Hmmm. Do these same people also want to not count payroll taxes paid by corporations? I honestly don’t know, they very well might because to not do so would be hugely hypocritical. I know that I don’t even make six figures and when you count my employer’s portion of my payroll I pay over 30% in Federal total taxes (I own an small house and am single without kids.) So the average for the 1%'ers being around 30% elicts no sympathy from me, especially when in order to do so you have to also count certain corporation taxes.
The number I see for the top 1% for 2009 (most recent year) is 28.9%, but I guess that’s a nitpick. Or maybe I’m looking at a different number than you intended.
Using tax brackets for married filing jointly, to get the 28.9% rate, assuming all your income is active, not passive (so, it’s really the *minimum *you could be making and be taxed that much) - I get ~$486,000.
That doesn’t include the deductions and exemptions, so realistically it’s over $500,000 yearly income.
And up.
You raise a good point, Terr, but I just can’t get excited about people making more than $500000 a year having their taxes go up - on the margin - by 4%.
I took the poll after he posted but before I read his post.
We’re just all bad people, and it’s the Left’s fault. Are we done?
(FTR I did 20%. As close as you could get. I do think including corporate taxes is silly.)
I felt a little remorse for the threadshit, so to answer your Question 2, Terr:
One of the arguments for progressive taxation is that eventually large amounts of money can just earn the holder more money without any work. On a very small scale example, meeting a minimum to open a bank account, for example, lets you start getting pennies in interest and avoiding some antisocial fees for things like cashing checks. Or for a larger example - some people have the spare cash that they can afford to have a brokerage account sitting around and earning eight percent for them. Most of us don’t have the money to have access to that kind of instrument. If we’re going to live in a society, there should be something to keep the already-rich from just running away with all the rest of the money altogether. Progressive taxes are one way to do that.
Or you could take a results-oriented tack. Ask some very smart economists, historians, statisticians, etc. “What is the ideal wealth distribution for a healthy, stable, growing economy?” Then they come back to you with numbers like, 5% for the bottom two quintiles, 10% for the middle quintile, 30% for the fourth quintile, and 50% for the richest quintile. (I made these numbers up). Then you look at trends and slightly adjust the taxation levers every year to encourage the economy to hit those targets.
I guessed 25% - I feel exempted from answering this question.
2a. Not much.
2b. almost, but not quite
2c. Nobody is talking about triple. Obama’s plan is to raise the top marginal tax rate back to 39.6%. It’s now 35%. The worst the change would to is to raise some theoretical *very *rich person’s taxes almost 4.6% (asymptotically approaching a 4.6% increase as their income approaches infinity). For someone making $400,000 in wage income, their average tax rate goes up by about 0.12%.
Obama’s tax plan isn’t going to make a ha’penny difference to the deficit or improve the economy but I do enjoy how free many people are with other people’s money.
Regardless, as has been pointed out, it all depends on the type of income you earn. A straight salary or distribution will be taxed at a higher rate. Long term investments at a lower rate. The rationale is that there has to be an incentive for someone to tie up their (usually) post-tax dollars in an investment. Otherwise investors may stick to cash or hard commodities.
It’s not other people’s money. I agree with the Founders; once you pay your taxes, it is the government’s money, to be applied to debts legally incurred according the laws passed by a representative Congress.
As others have said, I’m not sure why we’re using the first table instead of the second one labeled “Individual Income Tax,” which puts the answer closer to 20%. I may just be irked by that because I picked 20% and I still feel it’s the most correct answer.
I think John Mace raises a good point about people not realizing that Romney is not a typical 1%. I’m generally aware that the 1% pay the most in income taxes, but the percentage drops off when you start reaching Romney levels of super-wealth. Wage earners in the top 1% take it the worst.
There’s also another thing at work, which is that very few people ever bother to actually calculate their own federal income tax rate. When I was in the military and had a mortgage, my federal income tax rate dropped to 0%. That’s what lots of deductions and very little taxable income do for you. Thing is, lots of people in my exact same position liked to complain about how much they were paying in taxes. I think they just assumed they were paying 25 to 30 percent and never bothered to look at what TurboTax said.
While my situation was somewhat unique, there are lots of middle-income people who, as the chart shows, don’t really pay a whole lot in taxes. If I can climb on a partisan soap box for a bit, most of the people I meet who fall into this category of thinking they pay 30% but actually pay 10% are Republicans. The party has done an excellent job of convincing voters that the government is taking all of this money of theirs and giving it to poor people who are too lazy to work. One step of correcting this ignorance is to show people what they’re actually paying in taxes, and then show them what percentage of that goes to welfare type programs. But I can never seem to get that point across.
You’re right. 29.5 was from another source.
Seriously? You do understand that when you earn 8% on your money you’re taking a very serious risk of the money losing something like 10-20% or in extreme cases 50-70% in one day and not recovering for years if at all?
