Fact check: The wealthy already pay more taxes

[mettech]

USA Today 20 Sept 2011

 

"...WASHINGTON – President Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are.

 

On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

 

The 10% of households with the highest incomes pay more than half of all federal taxes. They pay more than 70% of federal income taxes, according to the Congressional Budget Office.

 

There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. But that's less than 1% of the nearly 237,000 returns with incomes above $1 million.

 

This year, households making more than $1 million will pay an average 29.1% of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.

 

Households making between $50,000 and $75,000 will pay an average of 15% of their income in federal taxes.

 

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5% of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7%...."

 

 

[cal50]

The rich did not put the government into the mess they spent themselves into.

The politicians did it.

 

I doubt the same people responsible for creating the mess have the smarts to fix it. Time for some new faces and ideas.

[goinbroke2]

If democrat's are against overspending and ballooning the deficit, and Republican's are against overspending and ballooning the deficit....and government is the only ones who can spend revenue generated by taxes........why is there a deficit? :shades:

 

Makes ya think huh?

 

 

 

Too much "it's not us it's them" going on.

 

 

 

 

(and no ljcdad it's not "luck" LOL)

Edited September 20, 2011 by goinbroke2

[mettech]

If democrat's are against overspending and ballooning the deficit, and Republican's are against overspending and ballooning the deficit....and government is the only ones who can spend revenue generated by taxes........why is there a deficit? :shades:

 

Makes ya think huh?

 

 

 

Too much "it's not us it's them" going on.

 

 

 

 

(and no ljcdad it's not "luck" LOL)

 

The major reason: Each party has to buy more votes.

[fordmantpw]

If democrat's are against overspending and ballooning the deficit, and Republican's are against overspending and ballooning the deficit....and government is the only ones who can spend revenue generated by taxes........why is there a deficit? :shades:

 

Makes ya think huh?

 

 

 

Too much "it's not us it's them" going on.

 

Agreed! If they really wanted to fix the problem, they would quit pointing fingers and just fix the friggin problem without attempting the make the other side look bad!

[TomServo92]

Agreed! If they really wanted to fix the problem, they would quit pointing fingers and just fix the friggin problem without attempting the make the other side look bad!

 

A similar post by me got a a caustic reply by Retro-Man saying cooperation isn't possible and that it was the Republican's fault. I'm just sick of partisan bickering.

[fordmantpw]

A similar post by me got a a caustic reply by Retro-Man saying cooperation isn't possible and that it was the Republican's fault. I'm just sick of partisan bickering.

 

Agreed on the bickering...BOTH parties are at fault!

 

I'm neither republican or democrat...I vote for whomever I feel has the best plan (or at least seems that way through what I know about the person). Only a staunch supporter of one party or the other can't see through the partisan crap they are all trying to pull!

[FiredMotorCompany]

Agreed! If they really wanted to fix the problem, they would quit pointing fingers and just fix the friggin problem without attempting the make the other side look bad!

 

You hit the nail on the head! You said, "If they really wanted to fix the problem".

The truth is they do not. It's working pretty well for them.

 

They take turns driving the car, blaming each other for running into the ditch, scratching the paint, burning up the engine and squeeling the tires. But they enjoy the ride.

And we get to make the car payments and pay for the repairs.

 

Expect better from your representatives. If they fail to perform, fire them. There seems to be no end to people willing to raise $1,000,000 for a job that pays $100,000.

[retro-man]

A similar post by me got a a caustic reply by Retro-Man saying cooperation isn't possible and that it was the Republican's fault. I'm just sick of partisan bickering.

Sorry man.

[TomServo92]

Sorry man.

 

It's OK.

[EdselBryantFord]

Fact Check, the wealthy make more money, thus pay more taxes!

[mettech]

Fact Check, the wealthy make more money, thus pay more taxes!

 

 

That is true... but this is identifying the % of tax on income.

[RangerM]

Depending on where you get your income can make your ETR go below that of a middle to upper middle class family.

Warren Buffett's annual "income" is $100,000.

Edited September 21, 2011 by RangerM

[Mark B. Morrow]

http://www.politifact.com/truth-o-meter/statements/2011/aug/18/warren-buffett/warren-buffett-says-super-rich-pay-lower-taxes-oth/

 

The tax rates on investments tend to be lower than taxes on regular income. If you make money buying and selling stocks or receiving dividends from stock ownership, those earnings are generally taxed at 15 percent, the rate for long-term capital gains and qualified dividends.

