Tell me how this works again?

“The Rich needs to pay their fair share of TAXES” the nanny state groups usually shout.

They seem to completely ignore a few facts.

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.

First let’s point out that 400 people paid  taxes on 345,000,000 dollars for 1 year — 58,650,000 in taxes. (thanks for the catch Perlhaqr) 

Over the same period, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent.

My quick computation puts the “rich” at paying 82% more in taxes than the average.

There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.

They also ignore the fact that many people don’t pay income tax. Have you heard of them calling for that 45% to contribute their fair share?

I haven’t.

More than half of the nation’s tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent. Still, the wealthy have access to much more lucrative tax breaks than people with lower incomes.

Obama wants the wealthy to pay so “the amount of taxes you pay isn’t determined by what kind of accountant you can afford.”

I think a more accurate statement of President Obama desires would be “He wants the wealthy to pay.” Period.

Those “lucrative tax breaks” are designed to benefit the country by providing charity and  capital for companies to create jobs so those people paying nothing in income taxes can work.

President Obama, like many other “Tax them until they bleed liberals” isn’t willing to give up his income beyond what it takes to feed, shelter and clothes his kids.

And Vice President Biden — yeah, there is a real compassionate guy – less than $5,000 in charitable contributions.

Have to hand it to Senator Hatch — great quote

Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, said he has a solution for rich people who want to pay more in taxes: Write a check to the IRS. There’s nothing stopping you.

“There’s still time before the filing deadline for them to give Uncle Sam some more money,” Hatch said.

So, what do you think is a fair percentage of their  money each person gets to keep?

Please join the discussion.

 

Edited to Add — Jake at Curse Foiled Again also posted on this article….and did a better job at it.

15 Responses to this post.

  1. Posted by Jake on 19.04.11 at 11:57

    Heh. I caught that same article on Yahoo the other day. Did you catch the bit about the collectivist swine that only paid 1% of his income in taxes and was going off about how wrong it was that someone with his income paid so little?

    Funny that he still took all those deductions and credits and refused to voluntarily pay more, isn’t it?

  2. Posted by Bob S. on 19.04.11 at 11:57

    I caught that. That is why I loved Senator Hatch’s quote so much.

    I’m always arguing with the idjits oh so concerned citizens over at OneUtah about tax rates. I’ve challenged them all to state how much they make and how much they donate to charity.
    Asking if they donate all they make over poverty level yields either silence or yells of “One person can’t do it all” type.

    It is simple to me, empty your pockets voluntarily before you start voting money out of mine.

  3. Posted by Suz on 19.04.11 at 11:57

    My internet’s been down, so I haven’t had time to research the facts in this article. I personally support lower tax rates overall with no write-offs. I already have two questions that the article doesn’t address:

    “More than half of the nation’s tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent.” So, what percent of this nation’s wealth do these people earn?

    Also, why is the author comparing wealthy people’s tax rates to “the average?” Considering the mind-boggling variables involved, “average” is pretty much irrelevant – who does “average” represent?

    I see politicians on both sides using the same numbers to tell very different stories. You published the Fox version, and here’s the Mother Jones version:

    http://motherjones.com/politics/2011/04/taxes-richest-americans-charts-graph

    Neither side tells the whole story, but both sides count on people like me not having the time to learn the details. I don’t trust either one.

  4. Posted by Bob S. on 19.04.11 at 11:57

    Suz,

    One thing the charts and Mother Jones article doesn’t talk about is how much of those taxes each person gets back at the end of the year. I couldn’t see it, maybe I missed it.

    But does anyone think that the janitor or security guard isn’t getting most of the tax they pay into the system back?

    The other issue is hidden in the article

    The IRS data do not reveal whether these returns were filed by individuals using the building as a primary residence, secondary residence, or as a business address.

    I wonder how many of those addresses are businesses and are keeping people employed?

    I also think that a simple flat rank with no deductions would be more equitable.

    Another aspect is the fact that most ‘rich’ people don’t leave money sitting idle. So out of that 1 million dollars, they are buying things — and paying more taxes in the form of Sales taxes, they are investing — and being hit on capital gain taxes on what that money earns but providing jobs, they do put money in the bank and pay taxes on the interest but the money is used to make loans.

  5. Posted by Suz on 19.04.11 at 11:57

    Bob,

    Exactly! There’s so much that neither article tells, and the interests behind those articles like it that way. If they can keep the majority of the population focused on the details that piss us off the most, we won’t focus on the basic and REAL flaws in the system. If we don’t know what it all really means, all our comfortable little solutions will be simplistic and unworkable. And nothing will change.

    My biggest question is this: who benefits from the status quo, who gains the most from keeping the pubic riled up, partially informed, and often irrational? My answer: The greedy. Greedy career politicians who will come out wealthy no matter who’s “in power,” greedy rich people who want more money than they can earn honestly, and greedy poor people who want more money than they would bother to earn, honestly or otherwise.

    Life itself may not be fair, but there’s no reason income tax can’t be. How about we add congressional term limits to those fair taxes? That right there would solve most of this country’s political problems. Pie (in the sky,) anyone?

  6. Posted by Bob S. on 19.04.11 at 11:57

    Suz,

    I agree with you on most counts but I have to wonder about “greedy rich people who want more money than they can earn honestly”.

