<p>Well Kluge, I took your advice and went to the IRS website and… I actually learned something! I know what a regressive tax is and a progressive tax is, and that we have both. I didn’t realize that the net effect (at least according to the IRS) was that when you add it all up most people pay about the same percentage in total taxes, so while the Federal income tax is most definitely a progressive tax, it is fair to say that the tax system as a whole is not progressive.
started with this:
<p>Gee why am I not surprised that the top half of income tax filers - paying over 96% of federal income taxes IS NOT ENOUGH FOR THE LEFTIES</p>
<p>…and to think how rich some of those people - in the top 50% adjusted gross income (single or joint filing) making over $29,079 per year - really are</p>
<p>Let the democratic congress propose a progressive sales tax based upon one’s adjusted gross income - good luck with that one</p>
<p>The reality for people in the top 5% of income, some of most productive people in the country including many dentists, doctors etc , the income tax burden tends to be very high, and excise, use, and sales tax are very low - and it is the income tax that is absolutely progressive</p>
<p>In many states for such earners - the marginal rate (i.e. the tax rate for each extra dollar earned) can be (35% fed + 5% state) or $4000 directly to the government for every $10,000 earned</p>
<p>For a joint filer with a spouse working the marginal rate on that extra income can hit (35% +5% + 7.5% payroll tax) 47.5% </p>
<p>For a self-employed spouse it can be (35 + 5% +15.0% plus) or 55% plus on each dollar going directly to the government. Wow 45 cents of each dollar left over - to pay for daycare, new clothes, transportation, and various 2nd job expenses -and maybe see their young kids one hour a day before they go to bed</p>
<p>Some, no doubt (sometimes called socialists) would no doubt prefer the European system where they take even more and have unemployment rates 3 times that of the United States</p>
<p>If the dems in Congress want to rule as socialists the next 2 years - then let them put their proposals on the table</p>
<p>People who have to be concerned about income tax are only the merely rich. That usually includes dentists, doctors, and profs --including those who sit on boards, etc…</p>
<p>This can’t be serious. What about all the lower-scoring SATs who have great business sense, people skills, diplomacy, or cut-throat competitiveness–everything it takes to get to the top in business and make much more money than the people who are merely book-smart? Sorry, but you can’t assume a person has the capacity to make lots of money based on SAT scores.</p>
<p>Not to mention this would surely discourage smart people from benefiting society by taking lower-paying jobs such as teaching or social work. </p>
<p>The professor, if he is serious, is a nincompoop.</p>
<p>Wait a minute -the LEFT (which dominates the ranks of college professors) has been telling us for years that high SAT scores have no provable connection to overall intelligence , that they only predict 1st year grades or perhaps test taking ability - yet now SATs strangely enough are now being connected to odds of lifetime success</p>
<p>I agree. I am a well educated person (won’t make any claims to my intellect or SAT scores) and chose to pursue a career as a teacher and in the field of education…low paying jobs. I have a daughter who has very good SAT scores who has chosen to go into musical theater, surely not a lucrative field for most. So, based on this system, a smart person could not be a teacher or a performer. So much for our schools and so much for the arts. (let alone, God forbid a smart woman or man stays home to raise the kids)</p>
<p>Well, I don’t know the political affiliation of this particular prof. For all I know, he may be one of the resident conservatives; they are not an entirely endangered species on college campuses and law schools in particular seem to teem with them. But I agree that high SATs have no correlation with earning potential, either because of some personal characteristics (would Einstein have been able to sell you anything?) or by choice. I met a young man who has an advanced economics degree from one of the top universities. For many years, he worked in ibanking until he tired of “making the rich richer” (his words). He quit and went to work helping the poor obtain microcredits. He’s earning a fraction of what he used to earn and is happy with the choice he’s made.</p>
<p>I assume that Prof. Z is not arguing from the perspective of his narrow self-interest, but rather from general philosophical principles.</p>