 

Some hedge fund managers and other finance-sector executives get taxed at this rate on their earnings because their compensation is classified as "carried interest" and taxed as a capital gain. (The Wall Street Journal breaks down how carried interest works.) In fact, some economists believe that the lower rates for capital gains actually encourages tax dodges, because it motivates high earners to look for ways to classify normal income as capital gains. Defenders say the lower tax rate helps the economy because it rewards investors for risk-taking and entrepreneurship. They also argue that taxing dividends amounts to double taxation because corporations pay taxes on their income before investors are paid dividends. We won't settle the argument here, but there's no doubt that investors get lower tax rates on their income than workers.

 

Getting back to Buffett's op-ed, his claims rest on how these taxes interact with each other. The fact we're checking here is that "the mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes," while middle class taxpayers "fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot."

 

He's right that a billionaire whose income is mostly from investments is probably taxed at a lower rate than someone who has an ordinary job. Very little of this taxpayer's income is wage income, so payroll taxes don't take much of a bite. It seems likely that much of this hypothetical person's income would be taxed around the 15 percent rate. And, in fact, as Buffett says, statistics from the Internal Revenue Service show that the 400 wealthiest taxpayers pay tax rates of less than 20 percent.

[xr7g428]

Would you support increasing EVERYONE'S taxes? Not just OTHER peoples taxes?

[goinbroke2]

"In fact, some economists believe that the lower rates for capital gains actually encourages tax dodges, because it motivates high earners to look for ways to classify normal income as capital gains.

 

True but I don't like the term "dodges" because that is implying criminal activity. It is not tax evasion, that is totally different. This is using a legal "loophole" to minimize your tax burden.

 

"Defenders say the lower tax rate helps the economy because it rewards investors for risk-taking and entrepreneurship"

 

Also true. This is the premise of never using your own money to invest.

Two people have $10,000;

Person a) invests 10,000 and gets a 10% return, he has 11,000 now.

Person B) uses his 10,000 as collateral and borrows 50,000. Not only does he get a write off at tax time worth almost $5000 but if he gets the same 10% he has an extra 5000 on top off the tax write off.

Person (a) has $11000

Person (B) has $60,000 but he's paid say $5000 off the principal (way more than realistically but you get the idea). He ends up with $55,000.

The real winner is the entreprenuer looking for start up cash who receives $50,000 to start his business he otherwise couldn't start. Which in turn makes the economy a winner as new jobs are created.

 

"They also argue that taxing dividends amounts to double taxation because corporations pay taxes on their income before investors are paid dividends."

True.

 

Also, business's purchase with after-tax dollars, which is again double taxing but that will never change.

Edited September 21, 2011 by goinbroke2

[goinbroke2]

And Mark, this has been beat about before but we both know he's a hypocrite and could pay more if he felt so inclined. it's how he's classifying his income. :beatdeadhorse: Enough of that though.

 

Bottom line is, it is the way it is. If it is changed then people will no longer do it, or more accurately, people will do whatever is legal to reduce their taxation.

 

Flat tax with no deductions, then everybody pays the same amount. Of course that is way too simplistic, but you get my idea.

[RangerM]

The tax policy center suggests lowering the top marginal rate but raising gains including dividends to 28 percent.

 

And it clearly shows that the gap between the rich and poor in taxes rates is less than we expect. and that they rich could be taxed more.

There is still a gap between rich and poor in terms of what total amount they pay. Everyone "could be taxed more".

 

The wealthy aren't the only persons whose income is heavily dependent on investment returns. Over half of the elderly receive a portion of their annual earnings from investment income. Taxing the elderly is going to be real popular, I'm sure. Simply deciding to raise the rates on investment income gets real complicated, real fast, doesn't it?

 

And if you reduce peoples' incentive to invest in America....well....you can imagine what might be the consequence.

 

The wealthy can (and will) move their money to a more hospitable environment, should the U.S. become too hostile.

 

Unless you're going to arrest them and confiscate their wealth you aren't going to change that.

[jpd80]

The one thing to watch out for when attempting to charge the rich a higher rate of tax is that many of them know tax and business law very well and have contingent strategies that allow quite a bit of any income to be offset against business losses. When ever you attempt to charge an individual or a company more tax than they are prepared to pay, you can bet minimization processes come into play..

[xr7g428]

Why is income redistribution so important to Obama?

 

Dad, if government spending were really the key to economic growth, wouldn't some body have figured that out already? I mean really, is there anything that is easier for government to do than to spend money? Does common sense count for nothing these days?

 

 

Presidential prevarication

 

Last Updated: 12:18 AM, September 21, 2011

 

Posted: September 21, 2011

 

 

Not that there was ever any doubt, but the Associated Press ran the numbers on President Obama’s soak-the-rich tax scheme, and guess what?

 

The president’s a fibber.

 

The news agency culled figures from a number of key authorities -- like the IRS and the nonpartisan Tax Policy Center -- and demonstrated conclusively that top US earners pay far higher rates than other folks.

