How can it be true that the top 1% pays the most taxes in the US?

[Gin]

The middle class is bigger, we don't have the same tax breaks as the 1% do. I think this is another spin to justify the tax cut and I have not seen any rebuttle to the information.

So, is it true?

[dofus]

1. Because the top 1%

earns or otherwise rakes in a whole lot more than 1% of the income in this country. They get almost 21% of the income, according to this link: http://www.taxfoundation.org/prtopincometable.html

Notice that these are people whose income is above $313,000 per year as of 2000. And I'm not sure if the "unearned" income is even included here, the tax free interest on bonds and the like. Perhaps it is. Nonetheless, the very rich are very, very rich.

[papau]

12. That is AGI Income - AFTER SCH C deductions and w/o Tax free inc

It is the tip of the iceberg. Those 1282 returns begin at 313000 - the average is not 313000 - it is $1,042,000

Besides total income - after tax planning - is usually cut in half to get to AGI Income - at least on the ones that I worked on.

But the top 5% do pay over 56% of the FIT tax while reporting only 36.5% of all AGI income in the US on their tax return.

However just about an equal amount of income tax is collected via the payroll tax - and here the rich pay on only first 85,000.

So on payroll tax the rich pay at a rate that is in effect only 10% of what you and I pay. Effectively we pay a rate 13% versus the rich paying 1.3% (this is not exact - just an illustration) on our income.

So if you are rich and pay the average 25% of AGI that the rich pay (average now - not the top bracket rate of 35% - but the total tax divided by total Adjusted after tax credits and adjustments income ) you also pay about 2.5% for payroll tax, or 27.5% - but if you relate to top 20% of AGI income (not top 1%) , the rate is about 19%.

Note that Clinton had brought the average FIT ONLY rate paid by rich down from 28.23% to in 2000 27.45%, so you can see the reason for the Bush rush to reduce the tax rates on the rich :-) !! sigh )


And that rate is about what the folks in the bottom 20% pay for SS and FIT. The combined rate drops a bit for the next 3 20% groups, so the tax system is "progressive" - but not by much - and those Wall Street Journal "lucky Duckie's" in the bottom 20% overpay.

(Does the Dean or Kerry campaign need a free "staff" for tax or pension or health care work? - oh well - back to posting!)

[AP]

14. Try the Edwards campaign -- he's the only candidate I've heard

who is taking this tax issue very seriously and really trying to articulate to people the issues and explain the math in a way people can wrap their heads around.

[Kbowe]

25. Because it is a lie!

Especially if you count "after loophole" taxes. The top 1% have very little "payroll" taxes.

[SharonAnn]

27. Yes, we need to stop saying "earns" and use "receives"

Yes, we need to stop saying "earns" and use "receives" instead for these very high income people. In many cases (IMO) they do little or nothing to "earn" the amount of money they receive. They just managed to get in the right position in a con game, that of the "con man" instead of "the rube".

Besides, "receives" has a more passive feel to it and doesn't imply anything like actual, you know, "work".

So, let's all make a compact. We're not going to use the word "earn" when talking about very high income people's income. They "receive" it.

[Wapsie B]

2. Federal Income Taxes yes.

But there is a myriad of taxes that are paid by the lower classes in this country. FICA, with its cap of $80k is a big one.

[nothingshocksmeanymore]

3. It isn't

Payroll taxes and the social security trust fund which has been raided are never factored into this equation.

[hadrons]

4. top 1% pays the most taxes in the US because they have more

The reason 0.5 percent of taxpayers pay so much in income tax is they've got most of the money.

The U.S. gross domestic product for the year 2000 was $9.88 trillion; the Forbes 400 richest individuals for the same year had an aggregate worth of $1.2 trillion. That's 400 people out of an estimated 2000 population of 284,796,887, or something like .0000013 percent of the population, with a pile of wealth representing 10 percent of the GDP.

Of course, this is FEDERAL Tax, these figures don't include payroll taxes; property taxes; sales taxes; state taxes; sin taxes and hidden taxes and gas taxes and government fees like yearly title fees, car inspection and insurance requirements and the like.

[Caution]

5. this is how

All figures pulled out of my ass
Joe Millionaire makes $20 million this year. He pays 33% in taxes for a total of 6.6 million dollars

the next group of americans, the 99% who make less than him make a grand total of 9.9 million (im being very generous here...assuming that every other american make 100,000/year!) and pay 33%

they pay a total of $3.2 million dollars.

