May 16, 2006

“The Evil Rich are Carrying Us” Table of the Day

Filed under: Economy,Taxes & Government — Tom @ 3:12 pm

May 17 Follow-Up: More on How the “Evil Rich” Are Carrying Us (A more comprehensive look at most other taxes)
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The table that follows (about halfway down the linked page) shows the percentage of all federal income tax paid by each quintile of the country’s individual taxpayers. The lowest quintile is negative because the Earned Income Tax Credit outweighs the income taxes paid in by that group.

Quintiles

The bottom 60% of all taxpayers pay less than 5% of all federal income taxes. The top 40% pay the rest.

Is anyone really going to argue that the highest earners aren’t carrying their share of the load?
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UPDATE, June 8: (also posted here as a new item) Steve Forbes notes in his subscription-only column in the June 19 issue of Forbes that “The top 0.1 percentile earned 8% of the nation’s personal income and paid 15% of federal income tax revenue. With 136 million tax return filers (second paragraph at link), that means 136,000 filers and their families are shouldering 15% of the personal income-tax burden. Talk about being carried by the few — Is that “progressive” enough?

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20 Comments

  1. Just shows how far the income gap is widening between rich and poor, not some kind of “unfair” burden on the rich.
    Duh. Nice try at misdirection, though.
    Oh, the rich…the poor, poor rich! Thank you for coming to their defense.

    Comment by Theo — May 16, 2006 @ 5:02 pm

  2. Your local Democrat candidate will be more than happy to oblige.

    Comment by Steven J. Kelso Sr. — May 16, 2006 @ 5:16 pm

  3. Oh Theo #1, please read this post on income inequality and income mobility and come back when you’re done.

    Income Inequality + Economic Mobility = Long-Term Prosperity
    http://www.bizzyblog.com/?p=574

    Comment by TBlumer — May 16, 2006 @ 5:57 pm

  4. It would be so much more helpful with an additional line that reminds us of the income brackets for the respective quintiles.

    Comment by Nasty, Brutish & Short — May 16, 2006 @ 8:12 pm

  5. Dude, you got busted.
    Just take it like a man.
    Now you’re going to have to come up with some other rationalization for the “tax cuts for the rich” BS.

    Comment by Theo — May 16, 2006 @ 9:16 pm

  6. Theo:
    Nice try at subterfuge.Don’t be ashamed of your obvious undersupport of the Country.But…please atleast acknowledge that the high income earners are more than carrying their way and a big piece of yours.
    P.G. Calabalini

    Comment by P.G.Calabalini — May 16, 2006 @ 9:45 pm

  7. #4, the cutoffs change every year a little bit, as you might suspect.

    The latest available data from the IRS on the cutoffs for the various income percentiles, etc. is from 2003, and is as follows, for Adjusted Gross Income (they do theirs with different cut points, and they didn’t provide a 75% cut point, which really doesn’t matter):

    - Top 1% — $295,495 (from the table, these people paid 33.6% of all federal income taxes)
    - Top 5% — $130,080 (these people paid 55.1% of all FIT)
    - Top 10% — $94,891 (these people paid 67.9% of all FIT)
    - Top 25% — $57,343 (87% — see the next para)
    - Top 50% — $29,019 (MINUS 0.3% — see the 2nd next para)

    The spreadsheet to download that has the data is here (it will come to your desktop if you click).

    Top 25% — Since the top 20% paid 83.0% of all Federal income tax according to the table, the top 25% would have kicked in that percentage plus at least a quarter of the fourth quintile’s 14.8% (you would expect it to be a little more, so let’s use 4.0%). So the top 25% paid roughly 87% of all federal income tax.

    Bottom 50% — Correlating the above with the 2003 column in the table in the post, you can conclude that collectively the bottom 50% (those with AGI under $29,019) collectively paid slightly negative income tax (the -2.7% and -0.2% for the first two quintiles, offset mostly but not completely by an estimated half of the +5.2% in the third quintile (it would logicallly be a little less than that, but I don’t know how much less) — -2.7% – 0.2% + 2.6% = -0.3%.

    Conversely in 2003, the TOP 50% of all earners collectively paid ALL the federal income tax, and then some.

    Comment by TBlumer — May 16, 2006 @ 10:17 pm

  8. With official data like this, it is much harder for people to say the poor are paying so much more in taxes under this administration. That is obviously not true.

    Comment by Ben Keeler — May 16, 2006 @ 10:32 pm

  9. #5, see #7. Surely you jest.

    The bottom half of all taxpayers collectively paid NO federal income tax in 2003, the last year for which detailed IRS info is available.

