The Tax Facts: "You Do The Math"

Tyler Durden's picture


As UBS reported said, in both the Republican primary and the general election campaigns in 2012, various Presidential candidates in discussing taxes have recommended that voters "do the math" in evaluating various tax change proposals. The following preliminary 2010 data from the Internal Revenue Service (IRS) should be helpful for performing such calculations. We present a variety of self-explanatory exhibits sourced directly from the IRS, which include all the DIY math on income distribution, tax rate schedules, who is affected if Bush taxes cuts for high-income taxpayers expire, sources of itemized deductions and higher incomes, the size distribution of businesses paying individual income taxes, and everything else that may and likely will be thrown out, if incorrectly, by one or both candidates tonight, in an attempt to rally any one group of people behind the cause (what cause exactly remains to be seen).

Source: UBS

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Tue, 10/16/2012 - 18:18 | 2896305 krispkritter
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Tax Facts: Do the Meth...

As illegal/immoral today as it was 100 years ago...

Tue, 10/16/2012 - 18:36 | 2896334 WillyGroper
WillyGroper's picture


Tue, 10/16/2012 - 18:58 | 2896365 MillionDollarBogus_
MillionDollarBogus_'s picture

Asking Americans to 'do the math' when it comes to taxes and things like treasury spending VS tax inflows, is like asking Americans to count the number of calories they consume VS calories burned doing exercise.

They don't want to know the final answer.



Tue, 10/16/2012 - 19:14 | 2896395 Paul Bogdanich
Paul Bogdanich's picture

Almost a totally worthless analysis.  Add in payroll taxes which is a larger portion of revenue than income taxes and then see which brackets are paying what.  But these propaganda pieces never,, ever do that as the facts are startling.  One of the better things to do on taxes (revenue wise) would be to preserve the Bush tax cuts for everyone would be fine but an adjustment for the top 5% would be better, and then eniminate the ceiling of SSAN, FICA and FUTA contributions.  Make the rich pay the same gross percentage as everyone else.  Then watch the screaming.  You can't do this to me.  I'm rich.  Payroll taxes are for janitors, secretaries, public sector workers, sales clerks and other wage minions.  I'm rich.  How dare you.  Which is why such an option is never suggested and the facts to do a comparisson are never even presented.  The whole frame of the "debate" is a slanted joke.      

Tue, 10/16/2012 - 19:24 | 2896414 DCFusor
DCFusor's picture

Damn, did you ever get that right.  How dare you!  Facts not allowed!  And we should means-test the bennies on top...which might not solve everything, but it'd sure go a long way in the right direction.

I personally know multi millionaires who collect SS.  Pretty sick.

Tue, 10/16/2012 - 19:31 | 2896431 The Alarmist
The Alarmist's picture

It's not a revenue problem, it's a spending problem.

BTW, why should someone who paid into an alleged insurance scheme not get some of the benefit he or she was promised when forced to make those "Contributions"?  

It's sick that people sit around thinking they can take, take, take from others because the others have more. Can't wait for the return of fuedalism so we can get back to chaining the serfs to their plows in exchange for the protection and handouts.

Tue, 10/16/2012 - 19:52 | 2896477 blunderdog
blunderdog's picture

It's not a theoretical question--we're well past the point of "principle."  There's just no money.  If you want your taxes to continue to increase to provide fun-money for guys like Warren Buffet and John McCain, you should clarify the socialist argument a bit. 

It should start something like this:

"Government should *definitely* be collecting money from fast-food employees to provide Social Security checks for Ted Turner BECAUSE _________________."

Wed, 10/17/2012 - 10:17 | 2897900 Apocalicious
Apocalicious's picture

Can't wait for the return of fuedalism? It's already here, my friend, just in new clothes.

Tue, 10/16/2012 - 19:49 | 2896473 nmewn
nmewn's picture


The problem is you're trying to make a silk purse out of a sows ear. The progressive tax code relying on earnings/wages is what the problem IS. Entire forests have been decimated by politicians screwing around with the tax code trying to herd people this way & that. Cronyism is rife within it.

Tweaking it solves nothing.

Abolish it, go with a flat tax at point of sale and fire three quarters of the IRS.

Wed, 10/17/2012 - 06:36 | 2897500 KidHorn
KidHorn's picture

I think a point of sale tax is a good idea, but you know, over time, they'll tinker with that also. Certain items will have lower taxes than others.

Wed, 10/17/2012 - 07:39 | 2897532 nmewn
nmewn's picture

Or no for example, shouldn't be taxed IMHO.