Now rich Joe Millionaire starts bitching and moaning becuase he paid more in taxes than the others combined. Oh boo hoo poor Joe millionaire. He takes home 13.4 million dollars after taxes. More money than the other 99 people made before taxes!

It's what Al Gore called "Fuzzy math" and "Phony numbers"

[AP]

10. Joe Twentymillionaire isn't paying at the 33% rate unless the

income was a windfall he didn't expect.

If you're making 20 million a year, you're going to plan. You're going to take some of it as deferred compensation, some as stock options. You're going to channel it through vehicles which allow you to take advantage of the lower tax rates on capital gains, and, now, dividend income.

[Caution]

11. right but he still wants to get rid of those taxes

so he doesnt have to fork over a couple hundred dollars to an accountant!

[dofus]

33. Paying a couple of hundred dollars

to an accountant to several thousands, or perhaps millions of dollars in taxes is quite a bargain. I'm under the impression that the very wealthiest people more or less have an accountant on the payroll as a matter of course. If not on the payroll, then readily available to make sure taxes are minimized, income is maximized.

[Changenow]

6. Yes they do.

They also hold 42% of the wealth of the Nation. Rest assured they do not pay 42% of the taxes, but one could argue that even if their burden was equivalent to their disproportionate holdings it would still be unfair to the rest of us because it makes no difference in their standard of living to pay a proportionate share, they can afford it using any standard and they consume more services than the rest of us.

[jagguy]

7. of course it's true

OK you're middle class, your income is for sake of arguement 75k, you pay 20k in taxes (numbers are made up, not intended to be actual). Those top 1%'ers make 75m and pay 20m in taxes. Takes a LOT of 20k's to match that 20m.

Its not that hard to imagine.

[kentuck]

8. Just how much of our federal budget is financed with FICA taxes...

Which is paid on 100% of income of folks making less than $85,000 dollars? So isn't this where the burden of taxation lies? Forget the top 1% - they are not paying their fair share.

[jagguy]

20. not that much

and even that is a crime. There is no such thing as a Social Security surplus. Its money that will be needed later when the boomer bubble bursts.

[AP]

9. The top 1% is so much richer than everyone else that they

even though they pay a much smaller percentage of their income (and on each additional dollar of income) than the other 99%, they pay a higher absolute number.

People don't realize how much richer the top 1% is than everyone else.

The total income and asseets controlled by each successive percentile isn't a gentle slope. It's more like exponential growth.

The average American makes something like $45,000. But the average income of someone in the top .5% is probably like $700,000, but, more importantly, the average American is probably in debt (ie, net worth $0), whereas, the person in the middle of the top 1% probably has assets in the range of $5 million.

So, let's say that the average American isn't maxing out their credit cards and has a net worth of 1 penny, for the sake of argument, the person in the middle of the top 1% would have 5,000,000,000 times the wealth. I would hope that those people in the top 1% are, collectively, paying more in taxes than the other 99% who are working so hard to make sure that America works really well for them. Unfortuntatel, the relative burdens (despite the absolute numbers) do not reflect that reality.

[F.Gordon]

13. Eggs...actly........

You can go to the IRS web site and work your way around. This is a good starting point.......

http://www.irs.gov/taxstats/article/0,,id=96981,00.html

What is interesting is that the top 1% actually started to pay less income tax as a percent of income during the last few years of the Clinton Administration. (I'm not talkin' tax brackets, I'm talkin' what was actually PAID) Of course, the middle class income groups started paying a higher percentage.

The Bush* tax cuts largely favored those that have already seen their percent of income tax decline under Clinton. You remember him? That evil "tax and spend" Democrat. The RICH keep getting RICHER and the rest of us just get f**ked.........

[AP]

15. One number I heard was that

in the 10 years of the half of Bush I and all of the Clinton administration, the top 10% saw their wealth increase by 150%, but saw their tax burden fall by 50%, or something like that.

Clearly, when the economy heats up and people get richer, you have to tweak the tax structure to maintain progressivity. If your top bracket starts at 300K, but you discover you have 10 times as many people in that bracket, you discover that you're creeping towards a flat tax structure. When people got wealthier, they should have re-jiggered the brackets and the rates. Because they didn't, income tax got more regressive.

Clinton could fix the economy, but he clearly couldn't get together the political will to change the tax brackets to increase progressivity. And you know, this should have been an easy thing to do -- you can lower the rate for most people, and then add another bracket with a higher rate, and who's going to argue? The 6% in the new higher bracket whose income just increase by 175% and are only asked to continue paying at the same relative burden so that they can get 175% richer in the next decade?

