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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.
- advertisements -
We've picked-apart many of the structural aspects of U.S. Tax policy and you're on the right track, but you seem to have missed the larger points of the article. We have more elaborate and deeper research but we don't give that away for free (again, we're not dissaggreeing with what you're trying to say, its just a debate that is far more complex). Thank you for your comment.
Oh, so this is an advert?
If it's an ad, I'm not buying.
It's like listening to a third grader...you haven't picked apart anything.
Maybe you should have mentioned that that 87% the top 25% pays still doesn't cover HALF of what the government spends.
I know, but, but if we cut spending there goes the growf....
We are staunchly in support of a smaller Government.
I suppose then, that you railled against any bailout whatsoever?
And that's how the parasites survive. When someone says "raise taxes" you scream "cut spending!" and the wealth transfer goes on...
What say we freeze the debt ceiling?
Starve them, Burn them and then kill them... for TREASON!!!
I love how this article totally calls out the progressives and populists both, the two most toxic Ps in the political landscape.
For the likes of "Analyst" and his clients...
Dr. Guillotin had a solution...
What clients? I'm not currently working on any committed client engagements and I do not manage any client money. Take off the tin-foil hat, buddy.
You're certainly free to post an article about statistics. It would be helpful though if you mentioned out of WHAT population these 87% of comprised of. Children of course, do not pay taxes. Are children included in your numbers? You never gave a clear base amount which your percentages were referring to. Can we get some clarity?
Other than that, your article was written top notch. I just have no way of believing your statistics if they're not clear.
Sorry, meant to include that in the post (I've written about this so many times I forget to keep linking to the same easy-to-find data):
http://www.irs.gov/taxstats/indtaxstats/article/0,,id=96679,00.html
http://www.irs.gov/pub/irs-soi/07in05tr.xls
http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=6&ViewSe...
Better?
Congratulations. This is the kind of elitist head-up-your-assery that wins Nobel prizes.
The cost of your beloved "GDP growf" is a deficit equal to $6000 per person per year, moron, most of which winds in the pockets of the one percenters. They didn't earn any of it, yet have the audacity to bitch about giving Uncle Sam kickbacks.
They outsource every job possible to line their own pockets, then have the nerve to look down on those people as welfare cases. New flash shithead: America's biggest problem is the welfare cases at the top. I'd say people like you, but honestly I doubt you're very successful.
Impress me with your ability to do basic math. Calculate the cost of the existence of these three people: Hank Paulson, Bob Rubin, and Angelo Mozilo. Every single dollar they ever "earned" probably have cost real taxpayers thousands of dollars - and schmucks like you defend them, offering to lick their boots, lobbying for lower taxes for the very people who would make us slaves.
As big an asshole as I am, I don't wish ill on the people I disagree with, but in your case, I'm gonna make an exception.
Understatement of the decade.
+1, Mark!
LOL
++ and some Hyde thrown in
Non-discretionary spending
Medicare, Social Security, Defense
2009: Defense and Homeland Security ($782B or 23%), Social Security ($678B or 20%), and Medicare & Medicaid ($676B or 19%).
70% of expenses, directly or indirectly (as in Social Security) are salary related.
Focusing on the top 25% of taxpayers:
Medicare: Medical Professionals, be they Physician, Surgeon, Drug Chemist, Hospital Administrator, and all the rest, require salaries commensurate with their education level.
One of the great dichotomies of American Society is that is is next to impossible to attend medical school, mostly due to limited availability, but the profession itself is practically dominated by those who obtained their training and eduction from third world countries. For all the talk of outsourcing there is very little discussion about the top 255 insourcing, it is a great part of the fabric of our society but not exactly jobs Americans don't want. Be careful about your patriotism if you attempt to defend this one.
It is very complicated, but without $276 billion (approx 10% of the annual total) to prop up the very large discrepancy between the need for ever more medical care/prescription drugs to live ever longer and the desire to maintain a lifestyle far beyond what any professional study has ever shown as required to be happy in a "free market society" (depending on your interpretation of just what this term constitutes), it is difficult to gauge/judge/implicate just how much the tail wags the dog and how much of the $276 billion ends up directly in the hands of the top 25%.
Simple example: For 150 years an x-ray was sufficient and now a CAT scan machine costs $1+ million which is 100% tax deductible under the cap-ex waiver.
Social Security: No means test for need, focus is on entitlement. As by your argument, the top 25% are responsible for a majority of the funding. What do seniors with a real need spend it on versus those who see it only as entitlement? There is no solution, especially investment in the stock market, aka casino without the free buffet. .
Defense: Do I really have to cover this one? How about this: as a proportion of society, those that serve, never mind give their lives in combat, come almost exclusively from the 75%'ers. New Yorker's paid $400 in the 1860's to avoid the draft, how much to keep your son or daughter out of harm's way?
"...One of the great dichotomies of American Society is that is is next to impossible to attend medical school..."
The AMA has done its best to limit the number of medical schools in the U.S. ever since the G.I.'s came home from WWII and started going to college, thereby artifically inflating the salaries of medical doctors along with medical costs.
