Who’s bearing the tax burden?
One of the main underlying themes in today’s political calculus is that Americans are overtaxed. This meme persists despite plenty of reports to the contrary, at least on the federal level.
We’re actually paying less in federal taxes as a percentage of income than we have in some time.
Still, most American say they’re paying too much taxes. This very nifty graph (H/T @fivethirtyeight) may explain why.
The Reagan era lowered the tax burden of wealthy Americans tremendously. The G.W. Bush era dropped most everyone else at least down to historic averages.
Two things stick out to me. 1) Almost no one is dramatically overburdened in paying federal taxes, according to these figures. 2) If anyone, it’s the middle class that’s being leaned on. That’s the conclusion the graph’s author comes to:
The people at our economy’s core – the full-time workers earning between $20,000 and $150,000 a year – still pay at up to double the rate of the ultra-wealthy, relative to what history suggests they should.
As tax time approaches, how are you feeling? Do you buy the argument this guy makes?
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“It’s not just on the bottom end that a flat tax isn’t fair. We have people pulling down tens of millions of dollars annually. Why should they pay the same percentage as someone making $40,000 per year?”
If you go with a flat tax you would have a cut off. Below that there would be no income tax. Similar to what we have now. The difference is that for the folks paying taxes you all pay the same proportion of your income, what isn’t fair about that? Then you get rid of all the ridiculous deductions, many of which favor people with higher incomes.
Oh yeah, and on your 9:29 comment- clearly I’m painting a simplistic picture. But the point is that taxing the rich until they become poor accomplishes what exactly? We can take their money and turn them into us. And we WILL spend all their money. So what are we left with?
Re your idea that only Gov’t can fix this. Sorry, you lose. Ain’t gonna work. We’ve been through this before.
bret – those (Canada and Europe) are “socialist” countries! They have 10 “wealth redistribution” systems for every one that we have (blatant statistical fabrication). They have plenty of dumb ideas too. Maybe next year they will be worse off than we are. In fact – the fact that Spain and Portugal cant devalue their currency is a major problem for them. They have to deflate – lower peoples salaries when there are lots of union contracts – which is slow and ugly.
Mervel, by definition the free market is dead. In order to have a free market you must have a degree of fairness. When goods are bought and sold there must be some way for the people on each side of the transaction to establish a price based on knowledge. There are too many things in our current system, whatever it is, that are a complete mystery to the buyer. Look at almost anything in health care. Look at the commodities markets which are constantly manipulated. Look at the whole concept of short selling stock–selling something you don’t own, something someone else owns, someone who doesn’t know you are selling it, with a promise to buy it back later. Never mind the exotic trading that is being done that nobody but a mathematics Phd understands.
Tell me why the price of gas is $3.70 a gallon? There is no problem with supply. How does the price per gallon relate to the price per barrel of oil? It is all magic and we are told to trust the man behind the curtain.
How about Ireland – low tax, low regulations. for years the darlings of the conservatives (see – low taxes works), and then the crash. Like us, it was just a bubble. Now we get to point to Ireland as an example of how bad it is to be a low tax low regulation country. Peter Hahn
A deduction system and the tax rate are not tied to one another.
You could get rid of all the crazy deductions we have now, and still keep the progressive tax rate we have…
Or you could implement a flat tax with a lot of deductions.
I am personally for a progressive tax rate – I believe it is fair to ask those who have benefited more from our society to pay more – but I can’t stand our crazy nonsensical, deduction system. I would prefer it if your tax rate was your tax rate and that was what you paid – period. Imagine the savings in administration costs.
Phan, socialist or not they didn’t engage in ponzi schemes like our guys did- this time around. They’ve done some nutty things in the past and apparently some of them learned from it. Of course in some of those countries they storm the gov’t buildings and beat the legislators when things go bad, so maybe that’s part of it.
We played fast and loose, that I’m sure you can agree with. It was wrong. Much of what is done is wrong but how you would fix it and how I would fix it are probably two different things. I believe in leaving the money in the pocket of the man that earns it to do with as he see’s fit. You seem to think another way.
Knuck- re your 8:23- If you change the word “fair” to “uniform” I can agree with much of that. “Uniform” gets you equal treatment. “Fair” gets you special dispensation for particular groups- that’s not “fair”.
Ah, right, the banksters were FORCED to make all those undocumented loans. That’s not how I read it, but nowadays, everyone gets to make up their own facts, so go for it. See, my facts are that Georgie deregulated everything he possibly could, at which point the banksters went absolutely bonkers (in exceedingly clever ways, of course). Who knows, with all the alternate universes flying through the airwaves, maybe both facts are true.
