Rich people taxes

DosEquis · 07-02-2009, 11:46 AM

Ok, the questions are....

How much, as a percentage of their total income after they are done filing taxes, does the average person in the upper 1% pay income taxes?

How much, as a percentage of their total income after they are done filing taxes, does the average middle class person pay income taxes?

How much, as a percentage of their total income after they are done filing taxes, does the average poverty level person pay for income taxes?

I know of two examples, but I do not have an example for the last question.

Warren Buffett paid 17.7% on 46 million dollars of income.

DosEquis paid approximately 28% last year on his mid 60k income, and so far I am on pace for 27.7% again this year.

Warren Buffett has said his average employee pays 32% of their income.

I suspect after standard deductions someone at the poverty level pays between 2-10% of their income.

The debate comes about when talking about "what is fair". A common answer is a flat tax. A flat tax would probably result in a significant tax cut for people like me, and significant increases on the wealthy and the poor. However when you speak of increasing taxes on the wealthy you get a common response like "don't punish success" or "why do you want wealth redistribution".

Everytime someone like myself starts a thread that says the wealthy do not pay enough, I get a response like "The upper 1% pay 30-40% of the total tax bill".

The goal of this thread is to find out what the average percentage the upper 1% pay on their total income. I realize they have upwards of 35% on regular income tax. I am talking about what percentage of their total income vs. what they pay in April when the bill is due. Warren bet other Fortune 400 business owners 1 million dollars to prove their tax burden, as a % of income, was equal to or more than their average employee. NONE of them took on the bet.

Equal percentage has generally been the benchmark for fair. Someone like me pays 28%... they pay less... raise their taxes or cut mine.

Winston · 07-02-2009, 12:29 PM

The first thing to consider is the source of the income. If it is active income--that W2 income from a job, then it is taxed at the income tax rate. But, most of the income of the wealthy is passive income and is taxed at the capital gains rate.

It makes no sense to have a capital gains rate that is LOWER than the income tax rate. And in most of the history of the nation that capital gains rate was greater than the income tax rate. When the capital gains rate is lower it encourages the creation of tax shelters, tax avoidance strategies, and income shifting.

Now, the second thing to consider is rather or not a greater progressivity in the tax rate would actually benefit the lower and middle class. Make no mistake about it, the progressiveness of the US taxcode--that is, the percentage of total taxes paid by the wealthiest five percent, has INCREASED in the last twenty five years. They pay a greater share of the total tax burden and yet they have managed to garnish an even greater share of the nation's wealth. So much greater a share that that greater tax burden they paying requires less of a PERCENTAGE of their total income than ever before.

Let's have an example. Joe works for six bucks an hour. He pays a ten percent tax. John works for ten bucks an hour, he rich. He pays a twenty percent tax. So, we figure Joe need to get a break. He pays five percent and to pay for that, well we make Joe pay thirty percent. After a couple of years, well Joe, he making seven bucks an hour. He only paying thirty five cents. But John, he now making forty bucks an hour. Joe's aftertax income improved by a buck an a quarter an hour. But John, damn if he ain't making nineteen more dollars an hour.

Interestingly enough, the OECD did a study on taxation among industrialized nations. They found that the distribution of wealth is more tilted in favor of the rich in the nations with the most progressive taxcodes. The United States, with no universal sales or VAT tax, has among the most progressive taxcodes in the world. At the same time, the US is among those with the highest poverty rates.

In the end it all worked out kind of like a travel baseball team for your kids. Let's say you got two choices. One choice is an unsponsored team, costs you a few hundred bucks to participate and you got to buy the equipment. Second choice is a sponsored team, cost nothing to play and equipment is furnished. If you choose the later, and some bumbling bafoon is playing shortstop, well you can't really complain if that shortstop is the son of the sponsor.