 

And foot a wildly outsized portion of the federal tax tab.

 

“It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million,” Obama huffed Monday.

 

Well, it would be wrong -- if it happened. Which it rarely does.

 

The truth? Households earning more than $1 million a year fork over, on average, about 29 percent of their income to the Tax Man; those earning between $50,000 and $75,000 pay just 15 percent.

 

By the way, the seven-figure-plus crowd, which included just 236,000 taxpayers in 2009 (of more than 140 million), picked up fully 20 percent of the nation’s tab.

 

That infamous top 1 percent? They footed more than a third (38 percent) of the bill, though they accounted for just 20 percent of wages in 2008.

 

The top 10 percent shouldered 70 percent of income taxes (while almost no one in the bottom half paid a cent).

 

How can Obama claim with a straight face that wealthy, productive Americans don’t pay their “fair share”?

 

True, high rollers can afford to pay more than the poor.

 

But again, they do -- notwithstanding Obama’s claims to the contrary.

 

Do some wealthy taxpayers wind up with lower overall rates than less well-off folks?

 

Sure: Money-man Warren Buffett, who Obama says longs to pay more taxes (yet assiduously avoids them), gripes that his 17.4 percent rate is less than his secretary’s.

 

That’s a claim we’d like to hear his secretary make -- whoever that might be.

 

Anyway, Buffett’s income comes largely from dividends and investment gains taxed nominally at 15 percent; much of that has already been taxed as corporate income, at 35 percent. Buffett’s actual bottom-line bill? North of 40 percent.

 

Obama knows all this. But he thinks low- and middle-income voters will take the bait -- and applaud his drive for “fairness.”

 

In his mind, it’s his route to re-election.

 

Whether that works remains to be seen.

 

But it’s more than a little sad that he finds it necessary to base his campaign on such a transparent lie.

 

Read more: http://www.nypost.com/p/news/opinion/editorials/presidential_prevarication_32ZrcC7SQqukPJPiKVthGM#ixzz1YcJww2HP

[grbeck]

It also needs to be remembered that President Hoover signed into law the biggest tax increase in history for 1932 (and unemployment hit 25 percent in 1933), and President Roosevelt raised taxes again in 1936-37 (which helped trigger the 1938 recession, and pretty much ended the New Deal). So anyone concerned about reducing federal needs to remember those key facts as well when pushing for tax increases.

[jpd80]

Whenever you look at increasing upper marginal tax rates, you invite the wealthy to find ways to avoid paying it

because unlike the poor, the wealthy have the ways and means of changing their business portfolio to minimize tax.

 

Conversely, if you make the tax rate small enough, the bite in dollar terms may not be enough to justify reorganizing

investments to avoid a piddling amount. There's a fine balance to walk with taxes that most working people don't get.

It's not the tax rate per se, it's the total dollars in taxation that triggers thoughts of avoidance....

 

Tax compliance comes with low tax rates, the higher you make tax rates, the more you encourage avoidance schemes.

In my country, we used to have upper marginal rate of 47% tax which was like a red flag to a bull, people would go out

and deliberately negatively gear their investments just so they wouldn't pay 47% tax, end result was that not only didn't

our government get the money they planned, they in fact, began paying out more in tax refunds....

When the government finally relented and changed the tax thresholds to give marginal rates between 15% and 30%,

all the elaborate schemes came to a stop and people started paying the tax rather than their money all tied up..

 

 

My two cents....

Edited September 23, 2011 by jpd80

[Imawhosure]

Whenever you look at increasing upper marginal tax rates, you invite the wealthy to find ways to avoid paying it

because unlike the poor, the wealthy have the ways and means of changing their business portfolio to minimize tax.

 

Conversely, if you make the tax rate small enough, the bite in dollar terms may not be enough to justify reorganizing

investments to avoid a piddling amount. There's a fine balance to walk with taxes that most working people don't get.

It's not the tax rate per se, it's the total dollars in taxation that triggers thoughts of avoidance....

 

Tax compliance comes with low tax rates, the higher you make tax rates, the more you encourage avoidance schemes.

In my country, we used to have upper marginal rate of 47% tax which was like a red flag to a bull, people would go out

and deliberately negatively gear their investments just so they wouldn't pay 47% tax, end result was that not only didn't

our government get the money they planned, they in fact, began paying out more in tax refunds....

When the government finally relented and changed the tax thresholds to give marginal rates between 15% and 30%,

all the elaborate schemes came to a stop and people started paying the tax rather than their money all tied up..

 

 

My two cents....

