“And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2 percent of Americans. It's not a matter of punishing their success. It's about promoting America's success.”Except it IS a matter of punishing their success. He once again ignored, like the liberal that he is, the insane amount of taxes that that top bracket pays in relation to everyone else. That unfair 1% of the evil richest Americans pay... 40% of the federal tax bill!
Let that sink in for a moment. From a prior post: Fleeced: The upper 1% earned 19.6% of total income before tax, and paid 41% of the individual federal income tax. "No other major country is so dependent on so few taxpayers" As for Obama’s assertion that fleecing the top 2% is “about promoting America’s success,” I have two points of fact to refute any such notion. 1) Taxing that 2% a bit more will make a negligible impact on the record deficits that Obama is racking up. The tax increases will amount to tens of $billions in relation to a deficit that will be a record $1.5 TRILLION (or $1,500 Billion). But more importantly 2) as a matter of historical fact, each $1 in higher taxes results in $1.17 of new spending. Heck, just look at history, and show me where, since WWII that the debt has come down even once no matter the tax increases:
UPDATE: Linked by Instapundit! Thank you!
UPDATE #2: For the commenters that are looking at percentage income, do keep in mind that those numbers are before taxes, so in essence, meaningless. Also, those closer to the bottom are being subsidized quite heavily and are getting benefits from a system they aren't paying into at all. From Zero Hedge: In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year
Concur fully with your point, but it would be more compelling if you include all Federal taxes, not just income. As far as I know, SS and Medicare taxes are essentially all of this.
ReplyDeleteThis would preempt the immediate usual counter to this income tax data.
I don't see any useful distinction between types of Federal tax (income, SS, Medicare) etc- its all money.
Yeah, the rich are sooo productive, productive at getting an ever bigger share of the pie at the expense of the middle class. Numbers don't lie.
ReplyDeleteDistribution of income in the United States, 1982-2006
Top 1 percent /Next 19 percent /Bottom 80 percent
1982 12.8%/ 39.1%/ 48.1%
1988 16.6%/ 38.9%/ 44.5%
1991 15.7%/ 40.7%/ 43.7%
1994 14.4%/ 40.8%/ 44.9%
1997 16.6%/ 39.6%/ 43.8%
2000 20.0%/ 38.7%/ 41.4%
2003 17.0%/ 40.8%/ 42.2%
2006 21.3%/ 40.1%/ 38.6%
from: Wolff, E. N. (2010). Recent trends in household wealth in the United States: Rising debt and the middle-class squeeze - an update to 2007. Working Paper No. 589. Annandale-on-Hudson, NY: The Levy Economics Institute of Bard College.
Could you furnish the source of your data? Not that I don't believe you but I'm a Letter-to-the-Editor kind of guy and this subject seems a likely candidate. So, I'd like to reference the source.
ReplyDeleteToo many people enjoy the ride but don't want to chip in on the gas. BTW, I ain't rich, not even close. I'm just a firm believer in everyone should put some skin in the game, everyone.
Anonymous at 11:00 PM comments that '-its all money'. However, SS and Medicare taxes are separately levied and at least nominally (and fictionally) designated for specific entitlements. Also, they are not levied on non-payroll income. Hence it is reasonable to talk about these taxes separately. Or, SS and Medicare taxes can be abolished and these entitlements funded from general tax revenues.
ReplyDeleteAnon (January 30, 2011 11:02 PM):
ReplyDeleteTake a peek at the chart in Update #2. Is there any doubt why the bottom 80% earn a smaller and smaller share of the country's income? The current tax-and-spend regime encourages those at the bottom to drop out of the productive economy. Want the poorest Americans to earn a bigger piece of the pie? Reward - don't punish - economic participation for those citizens.
My solution is simple. Your tax rate should depend on who you vote for. Vote for big spenders, and your taxes go up, such that the taxes paid by all who voted for the big spenders becomes enough to fund their budget for the year. Pay for what you vote for. The winners get to choose amongst themselves what their tax brackets are. (That'd be fun to watch on C-SPAN, Top Democrats would suddenly discover the flat tax.)
