Who Pays Income Tax In America ???

[jimmoyer]

Last week, the Internal Revenue Service released data on distribution of the income tax burden in 2002. They put a lie to John Kerry's contention that the rich are not paying their fair share and should be taxed more.

The IRS data divide taxpayers into percentiles according to their adjusted gross incomes. Following is the share of aggregate income taxes paid by each group:

Income Group ---- Tax Share
Top 1 percent ---- 33.7 percent
Top 5 percent ---- 53.8 percent
Top 10 percent ---- 65.7 percent
Top 25 percent ---- 83.9 percent
Top 50 percent ---- 96.5 percent

The data also reveal that despite the Bush tax cuts, the income tax is still highly progressive -- taking more from each group as their incomes rise. The following percentages measure the taxes paid by each group divided by their income. Economists call this the average or effective tax rate.

Income Group ---- Tax Rate
Top 1 percent ---- 27.25 percent
Top 5 percent ---- 22.95 percent
Top 10 percent ---- 20.51 percent
Top 25 percent ---- 16.99 percent
Top 50 percent ---- 14.66 percent
Bottom 50 percent ---- 3.21 percent

Finally, the data show that the rich are not only paying tax rates as high as they were during the Clinton administration, eve after large tax cuts in 2001 and 2002, but they are doing so even as their incomes have fallen. The aggregate income of the top 1 percent was down 26 percent between 2000 and 2002. In 2000, the income threshold for getting into the top 1 percent was $313,469. By 2002, that figure had fallen to $285,424, reflecting the slow economy and weak stock market.

This doesn't mean we should shed tears for the rich. They're still doing pretty well. But these data raise serious questions about class warfare agenda. How much more taxes does he think rich people should pay?



For this reason, even sophisticated leftists recognize that class warfare is a non-starter in American politics. As columnist Bob Kuttner recently put it, "Because nearly everyone identifies upward, you don't gain traction in American progressive politics by baiting the rich." Mark Penn, Bill Clinton's pollster, put it this way: "The more government tries to monkey with income distribution, the more people dislike it."


Bruce Bartlett is the author of Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy.

Copyright © 2004 Creators



http://www.townhall.com/opinion/columns/brucebartlett/2004/10/19/13380.html

Edited to remove caps in thread title ... Jimmoyer, please use upper and lower. With the new format, it takes way too much room. Add to that my OCD about these things. Thanks! Cosmo

 

[I think not]

Re: WHO PAYS INCOME TAX IN AMERICA ???

The income tax in the US is progressive, the more you earn, the more you pay, with a federal cap of 35%.

 

[darkbeaver]

RE: WHO PAYS INCOME TAX I

Either make a comment that adds to the conversation or shaddup. One word tantrums don't do anything to further your position. Plus it's annoying. Cosmo

 

[I think not]

Re: WHO PAYS INCOME TAX IN AMERICA ???

Hahahaha.

 

[Kreskin]

Re: WHO PAYS INCOME TAX IN AMERICA ???

Warren Buffet - 2003

"Now the Senate says that dividends should be tax-free to recipients. Suppose this measure goes through and the directors of Berkshire Hathaway (which does not now pay a dividend) therefore decide to pay $1 billion in dividends next year. Owning 31 percent of Berkshire, I would receive $310 million in additional income, owe not another dime in federal tax, and see my tax rate plunge to 3 percent.

And our receptionist? She'd still be paying about 30 percent, which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly. Let me repeat the point: Her overall federal tax rate would be 10 times what my rate would be.

When I was young, President Kennedy asked Americans to "pay any price, bear any burden" for our country. Against that challenge, the 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax-free -- seems a bit light.

Administration officials say that the $310 million suddenly added to my wallet would stimulate the economy because I would invest it and thereby create jobs. But they conveniently forget that if Berkshire kept the money, it would invest that same amount, creating jobs as well.

......Supporters of making dividends tax-free like to paint critics as promoters of class warfare. The fact is, however, that their proposal promotes class welfare. For my class. "

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A13113-2003May19

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

Kreskin, ITN, and my post all are all correct.