DosEquis · 07-02-2009, 01:31 PM

Originally Posted by Winston

Let's have an example. Joe works for six bucks an hour. He pays a ten percent tax. John works for ten bucks an hour, he rich. He pays a twenty percent tax. So, we figure Joe need to get a break. He pays five percent and to pay for that, well we make Joe pay thirty percent. After a couple of years, well Joe, he making seven bucks an hour. He only paying thirty five cents. But John, he now making forty bucks an hour. Joe's aftertax income improved by a buck an a quarter an hour. But John, damn if he ain't making nineteen more dollars an hour.

In a progressive system they only pay that % to a certain amount.

Single file for Federal 2009 looks like this.

10% 0 to 8350
15% 8350 to 33950
25% 33950 to 82250

If you make 65,000 you do not pay 25% on all 65,000. You pay 25% on income from 33,950 to 65,000. Then you pay 15% on 8350 to 33950. 10% on the first 8350.

For 65k taxable income
835+3840+7762 = $12,437

Grand total is 19% of the taxable income for federal taxes.

A person with 65k taxable income might have 75k gross income, as standard deduction will be $5700 in 2009.

Anyway your statement about "source of income" is really at the heart of the problem. Everyone thinks the wealthy are taxed at like 40% of their income and it is simply no where near the case.

Photon1001 · 07-02-2009, 05:18 PM

Having greater amounts of wealth means having a greater chance of affecting the decisions of congress. Its as simple as that.

The Great Catpiss · 07-02-2009, 06:38 PM

Originally Posted by DosEquis

Ok, the questions are....

How much, as a percentage of their total income after they are done filing taxes, does the average person in the upper 1% pay income taxes?

How much, as a percentage of their total income after they are done filing taxes, does the average middle class person pay income taxes?

How much, as a percentage of their total income after they are done filing taxes, does the average poverty level person pay for income taxes?

I know of two examples, but I do not have an example for the last question.

Warren Buffett paid 17.7% on 46 million dollars of income.

DosEquis paid approximately 28% last year on his mid 60k income, and so far I am on pace for 27.7% again this year.

Warren Buffett has said his average employee pays 32% of their income.

I suspect after standard deductions someone at the poverty level pays between 2-10% of their income.

The debate comes about when talking about "what is fair". A common answer is a flat tax. A flat tax would probably result in a significant tax cut for people like me, and significant increases on the wealthy and the poor. However when you speak of increasing taxes on the wealthy you get a common response like "don't punish success" or "why do you want wealth redistribution".

Everytime someone like myself starts a thread that says the wealthy do not pay enough, I get a response like "The upper 1% pay 30-40% of the total tax bill".

The goal of this thread is to find out what the average percentage the upper 1% pay on their total income. I realize they have upwards of 35% on regular income tax. I am talking about what percentage of their total income vs. what they pay in April when the bill is due. Warren bet other Fortune 400 business owners 1 million dollars to prove their tax burden, as a % of income, was equal to or more than their average employee. NONE of them took on the bet.

Equal percentage has generally been the benchmark for fair. Someone like me pays 28%... they pay less... raise their taxes or cut mine.

Here is something to ponder. We have been brainwashed to think that paying a similar % is fair. Is it really fair?

I don't know what is fair. I find a % acceptable, but I don't know why. Perhaps there are too many variables to calculate.

What is unfair is how many people don't pay enough taxes to cover what the government spends directly on them. These people vote for more spending and want others to pay for it. This isn't a miniscule amount of people who can't afford to cover themselves. A family of 4 needs to earn about $110,000 per year in order to cover their personal tax footprint (on average). This figure doesnt include stuff like military, war, economic stimulus... It just counts in all the services provided to a family of 4 on average.

Also note that many of these wealthy people spend a lot of money. They often even hire people creating more jobs. When such expenses are deducted their % paid to taxes goes down, but they did put more money into the economy. The argument that $1 spent generates $XX in tax revenue would also be in favor of getting people to spend money over paying taxes. Some will say "What if they never spend their money?" I suppose the answer is that they will have less to deduct and pay higher taxes.