<p>The argument goes as follows: Let’s say that Prof. Z could earn, say, $1 million a year in a Wall Street law firm, but chooses instead to earn $200K teaching at Duke because of the amenities and quality of life aspects of being a law professor. Those amenities are worth $800K to him and should be viewed, in the eyes of some economists, philosophers, and legal theorists, as $800K of “psychic income.” The principle of horizontal equity theoretically requires that he pay tax on his psychic income.</p>
<p>Of course, there are many practical problems with implementing such a principle, and that’s why this article appears in a law journal and not in a CPA journal. </p>
<p>Law journals are full of this kind of abstract esoteric brainstorming on a variety of topics. More generally, law schools have come under increasing criticism because their curricula are often arcane and far removed from the actual practice of law.</p>
<p>the tax stats presented here are convuluted at best…can’t be taken at face value…but no point in trying to correct them…statistics can be twisted and turned any which way to make anyones point</p>
<p>most people that have 2 jobs aren’t paying 55%…that one paragraphs makes me doubt the veracity of the rest</p>
<p>Terrific. Tax on psychic income ought to be paid with psychic money. It sounds vaguely like something a palm-reader would think about. At any rate, it would be as substantive as will-o’-the-wisp.</p>
<p>That is indeed the practical problem with the logical conclusion of the analysis.</p>
<p>It is relatively straightforward to tax money income and require that people pay a certain percentage of it to the government.</p>
<p>It is not at all straightforward to tax nonpecuniary income and require that people pay a certain percentage of it to the government.</p>
<p>But it is still a philosophical point worth pondering in the design of our tax code. An alternative approach would be to allow people with very difficult jobs to deduct some of their “psychic dis-income.” </p>
<p>For example, consider two people who work in a factory or mine. One of them has chosen a more dangerous job than the other and gets hazardous duty pay, so his money income is higher. Arguably, if both had a choice of both jobs, their potential earnings are the same and they should pay the same in taxes.</p>
<p>In practice, this gets complicated and very impractical to implement.</p>
<p>The tax code is full of deep Talmudic problems like the NYS marshmallow vs. minimarshmallow problem. </p>
<p>The amusing thing about cross-posting (I wouldn’t call it communicating) with righties is that a mere recitation of objective fact is enough to send them into a sputtering rage:<br>
“We don’t have a progressive tax system.”<br>
“YOU’RE JUST A STUPID SSSOCIALISSST!!!”</p>
<p>Let’s see what some more simple facts provoke: That huge income tax burden borne by the top 50% of taxpayers? It comes to 13.5% of our combined income. For the top 1% of taxpayers, with a minimum income of $328,000, and an average income of $1M per year, the income tax paid is a shade less than 23.5% of their combined income. Ooooh! Socialism! </p>
<p>Some pay more than the average, some less, and you can always pull isolated factors out of the mix and construct a theoretical marginal tax rate which is higher, of course - but the figures above are the actual average of what actual American taxpayers actually pay as a percentage of our actual income. But again - you’ll never see those numbers on the blogs. They are too objective, and fail to conceal the fact that the rich and poor pay about the same percentage of their income in taxes overall. </p>
<p>We are supposed to be whining about how the affluent pay too much in taxes. For some reason you never hear people complaining that the poor pay too much in taxes, even though they pay about the same percentage overall as do the wealthy - and have less to work with to begin with. But then, they can’t afford the ongoing propaganda effort that drives the distribution of things like the slick and tricky, apples-to-oranges “50%-96%” stat.</p>
<p>“most people that have 2 jobs aren’t paying 55%…that one paragraphs makes me doubt the veracity of the rest”</p>
<p>My post was referring to marginal rates, and no one said is was most taxpayers - however instead it referred to generally highly productive professionals or successful small business owners via Sch C income. </p>
<p>Actually the “rich” are paying quite heavily at near consficatory rates - despite the constant claim they "are not paying their “fair share”</p>