The top 25 percent of America pays 83.9 percent
of all income taxes collected by the government.

That means the bottom 75 percent of America
pays 16.1 percent of all income tax collected
by the government.

Kreskin's post is also correct.
The burden on lower tax payers is still high
as a proportion of their income -- BUT their contribution
to the federal treasury is small ---just 16.1 percent
of all income tax collected.

So you have a leftwing fact and a rightwing fact.

Neither are false.

But when one side only presents their fact
it skews the perception one way.

What can only explain this leftwing and rightwing fact
as both correct ?????

It is what ITN said : Progressive income tax despite
all the loopholes AND the fact that the rich are really really
rich.

 

[Kreskin]

RE: WHO PAYS INCOME TAX IN AMERICA ???

Those tax rates apply to taxable income. Everything a working stiff makes is 100% taxable. Dividends aren't taxable in the US. Self employed have always paid themselves dividends for income as they were at a preferred rate. Zero is now a pretty good preferred rate. As Warren Buffet pointed out the dividend tax elimination doesn't create more jobs, but the wealthy will spin it that way. They can live high on the hog and pretend to be heroes by pointing to the tiered tax rates. Most of their income has nothing to do with those tax rates. It's a smoke and mirrors show.

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

For Tax Year 2003

Percent Ranked by Adusted Gross Income -------column 1
AGI Threshold on Percentiles ---------------------column 2
Percent of all Federal Income Tax recieved------column 3

Top 1% ..........$295,495...............34.27
Top 5%...........$130,080...............54.36
Top 10%..........$94,891................65.84
Top 25%..........$57,343................83.88
Top 50%..........$29,019................96.54

Bottom 50%...... $29,019............... 3.46

 

[Kreskin]

RE: WHO PAYS INCOME TAX IN AMERICA ???

But gross income excludes dividends because they aren't taxable. Smoke and mirrors.

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

It's not smoke and mirrors.

You're correct that the burden is higher on
lower income groups.

But literally the federal government collects only
less than 4 percent of its income tax revenue from
the bottom 50 percent of society.

The rich don't bear the burden like the poorer do,
but the top 25 percent pays 85 percent of all
income tax received.

LEFTWING FACT:

On one hand you have the "BURDEN" on different
classes of people.

RIGHTWING FACT:

On the other hand you have a picture of what
groups deliver the highest percentage of collections
to the federal treasury.


By the way Canada stats show the same parallels.

By the way I know for a fact my dividends are taxed.

 

[Kreskin]

Re: RE: WHO PAYS INCOME TAX IN AMERICA ???

It's not smoke and mirrors.

You're correct that the burden is higher on
lower income groups.

But literally the federal government collects only
less than 4 percent of its income tax revenue from
the bottom 50 percent of society.

The rich don't bear the burden like the poorer do,
but the top 25 percent pays 85 percent of all
income tax received.

LEFTWING FACT:

On one hand you have the "BURDEN" on different
classes of people.

RIGHTWING FACT:

On the other hand you have a picture of what
groups deliver the highest percentage of collections
to the federal treasury.


By the way Canada stats show the same parallels.

By the way I know for a fact my dividends are taxed.

Top 1 % Top 10 % Top 25 % Bottom 50 %
1993 Income (1) $185,715 $66,077 $41,210 $21,179
2003 Income (2) $295,495 $94,891 $57,343 $29,019
1993 Income Adjusted for Inflation (3) $232,415 $82,693 $51,573 $26,504
Gain (1)-(3) $ 63,040 $12,198 $ 5,570 $2,515

Now you can pee away that $2515 on additional gas in a pickup truck alone. Not quite the same effect on high income earners.

I believe Bush didn't get his zero dividend rate, but did get something like 15-20%. So if most wealthy draw their income in dividends and pay 15-20% on that income that's a far cry from carrying a large societal burden.

I suspect those paying 85% of the taxes are probably collecting over 95% of the income anyway.

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

Exactly Kreskin.

Now you're getting it.


It blows the Leftwing mind, when you say the
top 25 percent in America pays 83.9 percent of all
income tax revenue collected by the federal government.

