this is to take away most of the government's resources and let people get along with their lives free of interruption.
The moment we allowed an arbitrary authority (government) to use the monopoly of force against us, not to protect life and property but help us in our pursuit of happiness we were doomed.
It is sad to see the debate ranging around how best to expropriate property from one group and give it to another, instead of how to build more wealth individually.
The banker bailout is no different than the redistribution of wealth. The government has proven absolutely inebt at doing it.
Within 80 years it has taken us from the greatest industrial nation the world has ever seen to a country of paper shufflers and cell phone salesmen. Isn't it obvious by now that the government should only protect private property and nothing beyond that?
I just hope I live long enough to see the end of this madness.
i stopped reading at the henderson, nv analogy. i get the point of th article. i hear it constantly from the rich people i work with. but you know what, if i lived in henderson, nv, i would not have the job i have making around $50k a year. i make this because i live in LA and spend way to much to barely make it by. there are no jobs in henderson. only so many people can make a sandwich at subway or coffee at starbucks. and that defeats the whole purpose of this exercise. plenty of people are fine but being held back. plenty of us are working hard and getting no where. and a handful are running to the bank with huge smiles.
"Is it "fair" that the top 0.1% of earners pay over 20% of the taxes? Is it fair that the 75% of filers making less than $32,095 (the lowest income in the top 25% in 2007) a year only pay 14% of taxes, yet are disproportionally the recipients of Government aid programs?"
Bullshit. Stoned Advisors more like it. Echoing many above, the highest earners aren't paying near enough and as for government aid, isn't Ben, his printing press and TARP etc. etc. enough for you apologists for the super-wealthy. Jesus. Insult to intelligence. But typical of this type and their "deep thinking" on the issues of our time. Put these guys on CNBC and get them off this website.
If you increase my marginal rates I will find a way to pay less in taxes. I run my own business so I have a lot of flexibility in how I determine my income. Good luck with your class warfare thinking. Don't include the near wealthy like me in your class warfare rhetoric and you might have a few more allies.
The problems occur when you align with the very people you say you despise. Second, just because you run a business, doesn't make you any more almighty - especially when such ask for perfect conditions on a silver platter, and people looking for work are asked to take less.
For that, do not be surprised if the government finds ways to deal with the "flexibility".
Hey numbnuts Stoned Street Advizurs,
The average Joe and Jane pay their share AND your share with every health insurance premium, co-pay, loaf of bread, gallon of gas, DMV fee, school fee, toll booth, tire tax, phone tax, cable tax, sales tax, car tax, water, gas, electricity, air tax, ecetera, etcetera, etcetera.
Get over it; anyone making double the median wage is paying half or less for everything else on an income scale; and don't tell me those rich folks aren't sheltering income using accountants and attorneys the middle class can't afford.
Cut the class warfare and argue for a flat tax or STFU.
+1
I hate it when people use the argument of the "Federal Income Tax" as though its the only tax in existence. Social Security, Medicare, federal and state cigarette taxes can be added to your list ebworthern.
The most fair tax that would not control how we behave, procreate, buy, or sell woluld be a flat tax on all transactions with no exemptions:
http://www.apttax.com/
Agreed, thank you.
It's percentages you rich dip shit. Where to even start with this pathetic drivel? How about with the fact that many of us wouldn't use money at all had a capitalist system not enclosed us into it's clutches. How about with the fact that if you witnessed such disparity in resource allocation amongst any other species (e.g. 2 out of 100 chimps hogging 99% of the bananas) and the poor among them just taking it, you would wonder by what incantation or affliction such a scenario was possible (e.g. Why the 98 "poor" chimps didn't just beat the shit out of the 2 "rich" ones.) Or maybe we should focus on the fact that the "civilized" hierarchical system of human arrangement of which capitalism has become a central organizing tenet, requires that all humans pay in designated capital just to exist: Pay to sleep at night, pay to eat, pay to drink. Hell, I'm surprised assholes like you haven't found a way to charge everyone else for sunshine yet.