[0rganism]

31. Careful about using "average" numbers vs. median

The average AGI may be around $45000, but last I checked the median AGI for filers was $28000. This is called the "bill gates phenomenon": Bill Gates walks into a crowded sleazy bar on the Seattle waterfront, and suddenly the average person in the room is a millionaire.

The fact that the AGI average is about 70% more than the median speaks to the ridiculous imbalance of wealth in this country.

[Festivito]

16. An unpublished report appeared on a .gov site....

The report was listed as "unpublished" and yet it was on an official .gov site. There was a disclaimer that I did not have time to research. Something like the figures did not include taxes that were below zero or such.

I thought at the time that they were hiding rich people whose taxes zeroed or went below zero because of the election cycle drop in the economy around 2000. That statistic may have had more to do with the timing and the footnote. Obviously, Rush would forget to reveal such information.

Timing can be everything. Republicans tried to say gays represent less than 1% of the population. They telephoned randomly at the height of the AIDS crisis asking if they'd had sex in the last two years. Many gays were chaste during that period of time and were counted as straight. It's all in the footnotes.

[StClone]

17. Why the rich need to pay more taxes

They benefit most from the infrastructure built by the masses. Without a redistribution of wealth the Golden Goose of Democracy will be threatened by individuals of so great a wealth it can challenge the Governmaents authority. That is what is happening now.

Things that kill a civilization are:

-- Loss of fertile soil

-- Climate change

-- Widespread Act of God

-- War

-- Disease

-- The lower class comes so subjugated as to be unable to support the Elites.

[AP]

18. Also, if you're rich, it's a good investment.

If your gov't is taking your money to make it easier for people to joing the middle class and contribute to the economy in a way in which flowed profits up to people who owned the means of production, you'd be happy to make the investment in the government.

What's would happen if the rich bore no tax burden is that society would crumble. The poor and middle class would become so overburdened -- they would have to finance entirely a system which didn't benefit them at all. Eventually, rich people would have to get together and say OK, we're going to have to build roads and schools and pay for courts and stock exchange regulations, and they rightfully not trust each other, so they'd agree to elect people to represent their interests in a system governed by rules of law. We'd eventually get back to FDR's New Deal, which, everyone knows, is the system which create's the most wealth for the most people.

[oneighty]

37. I like that!

The lower class comes so subjucated as to be unable to support the Elites.

Killing the Goose that lays the Golden Eggs.

180

[janekat]

19. The truth is that the middle class pays MORE

What Rush Limbaugh and company neglect to add is that they are only talking about the income taxes people pay. That is only part of the taxes that Americans pay. There is income tax and payroll tax.

The dirty secret is that the middle class (and most of the lower class)pays more in payroll taxes than the wealthy. To make up the difference, the wealthy pay a higher rate in income taxes.

This is rather complicated but well worth understanding because the line of bull that the middle class and lower class pay no taxes in simply not true. It is repeated over and over again.

The payroll tax (12.4%) is applied to only the first $68,000 someone makes. So someone who is making over $68,000 - (like Bill Gates) is not taxed any more than a computer programmer who is making exactly $68,000.

An average American pays 12.4% of their income in payroll taxes. A person making a million dollars a year pays around 1%. A person making 100 million dollars a year pays 1/100th of 1% of their total income in Social Security and other payroll taxes.

The payroll tax is supposed to be split between employer (6.2%) and employee (6.2), but economists agree that the entire burden actually falls on the employee. In addition, any self-employed people or consultants must pay the entire 12.4% themselves.

THEN in additon to the payroll tax people must pay INCOME tax.
For the average American (earning between $28,000 and $68,000) they pay a 25% income tax on top of the 12.4% payroll tax.

The wealthy may pay a higher amount in income tax (39.7% vs. 27%) BUT they are only paying about 2% and below in payroll tax vs. the 12.4% everyone else pays (since payroll tax does not apply to any amount over $68,000).

Then, to add insult to injury: there's tons of hidden taxes that are imposed upon every citizen of this country, over and above income tax or payroll tax. These take the guises of workman's compensation contributions, excise taxes, luxury taxes, state taxes, gas taxes, corporate taxes, sales taxes, etc. ad infinitum. Also, in many states, the middle class ends up paying more than the upper class.

[newyawker99]

28. Hi janekat!!

Welcome to DU!! :toast:

[leftyandproud]

21. 1% paid 38.96% of income taxes

according to the IRS

[janekat]

22. some good sites to go to

to learn more about taxes.

