Please help me out with tax structure.

[Riley18]

I am always on this other site called LoanSafe which is for people trying to apply for a modified mortgage. Anyway, got onto this thread about how bad Fox is and somehow I got into how the top 1% of the richest Americans are not paying their fair tax. Believe it or not, there are actually people over there who are defending the tax structure and saying crap like the rich already pay 40% of the taxes in this country. I defended my position that because of Bush the rich are now getting away with paying far less than we do as far as percentage of income. I would like to have more facts because I think the same wingnuts will be back telling me how stupid I am to think the rich should pay their share.

It is amazing how brainwashed some people are even as they are about to lose everything because of corporate greed and an unethical tax structure that they would defend the status quo.

[Warpy]

1. They're missing the 40% of OASDI payments that the poorest make

on every dime of income with no exemptions or deductions that Congress robs and uses for revenue. They're also missing sales taxes, use taxes, licensing fees, and all the little niggling fees and taxes that have been enacted on the poorest of us in order to raise money given to the richest in tax cuts.

They're also missing the percentage of income paid in taxes by the various income groups in this country. Because of sweetheart tax cuts, the upper income people pay a much lower percentage of their high incomes in taxes than the poorest workers do on low income.

The poorest workers are going without essentials to pay their taxes. The richest will whine no matter how low their taxes go.

Finally, you can mention that the best economies this country has ever had have coincided with the highest taxes on the rich.

Then I suggest you drop kick this particular person. He's not going to change until he is forced to. Some people are just born suckers.

[angryfirelord]

2. One thing I like to point out

is that Germany has higher marginal tax rates (45% vs. 35%) and more kinds of taxes (such as a carbon tax, a VAT, and a trade tax), yet they still manage to remain 3rd in GDP numbers. In the booming 1950s, we had a 91% marginal tax rate and from 1964 to 1981, we had roughly a 70% marginal tax rate. So the notion that cutting tax rates is good for everybody isn't true.

Another way to see if high tax rates are good or bad is to look at per capita GDP, which tries to measure the average standard of living. If the supply siders are right, then a higher tax rate should starve government revenues and put a bigger burden on businesses, which mean reducing the standard of living. Yet this isn't true.

http://yglesias.thinkprogress.org/archives/2009/02/if_high_taxes_led_to_growth_the_most_taxed_countries_on_earth_would_be_the_richest_which_they_are.php

For the record, however, the most-taxed countries on Earth (i.e., the countries where revenue is the highest percent of GDP) are in order:

1.Denmark
2.Sweden
3.Belgium
4.France
5.Norway

In terms of per capita GDP these are, respectively, the 4th, 9th, 14th, 15th, and 3rd richest countries on earth while the United States is 17th. Of course in part that’s an exchange rate phenomenon and if you use PPP adjustments rather than market exchange rates, the U.S. looks better. On the other hand, if you peer into the future it seems to me that exchange rate comparisons are likely to make us look even worse in years to come. The high-tax five also do very well on things like the U.N. Human Development index.

In a follow-up to the HDI:

http://en.wikipedia.org/wiki/List_of_countries_by_Human_Development_Index

Again, the US sits at #13, although the gap between numbers is a lot less. Still, it proves that you can have more "socialist" programs and a higher level of taxation and govt. spending without having it impact businesses significantly.

[safeinOhio]

3. I would refer them to Warren Buffett's statement

about how he makes millions every year but his pay is in dividends and is taxed at only 15%. His secretary is paid in wages, makes way less and pays 30% in federal tax.

[Riley18]

4. Thanks for all the great info. DU has the smartest people!!!

[Davis_X_Machina]

5. ...the rich already pay 40% of the taxes in this country."

They do, actually, in absolute terms. Bookmark this page, from the Urban Institute and Brookings, and you'll never want for an answer in a tax argument: Tax Facts. (I poached the link from Krugman's blog.)

In relative terms, per-capita, Buffett's statement is also right.