...or that the bottom 75 percent of society
pays only 16.1 percent of all income tax collected.

Quote from the C.A.W. :

Tax cuts cannot produce a significant improvement in the standard of living of low-income Canadians, for the simple reason that low-income people hardly pay any taxes. Even for middle-income earners, tax cuts won't make much difference.

taken from Canadian Auto Workers Union article

http://www.caw.ca/whatwedo/research/taxfacts/whopayswhat.asp

 

[Kreskin]

RE: WHO PAYS INCOME TAX IN AMERICA ???

The net effect is more on the middle class because we all pay the same price for tomatos. A thousand bucks kept in the pocket a 40k earner will impact his/her family more than 10k left in the hands of the wealthiest (assuming it doesn't fall out of his pocket unnoticed).

I know someone who has a net worth of over 50 million. Do you think he would even notice if we put 40k in his account? Perhaps in a year or two he will figure it out, but that amount will feed , clothe and shelter a family of 3 or 4 for a year. He could pay nearly everyone's taxes in town and not live any differently.

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

I totally understand your point about BURDEN,
Kreskin.

But since most discussions on WHO PAYS THE TAXES
center on exactly your thinking, often it becomes
quite a surprise especially for the Leftwing to
find out that the bottom 50 percent of society
contributes less than 5 percent of all income tax
collected by the federal government.

No wonder any tax cut benefits the rich.

The poorer hardly pay any of it.

 

[Toro]

Re: RE: WHO PAYS INCOME TAX IN AMERICA ???

But gross income excludes dividends because they aren't taxable. Smoke and mirrors.

This is incorrect.

Dividends are taxed at a 15% rate. Until a few years ago, dividends were taxed at the same rate as income. The senate just passed a bil that would extend the dividend and capital gains tax rate of 15% to 2010.

But dividends shouldn't be taxed because dividends are paid out of after-tax income, and are thus double taxed.

 

[Kreskin]

Re: RE: WHO PAYS INCOME TAX IN AMERICA ???

But dividends shouldn't be taxed because dividends are paid out of after-tax income, and are thus double taxed.

Kind of a double-edged sword. If there was no dividend tax the corporation would never reinvest profits. Plus the corporation is a separate entity than the individual. Individual shareholders benefit when the company reinvests profits to make more money.

 

[Toro]

Re: RE: WHO PAYS INCOME TAX IN AMERICA ???

Kind of a double-edged sword. If there was no dividend tax the corporation would never reinvest profits.

That's incorrect.

Corporations will reinvest when they can make a return on the capital project above the cost of capital, regardless of the dividend tax. That's how companies grow.

The dividend payout ratio in the United States - the ratio of dividends to earnings - is sitting at around 30%, near an all-time low. Yet, the tax on dividends was cut to the lowest level in decades three years ago.

 

[Kreskin]

Re: WHO PAYS INCOME TAX IN AMERICA ???

Here's an interesting read on the effect of tax cuts on the US economy (deficit-financed tax cuts). This is from the CRS (considered as unbiased as it gets). Not exactly a glowing review.
http://www.senate.gov/~hutchison/RL32502.pdf

The Congressional Research Service is where Members of Congress turn for the nonpartisan research, analysis, and information they need to make informed decisions on behalf of the American people.

 

[jimmoyer]

RE: WHO PAYS INCOME TAX IN AMERICA ???

For the bottom 50 percent of society to pay less
than FOUR percent of all income tax collected by the
federal government, it becomes a little more clear
that the RICH WEALTHY does foot the bills.

 

[BitWhys]

Re: WHO PAYS INCOME TAX IN AMERICA ???

In the US the top 5% make 30% of the income and carry almost 60% of the burden. It sounds like a lot but consider the guy or gal at the median still coughs up 13% of his or her taxable income. That adds up to 2 things, a drop in the bucket in Washington and a whack of cash out of his or her disposable. 4 grand is a night on the town to the folks who own a third of the country.

no need to do anything drastic. mind you, it is kind of a fun sort of fact to know.