This one calculates how much you would pay in PAYROLL taxes
(it does not include income tax - which has to be paid on top of that).

http://www.paycheckcity.com/copayroll-taxes/netpaycalculator.asp

Then some other sites that talk about taxes in general are:
http://www.democratictalkradio.com/demvoices02.html
http://www.cox-internet.com/damor1/hiddentx.html
http://www.cato.org/testimony/ct-sm020498.html
http://www.ncpa.org/ba/ba261.html


(Be aware that many of these sites use tax rates from 2002-1997 - but they are close enough....)

[janekat]

23. Thats only in INCOME tax - what about payroll tax?

These people are not including the PAYROLL TAX. This is the tax that is mainly paid by the middle class. The tax that they were talking about is only the INCOME TAX - which is primarily paid by the wealthy.

The important thing to know is that everyone only pays payroll tax on the first $68,400 dollars they make. So, someone making $68,000 is paying the same in payroll tax as someone making $1,000,000! To make up for this inequity, most people must also pay INCOME tax.

Rush Limbaugh and others act as if payroll tax doesn't even count. Is the huge chunk of money taken out of our paychecks each month "play" money????

Here's a good article:

http://www.dailyhowler.com/dh012703.shtml
"One of the most remarkable items in last week’s press was that chart in Tuesday’s New York Times (see THE DAILY HOWLER, 1/23/03). The chart showed what percentage of their income different income groups pay if you include all taxes. The chart accompanied a piece by economics writer Daniel Altman. Here’s what different income groups pay according to Altman’s chart:

Top fifth of earners: 19 percent
Next fifth of earners: 17 percent
Middle fifth of earners: 16 percent
Next fifth of earners: 14 percent
Bottom fifth of earners: 18 percent
If that chart is accurate, the top fifth of earners—average income, $117,000—pay 19 percent of their income in taxes. The bottom fifth—average income, $8000—pay roughly the same percentage. Altman’s chart:

Here, for example, was TV’s servant-to-the-powerful Sean Hannity, boo-hoo-hooing once again about those overtaxed upper earners:

HANNITY (1/8/03): If Democrats say tax cuts for the rich, which is the mantra—if they say that all the time, don’t we have to define what the terms are? Let me put up on the screen and hopefully you can see it there. If not, I’ll read it to you. According to it, the top one percent pays 37 percent of the taxes; top five, 56; top ten percent, 67.3 percent of the taxes; bottom 50 only paid 3.9.

As usual, Sean was being slick. By “taxes,” he actually meant “federal income taxes,” one of our few progressive taxes. And he didn’t say how much income the top one percent earn; to state the obvious, you can’t judge the amount of tax this group pays if you don’t know the amount of income they’re earning. The structure of Hannity’s spin-point is clear; viewers are supposed to be stunned by the fact that “37” is a much larger number than “one.” All across the expanses of Dittohead Nation, jaws are supposed to drop onto chests when those two numbers flash up before them.

In short, Hannity wants his viewers to think that upper-income earners are vastly over-taxed. But Altman’s chart seems to say something different; it seems to say that our lowest earners pay the same rate of taxes as those at the top. And as noted, if Altman’s chart is on the money, it flies in the face of most normal understandings. For example, when Tim Noah discussed the chart last week, Slate’s headline expressed his surprise; “Tax rates are already flat,” the head said. As most people would, Noah expressed substantial surprise at the picture Altman portrayed.

But how much do different incomes groups pay? For an average observer, it’s almost impossible to answer that question. The topic is spun on a daily basis, but real facts are quite hard to come by. In our current benighted public discourse, we buy spin by the ton and facts by the ounce—and the few facts we purchase are brilliantly muddled. Reading on in Altman’s piece, the startling facts laid out in that chart seemed to be swiftly contradicted.

[janekat]

24. CEO pay 530 times higher than avg. worker's pay

This was in 2000. Due to cutbacks, this may have gone down SLIGHTLY. Most of their pay was in the form of stock options. Many times, they received "loans." I probably don't need to tell you - much of the money they receive is not taxed or is taxed at a very low rate. In addition, the top execs at most major corporations have very nice incentive packages way over and beyond the usual 401k.

In addition, to ensure that that the top dogs are not overburdened by taxes, the corporation frequently pays the taxes for the exec.

It’s also not unusual for CEOs and key executives to receive big pay increases, bonuses and stock-options, while their companies are laying off frontline workers.

