# what % of their income do you think the "rich" pay in federal taxes? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [December 8, 2012, 9:48pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455 "2012-12-08T21:48:42Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 5:08am UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/21 "2012-12-09T05:08:02Z")
> [@Little\_Nemo](#): > > I agree. Are we talking the actual amount of money they make in a year or the amount that is legally defined as income for tax purposes? Tax purposes. Unless you’re talking about gifts below gift tax limit, I am not sure what money you’re talking about that one can “make” that is not income for tax purposes. IRS is pretty thorough in that respect. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 5:09am UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/22 "2012-12-09T05:09:02Z")
> [@Little\_Nemo](#): > > Are you saying that all capital gains are taxed at the same rate as other forms of income? No I am not saying that. But they are “income”, are taxed, and are included in the percentage calculation about which I am asking. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [December 9, 2012, 5:49am UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/23 "2012-12-09T05:49:33Z")
I’m guessing around 20%–which would still be a good bit less than me percentage-wise, although I don’t quite make even six figures. (The joy of the self-employment tax.) ---
**Author:** ![Dag\_Otto](https://avatars.discourse-cdn.com/v4/letter/d/439d5e/32.png) [@Dag\_Otto](https://boards.straightdope.com/u/Dag_Otto)\ **Post date:** [December 9, 2012, 2:31pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/24 "2012-12-09T14:31:26Z")
> [@Terr](#): > > Tax purposes. Unless you’re talking about gifts below gift tax limit, I am not sure what money you’re talking about that one can “make” that is not income for tax purposes. IRS is pretty thorough in that respect. Gross income vs adjusted gross income, I would guess. It would make a difference when determining the percentage. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 9, 2012, 3:32pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/25 "2012-12-09T15:32:25Z")
> [@Terr](#): > > No I am not saying that. But they are “income”, are taxed, and are included in the percentage calculation about which I am asking. It’s hard to tell if you really don’t understand what I and other people are saying or if you’re just trying to keep your gotcha alive. But to make it really simple capital gains, to use an example I’ve already given you, are taxed at less than half the rate that income is taxed at. Personally, I think you are aware of this. In your OP you made a point of defining what you meant by rich and what you meant by federal tax. But you made no attempt to define what you meant by income. I think this was probably deliberate because you realized your question wouldn’t work if you had. ---
**Author:** ![Ludovic](https://avatars.discourse-cdn.com/v4/letter/l/7ab992/32.png) [@Ludovic](https://boards.straightdope.com/u/Ludovic)\ **Post date:** [December 9, 2012, 3:47pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/26 "2012-12-09T15:47:26Z")
> [@Little\_Nemo](#): > > In your OP you made a point of defining what you meant by rich and what you meant by federal tax. But you made no attempt to define what you meant by income. I think this was probably deliberate because you realized your question wouldn’t work if you had. I also don’t see a definition for how the average will be calculated. If it’s the total income divided by the total number of people that’s one thing. If it’s the average percentage that’s another thing, since I believe that the majority of those households making over $250K make the majority of their income from wages, which will be taxed at a very high marginal rate. As opposed to the average _dollar_ made by those making over $250K, which may very well be from dividends and capital gains since the bracket will also hold a few ultrarich people whose cash flow is taxed at a low rate compared to the average middle class wage earner. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [December 9, 2012, 3:50pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/27 "2012-12-09T15:50:24Z")
> [@Little\_Nemo](#): > > But to make it really simple capital gains, to use an example I’ve already given you, are taxed at less than half the rate that income is taxed at. You are very wrong about that, I suspect because you’ve never earned capital gains. But this is IMHO after all so please continue to tell us your uninformed opinion on the capital gains tax rate. For anyone that wants an informed opinion: “Short-term capital gains are taxed at the investor’s ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, which are gains on dispositions of assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets.” [wiki](http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States) And for people in the 25% and 28% tax brackets their long term capital gains are taxed at 15% which is **more** than half the rate that income is taxed at. ---