 

 

It is the same everywhere, NOBODY wants to pay more taxes, and avoids it like the plague. I live within 1 mile of the border of Indiana/Illinois. There are 7 gas stations right across the border on our side (Indiana) always filled with the people from Illinois because gasoline 5 to 10 cents a gallon cheaper. (wonder how many of them are liberals, hmmmmm. Maybe they are all POOR liberals, although I see lotsa Caddilacs, Mecedes, etc there)

 

Now maybe Warren Butfett.....or is it Buttfet, well whatever his name is, wants to pay more tax. He has that right, cut them a check, go ahead, I am not stopping you. But who is he to say because he wants to, everybody else should also? It is legal you know to send MORE of YOUR money to the government if you wish; so if you want to, do it.

 

On the other hand, it is NOT legal to send LESS than your share today; which may not be your FAIRSHARE tommorrow if they raise it, lol. This is why the rates should be lowered, or not touched. If someone feels guilty, instead of making a charitable contribution to the cancer society, The Juvenile Diabetes Foundation, or other places.....send your money to Obama, and let him use his brilliant OBAMANOMICS and spend that money to put everyone back to work. After all; his policys have been stellar so far, and what is another 450 billion or so to try again.

 

By the way, I am probably wrong, but maybe the government SHOULD spend money to get the economy going. I know, I know, lets give the auto companys billions, that ought to help! Oh wait, we already did that, darn. Then lets give it to the banks! Oh heck, we did that too! What about Wall Street! We already did that? What you talkin bout Willis!?!?!?!?!

 

Wasn't a HUGE part of that TARP money supposed to go towards shovel ready jobs? Really? REALLY????? Well let me tell all of you something------>from what I have seen, my next door neighbors 2 dogs have created more shovel ready jobs than Obama and OBAMANOMICS has, so if Warren wants to send his cash to him, that is his business, for me, let me keep more of mine and let me hire someone that will PAY TAXES, instead of collecting unemployment from us!

[partsisparts]

Some more info for all:

http://blogs.reuters.com/chrystia-freeland/2011/09/20/modern-capitalism-isnt-working-for-the-middle-class/

 

Chrystia Freeland» See all analysis and opinionModern capitalism isn’t working for the middle class

Sep 20, 2011 13:16 EDT

inShare.We know one thing for sure: the gap between rich and poor in the United States has widened in the past 30 years. In 2007 the top 1 percent of earners took home 18.3 percent of national income — that is more than two and a half times their level in 1973, when their share was 7.7 percent. Those at the top haven’t enjoyed such a big slice of the national pie since 1929. The middle-class dominated nation that the Greatest Generation inhabited has become as polarized as the plutocracies of Latin America or as America itself was during its fevered Gilded Age.

 

For a long time, the United States was in denial about its growing income gulf. The middle class clung to the old promise of mass affluence — and used home equity loans and credit card debt to make that dream real.

 

The elite, particularly the conservative intellectuals who have dominated the national economic debate since the Reagan era, insisted that growing income inequality was propaganda invented by the class warriors on the left, and cited robust consumer spending as evidence. In a 1998 speech at Jackson Hole at the annual gathering of American economists and economic policy makers, Alan Greenspan, then chairman of the Federal Reserve, argued that what mattered was what people could buy, not what they earned.

 

“Inequality in consumption, when measured by current outlays, is less than inequality in income,” he said. Greenspan illustrated his point with some unusual measures of inequality — ownership of consumer goods like dishwashers, microwaves and clothes-dryers. The comforting result? Even though inequality as measured in dollars was growing, when measured in dishwashers, microwaves and clothes dryers it was decreasing.

[mettech]

Whenever you look at increasing upper marginal tax rates, you invite the wealthy to find ways to avoid paying it

because unlike the poor, the wealthy have the ways and means of changing their business portfolio to minimize tax.

 

Conversely, if you make the tax rate small enough, the bite in dollar terms may not be enough to justify reorganizing

investments to avoid a piddling amount. There's a fine balance to walk with taxes that most working people don't get.

It's not the tax rate per se, it's the total dollars in taxation that triggers thoughts of avoidance....

 

Tax compliance comes with low tax rates, the higher you make tax rates, the more you encourage avoidance schemes.

In my country, we used to have upper marginal rate of 47% tax which was like a red flag to a bull, people would go out

and deliberately negatively gear their investments just so they wouldn't pay 47% tax, end result was that not only didn't

our government get the money they planned, they in fact, began paying out more in tax refunds....

When the government finally relented and changed the tax thresholds to give marginal rates between 15% and 30%,

all the elaborate schemes came to a stop and people started paying the tax rather than their money all tied up..

 

 

My two cents....

 

... Unlike the poor???

 

The poor doesn't pay fucking income tax... and they get a "earned income return" on top of paying little or no income tax.