<p>1) FICA - you have argued many times that you consider SS to be essentially a pension plan. If you treat it as a pension plan, you can’t count contributions to it as a tax. I don’t think anyone thinks it is unreasonable or unfair that people contribute to their own pensions.</p>
<p>2) Corporate taxes - corporations are owned mostly by the wealthy, which means corporate taxes are ultimately paid by the wealthy. Somehow I doubt you are counting this.</p>
<p>3) Local taxes - my state has a flat earned income tax, with large deductions, and a much higher unearned tax rate (more than 2x), which predominately affects the wealthy. There is no sales tax on food and most clothing. Sure seems like lower income earners are paying less in local taxes.</p>
<p>In the table from the WSJ article I linked to, the CBO says the 1% pay almost a 30% tax rate when considering all Federal taxes. The bottom 20% pays 5.6%.</p>
<p>You can believe whatever numbers you want. But I’ll take the CBO over some think tank with an unknown agenda.</p>
<p>^Good catch about FICA. I remember in the 80s, people were incluing SS surplus in the budget to reduce the deficit amount. Now they want it off table since it is separate but include in the tax paid by the poor. Only a year ago, we had a deficit crisis. Actually, we still had the crisis until a few weeks ago. All of sudden people claim it will melt away through growth. Only if we were sophisticated enough to follow them. It reminds me of my former financial advisor. He used to wave a colorful pie chart in my face to make a point how well he is doing until I pinned him down with numbers. Did I say “former”? Joe Davis at Vanguard,</p>
<p>“My biggest concern is that fiscal deficits are anticipated to persist indefinitely. This is a big problem because it relates to the sustainability of our debt. If we do nothing to address this situation, by the year 2030—when my young children will hopefully have graduated college and moved out of their parents’ house—our fiscal deficit will be closer to 13% than 9%. And our debt-to-GDP ratio will have doubled to 140%. That is the problem. That is why we are vulnerable, and that is why we must address it. This is critical to our economic future.”</p>
<p>I have no problem with the CBO. The CBO is estimating federal taxes. The tax share of the top 1 percent is lower with the CBO numbers…Than your numbers…</p>
<p>Your numbers were false. Like I said. You wrote taxes instead of income taxes for a reason. To make it look like the top 1 percent pay more…</p>
<p>This country has a teeny tiny progressive tax system.</p>
<p>On a different note, I just found out a frend of mine is buying a residence in another state to save money on state taxes. </p>
<p>So, he realizes the tax burden in this country includes state and local taxes.</p>
<p>But anyway, I understand what he is doing. He is going to save a lot of money. It still makes me angry. :)</p>
<p>The guy makes so much money, and if the fed government and fed didn’t bail out the financial system, he would have lost so much…</p>
<p>I realize I am mixing the federal and state governments, but it costs money to run the states and the federal government.</p>
<p>Now the rest of us have to pay more, and the friend will still live in Cal for a large part of the year and dodge some of the state’s taxes…</p>
Give me a break. We have been discussing Federal taxes, and income tax in particular. For you to accuse me of lying or being deliberately misleading because I said “tax” instead of “income tax” to save a little typing is silly.</p>
<p>Using federal income taxes to show the tax burden of the top 1 percent of income earners compared to the rest of the population is misleading because the federal income tax is not the only tax out there. That is a fact.</p>
<p>The fact is when all taxes are considered, this country has a slightly progressive tax system.</p>
<p>I like that you can pick and choose what you want. If you want a high-tax state, there are plenty of those. If you want a low-tax state, there are plenty of those. You can also pick at the city or town level too.</p>
<p>Krlilies, what the deal is on the retroactive state taxes are in California, is that even though Prop 30 passed in November, they are applying the tax increases to income made in all of 2012. That doesn’t even sound legal to me. But here’s the new rates, as quoted from the Sacramento Bee:</p>
<p>"Thanks to passage of Proposition 30 last month, high-income Californians would pay the nation’s highest marginal income tax rates – nearly 52 percent – if President Obama and Congress fail to make a deal to avoid the so-called “fiscal cliff,” according to a new study.</p>
<p>Without a fiscal cliff deal to the contrary, the Bush era tax cuts on high-income taxpayers would expire next year and rates would return to their previous levels.</p>
<p>Gerald Prante, an economics professor at Lynchburg College in Virginia, and Austin John, a Lynchburg economics student, calculated marginal tax rates – the highest rates on the highest levels of income – for all 50 states. They combined state, federal and, where applicable, local income taxes, plus payroll taxes for Social Security and Medicare and included the deductibility of some taxes.</p>
<p>Proposition 30 added three percentage points to the marginal state income tax rate for California’s highest-income taxpayers, bringing it to 13.3 percent. That action raised California over other high-tax jurisdictions to a marginal rate of 51.9 percent, slightly higher than New York City’s level. Hawaii was the only other place with a calculated rate above 50 percent."</p>
<p>“I like that you can pick and choose what you want. If you want a high-tax state, there are plenty of those. If you want a low-tax state, there are plenty of those. You can also pick at the city or town level too.”</p>
<p>So true. Which is why I’d think that there will (and have been) many high income taxpayers in states such as California, New York and Oregon who have fled the state (or found ways to declare residency in others) to avoid such high tax rates. Doesn’t seem like such a great idea to chase your higher income people away. </p>
