I just heard an interesting statistic on talk radio. THe host of a conservative show said that the top 11% of wage earners (those who have household incomes over $75) pay 2/3 of all federal income tax.
He also said that the top 6% (making over $100k) pay 50% of the fed. Income tax.
He noted that the top 6% of wage earners hold 34% of the personal wealth in the US.
The bottom 1/3 of wage earners pay 1% of the fed. Income tax.
My question is to those of you who have stated in other threads that the wealthy don’t earn their money and that the system of taxation is unfair. Well, how do you figure that our system is unfair to low income households?
It seems to me that the bottom third is riding on the back of the top 1/10, especially since I doubt the top 1/10 use many of the services that they are paying for.
It is all a big shell game. the majority of people are willing to go along with really high taxes because they know someone richer than they are are paying even more.
Rich people don’t use many of the services that they are paying for??!!
Do you imagine that national defense, criminal investigation, universal literacy, good highways, lack of epidemics, etc. etc., aren’t FAR more crucial to preserving the lifestyles of immensely wealthy corporate leaders like Bill Gates than they are to yours or mine? How long could Gates keep his company solvent if his potential workforce and customer base was overwhelmingly poor and illiterate? How long would his personal fortune last without the security of various forms of legal protection backed up by government power?
In the probably futile hope of heading off yet another libertarianism debate, I hasten to add that this is irrelevant to the questions whether anyone should pay taxes at all, whether government services are more or less efficient than private ones would be, etc. etc. etc. I’m merely pointing out that if government spending is useful to anyone (and the OP seems to think it is, from his comments about poorer people “riding on the back” of the wealthy), it is most useful to the rich, since they have so much more to gain from a reasonable level of prosperity among their employees, customers, and neighbors.
I wasn’t trying to head down that raod Kimtsu. I was just thinking that the top 10% probably don’t use a lot of welfare, food stamps, medicare, subsidized housing, etc. I believe that social services comprise the third largest expenditure.
Of course everyone shares in the benefits of a literate society and a good bnational defense.
I am NOT a libertarian. I am not arguing that taxes should be obliterated. Rather, I am wondering where all the seething indictments of the rich and the allegations of an unfair system come from.
Probably from the fact, Mr. Z., that institutional factors make it easier for those who have money (or are born into it) to save it and not have to live at a subsistence level, while at the same time making it nigh unto impossible for the poor to do anything beyond live paycheck-to-paycheck. And sometimes, not even that. How many working poor do you know who own their own home or a car newer than, say, 6 or 7 model years?
That doesn’t meant that they are necessarily paying a higher percentage of what they earn. Think of it this way: you have ten people who earn $15000 a year and [pay %25 income tax. Then you have one person who makes $1000000000 a year and pays %5. Where does most of this group’s tax come from? You guessed it, the rich dude, even though he pays a smaller percentage. Yeah, poor guy, let’s give him and even bigger tax break and let the poor make up the rest.
How do institutional factors make it easier for people with money to save money while making it harder for people with little money to save it?
I am not making the insane argument that the rich don’t have an easier time buying and saving. But how is this institutional?
The institution takes away 37% from those who do have money and takes little or nothing from those who fall in the bottom 1/3 of income. That would suggest that the institution makes it harder to save money as one earns more, not the other way around.
taxes don’t hurt the poor right now, they help them.
People making one million, 2 million, and 200 million all pay the same tax rate as Bill Gates. Is any of them really happy that other millionaires are paying through the nose?
The rich have to pay more than their per capita share. Simple math proves it. Using very round and quasi accurate numbers, dividing the nation’s 1.5 trillion dollar budget by its 250 million inhabitants means that each living soul in the U.S. is responsible for $6,000 of the federal budget.
The only real questions are the amount and form by which the payments are made.
Personally, I endorse the flat tax because it doesn’t destroy the incentive to earn. One an individual surpasses his “deductable” he knows that each additional dollar is taxed at the same rate. Hypothetically, paying 10% tax on income over $20,000 means that an earner knows that he keeps the same $900 on the next thousand dollars earned as he will when he earns the thousand dollars that nets him $40,000 for the year.
The shell game is how Social Security fits it. Somebody thinks that they’ve beaten the system by utilizing all of their deductions, child tax credits, minority credits, etc to pay zero in income tax and they forget that they’ve already been socked 15% for Social Security tax. It’s still an income tax, just under a different name and placed into a hypothetically different bucket.
SouthernStyle
Avalon, Do the percentages of Income really matter in light of the fact that households making over $75,000 (note, this means they are not millionaires) is paying 66% of fed. Income tax? no matter how you slice the numbers, they are picking up the tab.
But of course, we do have a progressive tax and I will hit the top bracket this year. I live in a small house and don’t have a car younger than 6 years old. I am not rich. I don’t see how I am being unfair to others by paying the lion’s share of the taxes.
Does anyone really think that a household income of $100k is a outrageous?
I am not saying that a progressive tax at some level is necesarily wrong. I am just saying that the poor are not getting screwed in teh current system.
Though I do think it’s fair for the big earners to pay the big taxes, it is amusing that the ones who pay less than their percentage share (as defined by SouthernStyle) whine about being screwed. You never hear a poor guy thanking Bill Gates for all he’s done through taxes and charitable contributions. Where’s the love?
Truth is, this is just one of those that’s-how-it-is things. If you want to build a great country, you’ve got to spend big bucks. If you want big bucks you ain’t gettin’ it from the poor. You got to get it from those that have it.
I am by far not an expert on the matter, but I would be interested in hearing a better source than “I heard it on talk radio.” Could this have been Rush Limbaugh speaking?
Mr. Z, the percentage of total tax collected is not just a function of the rates, but also of how many people are in each income group. If there were twice as many millionaires (or half as many) as there are now, then the percentages of total collected would be greater (or lower), even if there were no change in the rates. For an extreme example, suppose there were 100 poor people with incomes of 15,000/year paying at a 75% tax rate, and one billionaire with income of 100 million/year paying a 5% rate.
Poor share of total = 1,125,000
Billionare share of total = 5,000,000
The billionaire is paying 80% of the taxes, but it’s hardly fair to the poor.
Yes, I know our system is nothing like this, but my point is that percentage of total tax revenue is not a useful measure of fairness.
If you are going to decry a progressive tax, you should be prepared to explain why the concept of decreasing marginal utility is flawed. Until you do that, than Mr. Z paying $1,000 of tax for my $100 could be considered equal. After you do that, you should go and pick up your Nobel Prize in Economics.
The measurment base on percentages means nothing. You didn’t indicate in their what percentage of the wealth the top 11% hold. If they hold over 2/3 of all wealth then it’s obvious that thye don’t pay their fair share. But, I think the real issue has been the declining corporate taxes. Corporations have been paying a slowly declining rate of taxes over the years. This means that individuals rich and poor have been paying a greater rate of taxes. Does anyone think this is fair? (it’s only a semi-thread hijack since it still realates to the original question)
I get your point, Gilligan. I understand the math. I am just saying that ai don’t see how the rich are screwing the poor. I know it looks like II am creating a straw man, but I don’t want to go back through the posts and call out individual posters who bashed the rich in various threads.
It just seems to me that even if we did use the scanario you put together, the billionare is paying his big chunk and using the same or less than the poor guy with his higher tax.
And of course, this is not how our system is structured.
Rhythm, I have no idea what you are talking about, but I am not arguing entirely against a progressive tax. But I do wonder if $100,000/year makes anyone “rich.” I think that they put the bar a little low.
