What elfkin477 said.
How do you get a REFUND of taxes you’ve never paid?
Payroll taxes are federal taxes. As for the other taxes, I stand by what I said: By cutting the most progressive federal taxes (the income and estate taxes) and pushing burdens onto the state, Bush is making the tax system less progressive.
Sure, one could be working for making the state tax systems more progressive, but in the meantime, let’s not make the federal system less progressive. [And, there are probably reasons why state taxes are so regressive…One may simply be the historical reliance on sales taxes, but my guess is that there are also political pressures that push taxation to be quite regressive on the state scale. Two that come to mind are that the influence of money and economic power in politics may be even worse on the state and local level than on the federal level. Closely related to this, there may be some sort of “race to the bottom effect”…i.e., while that parable of the restaurant seems sort of silly on the national scale, there may be more truth to the idea of driving richer folks out of the state by higher tax rates … or there may be a perception among politicians that it is true.]
By the way, here is an interesting summary published today by CTJ of the distributional effects of all of Bush’s tax cuts. One of the interesting and surprising aspects to me is the extent to which the cuts are focussed to the very top. I.e., the richest 1% gets the largest windfall in terms of percent reduction in federal taxes whereas the other 19% in the top quintile actually make out worse than those lower down. (Although, as the last graph shows, this is an artifact of the “sunsetting” of some of the most regressive provisions and if they end up being extended, as the Republicans have already made clear they want to do, then the entire top 5% will do quite handsomely and the top 1% will cut their federal tax burden by a full 25%).
Another interesting tidbit one gleans from this chart is that the top 1% pays ~22% of the total share of federal taxes in 2003 (after the tax cuts). If one compares this to IRS data from 2000 (last year available), the top 1% of earners pulled down a 20.8% share of income (as measured by AGI). The fact that these two percentages are so close shows how “flat” our federal tax system is (at least at the top), despite the impression often given (on the basis of income taxes alone and often considerable spin and distortion) that it is (in the words of the WSJ editorial page) “steeply progressive”.
Simple answer. Republicans are all rich, so they don’t care if the poor die horrible deaths in the streets.
BellaVoce, that was a simple answer. Simple, wrong, and adds nothing to the debate. Thanks for the input.
Thank you jshore for the ctj link. It was a link I needed earlier. I think it puts the finger on exactly what I was trying to say earlier. Relief for the middle class COULD have been made and still made to look progressive, and could have garnered the administration less heat than the obvious play to the top quintile.
Heck, I don’t even care if the bottom quintile is touched, it could have been easily sold as a byproduct of jumpstarting the economy that the middle class benefitted, and they could have done some spin that promised work on the top and bottom quintile down the line. This would have accomplished two goals: Taking a firm grasp of the “hero of the middle class” mantle that the administration needs before the next election cycle (Clinton was good at this) while still accomplishing his stated goal of jump starting the economy.
The democrats need to cohesivly (Democrats and cohesive, is that like Military and intelligence?) work together to load their cannons and aim at the fodder that this administration has so kindly supplied to them. The Pubs gained on a moral highground in the house and senate by painting the Dems with a Clinton morals brush. It’s time the Dems did some painting of their own.
Instead he chose to pander to the top 1%.
On one hand, we have political conservatives who claim that tax cuts and runaway spending are a good idea because it spends up all the money that Democrats might be tempted to spend. They somehow manage to argue this position while simultaneously painting Paul Krugman as a doomsday loony for suggesting that Bush’s plans will be disasterous for… future spending on major entitlements. But that’s beside the point. The problem is that Bush himself is suggesting just the opposite about his tax cuts: in California, he said: “The way to deal with the deficit is not to be timid on the growth package; the way to deal with the deficit is to have a robust enough growth package so we get more revenues coming into the federal Treasury.”
So which is it? Are we getting more revenue to spend, or less? And since Bush’s statement seems economically very unlikely for the relatively minor cuts he’s suggesting, is he doing what the pundits are suggesting (depleting the treasury) and misleading the people to do it?
And when we get all this extra revenue from the tax cuts, will that mean that it’s time for more tax cuts (since, as the incomes of higher bracket people skyrocket, they’ll suddenly be paying more of the total taxes yet again, at which point it’ll be time to declare that the system has “gotten” progressive, even though there was no change at all in statuatory rates)?