I'm talking vegetables, meat, bread, soup, eggs, flour, sugar, fish, salt etc...not comfort foods like Pepsi and chips.

And so it begins, as you say...the carve outs ;-)

Wed, 10/17/2012 - 10:07 | 2897864 Apocalicious
Apocalicious's picture

Mr. Fawkes,

Interesting that you propose such as above.

I've done some analysis on what would it look like to abolish income taxes, and have a regressive sales tax based on inflation (i.e. low inflation items have a high sales tax, think computers and cars, and high inflation, food - energy, have a low to no sales tax) or simply a progressive tax based on the size of the purchase (necessary goods tend to be small absolute dollar amounts, and luxury items tend to be large dollar amounts - low to no sales tax on $5 dollars, but a 15% tax on anything of $20,000, obviously some linear model not a dumb step function like current laws).

Because TPTB control currency and inflation numbers, focusing on taxes alone is like fixing one side of a slide rule. They can make the taxes look more "equitable", but screw the poor on inflation and currency debasement - move the other side in the favor of the rich. A tax code that accounts for this intrinsic inequity actually appears to minimizes the fiscal and monetary forces that lead to ever expanding wealth disparity over time.

Would love to crowd source thoughts on this policy proposal from the brainpower we have at ZH.



Wed, 10/17/2012 - 13:03 | 2898356 Thisson
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Everything needs to have the same tax rate, otherwise you're still allocating production based on central planning.  The market pricing mechanism is necessary to avoid malinvestment and economic collapse.  This is one of Mises' basic principles: 

Wed, 10/17/2012 - 13:26 | 2898418 Apocalicious
Apocalicious's picture

True, but when you have a federal reserve / fiat currency, the market pricing mechanism is already basically being intentionally overridden when it comes to interest rates and exchange rates by TPTB. Without removing that from the equation, you don't / can't get market pricing anywhere else in the system, including goods and services, because interest rates and currency value drive all of those prices.


If you have central planning that is explicitly designed to inflate my cost structure/deflate my asset base, while deflate someone else's cost structure/inflating their asset base, that is central planning that leads to misallocation of capital and exponential compounding of the weath gap. We have no check and balance currently in place to address this.


Accepting that I have little probability of success in ending the Fed or a fiat currency system, I ask can one design a tax system that is explicitly designed to offset those distorting forces? Can tax be applied with the explicit goal of normalizing the market price distorting effects of monetary policy?


Mises and Hayek are correct, but that doesn't answer this question.

Tue, 10/16/2012 - 20:04 | 2896494 bilejones
bilejones's picture

For decades, of course we were told that "Payroll taxes" were "insurance premium " payments.

As the Social Security payment has an income related limit, the tax obviously should, too.

Tue, 10/16/2012 - 19:05 | 2896378 The Gooch
The Gooch's picture


Tue, 10/16/2012 - 18:56 | 2896358 Daily Bail
Tue, 10/16/2012 - 19:09 | 2896370 Pool Shark
Pool Shark's picture



Unlike Welfare, Section-8 Housing, FoodStamps or ObamaPhones; Unemployment is an insurance policy which every worker pays premiums for. The idea is to insure the worker against the loss of their job. Millionaires who earned incomes paid their premiums; why shouldn't they be allowed to collect their insurance benefits when they lose their job just like every other worker?

Tue, 10/16/2012 - 19:26 | 2896417 NidStyles
NidStyles's picture

The real question should be why do we have an Unemployment Insurance in the first place? If you want to be safe from one job to the next perhaps you should actually save some money rather than expecting OP to pay you for being a lazy bum and not finding a job.

Tue, 10/16/2012 - 19:45 | 2896462 Dr. Sandi
Dr. Sandi's picture

Stop typing and put down your iPhone, the fries are up.

Wed, 10/17/2012 - 01:05 | 2897391 All Risk No Reward
All Risk No Reward's picture

Debt Based Money makes it impossible for everyone to "save money."

Money is debt.  Your wealth is, by definition someone else's debt.

Warren Buffett is not just a good con artist, his billions literally enslave millions to perpetual debt.

Poverty: Debt is not a Choice

Debt Money Tyranny v. 6.1

The Trojan Horse, debt based monetary scheme is the world's biggest con game in human history.

The people running it aren't stupid, after all, they've enslaved every Western nation to debt based money and they are bombing the crap out of nations that don't allow usury...  until they a conquered and a central bank is set up to covertly enslave their populations to debt based money.

