I am not intrigued by your views, nor do I wish to subscribe to your newsletter.
@antibob 6.2T in 2012
@ravenman - You’re forgetting about all the other taxes, besides income tax taken from our paycheck. DOUBLE that number for some income groups.
First let’s talk marginal income tax since you brought it up. The money taken before we cash our paycheck. Many people pay more than 50% for each additional dollar of income, assuming the tax deductions do not change. Let’s say they want to invest in something extra for the future. To get these deductions you have to spend money, without cheating. We also have fixed expenses that are not deductible. So we are forced to spend, instead of saving, 20% of our income to get a 20% deduction? Seems to me we’re still paying more than 28% in income taxes if you weren’t planning to lease a car anyway, except for the tax deduction. Unfortunately there’s no easy way to calculate this. I realize I’m oversimplifying to illustrate my point. The 60-80% quintile by income, pays 67% of their wage earned income to the government eventually. Yet only 45% if you count
{cash transfer, workers comp, in-kind, food stamps, imputed, scholarship, pension, medical need, housing HUD, company car, life insurance, health insurance, cafeteria, pension}
as income from our employers and government contributions. I don’t think that’s a fair comparison because many people “earn” >90% of their income this way. This is unearned non-wage income by definition.
Which numbers do you want to discuss? Total income including all those above and capital gains, interest, dividends? Or are we talking job earned income?
Which government expenses? Fixed expenses that are needed? Or all expense? Federal? State? Local?
Once we have defined this, for our discussion only, it is easy to calculate a ratio of total american income / government spending. Simple math.
About 50%.
Finally!!! An answer.
Are we done here?
Same website shows GDP of $15.8T in 2012, instead of the $12T you claim. Of course, that assumes the numbers are good at all. The GDP figures seem in line with other sources I’ve seen, though.
At any rate, using the numbers for the same year (2012) from that single website gives something closer to 38%, rather than 50%.
A single anecdote is NOT data, but for my part (yes, I’m in the top quintile of earners), I don’t pay anywhere close to 50% of my income in any given year to the government, deductions or not and whether or not I include all those little factors you’ve listed.
In other words, the other posters are correct - both your numbers and your math are bad.
Make with the factual cites. It has been well-established in this thread already that your knowledge of government budgeting is based on perusing various websites of questionable accuracy, rather than having experience or formal education in these matters. Half of what you say here is just simply double-talk, obfuscation, and matters that have nothing to do with the amount of taxes paid.
It is simply not credible, and in fact wholly ridiculous, that you think that a quarter of the American people end up paying two-thirds of their income to the government.
The facts have been laid out since page one of this thread. The total burden of ALL Federal taxes on all Americans end up being a hair over 20% of their pre-tax income (with the top 1% paying just slightly less than a third of their pre-tax income in Federal taxes); and the average burden of ALL state and local taxes on all Americans is right around 10%, depending on where you live. The cites, again, are on page one of this thread, from the Congressional Budget Office and the Tax Foundation.
You often try to divert this conversation into digressions on how much one particular tax “costs” as opposed to another. This is like trying to establish the value of a car by going to Pep Boys and pricing out how much each individual part of a car would cost. This approach is a fool’s errand because the value of the car, or how much the average American pays in all his taxes, is a known and easily established number, which has been relayed countless times.
I’m not sure if you have some kind of conspiracy theory going on here, but all this fretting about what is counted as income and what is not, or what kinds of government spending is being calculated and what is not, are simply products of a hyper-focused, irrational and overly complex look at a simple question. Just relax, look at the citations already provided that show how much tax is paid on pre-tax income, and there’s your answer. That’s it. There are no further calculations to be made. Government spending on various programs is totally irrelevant to how much tax a person actually pays. And it isn’t a majority of the average Americans’ income, it’s a figure that is closer to the mid-to-high 20 percent range.
@antibob
My math is for 2010 not 2012. If we agree on the sources and there is only one operation, it’s called elementary division, we should get about the same answer, depending on how many digits of accuracy you type into your $2 calculator.
6/12 is 50%
5.98/12.1 is 49.4214876%
I am not debating your personal income or what portion of the government spending is due to your existence on the earth. I am talking Totals. The total government spending divided by total income of all people here in USA.
50%
You want to talk unreported income? I have numbers for that also.
First, we are currently talking about government spending / personal income. Totals. Not individuals. Measuring individual government spending is impossible. You can either disagree with 1 of these 2 numbers, or you can say it’s not useful to divide them. I am not trying to misrepresent what this means. I believe it’s relevant as a percentage. It’s somehow related to taxes.
I am not using total personal income to calculate 67%, I specified it was wage or earned income. The number you are looking for is 45% if you count all the entitlement programs I specifically listed as income. Please stop taking me out of context, and repeating back my simple assertions in a different way. That is why I refuse to continue or expand my written thoughts past the kindergarten level. It has not been a productive conversation.
From the same website?
That website claims a 2010 GDP of $14.6T and total spending of $5.9T.
While that’s bigger than 38%, it only increases to 40% (i.e. 5.9/14.6 = 40.4109589…%).
Cherry picking data from different years and/or different websites is not a good way of arguing your point.
@antibob - Clearly you have misunderstood. When you estimated the % you pay I feel you’re only considering income tax. Certainly you did not add up the alcohol, cigarettes, sales tax then all the taxes you will pay in the future on the income you have already earned, including when you die? This is nearly again as much as income tax, especially in your bracket. Because of all the deductions you claim. For a rough estimate double your income tax percent. I’m not asking you to tell me. On average this is true for all people totaled together.