That’s because these smart economists, historians, and statisticians have this tremendous track record of predicting things or recommending things, right?
And the other party has done an excellent job (as we see) of convincing voters that the “rich” pay less in taxes than they do and it is thus only fair to raise taxes on them so they at least pay as much.
Except you gave us a reference value of 15% for the fourth quintile, and a full 83% of respondents said the the rich pay 15% or higher. So, at least among dopers, no, we don’t think we pay more than the rich. Your own poll doesn’t support the conclusion you’ve just drawn.
Ah but there is absolutely no guarantee that those 83% think the middle class pays 15%. I bet most of them think it is 30% or higher. For examples, look at some responses in the thread.
Should have asked a different question in the poll, then.
I voted for 20% which I still think is closer to correct. Of course it depends on what you consider a tax. No rich person is writing a check to the govt for this corporate tax they are including. What tax are they talking about? Pass thru for S - or corporate level for C for companies they hold stock in?
Plenty of other source give a different - lower number for effective tax rate.
Low 20s:
http://www.politifact.com/truth-o-meter/statements/2011/jul/12/timothy-geithner/geithner-says-top-1-percent-have-tax-rate-low-20s/
24.01:
23.39:
21.01 for individual - 28.9 for total:
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=456
These were the first four google results for “effective tax rate of top 1” after that CBO report.
I am curious as what and why the corporate tax is included.
This report doesn’t change my mind, unless there is some secret corporate tax that just effects rich people that I was unaware of before.
S corporations do not pay taxes. I suspect they are talking about C corp taxes, where the “rich” person has a choice how to structure his taxes - whether have the corp he owns pay the taxes then pass the rest over to him in compensation or have the corp give the money to him and pay less corporate taxes and more individual taxes. Either way, the government gets the money that would otherwise go to the “rich” person.
So - the “rich” already pay much higher effective tax rates than the middle class or the poor - by whatever standard you apply. But they need to be soaked even more, right?
They weren’t being “soaked” before the Bush tax cuts, so returning to those rates that coexisted with the largest peacetime economic expansion in our nation’s history, is the appropriate thing to do.
Ok - so I think you are right about it being a C Corporation, but I think it is the corporate tax on any shares they own - I am just as much of an owner or McDonalds for my shares of the company as a rich person is of his. Otherwise the figures don’t make sense. There aren’t enough C Corp owners among the 1% for 8% to make sense and certainly not among the bottom quintile for ~1% to make sense. I know plenty of people that own S corps and LLCs, but very few that own (by themselves more or less) a C Corp.
However you slice it - the richer someone is - the more their income is taxed at the 15% rate. for either long term cap gains or dividends. You can argue that taxes at the corporate level would be money that otherwise would go to that person. You could also argue this for the person who gets a salary instead. But we all know McDonalds isn’t going to give more money to their employee if their tax rate is slashed, while it would go to the rich person in the form of dividends or cap gain. There is no reason to treat these two situations as different other than it makes the 1% taxes appear higher.
Of course the rich pay a higher effective rate than the poor - the poor can’t afford it. It has nothing to do with soaking the rich.
There are plenty of other things that the middle class pays - property tax for one - that can be significant and somewhat regressive (in that someone making $500k isn’t likely owning a home 10x as valuable as someone making $50,000).
The 1% gets to max out their retirement plans - while the bottom 20% can’t afford it. This all grows tax deffered. That CBO report doesnt include the employer half of 401ks and the like.
I suspect you don’t like the whole Warren Buffet quote about his secretary pay a higher tax rate than He did. Yes if you change Warren Buffet to the 1%, pick a poor secretary vs his well compensated secretary, and pick a CBO report that requires using figures that don’t appear on anyone’s tax return - you can sort of change some of the narrative.
Fact:
People pay 15% on dividend income (plus state tax where it applies). If I invest enough money in X company to get $100,000 in dividends - I will pay 15% on this. I DO NOT pay their corporate taxes. The fact that this may have resulted in me getting a higher dividend doesn’t effect how much I am paying the gov’t.
If I sell a stock after a year - I pay 15% plus state where applicable. They aren’t paying some 30% federal tax rate on this.
In the days where you could actually sell your house for a profit - a well to do couple could keep $500,000 of this profit tax free.
The tax code isn’t biased against rich people.
You can’t get enought money out of poor people, and taxing the middle class more would hurt the economy. Guess who is left?
It is all nice and dandy to claim we can cut spending (mind you I’m not claiming YOU said any of this, I am just ranting), but when pushed - people who claim this will point to vague concepts. Romney refuse to mention anything specific other than PBS (and I think one other thing - cant remember what it was). None of these add up to a hill of beans.
Shoot, I misread the question! Take my answer out of the average. 