ReplyDeleteThose who voted for the losers pay no taxes.
Those who don't vote get to pay the same taxes as the winning side, to discourage absenteeism.
For the Chicago factor, those who vote twice pay double taxes.
Since when is it the governments role to determine fairness with regard to what percentage one should pay (or not, in many cases)? No one's dollar is more valuable than anyone else, and the government certainly doesn't have the right to a greater or lesser percent of anyone's money, regardless of how it was legally aqquired. A FLAT TAX is the only true fair taxation system. Anything else is punitive, no matter how you dress it up. And no, I am far from wealthy, but I don't waste my time and energy begrudging those that have it.
ReplyDeleteAnd they lament the phrase "going Galt". What will their reaction be when they realize it's actually happening?
ReplyDeleteThe overall effect of this system in to shunt more and more wealth to the government without most individuals noticing it. The politicians are getting control of higher and higher percentages of the what we produce and the masses are cool with it because they think it is coming out of the hides of "the rich."
ReplyDeleteAnon 11:02:
ReplyDeleteYou neglect the fact that the pie has grown bigger since 1982, so the 99% still have more (in the aggregate) than they did since 1982.
Especially if they have not bought into the Biggest Lie of All:
All you need to do is show up for work ... your leaders and their "smart" associates will take care of the rest of your problems FOR you ... just do what we tell you.
... and instead have kept/taken more control of their own career and financial future, while avoiding the temptation to get in over their heads.
productive at getting an ever bigger share of the pie at the expense of the middle class.
ReplyDeleteYou do understand what you posted does not demonstrate your assertion, right?
Anonymous at 11:02.
ReplyDeleteIf you combine your data with the data from the tax burden chart, your data doesn't prove anything with respect to wealth and tax burden.
By your 2006 dollars example, 21.3% of the wealth shouldered %40 of the tax burden.
Take the ratio of wealth% to tax% for the top 1% of earners and you get the following:
year wealth tax ratio
1982 12.8% 25.0% 0.51
1988 16.6% 27.0% 0.61
1991 15.7% 25.0% 0.63
1994 14.4% 29.0% 0.50
1997 16.6% 33.0% 0.50
2000 20.0% 37.0% 0.54
2003 17.0% 34.0% 0.50
2006 21.3% 40.0% 0.53
Looks somewhat static to me since 1994 with a couple of bumps.
Funny how "Anonymous" talks about "getting" a bigger share of the pie, as if the rich are stealing something. How 'bout we use the word "producing" or "creating" instead?
ReplyDeleteWhile it is very interesting and data that I seen before and it bears repeating, I think what is lacking here are two things.
ReplyDelete1 - As with the first commenter all taxes. Not just the income tax
2 - What is the precentage of income that each group receives.
It is one thing to say that richest 1% pay 39% of all income taxes. It would another to that richest 1% earn (pick number) 35% of all (not just labor because they frequently get income as dividends etc) income and pay 40% of all taxes...
I fall almost perfectly into the $60K "head-of-family" category. Throw in a special-needs child with a $400/mo therapy bill and I'm pretty broke most of the month. Driving a 16yo car, wearing clothes from Salvation Army and Goodwill... yep, sure glad I even bothered going to college so I can have less disposable income than a Walmart greeter.
ReplyDeleteHaven't seen the TOTAL tax burden each income bracket faces. Doesn't that even things out a bit? (Not the whole way certainly, but some?)
ReplyDeleteThe only thing to consider to add context to the discussion coming from a ZeroHedge posted article. The top 10% of the population owns 97% of all financial assets while 90% of the population owns only 3%. But yet have to pay 3.1% of the tax burden.
ReplyDeleteFrom an asset standpoint, if the poor own 3% of the financial assets and pay 3.1% of the tax burden then the top 10% should pay 97% of the tax burden.
"Assets" = "savings". Taxing people based on how much they have saved up in the past (which they were taxed on at the time) is unbelievably stupid - it strong discourages saving.