Wake up!  Stay focused!

Wed, 10/17/2012 - 10:31 | 2897938 andyupnorth
andyupnorth's picture

+1 for your healthy mind and clear vision.

It's difficult not to lose focus or get confused.

Tue, 10/16/2012 - 19:27 | 2896419 DCFusor
DCFusor's picture

I never paid unemployment taxes as a contractor - or even the "CEO" of my business which only used contractors.  Nice loophole.  I gave each of my hires a choice of being a legal employee, or a contractor, and showed them how much money they'd get from customers either way.  Not one chose to be an "employee".  Did I only hire smart guys?  That's what I tried to do, but man...when you roll the numbers, no young guy wants to pay for unemploymet or disability insurance, no friggin way.  They want the cash to do with what they think best, period.

Tue, 10/16/2012 - 19:45 | 2896463 Dr. Sandi
Dr. Sandi's picture

Boat payments need to be made, dammit!

Tue, 10/16/2012 - 22:00 | 2896861 Raymond K Hessel
Raymond K Hessel's picture

That's what people don't understand.  Just like Dad said, 'I pay the bills and you will obey my rules while you live you under my roof.", the government does the exact thing with employees.  


Fuck the government.

Fuck the police.

You are not your job.

You are not your fucking khakis.


There is no hedge against calamity.


When it's your time, your time is up.







Tue, 10/16/2012 - 19:32 | 2896434 krispkritter
krispkritter's picture

I'm no millionaire but I'm self-employed. Every year I'd pay several hundred dollars in unemployment 'fees' but I can never collect any benefits. I don't want any to be honest, but why the fees? I pay both sides of taxation but don't derive any benefit as an employee would and have little if any tax benefit as a small business person so where is the incentive to hire? I've never been able to make the jump to employer and only use 1099 workers. The 'system' is seriously skewed towards big(ger) business and there is little incentive towards true entrepeneurship, if I sold my soul and begged .GOV for Bennies, I could move Forward! but then my incentive would be to pad my pockets and close the doors as soon as the numbers didn't make sense. The system is seriously screwed...

Tue, 10/16/2012 - 22:16 | 2896944 rayduh4life
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Spot on Krispkritter  and yet all the talk about how we have to help small business blah, blah.   The two parties are both the same side of a one sided coin.

Tue, 10/16/2012 - 19:34 | 2896440 The Alarmist
The Alarmist's picture

Same comment as before ... forced contributions to acquire a benefit, so why should that benefit not be provided when the precedent conditions are met? 

Tue, 10/16/2012 - 18:51 | 2896306 duo
duo's picture

Balancing a $1.5T deficit between 110,000,000 taxpaying households comes to $14K per household and change.  Make the top 10% of those pay, and oops, you need $150K from each household, more than they make on average.  You can see where this is going.

Tue, 10/16/2012 - 19:33 | 2896439 Lord Blankcheck
Lord Blankcheck's picture

Send the "two Bobs" into every Gov agency to CUT the waste?

Tue, 10/16/2012 - 20:54 | 2896625 HurricaneSeason
HurricaneSeason's picture

You're assuming the $1.5T deficit is the right spending level. 87% of Egypt hates our guts, but we need to give them over $1B a year to sit billions of dollars in planes and billions in support staff at the base so they'll be friendly to Israel and lots of stuff sold by the military industrial complex. All these countries get free schools and hospitals and such, even the ones we bomb. Egypt will help us with that problem and so will China, South America and Africa. It wont be solved by the president or congress because they are paid for.

Wed, 10/17/2012 - 13:30 | 2898429 dugorama
dugorama's picture

Eliminate foreign aid (maybe a good idea politically anyway) and you reduce the $1.5 T to $1.48T.  So what?  Cut our military spend down from #1 until it's in a two way tie for the most and you cut $1.5 T to $0.75 T.  Don't get hogswallowed by "conservative" politicians railing against foreign aid.  That ain't even rounding error.  And if we didn't blow up brown people who live in the sand, we wouldn't need the foreign aid anyway.

Wed, 10/17/2012 - 01:10 | 2897395 All Risk No Reward
All Risk No Reward's picture

If it was only $1.5 trillion.  What about the losses Fannie and Freddie are going to rack up?

How about the losses the worthless 2nd mortgage MBSes are going to rack up at the Federal Reserve Trojan Horse - and you know they will force those bankster losses down our throats, too.