**Author:** ![Little\_Nemo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/little_nemo/32/3120_2.png) [@Little\_Nemo](https://boards.straightdope.com/u/Little_Nemo)\ **Post date:** [December 9, 2012, 3:57pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/28 "2012-12-09T15:57:42Z")
> [@emacknight](#): > > You are very wrong about that, I suspect because you’ve never earned capital gains. But this is IMHO after all so please continue to tell us your uninformed opinion on the capital gains tax rate. > > For anyone that wants an informed opinion: > > “Short-term capital gains are taxed at the investor’s ordinary income tax rate and are defined as investments held for a year or less before being sold. Long-term capital gains, which are gains on dispositions of assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets.” [wiki](http://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States) > > And for people in the 25% and 28% tax brackets their long term capital gains are taxed at 15% which is **more** than half the rate that income is taxed at. The maximum rate for long-term capital gains (and by long-term we’re talking a year) is 15%. The maximum income tax rate is 35%. So is 15% less than half of 35%? ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [December 9, 2012, 4:38pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/29 "2012-12-09T16:38:42Z")
**Little Nemo** , no I think (s)he’s is discussing total tax burden versus total income. To cut to his/her chase, I am fairly sure that something like [this](http://www.cbo.gov/publication/42870) is the source (click through the slide show and see [this pdf](http://www.cbo.gov/sites/default/files/cbofiles/attachments/AverageFedTaxRates2007.pdf). > [@](#): > > CBO’s analysis of average tax rates assumes that households bear the burden of the taxes > that they pay directly, such as individual income taxes (including taxes on interest, > dividends, and capital gains) and the employee’s share of payroll taxes. … > > … Excise taxes are assumed to fall on households according to their consumption of taxed > goods (such as gasoline, tobacco, and alcohol). Excise taxes that affect intermediate > goods, which are paid by businesses, are attributed to households in proportion to their > overall consumption. CBO assumes that each household spends the same on taxed goods > as is spent by similar households that are shown in the Consumer Expenditure Survey to > have comparable income. > > Far less consensus exists about how to attribute corporate income taxes (and taxes on > capital income generally). In this analysis, CBO assumes that corporate income taxes are > borne by owners of capital in proportion to their income from interest, dividends, capital > gains, and rents. In that CBO analysis of 2007 the middle quintile’s all Federal taxes were 14.3% with Social Insurance being the lion’s share. The highest quintile was 25.1% with personal income tax being the lion’s share and 4.6 of it coming from corporate income tax they are given credit for paying (indirectly). (Without that debatable attribution they’d be at 20.5%.) And the highest 1% was at 29.5% with a more significant portion, 8.8, coming from corporate tax attributed to them. Without that corporate tax attribution they were at 20.7%. The slide show, slide 5, is pretty impressive. (And the data is available in the tabs to the right.) Between 1979 and 2007 after tax income for the top 1% had increased nearly four-fold. For the rest of the top 5% it went up by roughly half. For the middle quintile by just under 19%. In real income I don’t know how that translates. Going beyond the op [this graph](http://en.wikipedia.org/wiki/File:US_high-income_effective_tax_rates.png) also is informative. The effective tax rate (corporate taxes attributed are included in this) for the top 0.1% and even more so the top 0.01% were at record lows in 2005 and have hardly budged since. In comparison to the mere top 1% they paid substantially less. From the source of that graph, [the Congressional Research Service Report to Congress](http://online.wsj.com/public/resources/documents/r42729_0917.pdf): > [@](#): > > Analysis of such data suggests the reduction in the top tax > rates have had little association with saving, investment, or productivity growth. However, the top > tax rate reductions appear to be associated with the increasing concentration of income at the top > of the income distribution. The share of income accruing