Photon1001 · 07-02-2009, 06:50 PM

ok, now I'm confused. I never call upon the gov't, never even call the cops or firefighters or anything, and I'm pretty sure I never got any $100,000 last year or the year before. Now, if thats how did include the military, etc., then sure, I know they are wasteful like everyone, all those billion dollar fighter jets 'n stuff, but I guess what I'm sayin' is.. where da hell is my $100K, I want my $100K, dammit, give me my $100K!!!

Photon1001 · 07-02-2009, 07:08 PM

oh, hey, my buddy, well not so much my buddy, maybe now, since last month he came over and we got drunk and well, nevermind.. ..anyway, he owns a business, makes some good money, not rich rich or anything, but doing alright, he saves up receipts for his taxes, talks to all his buddies and asks them to save their receipts too, receipts for just about anything really, I wouldn't put it past him to even buy ppl's old receipts too.

Do I hold anything against him for doing that? Absolutely not, fuck the gov't. Oh, and really, wtf happened to my $100K, I want my $100K, for real man, somebody better gimme my $100K...

stolz25 · 07-06-2009, 03:59 PM

Originally Posted by DosEquis

Warren Buffett paid 17.7% on 46 million dollars of income.

DosEquis paid approximately 28% last year on his mid 60k income, and so far I am on pace for 27.7% again this year.

Warren Buffett has said his average employee pays 32% of their income.

I'm getting sick of this ridiculous Warren Buffet example. The vast majority of his income is derived from investments, and isn't earned income. While he ended up making money last year, he could have very well lost money too.

And while you are complaining about your percentage of taxes, Buffet paid more last year in taxes than you likely will your entire life. How fair is that? Is his government services that much better than yours? You've got the same military, same roads, and same utilities that he does. He's getting screwed.

DosEquis · 07-06-2009, 05:35 PM

Originally Posted by stolz25

I'm getting sick of this ridiculous Warren Buffet example. The vast majority of his income is derived from investments, and isn't earned income. While he ended up making money last year, he could have very well lost money too.

And while you are complaining about your percentage of taxes, Buffet paid more last year in taxes than you likely will your entire life. How fair is that? Is his government services that much better than yours? You've got the same military, same roads, and same utilities that he does. He's getting screwed.

Whats fair bro? All of the rich, even at 5%, will probably pay more that year than I will make in my life. You tell me whats fair.

He bet the leaders of fortune 400 companys 1 million dollars to show they pay less of a percentage of their income than their employees. None of them did it.

stolz25 · 07-06-2009, 06:26 PM

Originally Posted by DosEquis

Whats fair bro? All of the rich, even at 5%, will probably pay more that year than I will make in my life. You tell me whats fair.

None of it is fair. You are crying that they should be punished because they make more money than you.

Originally Posted by DosEquis

He bet the leaders of fortune 400 companys 1 million dollars to show they pay less of a percentage of their income than their employees. None of them did it.

What difference could this possibly make?

You're again talking about two different types of income, and the majority of the people making millions and billions of dollars in a year can do it somewhere else if they start getting charged 25% or more of their income a year to live here. Buffet could have made the exact same amount last year from any country in the world with internet access (or a boat in the middle of the ocean) if he had wanted to.

You should be kissing these people's feet instead of complaining about them, because without them your welfare state government wouldn't work at all.

DosEquis · 07-06-2009, 06:32 PM

Originally Posted by stolz25

None of it is fair. You are crying that they should be punished because they make more money than you.

What is fair taxation to you?

stolz25 · 07-06-2009, 06:39 PM

Originally Posted by DosEquis

What is fair taxation to you?

There isn't any fair taxation to me. Taking people's earnings is theft as far as I'm concerned.