I’d question the figures from your cite. Data from the US Congress Joint Economic Comitte shows the top 1% paid 37.4% of total Federal Income tax in 2002. You might want to double check data from “Citizens for Tax Justice”.
But even if we use your data it does not support your conclusion. For Example (using your cite’s data for 2003):
Top 1% income: 16.6% of total
Top 1% tax paid: 22.1% of total (after the cut, 22.9% before the cut)
Middle 20% income: 12.5% of total
Middle 20% tax paid: 9.8% of total (after the cut)
How is that flat?
And how can something be “flat at the top”? Flat means everyone pays close the same percentage. I don’t understand how you can use the term “flat” unless you are talking about all percentiles.
And, BTW, the bottom 50% of income earners pay 3.9% of total taxes.
“I.e., the richest 1% gets the largest windfall in terms of percent reduction in federal taxes whereas the other 19% in the top quintile actually make out worse than those lower down.”
Hmmm. My family (me, wife, baby) made a combined $36k last year, and we’ll receive a 41% reduction in our Federal Income Tax under the Bush plan. And you’re saying that that is on the low side? So the IRS is going to collect almost less than half in 2004 than they did in 2003?
Why do I have trouble believing that.
This is again the difference between percent of federal income taxes and percent of all federal taxes.
Okay, first I have to admit that I apparently did make an error by mixing figures from two different sources. My number of 20.8% of income earned by top 1% is the figure from the IRS (using adjusted gross income) from year 2000. I used this because I failed to notice that the CTJ charts had a column listing the income share. You are right that we should be consistent with sources. (I am not sure why the difference between CTJ’s 16.6% and IRS’s 20.8%, but part of the difference may be due to how they measure income and part may be due to the fact that the rich income share in 2000 may have been a bit of a high water mark because of the tremendous stock market gains…It did increase rapidly in the late 90s.)
So using the correct figures does reveal federal taxes as a whole to be less flat than I thought. Two points though:
(1) It is still a lot more flat than the “steeply progressive” claim of the WSJ editorial page that is made by just quoting the percent of federal income tax paid by the top 1% without even discussing income share data. And, it is also considerably more flat than one sees if one considers income share data but then looks only at federal income tax rather than all federal taxes.
(2) It would get flatter if one factored state and local taxes into the mix.
Well, what I mean is that you are trying to use one word to describe an entire distribution. The distribution is actually more strongly progressive at the bottom (bottom quintile earning 3.5% of the income but paying 1.2% of the taxes) than near the top.
I’m not sure where you get this as the CTJ link shows the bottom 40% paying 5.6%. (And the same link shows that they earn 11% of the income.) Your number may be a percent of federal income tax only again.
(1) You can’t go by one person; you have to look at a lot of different family situations.
(2) Again, you are looking at income tax only. Certainly, there will be some people who are going to get a 100% cut because they now won’t pay anything whereas they were paying a small amount of income tax before. In terms of dollar amounts though, these folks’ cuts will often be pretty small. And, in terms of percentage of total federal taxes they also won’t be too large.
But why insist on calling the proposed “refund” a “tax cut”? It’s neither. It’s physically impossible to “refund” income taxes that have never been paid. If you want to refund payroll taxes, then do that, but cut the BS, por favor.
I would say that jshore has done a fine job of cutting through all the bullshit.
I, for one, am grateful.
One additional point: the first politician to suggest cutting payroll taxes will be accused of trying to gut the social security system and leaving poor retirees to die like Eskimos on an ice floe. AARP will feast on that politician’s entrails.
Frankly, I’d love it. Let’s eliminate payroll taxes entirely, make up the difference with income taxes, and call social security what it really is: welfare for old people.
Absolutely. And at the same time recognize payroll taxes for what they are - a regressive tax on the poor and middle class that is routinely spent on general budget items, from highways to $500 pentagon hammers. Payroll taxes are both a huge swindle and at the same time the biggest triumph in deceptive marketing practices ever devised.
If you call using fictitious numbers a fine job, I guess you’re right. My numbers are the official numbers used but the US Congress. I guess you can choose which to believe.
Did you even bother going to the cite I provided? If you’re not sure, it’s only because because you didn’t look at the numbers provided by the US Congress, as per my cite.