to the top 0.1% of U.S. families > increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 > recession. The evidence does not suggest necessarily a relationship between tax policy with > regard to the top tax rates and the size of the economic pie, but there may be a relationship to how > the economic pie is sliced. … ---
**Author:** ![Enola\_Gay](https://avatars.discourse-cdn.com/v4/letter/e/3ab097/32.png) [@Enola\_Gay](https://boards.straightdope.com/u/Enola_Gay)\ **Post date:** [December 9, 2012, 5:39pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/30 "2012-12-09T17:39:28Z")
> [@Little\_Nemo](#): > > Are you saying that all capital gains are taxed at the same rate as other forms of income? > [@Terr](#): > > No I am not saying that. But they are “income”, are taxed, and are included in the percentage calculation about which I am asking. Little Nemo is making a very important point, that you seem to be either missing or ignoring. People who are working and actually earning more than $250k are paying a LOT more in taxes percentage-wise than someone like Mitt Romney, whose “income” is mostly in the form of capital gains. My family’s tax rate is about 3x that of Mitt Romney’s and we bring in much less “income” than he does. ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [December 9, 2012, 6:33pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/31 "2012-12-09T18:33:41Z")
No, the capital gains and the tax paid on it are included in that effective tax rate. That’s what lowers it down. ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [December 9, 2012, 7:38pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/32 "2012-12-09T19:38:32Z")
> [@Enola\_Gay](#): > > Little Nemo is making a very important point, that you seem to be either missing or ignoring. People who are working and actually earning more than $250k are paying a LOT more in taxes percentage-wise than someone like Mitt Romney, whose “income” is mostly in the form of capital gains. My family’s tax rate is about 3x that of Mitt Romney’s and we bring in much less “income” than he does. Then I’m missing it, too. Terr is asking, I think, if you include all Federal taxes, what would that represent as a percentage of total income, all types, for the top 1%. Some slices of that income are taxed at a lower rate. The question doesn’t depend on that distinction though. Total Federal tax paid divided by total income, all types. Looks like DSeid provided the answer: 29.5% ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 8:33pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/33 "2012-12-09T20:33:07Z")
> [@Little\_Nemo](#): > > It’s hard to tell if you really don’t understand what I and other people are saying or if you’re just trying to keep your gotcha alive. But to make it really simple capital gains, to use an example I’ve already given you, are taxed at less than half the rate that income is taxed at. Trust me, I know they are. > [@](#): > > Personally, I think you are aware of this. In your OP you made a point of defining what you meant by rich and what you meant by federal tax. But you made no attempt to define what you meant by income. Whatever is taxed, at whatever rate, is income. That includes capital gains, dividends, etc. Why is that a hard concept for you to understand? ---
**Author:** ![DSeid](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dseid/32/20194_2.png) [@DSeid](https://boards.straightdope.com/u/DSeid)\ **Post date:** [December 9, 2012, 8:39pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/34 "2012-12-09T20:39:06Z")
> [@Stratocaster](#): > > … > Looks like DSeid provided the answer: 29.5% Or 20.7 if you don’t credit them for taxes paid by corporations. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 8:41pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/35 "2012-12-09T20:41:37Z")
> [@Stratocaster](#): > > Looks like DSeid provided the answer: 29.5% Yes the answer is: 29.5 (see [http://cbo.gov/sites/default/files/cbofiles/attachments/43373-Supplemental\_Tables\_Final.xls](http://cbo.gov/sites/default/files/cbofiles/attachments/43373-Supplemental_Tables_Final.xls) - the first tab, first table on top) So - the 1%'s average _effective_ tax rate is ~30%. That’s double the rate of what the “middle class” (the fourth quintile, roughly) pays. Yet as we can see from the poll, 75% or so of people on this board - the board that is supposed to be composed of reasonably smart people - think they are paying less, with 50% thinking it’s 15% or less. So for me there are two questions: 1. Why do most people think it’s so much less? I would say the left’s propaganda about it was wildly successful and most people have been fooled into thinking that. 2. All those who thought it was much less and now find out it’s 30% - does that influence your opinion on whether they should be taxed more? Double the “middle class” effective rate is not “fair” enough? Should it be triple? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 9, 2012, 9:00pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/36 "2012-12-09T21:00:31Z")
