--- In FairfieldLife@yahoogroups.com, "boo_lives" <[EMAIL PROTECTED]> wrote: > > --- In FairfieldLife@yahoogroups.com, "shempmcgurk" <shempmcgurk@> > wrote: > > > > > > If elected, both Hillary and Barack say they'll put up the income tax > > rates for the rich. > > > > Yet, according to the statistics at the following site > > http://tinyurl.com/3cquum <http://tinyurl.com/3cquum> the rich are, by > > ANY objective standard of measurement, already paying far more than > > their share. > > > > Take a look at Table 1 (which, hopefully, I am successful in reproducing > > here, below) and look under the column "Group's share of income > > tax". The top 1% of taxpayers pay almost 40% of ALL income taxes > > collected! The top 10% pay over 70% and the bottom 50% about 3%. > > > People not familiar with working with numbers and percentages will be > impressed by the above, but obviously a percentage of an extremely > high number will be much higher than a percentage of a low number. > > The key is the percentage. The chart shows the top 1% paying a tax > rate of 23% compared to an average tax rate of 12.5%. Actually that's > not fair either, as the chart does not take into the highly regressive > payroll tax and 4 out of 5 taxpayers now pay more in payroll taxes > than in income taxes.
Yes, you are correct that the reproduced chart is limited to "income taxes" and not "payroll taxes" (i.e. FICA, of which the employee pays 50% and the employer pays the other 50%...or if you're like me and self-employed you pay 100% of FICA). The payroll tax is a flat rate of 7.65% for the first approximately $85,000 of adjusted gross income (the figure is probably off somewhat because I'm too lazy to look up the exact figure). So, as boo_lives correctly points out, the payroll tax is REGRESSIVE because after you reach the ceiling of $85,000 in AGI, there is no more payroll tax to pay, no matter how much income you have in a year. So, as a percentage of income, the person earning $10 million a year will pay LESS than his secretary earning $50,000 a year in payroll taxes. Indeed, this is the very example that Warren Buffet used to support his contention that the AGI ceiling for payroll taxes should be raised. But here's the thing: the payroll "tax" works differently from the way income taxes work in a very, very important way: how one benefits from it. Unlike all other expenditures by the government, the payroll tax (of which about 80% is a contribution to Social Security and about 20% to Medicare), what you get back in benefits is tied in to what you pay in to the system. For Social Security, the more you pay in, the more you get back in your retirement years. For Medicare, once you reach a certain number of quarters that you have at least contributed 1 cent, you get the full Medicare benefits once you reach the age of, I think, 62 or 65. It's an on/off type of benefit system. Payroll tax, therefore, SHOULD be kept separate from considerations of statistics, as reproduced as discussed here, because the way it is taxed and the way the benefits are given out are completely different than regular income taxes. With regular income taxes, all beneficiaries (i.e., everyone living in the United States) are equal and benefit equally. Not the case with payroll taxes and, hense, why we examine and treat their respective statistics separately. Their discussion should NOT be combined without this caveat. > So the difference is tax rates paid by the > richest 1% (whom obama and clinton intend to raise) is somewhere > around 5% higher than average. First point: when you are talking about tax rates, you are talking about the average rate an invidual or demographic group pays that is an average of ALL the 6 federal marginal tax rates that that individual or group is paying. Secondly, as I point out above, it simply is not right or fair to combine payroll taxes and income taxes into a comparison. > That isn't much difference. Plus keep > in mind that wealth disparity has been increasing rapidly in the US > since the middle 1970s, and now the top 1% own about 40% of all wealth > in the country, so their share of taxes seems about right. Who cares whether the top 1% owns MORE of a percentage of the wealth of the country? As long as the people in the LOWER income groups are increasing in the percentages of ownership of the country, I care not a whim what the rich get. The free market economy is not a zero-sum gain. When the rich get richer this can be a GOOD THING if they drag the poorer people and those on the lower income rungs up with them. If the disparity between rich and poor increases, who cares as long as the lot of the poor increases. > > Wealth disparity is a social issue as well. CEOs used to make about > 40 times more than the average worker in the 70s but it's close to 400 > times more. Wealth disparity is highest in the US compared to all > other industrialized countries. Good! And that disparity should INCREASE...let it go up to 1,000 from 400 if we drag the poorest of the poor up with the rich. > > Finally there's the issue of the gov't actually paying for what it > spends. The federal debt is over $9 trillion and clearly going > higher. The 3 republican presidents of Reagan, Bush1 and Bush2 have > increased the federal debt by about $6.5 trillion dollars. I'm fine > with giving republicans their tax cuts as long as they don't just > shift the burden of ultimately paying for them to our children. Well, on this I of course agree completely. Look at Canada. Not only have they balanced their budget but they create a surplus every year in order to pay DOWN their national debt. Of course, that has worked against them because this fiscal responsibility make their dollar stronger against the U.S. dollar, thus weakening their exports to the U.S. ... and since U.S. exports make up 85% of ALL Canadian exports, they are realy hurting over this. > > Of course I remember my discussion with a fairly high reagan appointee > in the 80s - I told him my concerns about lowering taxes while > increasing spending and the problem of ultimately bankrupting the > country. He smiled and replied - bankrupting the govt is not a > problem, it's our goal! Amen to that...although I don't think the kind of fiscal irresponsibility you correctly cite above is the way to accomplish that. >