    If we are talking people breaking the law, I’m with you. If we are talking about people who make money through investments, inheritance, etc; then I’m not.

    I have no problem with people making their money work for them instead of them working for their money. I want to get to that point – why should I work when I can make my living on work other people do with my money.

  7. Posted by Suz on 19.04.11 at 11:57

    Investing, inheriting, and even winning the lottery, are perfectly legitimate ways to acquire money; I didn’t mean to imply otherwise. However, investing in unethical schemes that are technically legal, is sleazy. Laws and lawmakers can be manipulated. That’s why I said “honestly,” rather than “legally.” This country is full of laws that make dishonesty profitable. Believe me, I have nothing against wealth, and nothing but respect for people earn it in an ethical manner.

  8. Posted by Bob S. on 19.04.11 at 11:57

    Suz,

    As you realize, this is where we get into a really gray area.

    I know of some investment schemes that sound really sleazy, until you know the full details or the levels of risk.
    In my opinion, too many people base their idea of sleaze on the level of return or the appearance of someone being taken advantage of.

    I can understand that but also see the other side. In many case, those schemes are risky yet the people might not get backing any other way.

    So where do we draw the moral line?

    I think you hit a point “full of laws that make dishonesty profitable” — it isn’t the tax rates that are the problem, it is the laws.

    And frankly I see no way to fix it by law.

    Seriously.

    Get rid of the questionable laws and people will find another way. Change the laws to make the loop holes go away, people will find another loophole.

    The fix isn’t in the law but the moral character of the country. And until we recognize that and stop “there is no absolutes, no right or wrong, just do your own thing” mentality, nothing is going to change.

  9. Posted by Suz on 19.04.11 at 11:57

    Bob,
    I agree 100%. It is about moral character. Would the unions and the socialist ideals ever have taken hold in this country if the “robber barons” of the industrial age were ethical and humane employers? There were plenty of good companies around until they were bought out and shut down by unrestrained greed. The resulting regulations helped temporarily, but once again, greed found a way around them. Now most business regulations hamper the very competition they were designed to foster. Perhaps the last best hope is greed itself – if an informed public would bother to boycott unethical business and support business that are good for the whole country, the greedy would be forced to compete. (I personally would love to chase WalMart out of my town, but most people still think shopping there is a real bargain)
    And no, we sure can’t legislate morality, but it would be a good start if we could stop protecting everybody from the consequences of their failures. I believe that the varying degrees of “Right and Wrong,” make them slightly relative, but one should be able to measure them by their natural consequences. As a society, we have become so far removed from consequences that we find ourselves shocked and surprised whenever someone is unfortunate enough to die of their own stupidity. We’re a pretty smart species, at least when we’re born. I think we’d learn to be a lot more responsible (in a big hurry, I might add) if life were allowed to teach us the true nature of cause and effect.

  10. Posted by Bob S. on 19.04.11 at 11:57

    Suz,

    When are you going to run for office?

    I’ll establish residency there so I can vote for ya.

  11. Posted by Suz on 19.04.11 at 11:57

    I’d be assassinated on my first day!

  12. Posted by perlhaqr on 19.04.11 at 11:57

    First let’s point out that 400 people paid 345,000,000 dollars in taxes for 1 year.

    That’s not what that except says. The excerpt says 400 people had an average of $345,000,000 in taxable income. The excerpt also states that they paid an average of 17% of that in federal income tax, or $58,650,000 in taxes.

    Which is still a boatload of money.

    ——

    So where do we draw the moral line?

    I’m not sure where the line is in particular, but companies buying laws to put their competition out of business is definitely on the “immoral” side of it. That would count as “dishonest enrichment”.

    Get rid of the questionable laws and people will find another way. Change the laws to make the loop holes go away, people will find another loophole.

    “The income tax rate is 10% of your remuneration.” Find me a loophole in that tax code. ;)

  13. Posted by Jake on 19.04.11 at 11:57

    “The income tax rate is 10% of your remuneration.” Find me a loophole in that tax code.

    Easy. $1 a year salary, and an unlimited corporate “operating” account. The money is never actually paid to the executive – it remains as “operating costs” for the company – so it doesn’t get taxed (well, taxed again, since the company paid their income tax when it came in). :D

    To avoid that, you’d have to close the loophole by defining expense accounts and counting them as income, with all the loophole abuse that will come with that.

  14. Posted by Bob S. on 19.04.11 at 11:57

    Jake,

    Renumeration is fairly well defined; if I remember my 1 semester business law class. The benefit from that ‘operating’ account would still be taxable under the current definitions.

    But I think it would be easier to close the ‘expense account’ loophole than the ‘income’ loophole.

  15. Posted by Bob S. on 19.04.11 at 11:57

    Perlhaqr,

    Thanks for the catch; that is what I get for writing posts too early in the morning. You are right, that is still a boat load of money.

    And it really shows the fallacy of trying to ‘tax the rich’ our way out of debt. Even if we implemented a 90% tax rate on those 400 people, the difference would be around $250,000,000 — it would be 0.002% of our current debt load.
    Check my math on that one again please :) current debt 14,253,320,500,000 right?
    Yeah, that will really help. In the mean time, how many people will lose their jobs because that wealth isn’t around to invest, spend or be loaned out?