> [@Stratocaster](#): > > Then I’m missing it, too. Terr is asking, I think, if you include all Federal taxes, what would that represent as a percentage of total income, all types, for the top 1%. Some slices of that income are taxed at a lower rate. The question doesn’t depend on that distinction though. Total Federal tax paid divided by total income, all types. Yeah, I don’t see why this is so hard to figure out unless you want it to be hard. Everything the top 1% takes in and everything they pay in taxes to the feds. I voted for 25%. I’m guessing it’s that +/-, but I think that’s pretty close. The top 1% is a different class than the folks like Romney. He’s more like top .01%. If we consider the adult population to be something like 150M people in the US, the top 1% is 1.5M people. That’s a lot of people. > [@Enola Gay](#): > > Little Nemo is making a very important point, that you seem to be either missing or ignoring. People who are working and actually earning more than $250k are paying a LOT more in taxes percentage-wise than someone like Mitt Romney, whose “income” is mostly in the form of capital gains. My family’s tax rate is about 3x that of Mitt Romney’s and we bring in much less “income” than he does. So what? He brings the average down. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 9, 2012, 9:06pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/37 "2012-12-09T21:06:20Z")
> [@Terr](#): > > 1. Why do most people think it’s so much less? I would say the left’s propaganda about it was wildly successful and most people have been fooled into thinking that. Because they think the top 1% has more people like Romney than it actually does. There aren’t a lot of people like Romney. As I said, he’s more like top .01% > [@](#): > > 1. All those who thought it was much less and now find out it’s 30% - does that influence your opinion on whether they should be taxed more? Double the “middle class” effective rate is not “fair” enough? Should it be triple? I’d sill like to see the carried interest “loophole” eliminated. That’s totally bogus, man. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 9:09pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/38 "2012-12-09T21:09:35Z")
> [@John\_Mace](#): > > I’d sill like to see the carried interest “loophole” eliminated. That’s totally bogus, man. There are a lot of “loopholes” that should be eliminated - not on increasing tax grounds, even, but on “what the hell were they thinking when they passed this” grounds. But the fact remains - the “rich” pay double the percent of the “middle class” and probably 4-5-10 times the percent of the “poor” of their income in taxes. So - double is not “fair”. What is “fair”? ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [December 9, 2012, 9:12pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/39 "2012-12-09T21:12:44Z")
> [@Terr](#): > > Yet as we can see from the poll, 75% or so of people on this board - the board that is supposed to be composed of reasonably smart people - think they are paying less, with 50% thinking it’s 15% or less. You should have let the poll run longer and shame on **Dseid** for spoiling the answer so quickly. But I think you’re going overboard on your analysis. It’s only 75% of the folks who voted before your post-- probably only about 1% of the posters on this board, coincidentally enough! What is fair is purely subjective. I’m more concerned with closing all the loopholes and deductions than I am about raising anyone’s rates. That’s what I think the heart of the “fairness” matter is. Not what aggregate groups pay, but what individuals pay and how many of the rich get off with paying very little. ---
**Author:** ![Terr](https://avatars.discourse-cdn.com/v4/letter/t/839c29/32.png) [@Terr](https://boards.straightdope.com/u/Terr)\ **Post date:** [December 9, 2012, 9:14pm UTC](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455/40 "2012-12-09T21:14:05Z")
> [@John\_Mace](#): > > You should have let the poll run longer and shame on **Dseid** for spoiling the answer so quickly. But I think you’re going overboard on your analysis. It’s only 75% of the folks who voted before your post-- probably only about 1% of the posters on this board, coincidentally enough! I couldn’t let the poll run longer since DSeid insisted on spoiling it. [Previous page](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455.md?page=1) [Next page](https://boards.straightdope.com/t/what-of-their-income-do-you-think-the-rich-pay-in-federal-taxes/643455.md?page=3)