People complain that the wealthy uses loopholes and avoid paying taxes. But look at the facts:
In 2001, the latest year of available data, the top 5 percent of taxpayers paid more than one-half (53.3 percent) of all individual income taxes, but reported roughly one-third (32.0 percent) of income.
The top 1 percent of taxpayers paid 33.9 percent of all individual income taxes in 2001. This group of taxpayers has paid more than 30 percent of individual income taxes since 1995. Moreover, since 1990 this group’s tax share has grown faster than their income share.
Taxpayers who rank in the top 50 percent of taxpayers by income pay virtually all individual income taxes. In all years since 1990, taxpayers in this group have paid over 90 percent of all individual income taxes. In 2000 and 2001, this group paid over 96 percent of the total.
The President’s tax cuts have shifted a larger share of the individual income taxes paid to higher income taxpayers. In 2004, when most of the tax cut provisions are fully in effect (e.g., lower tax rates, the $1,000 child credit, marriage penalty relief), the projected tax share for lower-income taxpayers will fall, while the tax share for higher-income taxpayers will rise.
The share of taxes paid by the bottom 50 percent of taxpayers will fall from 4.1 percent to 3.6 percent.
The share of taxes paid by the top 1 percent of taxpayers will rise from 30.5 percent to 32.3 percent.
The average tax rate for the bottom 50 percent of taxpayers falls by 16 percent as compared to a 12 percent decline for taxpayers in the top 1 percent.
The rich are supporting our government expenses, including supporting services for the poor. I think that’s pretty fair. Why do the poor hold such disdain for the rich in this country? The Chinese believe America is a land of golden opportunity. If you are willing to work hard, you can make a good living and even rise to the top. That is absolutely true. Condoleeza Rice is a good role model. She grew up poor in the South, but went against the odds to become a success. There are many examples of successful Americans who grew up with very little. They did not remain victims by blaming the society, the government, or education inequalities. They did not look to government for hand-outs. They applied hard work and took responsibility for their future.
Since I am not especially rich myself, I am at least thankful that someone is and paying a lot of taxes for services that we all use.
When people complain that the rich are not paying enough taxes, I say, look at the facts. Who pays more?
July 22nd, 2005 at 2:22 pm
Your statement is somewhat incorrect. According to the US Department of Labor and Internal Revenue Service, 53 percent of income taxes are paid by the top 25, not 5, percent of income earners. In that same year, the floor for the top 25 percent of income earners was $56,084.
While those earning over $300,000 per year pay a disproportionate percentage of the gross income tax revenue (sharing roughly 17% more of the income tax burden than they should), the rest of those top 25 percent, i.e. those earning between $56k and $300k, also pay 10 to 15 percent more of the income tax burden than they should.
However, if the assertion is that private income spawns job growth, then the largest sector from which disposable income does so is the middle class.
If the assertion is that private incomes of the wealthy are contributing DIRECTLY to job growth by way of job creation, that is patently false.
Most midsize to large businesses are corporations. Their financing comes from initial stock offerings to financial institutions that are also corporations.
Those corporations borrow from banks, which are corporations.
Those banks borrow from the Federal Reserve System, which is a corporation (if you think about it).
The Federal Reserve System borrows from… ALL TAXPAYERS.
There is no reason a wealthy individual (Mind you I paid $75,000 in taxes in 1999 alone) should be given a higher percentage tax break than someone earning $70,000 or $50,000 or $20,000.
More importantly, without curbing expenditures, tax breaks are worthless.
From 2001-2004, the Bush administration exploded discretionary spending 27 percent… the highest 3-year increase since 1989. This figure does not include expenditures on the Iraq and Afghanistan Wars and/or the so-called “War on Terror”.
Currently the government projects an $8 billion national debt. Who do you think repays the debt, with interest? We do.
There’s a reason bankers lend instead of borrow… there’s more to gain from investing now than there is to gain from borrowing now.
You’ve been misled by false figures, and a false philosophy. I am a graduate in management, and I can tell you that the ultra-wealthy… in other words, those who have built their wealth over decades, and aren’t just some pipsqueak widget salesman earning $300,000 a year and spending it on piddly crap like Porsches… have made the majority of their wealth by living on the LENDING side of the TVM equation.
Ever wonder why banks lend money (loans) at a higher rate of return than they borrow it (deposit accounts)? It’s because the majority of people are too stupid to understand economics and finance… and the people who think the Bush tax cut is helping the American economy are going to be sadly mistaken when, inevitably, they, and not the wealthy politicians, are going to bear the weight of having to repay back the deficits… with interest.
Why would anyone believe it’s smarter to buy a depreciating asset now and end up paying principal plus interest on it later… instead of saving now, earning a rate of return, and using the interest itself to buy the depreciated asset later?
Surpluses cause exponential growth just like deficits, because surpluses can earn interest too… in the form of infrastructure investment.
Paying into the system today means I have to cut one less welfare check tomorrow. That’s wise investing.
July 22nd, 2005 at 2:25 pm
… add to that… the reason I brought up corporations is because they are independent legal entities … when they loan money, it is not being put up by the shareholders. In fact, nowhere in the chain of equity instrument financing is a corporation’s financing put up by individuals.
So the question there basically is this: Why should an individual get a tax break for spending a corporation’s, and not his/her own, money?? Corporations pay taxes… let THE CORPORATIONS get the tax breaks.
July 22nd, 2005 at 2:30 pm
My mistake on the figure… you were right. 53 percent is paid by the top 5 percent. However, I should point out the top 25 percent pay 82 percent of the income tax.
82 percent of the income tax burden is shared by all households earning over $56,084 a year… think about that. Does $56,084 sound wealthy to you?
Let me tell you, $250,000 a year isn’t exactly what I’d call “wealthy”, either.
August 12th, 2005 at 3:10 pm
I think $250K a year is wealthy! I could live pretty well on that…
October 5th, 2005 at 9:46 am
THE IRISH FAIR TAX MODEL. How to boost the economy to 5% growth.
Irish wealth grew with over 167% between 1984 and 2002. Average European wealth grew at less than a quarter of that pace. Irish industrial jobs increased with 35% in this period, while in the rest of Europe industrial employment caved in. While the rest of the world was booming, the European economy gradually slided into stagnation or even recession.
Why is Ireland so different? Why could Ireland devellop into the second most prosperous country of Europe in barely a half generation of time? The Irish socio-economic model is a perfect synthesis of the social welfare state and Anglosaxisch liberalism. Its model differs from the rest of Europe by its “fair tax system”: an optimal combination of MODERATE AND EFFICIENT GOVERNMENT SPENDING (35% of GDP) and A BALANCED REPARTITION of the TAX BURDEN between direct and consumption taxes.
The irish model provides the incentives for productive contribution, for dynamic entrepreneurship and a high participation rate. The Irish model is successful. Today Ireland meets the challenges of globalisation and the demographic time bomb. Ever more European countries adopt Irish policies, particularly in the East.
Also in England, France, Belgium, Holland and Germany could boost growth, job creation, and wealth by implementing the strategy of decreasing their demotivating taxation, and shifting the tax burden from income to consumption. Ireland showed that it can be done and that the strategy works. Where does one wait for?
More over the Irish success story, how and why can be found at following adresses:
(Dutch and Frensh versions now available at the same web site)
http://workforall.net/
http://workforall.net/EN_Tax_policy_for_growth_and_jobs.html
http://workforall.net/EN_Europe_direct_and_indirect_tax_burden.html
http://workforall.net/EN_Europe_social_security_sustainability.html