The ABA had the same "problem", but since many universities already had undergrad law programs in place, it was too hard to limit the number of law schools, so they simply changed the study of law to a graduate program.
Put simply: if your WAGE earnings actually affect your standard of living, you're not rich, and you're never going to be.
Join forces with the rest of the country who shares that trait rather than bitching about 'em. They aren't your enemy.
Hear hear, dawg.
These lazy cretins who can't find a job should do something useful for society - like hold up a bank!
How about this - have them as people tasked with locating and repatriating offshore assets?
The many many ZH protectionists, socialists and entitlement-users here won't like this! Great article, though, and a welcome perspective.
a) Some are indulging in economic envy ("they didn't earn it honestly" or "it's not 'fair' that some have so much", "the rich SHOULD pay more", etc., etc.)
b) Some are bona fide big government advocates: "paying taxes is patriotic", "people NEED XX amount of income to buy YYY goods and services", or "the progressive tax system is 'fairer' than any alternative..."
Stuff all of them...all wealth should belong to those who put up and possess the capital. That's all. Labour is everywhere, in vast oversupply: why should we savers and investors, business and job-creators pay more?
I'm always surprised at how incendiary some of these comments are, well, that and totally ignorant. Our Bio's are on our website, we do not receive any compensation from positing here, and we do all of our research for free, to educate the public. Yet despite all of this, some members of the public don't like the results. These are official numbers. We do not make them up and the calculations are very basic (spreadsheet available upon request).
This is reality. Like it or not.
Stone St.,
It's the "Fight Club" schtick. Don’t read too much into it. There’s probably a reward out for 80-90% of the escapees who write comments around here (and a couple of the contributors, too). No way they’re indicative of ZH as a whole.
The best way to handle them is simply to order them to remain silent.
“It always eludes people that for every commentator there are 100-200 (half of which are institutional) readers who read in silence.”
~Tyler Durden
Indeed loupy speaks the truth, like he did about the GW article the other day.
Some people are very pumped up on ZH just now, more than usual i'd say.
i think they feel, correctly, the plebs are being shafted but more likely, people are uncertain about whether the gold and silver run will continue.
Our brothers and sisters are scared and have itchy fingers on the comment button.
To all of you i say 'Chill, motherfrackers... $1600 by June.'
Stoned Street Advizur - you sound like this:
"Oh holy calculator, protect me from the evil middle class. I pray that your data will let me ignore that I am a crony capitalist; supporting the rape of the working middle class, the propping of the phoney baloney cotton-candy stock markets propped by the as yet un-earned and un-taxed income of two or three future generations of the little people.
Please, oh holy data set, let me sleep soundly tonight believing that I am a victim of government (that bailed me out) and of the middle class (that allows me to abuse them) and a benevolent benefactor of the lower classes (whom help support my tyranny along with theirs).
In the binary database dollars and statistacal theoroms of dead monied PhD's and silver spooners I pray, amen."
*gag*
*wretch*
You're completely ignoring reality. The US government borrowed $1.7 Trillion in 2010 and you don't even understand where that money flowed to. That money was gifted to the rich. There's your "entitlement program". Goldman should be nothing but an unpleasant memory, instead it's a $300B a year zombie who doesn't think it even owes the taxpayers a reach around.
Jeff Immelt makes $33 million a year for sucking the taxpayers dry, and fucktards like you think he's taxed unfairly?
Cut back on the jacking and do some real research.
I can answer that.
You pay protection so that the masses don't fucking drag you out of your mansion and dismember you.
Flatter income distribution is reflective of healthy societies. This does not imply that government should attempt to flatten by force
Behind every great fortune is a great crime.
So, once again Kreditanschiesse you are full of shit.
The interest on the money "borrowed/appropriated" to save the fucking losers in the Bankster class should be 100% payable directly to the American public.
To paraphrase your bleatings "all wealth stolen by the ubermenschen" should be long to the thieves.
The only "capital" accumulated in the past 2 years was printed (theft from the middle class through inflation) or outright stolen (Paulson's daylight robbery)
PS. when are you moving to China to get a real return on your capital. Maybe have a few slaves around the house....
I have a business, employees and my own capital (no fucking bankers) and I do not need a fucking lesson from an amoral asshole like you.
Bravo. And only allow me to add: The greater the fortune the greater the crime. Think of the Rothchilds for example.
Kayman,
Here's hoping that good things happen to someone like you. It's good to know that real capitalist like you hate the kleptocracy too.
At times, I may come across as anti-small business, but I'm not. There is an element in our society that pretends to be well-intenioned small businessmen, but in actuality they just borrow, loot, and default. And they don't think they should have their lootings taxed. Just want you to know, I understand the difference between guys like them and guys like you. best.
Agreed.
Too many parasitic crony capitalists hiding behind the "Get the Commies" banner.
Bullshit.
What has the past two years (or more) been? An orgy of crony capitalism and elitist socialism run amok - both evil.
Tear the whole damn thing down.
why should we savers and investors, business and job-creators pay more?
Because you're bank account didn't get wiped out when your bank failed.
Because the Dow isn't at 2,000 (oh, by the way, where do you think the 8.8 Trillion increase in stock market cap came from in the last two years?)