This civilization rests upon and would collapse very quickly were it not for widespread violence. Period.
Now, I'm no fan of the government, or of taxation, but to claim that we have no right to complain about the mismanagement of the money were forced to rely upon, which is then stolen and diluted, is ludicrous.
Tyler, I'm a bit disappointed. Capitalist circle jerkers, flag as junk at will.
"Hell, I'm surprised assholes like you haven't found a way to charge everyone else for sunshine yet."
Dammit!! Don't give them any new ideas!!
Yeah Stone Street. $30k is absolutely enough for the 'common' folk. While $30k wouldn't get you a prime tee off time at your local martini sipping, in-bred 'club', it's absolutely enough for your maid, your nanny, etc. Afterall, they're not really smart enough to deal with alot of money-they WANT to live hand to mouth! If they want to get any healthcare, or send their motley rugrats to college, or god forbid go somewhere other than Orchard Beach or Coney Island, they should work harder! Like you good Stone St. folks! You worked hard to inherit your wealth!
What percentage of income do the top 20% pay toward the real necessities of life, like FOOD or electricity bill or rent or how about health care?????
The person writing this article needs help, he/she are displaying symptoms of a Psychopath.
"Psychopaths gain satisfaction through antisocial behavior, and do not experience shame, guilt, or remorse for their actions.[12][13][14] Psychopaths lack a sense of guilt or remorse for any harm they may have caused others, instead rationalizing the behavior, blaming someone else, or denying it outright.[15] Psychopaths also lack empathy towards others in general, resulting in tactlessness, insensitivity, and contemptuousness."
The top ten income earners in the United States are all stock manipulators with the help of insider trading and the United States Senate, Fed and House. They pay between 7% (hedge fund gurus) and 15% (Capital gains) on their income. The little schools teacher down the street earns $32,000 per year and pays nearly 30% of her income in taxes. These taxes include: auto, gasoline, property, excise, sales, AMT, FICA, etc. The school teacher does not have access to offshore accounts, tax attorneys, or corrupt government officials. The school teacher is honest.
Can you show me an honest billionaire?
Too bad the two assholes who junked you couldn't answer your challenge. Probably too busy in bed "earning" money from Mommy Government.
This article appears every few months or so, slightly varied but with the same stupid claims and half-truths. Stone Street Advisors is one dude, a paid blogger shill.
Stone Street Advisors is not one person but several. We are 100% unpaid. In fact, we lose money just paying for the website, etc. Nice theory, unsupported by anything, though.
Ahnold said it best, "fuck you, asshole"
What a crock of shit. Start to finish. But let me just leave it at the start by observing that it is not just the "taxpayers," narrowly defined as you like, who have paid, are paying and will continue to pay for the banksters' frauds, past present and future.
Everyone is paying. Figure one the various ways yourself.
You need $100m to figure out what broke really is, Fact!
Another way of looking at it might be - you 1% folks own 90% of the nation's assets - so you can have 90% of the liabilities too. So, let's take a look at that payment plan for ya...
They have the simple minded morality of kindergartners when the subject of really pulling their weight comes up. Fucking hustlers.
Well said, JAC!
The deficit accounts for all the growf.
GDP growf
Salary growf of the top "over-taxed" 25%.
It's trickle up economics.
And the funniest part is those same elitist will swear that Joe Sixpack will suffer the most if we stop subsidizing the rich!
This is some bullshit propaganda here, asshole. Payroll taxes start from the first dollar of earnings - for most low wage workers it is more than they pay in "income" taxes. And payroll taxes only apply to the first $100k or so. It wouldn't be such a big deal except that payroll tax surpluses have been subsidizing lower tax rates for income tax payers for decades. Of course, now that this is reversing soon it is time for "austerity" - I guess we should have seen that coming.
Plus there is the Alternative Minimum Tax (hopefully that isn't much of a factor though).