CEO pay is much higher in the US than in other countries, both in absolute dollar terms and relative to pay for the average worker. While American CEOs earns about 500 times as much as an average blue-collar worker, German CEOs make, on average, just 13 times as much. In Japan the ratio in Japan is 11, Canada 20. For Mexico (with low-paid workers) the ratio is 46.

[AP]

26. Loans are almost totally tax free income

Founders of corporations who have equity in their corporation will, rather than sell their shares, which incurs the CapGains tax, will get a bank loan secured by the shares. You can pay back your loan out of dividend income, or by selling other assets gradually, or out of income over the course of several years, all keeping your taxes very low. Meanwhile, that loan you took out could constitute 1 mil or 10 mil in "income" in one year, which didnt' get taxed as income...in fact, it didn't get taxed at all (and only gets taxed in the sense that you have to realize income over the course of years to pay back the loan).

So that's one way people who are very rich can get very low-taxed 'incocome' and convert it into valuable assets (like buying a house or ten in Florida or Colorado). And if you bought your house in Florida with this loan money (a state where there's no limit to the number of homes you can protect in bankruptcy proceedings) if your stock becomes worthless, you declare bankruptcy, have the loan cleared in bankruptcy court, and you retain all your assets TAX FREE (provided you pay your mortgage or didn't have one in the first place). The people who get screwed are the equity holders in the banks which loaned you the money, and the people who bought your crappy stock which then crashed.

I think this is what happened with many Enron insiders.

[w4rma]

29. I think the upper 1% tends to dodge paying alot of taxes

The top 1% wealthiest households in America own at least 38.1% of all the wealth in America. The Great Depression happened when 44.2% of all the wealth in America was owned by the top 1%.

The bottom 90% of American households own less than 30% of America's wealth.
The bottom 40% of American households own 0.2% of America's wealth.

http://www.ufenet.org/research/wealth_charts.html

Big buisnesses (owned by those in the top 1%) are running small buisnesses out of buisness. Big buisnesses are now leaving the country and taking their wealth with them. Run a small buisness and you have to pay high taxes. Run a big one and you can incorporate in the Cayman Islands, thereby avoiding federal taxes, and shop around in all 50 states for the one that will pay the board members the most to move there.

[ThoughtCriminal]

30. Deceptive selection of "Top 1%"

Almost always the figure quoted is the Top 1% of FEDERAL INCOME TAXPAYERS.

Not Top 1% of INCOME
Not Top 1% of WEALTH
Not even Top 1% of Taxpayers (which would include FICA, etc)

Also, what it may prove is not that taxes are too high, but how bad the rich-poor gap has grown in this country.

[0rganism]

32. Watch the spin cycle! This has happened before...

It goes something like this:

1) The UltraRich say they are taxed too heavily because they pay more tax (in absolute numbers) than everyone else.

2) They can afford to buy tax cuts and tax shelters from politicians via campaign contributions and lobbying on that justification.

3) The tax cuts increase their overall wealth at the expense of everyone else, as the gap between rich and poor grows ever larger.

4) Due to consolidation of wealth, the amount the UltraRich pay in taxes increases to its previous levels, and they once again pay more in total taxes than everyone else.

5) Rinse and repeat from step 1

The rebuttal, as you can see from the other posts as well, is that simply because a rich man pays more in taxes does not mean his plight merits great pity from people earning a thousandth of his annual take.

[Starpass]

34. Ask Arianna Huffington---stand back and let me blow

I've raised this so many times at DU because I'm soooo familiar with this crowd. Well, in this CA mess it was reported that Arianna owns like a $4 million dollar pad BUT that her combined income taxes paid to the US government for TWO years was like $742 dollars---yessss, that's seven hundred Not thousands or mega thousands. There is a world of difference between what their BILL is and what they pay. That's why they have the tax lawyers....in fact, Arianna should fire her's because she just paid $700 too much. That is why it has raised so many questions to me about the weathly tax break. They aren't paying fuck???- so what is this about???---ARE WE SENDING MONEY TO MULTI-MILLIONAIRES FROM OUR POCKETS?? See what I mean? If Arianna pays about $350 per year and obviously earns a hell of a lot of money to keep this spread of hers, what does she get under Bush tax cut?? Why in the hell would her kind care if it was reduced to $1?? It's meaningless to them. Thus, it leads me to the conclusion that we are literally paying hundreds of thousand TO these fuckers.

[NNN0LHI]

35. Because about 30% of Americans think they are in the top 1% of earners

That is what some polls have reported.

Don

[Gin]

36. Just as I thought...another spin....another scam...

gin