We are already about $20 trillion in debt, they just haven't told gullible citizenry yet.  Did I say citizenry?  I meant consumers.

Tue, 10/16/2012 - 18:19 | 2896307 Stackers
Stackers's picture

And people making between $100-200,000 get the biggest shaft while carrying the bigest load - who would have thought

Tue, 10/16/2012 - 18:34 | 2896332 FreedomGuy
FreedomGuy's picture

Maybe I am misreading the chart but the 100-200k is about even. I read that %agi as percentage of all taxes paid, not as the % of income, I.e., effective tax rate. Am I wrong?

If I am correct then this shows the wealthiest are pulling more than a proportional share of taxes.

Tue, 10/16/2012 - 18:58 | 2896364 Beam Me Up Scotty
Beam Me Up Scotty's picture

Why are they telling us married couples making $250k are in the top 1% and should be paying the highest taxes?? They aren't living like Wareen Buffet. And he pays less taxes to boot.

Answer: it's all bullshit.

Tue, 10/16/2012 - 19:11 | 2896389 nmewn
nmewn's picture

You should use the Big Bird Tax Credit and be subsidized for your talents & labor...its the latest thing in progressive taxation!

Tue, 10/16/2012 - 19:47 | 2896467 Dr. Sandi
Dr. Sandi's picture

I got cha Big Bird Tax Credit right heah...

Tue, 10/16/2012 - 20:00 | 2896486 nmewn
nmewn's picture

lol...Big Bird (crony capitalist).

Did you know my son and I blew up a Barney the Purple Dinosaur stuffed toy in our backyard when he was young?

It was a Christmas gift from a friend, my son looked at me when he opened the box...I smiled at him...he smiled back...aaah memories ;-)

Tue, 10/16/2012 - 22:03 | 2896874 Doña K
Doña K's picture


The Romans had no letter 'U', and used 'V' instead for printing, meaning the Roman representation would for Barney would be: CVTE PVRPLE DINOSAVR


Extracting the Roman numerals, we have:



And their decimal equivalents are:



100 5 5 50 500 1 5

Adding those numbers produces: 666.

Wed, 10/17/2012 - 07:32 | 2897526 nmewn
nmewn's picture

Well, there ya go.

What was left of Barney seemed right at home sitting there in the ashes ;-)

Tue, 10/16/2012 - 19:54 | 2896479 blunderdog
blunderdog's picture

Well, they ARE in the top 1%, but the top 1% is still mostly middle-class.

Tue, 10/16/2012 - 20:02 | 2896490 californiagirl
californiagirl's picture

Let's create the Warren Buffet declaration tax.  Any billionaire/millionaire that publicly declares that taxes should be raised, will automatically be assessed a new tax requiring them to contribute 25% of their net worth to the deficit problem.  Let them put their money where their mouth is. 

Tue, 10/16/2012 - 23:30 | 2897235 FreedomGuy
FreedomGuy's picture

All members of the Democratic party should be assessed an extra 5% to prove they believe the tax BS they spout, as well. Instead they park their yatchs in the lower tax states.

Tue, 10/16/2012 - 23:50 | 2897277 blunderdog
blunderdog's picture

That is by far one of the best tax proposals I've ever heard. 

Call it "blowhard tax."

Tue, 10/16/2012 - 19:09 | 2896387 fuu
fuu's picture

I took the "% of AGI" and "% of Taxes Paid" from chart 2 and the "AGI", "Taxable Income", and "Taxes Paid" from chart 1:



Tue, 10/16/2012 - 19:28 | 2896427 bilejones
bilejones's picture

"And people making between $100-200,000 get the biggest shaft while carrying the bigest load"


Wrong .


Divide the "% of Taxes paid" number by the "% of AGI" number to see the real tax burden,



I would have liked to have seen a break-out of the Earned Income Tax Credit nuber.

Tue, 10/16/2012 - 23:55 | 2897288 blunderdog
blunderdog's picture

     I would have liked to have seen a break-out of the Earned Income Tax Credit nuber.

Don't worry, when everyone's broke, everyone'll get it. 

Wed, 10/17/2012 - 01:25 | 2897408 FreedomGuy
FreedomGuy's picture

I would add that since the USA runs 25-40% annual deficits everyone's taxes should be that much higher to balance the books. If you add new spending as Obama and all socialists propose, then keep adding.

Wed, 10/17/2012 - 08:59 | 2897643 RKDS
RKDS's picture

What about the new spending that Romney and his socialists propose?

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