    Comment by TBlumer — May 16, 2006 @ 10:52 pm

  10. Thanks Bizzy. Helpful, but dismaying information.

    Comment by Nasty, Brutish & Short — May 16, 2006 @ 11:13 pm

  11. The notion that federal income tax is representative of one’s entire tax burden is something only a right-wing shill with his own blog would come up with.
    Taxes on dividends have been cut in half, cutting the rich’s collective tax burden considerably, not to mention what Dr. Frist wants to do to the estate tax.
    The rest of us, meanwhile, pay local, state, payroll and property taxes, and our collective tax burden is considerable.
    Income earned through interest and investments aren’t taxed in the same manner that income earned through labor is.
    Does that sound fair to you people? What IS the matter with Kansas?!?

    Comment by Theo — May 16, 2006 @ 11:15 pm

  12. #11 Theo — chill. Enjoy the following treatise on why the tax system is on an overall basis not just “progressive,” but very “progressive,” and sleep well tonight knowing that the evil rich are doing more than their fair share.

    So, let’s take each item one by one:
    - State tax — most state taxes are “progressive” and allow for very few deductions after federal AGI. The evil rich pay a much higher percentage of their income in most states than than those in the middle class. My brother, who you would consider among the evil rich, is I believe in the 9.3% tax bracket in California, which could be 12% if Meathead Rob Reiner gets his way, while it can be as low as 1% for lower earners.
    A convenient table of state taxes showing that the vast majority are “progressive” is here (most of the ones that are “flat” have exemption amounts that make them mildly “progressive”):
    http://www.taxadmin.org/FTA/rate/ind_inc.html

    - Local income tax — around here it’s a straight percentage of income. It’s not regressive, it’s not progressive.

    - Sales tax — around here sales tax is charged on everything except groceries and take-out food. That makes it progressive in the sense that those categories constitute a higher pecentage of a less well-off person’s or family’s budget. I can’t speak for other states, but a table of strictly the rates without identifying exempted items is here:
    http://www.salestaxinstitute.com/sales_tax_rates.jsp

    - Medicare tax — 2.90% (employer and employee portions combined) of ALL earned income. Sounds like it’s neither regressive or progressive, but the fact is that there should be some sort of correlation between what’s paid in and the benefits received. The fact is that the evil rich are plunking almost 3% of their gross earned income (no deductions) into a system where they will never get anything even resembling proportional benefits in return, while low earners pay in very little and get much more than that back in terms of medical benefits. The least you could do is say “thank you.”

    – Social Security — 12.40% (employer and employee portions combined) of all earned income up to about $94,000). This looks regressive, but is actually progressive based on the way benefits are calculated. Assuming no inflation, someone making $25,000 a year during their entire working career will get a benefit of about half that, or $12,500 per year. A person making $75 grand a year during their entire career will get a benefit of about 25% of that, or say $19,000. The person who paid THREE times as much into SocSec is getting a benefit that’s only about 50% higher. On top of that, the upper-middle income person usually has to pay Federal income tax on 50%-85% of his SocSec benefits, while a lower-middle income person doesn’t. You can call Social Security a lot of things, but regressive is NOT one of them.

    So, let’s review:
    - State income taxes — “progressive”
    - Local income taxes — flat
    - State sales taxes — flat to mildly “progressive”
    - Medicare tax — flat, but VERY “progressive” when benefits to be received are compared to money put in are compared.
    - Social Security — flat up to the earnings limit, but VERY “progressive” when benefits received are compared to money put in are compared and the federal income taxation of benefits on higher earners is considered. Earnings above the limit aren’t taxed, but no additional benefits are earned either.

    So what does that leave:

    - property taxes – essentially a “flat asset tax” based on property value. The decision to own a home is voluntary one based hopefully on an evaluation of what a person or family can afford. Renters tend to pay proportionally less in property taxes that are inherently included in rents.

    - dividends and cap gains — the money used to invest in stocks, bonds, etc. is after-tax income that was already taxed when it was earned. A real good argument could be made that they shouldn’t be taxed at all on that basis. It should also be noted that the tax collections from cap gains have skyrocketed since the rates were lowered because the evil rich have been more willing to move their money around to better investments, even if it means having to pay the cap gains tax as a result. This not only raises more revenue, but moves money in the economy into better-quality investments as opposed to keeping it locked into lesser-quality ones.
    Also don’t forget that all dividends in 401(k) are tax-deferred, and all cap gains are tax deferred, and those investment plans are more available in proportion to income to the middle class than they are to the upper class because of contribution limits, so-called discrimination testing, and the like.