ReplyDelete> However, SS and Medicare taxes are separately levied and at least nominally (and fictionally) designated for specific entitlements.
ReplyDeleteNot just specific entitlements, but individual entitlements - the return is tied to contributions.
However, the "return on investment" depends on the level of contributions. The less that you contribute to SS, the better the return. Folks who hit the cap get near-zero return on their contributions - they'd be better off burying greenbacks in the backyard.
You don't specify, so I have to ask.
ReplyDeleteIs you plot of national debt adjusted for inflation?
If so, that's pretty shocking. If not it's just a scary looking but meaningless plot.
A couple of points:
ReplyDelete(1) When using the % share of all household income it is important to understand the demo's of each group. For example, richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth.
Please read W. Michael Cox's NYT piece to fully understand the issue:
http://www.nytimes.com/2008/02/10/opinion/10cox.html?_r=1
IOWs, there's a logic reason for the differences and most people abuse the statistic to justify more taxes. Sad.
(2) The reason you don't count SS/FICA taxes is because those taxes are used to fund a future entitlement. I'd much prefer that this money never reach the gov't. Instead, I'd rather see this money directed to a 401(k)-like account (yes, privatize it with a "no touch" policy when the balance is <$250k). Unfortunately, the politicians have already spent the $2.5T excess in SS receipts. Translation: good luck with that retirement when you hand over control to the gov't.
If the goal is to maximize revenue, President(s) and the Congress need to deal with the following realities: a) increasing tax rates does not always increase revenue; and b) decreasing tax rates often increases revenues.
ReplyDeleteWith the Bush tax "cuts," like the Clinton tax "cuts" before them, revenues increased, quite dramatically at first. Some of this was intuitive - you decrease the capital gains rate to a reasonable 15% and reasonable investors will cash out gains and suck up paying taxes a lot more than they would when rates were substantially higher. Some of it, however, was less intuitive or obvious.
At certain rates, like the 90% rates that the UK tried to charge in the 60's and the 70% rates that the U.S. tried to charge in the 70's, those who can refuse to pay. They avoid, or evade as the case may be paying such confiscatory rates.
At high, but arguably not confiscatory rates, people may not avoid or evade paying the taxes, but they certainly feel justified in fudging a little.
I think that we learned from the Bush tax rate adjustments that fewer people fudge, or they fudge less, when they consider the rates reasonable.
You increase the rates too much from where they are today, revenues will decrease.
Higher tax rates are unlikely to serve their intended purpose, in my 'umble opinion.
Here's the share of income by quintile.
ReplyDeleteBottom 20% Households: 3.4%
Next 20%: 8.6
Middle 20%: 14.5
Next 20%: 22.9
Top 20%: 50.5%
For interest: top 5% earns 22%
Keep in mind that richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. So the smaller household almost by definition will make less - because fewer people are working. Can't have two incomes if there are only 1.7 people....
Now let's look at percentage of taxes paid:
Bottom 20%: 0.8 (all federal) and -2.8 (income - they got $ back)
Next 20%: 4.1 and -0.8 (they also got $ back)
Middle 20%: 9.1 and 4.4
Next 20%: 16.5 and 12.9
Top 20%: 69.3 and 86.3%
This info is from the Census Bureau and the CBO. So please don't quibble. You are welcome to look it up.
No matter how you slice it, the US tax code is steeply progressive, taxes any dollar that a two-income household earns more heavily than a one-income household, penalizes extra effort, and gives back far more to low income households than it takes.
You are welcome to argue about whether that's good or bad, but let's put to rest the tired bullshit that "the reason the top [fill in the blank] get taxed is because they have all the money."
u know y because its tax . the rich pay for the poor. that is the entire idea nitwit. u get enough to live on and then only a bit of the extra that u earn. the rest is tax. so those who are starving can have a meal or an education
ReplyDeleteI get your point...but the numbers in your chart do not jive with your conclusion. Exaggerating your point lessons it's impact.
ReplyDelete