That said, looking at it from your standpoint, I can't imagine why you'd think a percentage based tax off income is at all fair. This seems to be the starting assumption from your side, yet you give no reason for it. Everyone's services are essentially the same, yet some people pay multiple billions of dollars over the course of their life while some pay nothing. I get the impression people think the rich are evil and should be punished for making money. You'd think the people who build businesses, bing us new technology, and make our everyday lives easier would be celebrated, instead people treat them light a blight on the world.

DosEquis · 07-06-2009, 07:06 PM

Originally Posted by stolz25

There isn't any fair taxation to me. Taking people's earnings is theft as far as I'm concerned.

That said, looking at it from your standpoint, I can't imagine why you'd think a percentage based tax off income is at all fair. This seems to be the starting assumption from your side, yet you give no reason for it. Everyone's services are essentially the same, yet some people pay multiple billions of dollars over the course of their life while some pay nothing. I get the impression people think the rich are evil and should be punished for making money. You'd think the people who build businesses, bing us new technology, and make our everyday lives easier would be celebrated, instead people treat them light a blight on the world.

Its not theft when the people elect representation and this representation creates the taxation. You think it is theft but it is clearly not. While you live here you have to pay it but you can most certainly go live some place else. Or elect people that will get rid of it.

As far as rich people being considered evil, wanting to punish success, etc, I do not feel anything of the sort. As long as we talk about strictly dollars the wealthy will always pay more no matter what. Thats not my desire to punish them or hate them, thats reality.

stolz25 · 07-06-2009, 07:20 PM

Originally Posted by DosEquis

Its not theft when the people elect representation and this representation creates the taxation.

I didn't.

Originally Posted by DosEquis

You think it is theft but it is clearly not.

Yes, clearly...

Originally Posted by DosEquis

While you live here you have to pay it but you can most certainly go live some place else.

Did you really think I was unaware of my option to leave? I obviously think that my overall best situation is here, even though I disagree with the morality of taxes. Why this in your eyes gives some legitimacy to taxation I can't understand though. Afterall, shopkeepers often pay protection money to gangs when they have the option of leaving and going elsewhere. Does this make the gang legitimate?

Originally Posted by DosEquis

Or elect people that will get rid of it.

Soon as that becomes an option I'll do it. Until then I'll pay my extortion money.

Originally Posted by DosEquis

As far as rich people being considered evil, wanting to punish success, etc, I do not feel anything of the sort.

Okay, then why, when you notice that Buffet is paying less percentage than you are, do you immediately scream for their taxes to be raised instead of yours to be lowered?

Originally Posted by DosEquis

As long as we talk about strictly dollars the wealthy will always pay more no matter what.

You state this as a fact when it's not, and give no reason at all for why you think that should be so.

Originally Posted by DosEquis

Thats not my desire to punish them or hate them, thats reality.

No it isn't. You could easily devise a tax system where everyone paid the same amount. Again, you give no reason we should have a percentage based income tax, or why it should be progressive.

DosEquis · 07-06-2009, 08:07 PM

Originally Posted by stolz25

IOkay, then why, when you notice that Buffet is paying less percentage than you are, do you immediately scream for their taxes to be raised instead of yours to be lowered?

You state this as a fact when it's not, and give no reason at all for why you think that should be so.

No it isn't. You could easily devise a tax system where everyone paid the same amount. Again, you give no reason we should have a percentage based income tax, or why it should be progressive.

There are 12 trillion reasons and counting. Even if you cut spending down to zero, it would still take nearly 6 years to pay all that off.

Winston · 07-06-2009, 08:41 PM

Originally Posted by stolz25

Everyone's services are essentially the same, yet some people pay multiple billions of dollars over the course of their life while some pay nothing.

The same my ass. That is astoundingly naive.

If you don't have a bank account you kind of don't need the FDIC.

If you never fly in an airplane you kind of don't need those damn air traffic controllers or loud ass airports.