How much is personal income from 2010?
http://bber.unm.edu/econ/us-tpi.htm
I never mentioned GDP.
Do you have a better source for me?
I’m not going to argue over 10%.
Spending is not taxation. Spending is not taxation. Spending is not taxation.
It is completely wrong to do arithmetic on spending and income and think is says something about taxation. At the Federal level, roughly one out of every three and a half dollars spent is not the product of taxes.
As has been stated many times, the total amount of state income tax, sales tax, cigarette taxes, real estate taxes, and all other local taxes averages out to be about 10% of the typical American’s income. That’s a bit less than the average American pays in Federal income taxes.
That’s a great point Ravenman! I agree. Certainly I’m aware of it. We even talked about the deficit and bonds above. Where does the other 2/3 come from? Exact numbers please? Who pays this in the end?
FYI: “Total personal income” is a bad number to use. The federal government’s budget is primarily from personal income, but that’s not the only source. It doesn’t include corporate or other income (which are also taxed), which comprise a fair amount of money. So, the 50% figure means the $6T is inappropriate.
And certainly I did include sales, alcohol, cigarette, etc. As I am a resident of the state of Texas, I deduct sales tax rather than income tax (there’s no state income tax) on my federal return. Of course, property taxes and such are also deducted. So, I’ve a pretty good idea of how much these add to my total tax bill.
I don’t smoke = no cigarette taxes.
As for alcohol, this varies by state. While I do consume, my number of gallons per year of the hardest taxed (hard liquor) is pretty limited. I drink a fair amount of beer, but that amounts to 20 cents on the gallon. My actual alcohol tax, on a yearly basis, amounts to less than $20 (and that’s being generous). Of course, this figure would be different should I reside in Utah.
Capital gains? Already figured in, mostly.
Taxes I pay in the future on income already earned? No such thing. You mean investment income on stocks/bonds/funds I purchase with post-tax dollars? You only pay taxes on the growth. So, unless tax law changes, there exists no such thing.
“Death” taxes depends on how you have your money secured. Either way, it won’t push my overall average past 50%. In the US, it’s actually applied to the person inheriting. So, if I die, I’m not the one paying it. Even if I came into money, there’s a deduction of a couple million dollars and the tax rate is currently capped at 35%. To push an overall average to 50%, you’d have to play funny accounting tricks.
You can try fudging my numbers how you please, but I have done the calculation many times in the past. The federal portion is, by far, the largest. And the total doesn’t approach 50%.
I assert that government revenue in 2009 is 71% from income, social, sales and property taxes. Another 8% from health, education, transportation fees.
Besides Revenue, where does spending money come from?
I’m asking because I want to learn, not trick you.
Who pays corporate taxes in the end? (indirectly)
Sorry, but this made me laugh. This is exactly why there is such difficulty communicating here. Roughly one-third of Federal spending is financed by debt. Roughly two-thirds is through taxes. But you’ve now got that backwards, thinking that two-thirds is NOT from taxes. It’s hard to explain a complex topic when we’re continually having to correct fundamental misunderstandings like this.
Debt issued by the government can be retired through surpluses or continued through issuance of additional debt.
@antibob - Ah so the numerator (gov spending) should be lower because mine also includes all the benefits the corporations get from our government? Since corporate income is not included in the bottom number, we have to subtract the benefits the corporations get from our government spending in the top one. What are those exactly? Police protection? Emergency services? Why would a corporation pay these taxes without getting much in return? Maybe the people who work for and own the company benefit as well? That’s why I assert all government spending is for people, not corporations in the end. I disgress, we’re getting of topic.
The annual deficit is mostly or completely funded by public debt?
The difference between revenue and spending…
It is 1T of the 6T total government spending in 2010?
The Federal deficit is around $1.1 trillion, but I couldn’t begin to tell you what spending by states and localities are paid for by bond issuance. It has to be substantial, I just have no clue.
I’d like to illustrate a scenario to show how bad it is and we’re not aware of it. Let’s say our tax deductions are fixed in each case below. The extra money we earn we are saving or spending in some non-tax-deductable fashion. Say holiday vacations, alcohol, fuel, cigarettes or something fun that we enjoy. I’m going to simplify this with round numbers to make the math easier. The first 50k we earn each year is taxed at a much lower rate due to standard or itemized deductions. These would mostly occur even if we only earned 50k. But we are earning 200k. Most of this difference of 150k is taxed at our marginal rate of 50% before we cash our paycheck. There is an addition tax of 10-20% that we pay later as we spend the money. Now let’s say our boss gives us a raise of 10k next year. How much of this do we get to spend or save? We’ve already maxed our IRA contributions. Certainly we could spend it all, but then we’d owe about 6k in additional taxes. We don’t get many raises like that in this economy. Some of us work 8 hours of overtime each week. That could easily be 10k. The exact same thing happens. We are getting paid less than half for our extra hours of effort. Less than half for our diligent productivity that got us the annual raise. Does that motivate you to work harder?
Why are we motivated to work so hard at our jobs when we get to keep less than 1/2 of any extra amount we deserve? Does it feel fair to you? Who is to blame?
I guess that most people keep these jobs that they hate for the health insurance!
If they change jobs the waiting period starts over for their family.
They work an extra hour a day because they need the additional money to “survive”,
NOT because they did the math and want to work for 1/2 their hourly rate.
Is there another reason I’m missing?