Because here's the real inside scoop on "entrepreneurs":
Borrow money -> hire -> borrow more money -> pay self big bucks -> borrow more -> bigger bucks for self -> default on debt.
With an "economic engine" of ponzi schemes and uncollectable debt financed by the middle class, I'd really rather you just say, "thanks, I don't deserve this."
Yeah K...let's give EVERYTHING to those fortunate enough to HAVE Capital...anyone who merely works for a living is just a DRAIN on that ever-so-deserving one-tenth of 1%.
After all, it is THEIR capital that build all the new factories in China and tech centers in India where all the jobs of the "undeserving" US middle class went...
Trouble is, when the newly poor and now-starving jobless come for you, dragging their tumbrils and guillotines with them, the fact that "Your Class" paid so much in taxes won't save you.... your head will be on a pike with all the others.
In fact, I hope you get to see your spouse beheaded and your kids impaled on stakes before they put you face down on the platform, awaiting the drop of that 500lb. trapezoidal knife...
Yes - it should always be that way - until the masses decide that they don't like it that way. I wonder how the various members of the Russian "nobility" felt about the results - hell - they even had the cossacks (ethnically different from ordinary slavic russians) on their side. Their were some great scenes in Eisenstein's "Battleship Potemkin" as the seamen went hunting for the officers...and those ignoramuses even figured out how to direct and fire the guns all by their little selves.
Then again - there was the French Revolution - that turned out well for the wealthy. Of course - they just got replaced by a new group (largely) and some of the families survived - those who were sharp of eye and fleet of foot.
I especially like to think about these things in light of all the weapons and ammunition being sold these days with nary a background check...I don't think people will be sporting pitforks and torches... I think that bread and circuses may just be your finest investment.
For the record - I don't want your money. I don't own any guns and I pay taxes - as I have since I got out of college.
Guess you'd check this out:
http://www.atlasshruggedpart1.com/
Hopefully, the Great Implosion will stall until the remaining part(s) can be made and seen.
even if your stats are correct, and much of the public are net drains on the public coffers, everyone still has a right to be pissed about bank bailouts. money fucking floods from the printing press to the banksta class/industry, and then merely trickles down to everybody else. do u not see the inherent unfairness in that?
If you include payroll/social security/medicare tax, the lower classes pay a hell of a lot more tax than the upper classes like to pretend when they just limit this picture to "income tax."
What a brilliant idea for the rich -- make half of all "income" tax be paid out of the first 100k of income. Then let them whine about what a vash share they pay of the other half of the tax.
Social Security.
And 100% of the Federal Income Tax doesn't pay for even 10% of government expenditures. The rest is conjured out of thin air by a printing press. I wouldn't put that 25% on too high a pedestal.
High on Koch.
You know people. The author has a point but does go overboard.
As one f*cked by the alternative mininium tax I am distgusted with our tax system. Morgage tax deduction..., who cares, the AMT cleans my clock, the same with most other deductions.
The tax system clearly favors the super rich versus those who merely work hard and get paid. Your typical urban professional family is getting squeezed. Do they make big bucks compared to small town America, yes but there expenses are super high.
The tax structure needs to be adjusted to reflect reality and to modify behavior. Cash bonus's should be taxed punaitvely if we want business to focus on the longer term. How abour raising the tax rate for cash bonus incentives and adjusting stock bonuses to encocourage longterm thinking. If the stock is cashed out in year one than 90% down to 25% in year eight. Ya think that might change behavior of how top management runs a company?
The super duper rich need to pay something for the privelege of living in the USA and enjoying the benefits of our judicial system and military. Why should there be 12th generation DuPonts inheiriting hundreds of millions of dollars without much tax liability. I am not saying take it all or even most but take a rational percentage.
I used to think Steve Forbes was wacko but a flat tax on all forms of income along with a modest VAT would be very interesting. I am curious to see how that tax burden would be distributed. Where is Arthur Laffer when yuo need him. The man has been strangely quite the last few years.
Arthur
The top 1% pay fuck all in taxes because most of their income is "offshored"
These fucking thieves have shills like "Stoned Advisors" to provide cover. I am sure many of their working class citizens would gladly contribute to the tax pile; if only these thieving fucks hadn't "outsourced" their jobs to a Chinese slave factory.
Doctors, Dentists, Accountants, Middle-Managers, etc don't have Swiss bank accounts moron. Top 0.1% is just scratching the surface of offshore accounts, but the majority of U.S. citizens' offshore assets are more those with inherited wealth, not from earned.
Time to have said 1% discover that they can't hide it. There is no place to hide that can't be discovered, collected, and repatriated.
Time to have said 1% discover that they can't hide it. There is no place to hide that can't be discovered.
Though I don't have any hard data to prove it I would guess that it is people in the top 25% but not in the top 1% that are complaining (do those who are doped up on Dancing With the Stars even think about things like this?). I know that I pay more in federal taxes as a percentage of my income than many major companies do (e.g. GE), and I didn't get any direct bailout funds. I mention companies only because I cannot look at the tax returns for other people.
It sure seems that the closer you get to the top the harder it is to continue moving up.