<p>In Massachusetts for example with one spouse reaching 182k in income, the additional earning spouse would pay either 45.95% on each marginal dollar working for someone else, or approx 53.60% on a self-employed basis, with a slight offset for 1/2 the self-employment tax being deducted on the 1040</p>
<p>This income level is hardly “rich” for a family of 4 - and it is w/o any doubt an example of progressive taxation</p>
<p>At the highest bracket in Massachusetts (starting around 326k) the same numbers would be around 47.95% and 55.60% of each marginal dollar taxed for the 2nd earning spouse. Now someone might claim that that income level is “rich” - however taking the the case of medical doctors, that level of salary would represent approx 12 years of undergrad, medical school, residency, and specialized practice to normally hit the 300k (e.g surgeons) plus level - and these are with doctors that often owe 150k plus in loans </p>
<p>For someone living in NYC (adding both a city and state tax and fed plus payroll tax) - the numbers can hit as high as 63.82 cents of each marginal dollar at the highest bracket</p>
<p>As a general rule of thumb in most states, these professionals or successful small business persons (e.g. primary care physicians -earning less than 300k) would be paying marginal rates of approx 45 cents (fed 33%, state 5%, fica 7.65%) on each dollar beyond approx 182k a year - and no one can claim they are not paying enough taxes</p>
<p>The problem is the bottom half of taxpayers are paying nearly no taxes, with 50% paying 3 to 4% of the fed tax load - and this only refers to the above ground economy</p>
<p>They have almost no stake in the tax system, because they pay so little</p>
<p>Add in the underground cash economy, and there are millions more not even filing to pay any taxes</p>
<p>Add in Sec 8 housing, food stamps and a dozen other welfare programs - all non-taxed to the recipients programs - and you can see why the the wagon train is being pulled by the top half</p>
<p>As for “corporate welfare” let the DEMS now knock out farm subsidies - however 10 to 1 odds they won’t do it</p>
<p>Add in the “earned income tax credit” and it means millions are in effect paying little if any into social security even though they will be entitled to full benefits someday - because the EITC can be an offset against ZERO fed taxes paid</p>
<p>The Dems now control congress - if they want to they file legislation - moving the USA to a european tax system, which won’t be that far away, because we are already two-thirds of the way there already</p>
<p>Although it is true that the bottom half of the income distribution pays little or no income tax, they still pay taxes.</p>
<p>First of all, virtually all residents pay general sales taxes as well as excise taxes on items such as gas, etc. </p>
<p>In addition, general equilibrium models in economics show that many people pay implicit taxes in the form of higher prices. In other words, some part of the property tax burden imposed on landlords is actually paid by tenants in the form of higher rent. </p>
<p>Some part of the corporate income tax is passed forward to consumers in higher prices and some is passed backwards to labor in the form of lower wages. </p>
<p>Economists make a distinction between the statutory incidence of a tax (who actually writes the check) and the true economic incidence of a tax (who bears the actual burden–in the form of paying a higher gross price for a taxed good OR in the form of receiving a lower net price for a taxed good.)</p>
<p>There is evidence that the true economic incidence of many taxes falls on the poor, even when they do not actually write the check. For example, consider gasoline excise taxes paid by truckers delivering goods–those taxes get passed forward to consumers in the form of higher prices on the delivered goods they buy.</p>
<p>Total government spending (by governments at all levels) is close to 1/3 of Gross Domestic Product (GDP). </p>
<p>The Federal Income Tax is about 8% of GDP. State income taxes are an even smaller part of GDP. Well over half of government revenues come from sources other than income taxes.</p>
<p>The income tax is highly visible (because we all have to go through the annoying task of keeping records and filing a return), but there is a lot more to taxes than the income tax!</p>
<p>And poor people pay a surprisingly large tax burden when all is said and done.</p>
<p>If SAT scores have a genetic component, and you tax them, you might initiate what is called dysgenics, in which case the higher scoring have less children and the average score moves downward.</p>