<p>I’ve realized that my state (Washington) is quite tax friendly to all. No personal income tax whatsoever. Property tax is a little high, but one can choose to not buy an expensive property, and seniors can get great tax breaks. Sales tax is on the high side, but food is exempt from that. You don’t have to choose to buy costly items. With the Bush tax cuts allowing lower income people to pay low/no federal tax, after you get the earned income credit (if you have a few kids), you could end up getting enough in credits to cover whatever FICA and Medicare tax you’re paying.</p>
<p>Not saying it’s a great deal to be low income, but you could easily end up paying nothing in certain states for all your taxes, and to pretend otherwise is disingenuous. And I don’t really want lower income people to pay more, but I prefer truth over spin.</p>
Even if true, I strongly believe that the Federal tax system should not be used to try to fix the regressiveness (if there is any) of state and local taxes.</p>
<p>People who live in each state and locality should fix that at the state and local level.</p>
<p>They are completely separate IMO.</p>
<p>The Federal system in its entirety is already pretty progressive.</p>
<p>"From its roots as an idea from conservative economist Milton Friedman several decades ago, the Earned Income Tax Credit has become an increasingly important tool to make work pay more than welfare and enough to lift people working full time at the minimum wage out of poverty.* Research has demonstrated the EITC’s effectiveness.* Nobel laureate (and noted conservative economist) Gary S. Becker has written, “Empirical studies confirm . . . that the EITC increases the labor force participation and employment of people with low wages because they need to work in order to receive this credit.”[27] * (Becker also has applauded the EITC for being “fully available to families with both parents present, even where only one works and the other cares for their children [i.e., for being available to low-income working families with stay-at-home mothers].”)</p>
<p>One problem I have with things like this is that they define “progressive” purely in terms of %age, while ignoring the absolute dollars paid.</p>
<p>And I think the total dollars also matter.</p>
<p>Especially at the local level, where taxes are used to directly provide benefits to everyone more or less equally, such as schools or police protection.</p>
<p>A millionaire doesn’t use more police protection than a person making $10,000. He perhaps has more property to protect, but the police don’t spend more of their budget on them protecting it. A public school doesn’t spend more on the rich person’s kid. So why should he pay more?</p>
<p>The most wonderful thing about statistics is that there generally is a way to make the figures reflect whatever you want it to. </p>
<p>Take a very poor person who has a very low earned income and is on medicaid, and receives welfare, housing, etc. If you treat these as negative taxes, then you could say for every dollar he actually earned, he paid a huge negative tax percentage, ie., extremely progressive. OTOH, if you ignore what the government paid him, and look only at the fact that he had an earned income of $100 and paid $200 in sales tax based on purchases on his income from welfare payments, then his tax rate is 200% making it highly regressive. And if you want to make things believable to support whatever agenda you have, you adjust the numbers to get to the percentage you want.</p>
<p>Dstark, that chart looks like a load of garbage to me. Washington state as the most regressive, highest taxed state for the poor (at 17.3% of income)? Really?</p>
<p>We have no income tax, and no tax on food or prescription drugs. I’ll bet they aren’t accounting for things like wealthy people pay very high property taxes (because they live in more expensive properties), and much more in sales tax because they buy more. Excise taxes are pretty high on property sales(ours would be 40K if we sold our home, which is grand theft in my eyes), but I’m guessing that if you are in the bottom 20% of income, you aren’t a homeowner and will not pay excise taxes of that type.</p>
<p>They are including property tax in this, sales tax, and excise tax (on things like beer, cigarettes, and gas). Okay, so don’t buy plenty of beer and cigarettes if you have a low income, taxes are high on that, you can’t afford it. This chart looks like nothing but a rationalization for income tax, and thankfully the people of Washington state have been smart enough to vote it down every time. We don’t trust our lying politicians.</p>
<p>“A public school doesn’t spend more on the rich person’s kid. So why should he pay more?”</p>
<p>And quite often, the rich person’s kids go to private school. So the public school doesn’t pay jack to educate their kids. In addition, it is less likely the rich people will use public services, jails, medicaid, police protection, child welfare services.</p>
<p>If everything is made progressive, then if Buffet’s secretary pays 1% of her income on gasoline tax, he should pay 2% for the same, etc. Assuming someone on minimum wages is living paycheck to paycheck, then Buffet won’t be able to afford that lifestyle as long as every expense of the former has to matched by a progressive version for the latter (ie., a higher % of his salary). </p>
<p>So the simple answer to your question is that it’s because we’ve been trained to believe that progressive policies where they exist today are good.</p>
<p>So we are going to count subsidies like medicaid now?
Where can I sign up for medicaid?
The coldness of some of you posters blows me away…</p>
<p>We took people off welfare with programs like the earned income tax credit, and the eitc program works. The government and society does better with the program. Then we complain when people get the credit that they aren’t paying enough taxes.</p>
<p>This is a fact. Federal Taxes for the highest income earners have not been lower for at least 60 years.</p>
<p>Also, the share of income that goes to the top 1 percent hasn’t been this high for what, 80 something years?</p>
<p>And look at all the complaints.</p>
<p>If you are in the top couple of percent of income, and you think you have it tough, what do you think about those that aren’t in the top?</p>
<p>Don’t worry. Taxes aren’t that progressive.</p>