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Come on, John, let’s not get testy here. I am not disputing the numbers from the US Congress…I didn’t even have to go to that site because I am already familiar with the 37.4% number as being the percent of federal income tax paid by the top 1%, not the percent of all federal taxes, as I thought I explained in my last past.
The 3.9% number also sounded familiar as being federal income tax. And, now that I have gone to that site, I have confirmed that indeed they say federal income tax.
I’m trying to keep the debate as clear has as is possible. I admitted that I screwed up somewhat when I tried to compare a number for the total percent of all federal taxes paid by the top 1% from one source (CTJ, using year 2003 estimates) with the income share of the top 1% from another source (IRS, using 2000 year data and AGI as the indicator of income).
But the other stuff is simply that they are measuring different things.
By the way, the Congressional Budget Office did a study of the total federal taxes paid by income groups and, as I admittedly hazily recall, I don’t think they estimate was that much different than CTJs. (Or, more precisely, I think their number was a few percentage points higher but that their number for the income share of the top 1% was also a few percentage points higher … And, thus the inferences one could draw were about the same.) Someone can look up the study if they want…It’s a bit too late for me and I have to be up early tomorrow.
Of course, that should be “post” and it was really the second-to-last post from that one (or the third-to-last from this one)…It’s bedtime!!!
jshore:
Those late night posts can get a bit testy, can’t they?
Well, the way I see it is that the whole Social Security system is completely screwed up. It’s a pyramid scheme that would land any private citizen in jail if they set somthing up like this. I am dead serious about that. And the pols (mostly Democrats) have made it so sacrosact that anyone tyring to reform it is simply dead politically.
So, I don’t buy the whole “total taxes paid” analysis. The income tax is the only thing that can be worked with. I judge it as a stand alone system since SS simply cannot be touched. I’d be happy for someone to reform the whole SS mess, but until then I’ll look at the Income Tax numbers and judge them on their own merit.
One more time for anyone who didn’t get it:
Top 1% of income earners: 37.4% of total income tax paid
Bottome 50% of income earners: 3.9% of total income tax paid
You be the judge of whether the “rich” are getting a free ride at the expense of the the “poor”. And just remember that the “poor” are burried well below that 50% threshold, and generally pay 0 federal income tax.
John Mace,
I am applauding jshore for his analysis of the tax burden in opposition to those like you who try to distort it to fit your preconcieved notions. “Total taxes paid” means total taxes paid. Words mean things, you know. As he points out the federal tax scheme isn’t very progressive overall without even including state taxes.
It is impossible to judge the merit of taxes from the statement that the top 1% of earners pay 37.4% of the income taxes and the bottom 50% paying 3.9%. Just from that it appears that the higher income people are paying higher percentages but we don’t really know that. That isn’t a useful comparison because it is impossible to make conclusions without knowing how much income each earned. If the top 1% earned 10% of the income then the system is progressive but if the top 1% earned 95% of the income then the system is regressive.
Now that you have been shown that your numbers are deceptive can we assume you will be honest enough to avoid this trick in the future?
And notice that there is nothing “sacred” about SS taxes. It is the pol that threatens SS benefits that is risking their career.
And, that is only comparing incomes. America’s wealth disparity is even greater than its income disparity. What I would like to see is a chart of total taxes paid by level of accumulated wealth. I bet that from that perspective the tax structure would look completely regressive.
I’m afraid you need some tutoring in math and vocabulary.
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37% > 3.9% got it?
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Progressive is used to mean higher earners pay higher rates. Nothing more, nothing less. It doesn’t matter if they earn 50%, 70% or 99%. If higher earners pay a higher percentage, the system is called “progressive”. Got it?
Uh, no. You are the one needing a math lesson and here it is:
There are three people: me making $1 million a year, you making $100,000 a year, and that poor bastard jshore who only makes $10,000. Now if there were a 10% income tax I would pay 100K, you would pay 10K and he would pay 1K. The top 1/3 ( me ) would be paying 90% of the tax. Does that make it a progressive tax? No. It’s still a flat tax of 10%. Since progressivity is determined by percentage of income you can’t determine whether a tax is progressive or not if you ignore the amount of income earned by the various actors. So stop ignoring the amount of income earned.
According to the link jshore provided the top 1% take in 16.6% of all income whereas the bottom 40% take in only 11% of all income. The top earners pay more not just because the income tax is progressive but because they make a lot more.