Suffice it to say, you’re right that Canada was more fiscally conservative, and didn’t deregulate their banks. That much we can agree on. They also didn’t give a tax holiday to the wealthy, and yet, somehow, they managed to do OK anyway. What can it possibly mean?
Also, there is another whole group of countries – mostly third world ones – that run on purely unregulated free-market principles (even the regulators are for sale). Pretty much, the poorer they are, the more unregulated/free-market they are. The more socialist/regulated they are, the richer they are.
There is more “growth” right now in the poor countries, but there will be a bigger crash. Thats classic boom and bust. But the long term trajectory isnt good for the free-market countries.
Alright, I’ll shut up in a second, but- We keep seeing people talk about “fairness” and at the same time talking about why “the rich” should “pay more”. The higher up the income ladder you go, the more you pay. There comes a certain point, one I’ll never see, where you get enough money that you can move it to a trust or off shore account and effectively remove it from taxation. That’s legal, I don’t know that I approve of the basic idea of being able to remove money from taxation, but OTH if it’s already been taxes once, that should be enough.
What this comes down to is jealousy. They, the rich (whatever that is) have MORE. So we, who aren’t rich, come up with the idea of passing laws to take from the rich, to tear them down and punish them, to seize what they earned (another word with varying definitions) and to let the gov’t have that money to “use correctly”. So we punish the successful and let another rich guy in Congress give the formerly rich persons stolen assets away to buy votes with??? Sorry folks, I see a fundamentally basic problem with all this. That’s not fair, that’s anything but fair.
Someone said “Why should a guy raking in millions pay the same rate as someone making $40K?” To me the question is why shouldn’t both parties be treated uniformly? While I agree the middle class is taxed more than seems “fair” I don’t see why we should punish anyones success. What incentive is there to grow a business or invest or build if the axe is waiting around the corner? It seems like a recipe for mediocrity to me.
Whatever, I don’t expect anyone to agree, but at least stop calling this scheme “fair” because there’s nothing fair about theft through taxes and punishment for success.
“The point is precisely that examples used to abound. Today, not so much.”
Walker I don’t think this is true.
Look the NYS metro area alone has 650,000 people that have over 1 million dollars in investible assets. That is up 18.7% from 2008. Houston is up almost 30%.
http://blogs.wsj.com/wealth/2010/08/03/new-york-has-the-most-millionaires/
Your point that many middle and lower class folks are struggling is true but your point above is not in line with the facts. Try and use real facts to support your points especially when you are on a mission to discredit other people’s comments, don’t just make up stuff.
Paul, we’re talking about becoming wealthy starting from scratch, rags-to-riches. The number of millionaires in NY has nothing to do with it, unless you really think that all of New York’s present millionaires started with nothing. I don’t have a link to point you to, but I think the idea that wealth and privilege have become more and more a matter of inheritance in this country is not a difficult fact to establish. In the early nineteenth century, people arrived in the US with NOTHING, and ended wealthier than I would ever want to be.
Which brings me to Bret: No Bret, it’s not about jealousy. I do NOT want to have 100 million dollars, nor do I want a 10 million dollar salary, nor do I want to do the things you have to do to “earn” such a salary. Honest. I don’t.
Look, you can live quite comfortably on, say $60,000 a year. $1.5 million, invested conservatively, will give you that income, forever, if they don’t muck up the economy too much.
Now you tell me why anyone NEEDS hundreds of millions of dollars, or salaries of tens of millions. I’m not interested in redistributing accumulated wealth– I just think we could stand to slow the rate at which it’s being accumulated by the wealthiest.
Anyway, that’s not really the point. The point is, we need our roads and highways and bridges maintained, and our children educated, and health care for all who need it, and police and fire services, and a military (preferably kept firmly in check) and some way to look out for the poor and elderly. The only way to do all that is by taxing people, and it makes sense to me to tax those who can afford to pay more than those who can’t. That’s the path we have followed ever since the Great Depression. Starting with Ronald Reagan, the rich have been engaged in a major effort to redistribute the tax burden downward. You may think that’s fair. I don’t.
Polls have demonstrated that if you ask people what they think the distribution of wealth should be in this country, they’ll describe a distribution much closer to the way things stood in the 1950s than the way they are today. Interestingly, if you ask them how they think the wealth distribution stands today, they believe we presently look more like the 1950s than we really do. I think if the American people ever wake up to what has been going on for the last 30 years, things might just have a chance of changing.
The system is rigged.