    - The death tax — This is an asset-based tax. The only other asset-based tax in the list above is the property tax, which at least has some correlation with the services rendered by the state, county, city, and/or school district involved. There is no such correlation with the death tax — it is simply government-sanctioned theft of wealth that takes place only because a person happened to die, and then only because the person did not employ estate-tax avoidance strategies. It should be eliminated, because the money involved in building the estate was already taxed at least once and maybe four times (take your pick — income tax, dividends tax, cap gains tax, and property taxes on homes and farms); because eliminating it would eliminate the entire tax-avoidance side of the estate planning industry and put those people to work doing more productive things; and because assets wouldn’t remain locked in place as a strategy to avoid the tax, improving capital flows in the economy and the economy’s performance.

    So, as I noted earlier, the tax system as a whole is still very “progressive,” despite your concerns about items besides federal income taxes. So you can sleep tight knowing that the rich are doing more than their fair share.

    Always glad to be of service.

    Comment by TBlumer — May 17, 2006 @ 12:32 am

  13. Or, to reply with a brevity you seem to lack – the rich earn more, so they pay more.
    And the estate tax is in place to prevent the kind of aristocracies that the Bush family represent.
    Boo friggin’ hoo. I feel so sorry for them, really.
    It’s comical how protective of you people are of the rich and so oblivious to your own interests – especially since the game gets rigged further for them and against us with each passing day.
    And I seem to remember some hippie saying something about it being easier to pass a rope through the eye of a needle than a rich man to enter the kingdom of heaven. Aw, Republicans would never be caught dead with someone who’d say something like that…

    Comment by Theo — May 17, 2006 @ 12:42 am

  14. #13, here’s a quick translation of what you just said:

    I’ve been owned, but I don’t have the grace to admit it.

    G’night.

    Comment by TBlumer — May 17, 2006 @ 12:52 am

  15. #13, That same “hippie” said that “you will always have the poor.” (Mt. 26:11; Jn 12:8). And since you obviously don’t know Him, let me tell you that he was much more into personally empowering people – through their faith in Him vs. enabling them through some system of government.
    Through Paul He said “If I give all I possess to the poor and surrender my body to the flames, but have not love, I gain nothing.” 1 Cor 13:3 A verse that SCREAMS out of your posts. And I pray that will change for you.
    Punishing those who have worked hard and made good financial decisions, or making policy that prevents everyone from making or keeping a buck not only makes more folks poor, but cuts off philanthropic resources to the poor. So once again, you libs get the very thing you say you don’t want.
    The “hippie” did not hate money (donations – not extortion – funded His ministry)…it was the love of money, He warned, that can became a form of idolatry for SOME…not ALL folks who were blessed with more than others.
    John 8:32

    Comment by Anon — May 17, 2006 @ 8:49 am

  16. Theo: would it be wrong to conclude that from your argument (#13: “the rich earn more, so they pay more“) that you would then advocate that “the rich should earn less, so that they would pay less“?

    Comment by Porkopolis — May 17, 2006 @ 10:42 am

  17. Awesome. Republicans even take Jesus out of context to try to justify their sins.
    “The poor you will always have with you, but you will not always have me” is the full quote, and Jesus meant that we should treat the poor the way we would treat Him.
    I was raised Catholic. Please don’t make assumptions about what I know and don’t know – because as I’ve shown, your understanding of Scripture is clearly lacking.
    Republicans certainly don’t have a monopoly on faith, values, or good works.

    Comment by Theo — May 17, 2006 @ 6:42 pm

  18. #17. Puh-lease. You see and hear what you want. Born & raised a Catholic myself, we do NOT have a monopoly on the faith… especially “social engineering” catholics who can justify abortion through some crazy philosophy like the Judicial Watch/Weddington piece posted a few days prior.
    So, “Mr. Catholic,” who is Jesus to you?

    Comment by Anon — May 18, 2006 @ 8:16 am

  19. Lol @ #12. Calling sales tax a progressive tax. And even more so at #18′s Catholics who outright disagree with the Pope on questions of morality.

    Comment by Wandering Googler — January 10, 2007 @ 1:11 am

  20. #19, glad to provide such enjoyment of a demonstrably true statement. In OH, which was the state under discussion:

    - If a family takes home 30K, spends 5K on food and take-out food, 15K on housing and other nontaxables, and every other dollar (10K) on taxable stuff, they will pay 6% x 10K or $600 in sales tax. Their sales tax rate is 2% of all their income.

    - If a family takes home 60K, spends 6K on food and take-out food, 24K on housing and other nontaxables, and every other dollar on taxable stuff, they will pay 6% x 30K or $1,800 in sales tax. Their sales tax rate is 3% of all their income.

    - The higher earning family is paying a higher percentage of their income in sales tax. That makes the OH sales tax mildly *progressive*.

    So you may find it LOL, but it is also true.

    I do not get your second point. Be specific.

    Comment by TBlumer — January 10, 2007 @ 7:31 am

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