And why the hell am I paying for the coast guard. I don't live near an ocean, probably ain't going to need to be rescued off my damn sailboat anytime soon, and honestly, I don't give a rat's ass about any drugs coming in.

I got a well, septic tank too. I live a half mile down a private maintained dirt road and ain't seen a cop in a damn decade. Somehow I kind of believe my parents, with city water and septic and a cruiser passing by several times a day, get a little more in services than I.

And the weatherman, he dumber than dirt--I look at the sky, examine the clouds, and use my nose, what the hell are my tax dollars doing paying for dobbler radar and weather satelittes.

stolz25 · 07-06-2009, 11:39 PM

Originally Posted by DosEquis

There are 12 trillion reasons and counting. Even if you cut spending down to zero, it would still take nearly 6 years to pay all that off.

So, since the government borrowed a whole bunch of money to spend on stuff they shouldn't be spending on, we should raise taxes and give them more money to waste?

stolz25 · 07-06-2009, 11:48 PM

Originally Posted by Winston

The same my ass. That is astoundingly naive.

Yes...naive.

Originally Posted by Winston

If you don't have a bank account you kind of don't need the FDIC.

If you make a billion dollars you kind of don't need unemployment.

Originally Posted by Winston

If you never fly in an airplane you kind of don't need those damn air traffic controllers or loud ass airports.

If you make a billion dollars you don't need food stamps or housing subsidies.

You split hairs on my post and then focused entirely on that for yours. Would it make you feel better if I said we all have access to the same services, provided we choose to use them?

Originally Posted by Winston

I got a well, septic tank too. I live a half mile down a private maintained dirt road and ain't seen a cop in a damn decade. Somehow I kind of believe my parents, with city water and septic and a cruiser passing by several times a day, get a little more in services than I.

Let's assume these aren't paid by local taxes and that you actually make sense here, what would be your point? You could choose to live in the city and get those services if you wanted.

The Great Catpiss · 07-07-2009, 01:35 AM

Originally Posted by DosEquis

Its not theft when the people elect representation and this representation creates the taxation. You think it is theft but it is clearly not.

While it may be a democracy and legal, it's still theft.

Furthermore, many laws affect businesses, yet businesses don't have a right to vote. I understand they shouldn't, but it is an example that there is plenty of taxation without representation in America.

Originally Posted by DosEquis

While you live here you have to pay it but you can most certainly go live some place else. Or elect people that will get rid of it.

Perhaps that will become a viable option. Unfortunately, as humankind progresses the mob gets more and more powerful.

Originally Posted by DosEquis

As far as rich people being considered evil, wanting to punish success, etc, I do not feel anything of the sort. As long as we talk about strictly dollars the wealthy will always pay more no matter what. Thats not my desire to punish them or hate them, thats reality.

So why do you think they don't pay their fair share, while people who don't pay taxes keep voting for more and more spending?

Would you rather the wealthy not stimulate the economy. Tax breaks usually are giving for actions that help stimulate the economy (spending, or employing people). I don't see how anyone can be upset at the wealthy get tax breaks yet support Obama spending to stimulate the economy.

Winston · 07-07-2009, 09:30 AM

Originally Posted by stolz25

You split hairs on my post and then focused entirely on that for yours. Would it make you feel better if I said we all have access to the same services, provided we choose to use them?

Nope, because we all DON"T have EQUAL access.

A family rents their home, has little income, and recieves food stamps--maybe $500 a month worth. The rich dude has a $500,000 mortgage that he deducts the interest from his taxable income. Who getting the most "benefit" from the government?

Two employees working in a factory. One, he poor--he can't afford the group medical insurance. The other, he rich--he a manager. He got a big ass healthcare plan and he pays for it with pretax dollars. The poor dude is SUBSIDIZING the cost of the rich dudes healthcare plan. Sweet.

Rich dude--he got a trust, it is held in a bank, and his will is held at the courthouse. Poor dude, he got a coffee can buried in the backyard. Who is getting "protection" from the government?