GE profits: 14.2 billion
US taxes paid: $0.00
Regarding my last paragraph, above, here’s a link:
http://www.good.is/post/americans-are-horribly-misinformed-about-who-has-money/
A brief synopsis of that site comes from another site:
“In a recent survey of Americans, my colleague Dan Ariely and I found that Americans drastically underestimated the level of wealth inequality in the United States. While recent data indicates that the richest 20 percent of Americans own 84 percent of all wealth, people estimated that this group owned just 59 percent – believing that total wealth in this country is far more evenly divided among poorer Americans.
What’s more, when we asked them how they thought wealth should be distributed, they told us they wanted an even more equitable distribution, with the richest 20 percent owning just 32 percent of the wealth. This was true of Democrats and Republicans, rich and poor – all groups we surveyed approved of some inequality, but their ideal was far more equal than the current level.”
From http://machimon.wordpress.com/2011/03/22/should-we-care-about-the-growing-disparity-in-the-distribution-of-wealth-does-this-disparity-bode-ill-for-the-future/
I think that federal taxes will have to be raised and Big Government made smaller and more efficient. The tax code should also be simplified. IT can be an overwhelming challenge for the average taxpayer to calculate their federal taxes by hand.
Walker, “Now you tell me why anyone NEEDS hundreds of millions of dollars, ”
Why does the gov’t need it? Because they WANT IT. There ya go.
So what you propose is that everyone be limited to $60K. Cool. That’ll really grow the economy and provide an income capable of sending kids to college, buying a home, car, etc.
Sheesh.
Scratchy, you’re right. The days of giving everyone everything they whine for is done. It never should have existed in the first place.
Bret, gimme a break, I did not propose limiting everyone to $60k. It was a figure used to put today’s extreme CEO salaries and wealth accumulation in perspective.
And if you drive on roads, depend on police and fire protection, expect not to be poisoned by your food (and water and air), enjoy going to the library, listen to NPR, take public transportation, expect mail service, don’t want to see people starving and dying in the streets, want terrorists stopped, expect advance warning of hurricanes, want businesses regulated, and want your fellow citizen to be able to read… those are some of the reasons the government needs your money.
Unless you can figure out how to handle those matters on your own, taxes gotta be paid. It’s the price of civilization.
We can provide basic services Walker, we just need to be efficient and cost conscious. What have is a situation where everybody whines for money for their pet project and gets it, and expects more next year. That’s nuts. Gov’t is playing areas it doesn’t belong. There is no reason for the Federal Gov’t to be funding a sidewalk in a local community. If the community can’t afford it, or doesn’t think it’s important enough to fund, then they don’t need it. The same idea goes for whole multitude of items from corporate welfare and subsidies to local gov’t funding something that benefits a board member and not many others. We have a problem with politicians and bureaucrats treating tax dollars as their own with little regard for effectiveness, efficiency or the future. I’m completely serious when I point out that tax dollars have become nothing more than a way to get re-elected. The guy that gives you the most money/things gets your vote. There are very few people voting against a politician because he spends too much, but rather because he spends on the wrong things. That doens’t even get into the laws and regulations passed that limit or harm business and enterprises that would otherwise flourish.
We managed to create a system that will destroy itself through simple greed, jealousy and short sightedness. You want to limit people from accumulating wealth, or as I look at it from bettering themselves, and I want to remove the limits on people accumulating wealth. There’s the basic difference. I want to leave the money with the guy that earned it to spend as he see’s fit and you want to take it from him to be spent as YOU see fit. Every penny taken from your hand through taxes/fees/ regulation is a penny you have to make up from somewhere else or do without. That’s a penny you can’t spend locally or to build whatever it is you want to build. Why are you so willing to cut your own throat (and mine) so that a Senator can get a nature walk named after him in East Armpit Arkansas? Or so we can build a mosque in some foreign country or a bridge to nowhere?
And people accuse me of favoring the wealthy…
Bret, you’re still turning me into a straw man. I do NOT want to keep anyone from becoming wealthy, but I do think that as a person’s income increases, the percentage of it that they should pay in taxes should increase. To PREVENT anyone from becoming wealthy would require a tax system that taxed income over a certain level at 100%; we in fact did have a 90% bracket in the 1950s. And since taxes are only on INCOME, no one is going to be made poor by taxes alone.
You say “Every penny taken from your hand through taxes/fees/ regulation is a penny you … can’t spend locally.” Ah, but the government can spend it for you building or repairing the highway you drive on. If they don’t, what good is your car? And I am no more enamored than you are of Senators using my money to get nature walks named after them, but I’m VERY glad that the Adirondack Park and Yellowstone Park and Yosemite exist, even the parks I’ve never gotten to. And I’m glad there is a highway system to get me there. Taxes aren’t cutting my throat, though drowning government in the bathtub just might.
(Are we really building mosques in foreign countries? Examples?)