[zeos3]

6. Look here for more info

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x6520645


I also agree with Warpy in the first reply. You have to be clear with what you are arguing with these people. If they are referring to INCOME taxes or ALL taxes it makes a big difference. Any WAGE income over $106K per year is not subject to payroll taxes. That is an effective tax reduction for the top 1 percent since they make a lot more than $106K per year. All those millions of dollars are NOT subject to the 7.65% (or 15.3%) payroll tax.

The payroll tax is not a variable tax, as might be inferred by my previous sentence. 7.65% is contributed by the employee and 7.65% is contributed by the employer for a total of 15.3%. They are complaining about raising the top income tax bracket by 3 percentage points. Could you imagine the shrieking that would go on if we agreed to not raise their income taxes but subjected their entire income to the 15.3% payroll tax?

The reason I'm using 15.3%, even though half of it is contributed by the employer, is as follows: the theory is that if the employer wasn't contributing this 7.65% toward payroll taxes, this money would go to the employee as part of their salary. I personally believe it would stay firmly in the pocket of the employer and never make it to the employee.

I'm telling you this because the big picture of tax structure is more complicated than just INCOME taxes, which is what most of these arguments are about. The implication is that the top 1% pays more than their fair share of taxes and I don't believe that's true given all the other taxes that the rest of us pay (payroll, sales, etc). The top 1% probably don't even make most of their money as wages or "earned income" but rather as business profits or capital gains or other "unearned income."

I hope this helps. It's late and I'm tired and I'm starting to think I don't make sense anymore. On the plus side, thinking of all this tax stuff has done wonders for my insomnia.

[stevebreeze]

7. they pay more of the type of taxes the far right hate. personal income

and estate taxes. They pay far less in things like property taxes and sales taxes an state taxes in general. When you factor in SS tax most wealthy pay a lessor share of income in taxes then the middle class.

The right hate taxes on the wealthy and loves to raise fee's and other regressive taxes.

[econoclast]

8. Fascinating ......

I just was playing with some US federal withholding tax calculators.

Fascinating.

Now, I have no idea how accurate these things are, but they seem to return similar numbers from one to the other.

Here is a representative example. I input hypothetical data for a family of 3. No itemized deductions.

W4 Information
Federal Filing Status: Married
Federal Allowances: 3
Federal Additional Withholding: 0.00
Paycheck
Gross Pay: 400,000.00
Supplemental Pay: 0.00
- Pretax Retirement Deduction: 0.00
- Cafeteria Plan Deduction: 0.00
- Aftertax Deduction: 0.00
- Medicare Withholding: 5,800.00
- FICA Withholding: 6,324.00
- Federal Withholding: 105,310.00
Take Home Pay:  282,586.00
Total tax:  117,414.00.  
29.35%  



W4 Information
Federal Filing Status: Married
Federal Allowances: 3
Federal Additional Withholding: 0.00
Paycheck
Gross Pay: 50,000.00
Supplemental Pay: 0.00
- Pretax Retirement Deduction: 0.00
- Cafeteria Plan Deduction: 0.00
- Aftertax Deduction: 0.00
- Medicare Withholding: 725.00
- FICA Withholding: 3,100.00
- Federal Withholding: 3,947.50
Take Home Pay: $42,227.50
Total tax:   7,772.50
15.55%  


So it appears that even with SSI and Medicare, it might be a fallacy that the rich pay a lower average tax rate.

[PoliticolAtheist]

9. Taxation is not ethical. Not once, not ever.

First I would like to start off with a definition.

Extorting - to wrest or wring (money, information, etc.) from a person by violence, intimidation, or abuse of authority; obtain by force, torture, threat, or the like.

Then I ask:
Why should I have to pay for something I do not believe works, is unethical or have no desire for?

If a company said they would cut my lawn for me for a monthly fee and I refused their service. Is it okay for the company to cut my lawn anyways and then charge me with interest for nonpayment?
Even if I am wrong about a certain government services, shouldnt it be my CHOICE to opt out to decrease my cost of living? If so many of the governments services were so good then we would not be forced to pay for them we would do it voluntarily.