How rich are hiding income and not paying taxes

Parent Cafe
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<p>The question is not whether investment bankers do a lot of good for the economy. The question is whether they do a lot of good for the economy compared to their wages. Writing some debt. Creating some new financial instruments. Completing an M&A deal? Truly, not that complex. Certainly no more complex than designing a new microchip, airplane wing, or some new pharmaceutical product.</p>

<p>Trading as a whole is zero sum, so I don’t see how the development of massive trading departments specializing in secondary market transactions somehow adds to the economy. That’s not even accounting for the massive levels of risk they add to the economy with huge leverage & poorly developed concepts of risk (as is continually showcased with massive fund blowups).</p>

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<p>Nothing philanthropic about it. It’s a fact. The wealthiest 1% pay 50% of the taxes. The bottom 50% pay virtually nothing. That means, in rough terms, that the 49% left pay the other 50%. I’m pretty sure I paid about 12% in federal taxes last year (one of those middle class folks btw). Both on a percentage basis and dollar base the wealthy pay more than I do. </p>

<p>pmrlcomm- you do know that this statement is factual incorrect- you must be referring to the Federal Income tax because the burden from all federal taxes is quite a different story. I always hear this statement in the Republican talking points but it is misleading the burden from all federal and state/local taxes is more of a burden to the low and middle class.</p>

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<p>The tax burden for the rich is too high in this country, although, not as high as other European countries and Canada. There are a lot of inefficiencies in the government system, and for me, it can’t justify raising taxes. </p>

<p>The GAO released a report a couple of months ago about all the wastes in the Defense Department. Workers using government issued credit cards (I wish I could get my hands on one) to make orders that have nothing to do with defense. I think the government should spend more time making sure that it is efficient before asking the citizens to pay more taxes.</p>

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<p>tega- While I agree that taxes are to high- the overall burden of taxes is higher as a % of income the lower the income.</p>

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<p>The tax burden for the ‘rich’ is definitely higher in Canada. Having lived in and paid taxes in both countries, I can attest to that. We chose to return to Canada and try not to complain about it too much because our tax dollars here help provide for far better overall services than the current U.S. system. </p>

<p>Returning to the subject of the original post, as someone else said, it’s a small percentage of wealthy people who are trying to hide their income and avoid paying taxes. The article actually was encouraging because it looks as though the process to catch and prosecute them is working. </p>

<p>We don’t complain about paying more taxes than others but I have to admit that it gets tiresome having people feel that we haven’t earned what we have, that we haven’t worked hard for it, and that we don’t deserve it.</p>

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<p>tom you have a selective reading problem. You obviously skipped over this…</p>

<p>“As for state, local and all the other federal, non-income taxes…that’s a whole other discussion.”</p>

<p>Anyone who isn’t trying to legally pay the least amount of taxes that they can is either lazy or doesn’t care. It would be like driving past a gas station selling gas for 3.50 a gallon cheaper and filling up across the street for $4.00 a gallon. </p>

<p>Anyone doing illegal things to avoid paying taxes should be prosecuted according to the law, no more no less.</p>

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<p>tom1944, I can see how that can happen. </p>

<p>I think the tax codes are so complicated that, only rich people can afford to pay tax specialists to find all the loopholes in the tax codes. I believe we need a tax reform to correct this problem.</p>

<p>I am very much in favor of simplified tax codes, the current tax codes are just too complicated.</p>

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<p>Here you go folks. Of course the data I spewed out is what I heard not read so I went and looked it up (even after I said I wouldn’t…hate to be wrong). The top 1% paid 39.4% and earned 21.2% of all income. The top 25% of earned 67.5% of the income and paid 86% of the taxes. </p>

<p>[The</a> Tax Foundation - Summary of Latest Federal Individual Income Tax Data](<a href=“http://www.taxfoundation.org/news/show/250.html]The”>http://www.taxfoundation.org/news/show/250.html)</p>

<p>This 2005 data:</p>

<p>"The IRS data below include all of the 132.6 million tax returns filed in 2005 that had a positive AGI, not just the returns from people who earn enough to owe taxes. From other IRS data, we can see that 90.6 million of the tax returns came from people who paid taxes into the Treasury. That leaves 42 million tax returns filed by people with positive AGI who used exemptions, deductions and tax credits to completely wipe out their federal income tax liability. Not only did they get back every dollar that the federal government withheld from their paychecks during 2005; but some even received more back from the IRS. This is a result of refundable tax credits like the Earned Income Tax Credit, which are not included in the aggregate percentile data here.</p>

<p>Including all tax returns that had a positive AGI, those taxpayers with an AGI of $145,283 or more in 2005 constituted the nation’s top 5 percent of earners. To break into the top 1 percent, a tax return had to have an AGI of $364,657 or more. These numbers are up significantly from 2003 when the equivalent thresholds were $130,080 and $295,495. Top incomes in 2005 are also continuing to surpass the peak they reached in 2000. At the height of the boom and bubble, $313,469 was the threshold to break into the top 1 percent, and then it fell to $285,424 in 2002 only to finally recover fully last year.</p>

<p>The top-earning 25 percent of taxpayers (AGI over $62,068) earned 67.5 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86 percent). The top 1 percent of taxpayers (AGI over $364,657) earned approximately 21.2 percent of the nation’s income (as defined by AGI), yet paid 39.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid about the same amount of federal individual income taxes as the bottom 95 percent of tax returns."</p>

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<p>tega - Absolutely we need some kind of tax reform. There shouldn’t be any loopholes at all. The % of tax paid is absolutely arbitrary based on the number of deductions and loopholes you can find. I doubt it will change anytime soon because we keep recycling our elected leaders… It doesn’t matter who we vote for, the DC machine will assimilate them.</p>

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<p>I think all of us should remember folks like Bill Gates who established the Gates Foundation. If all billionaires were as socially responsible like Mr. Gates the world would be a different place.</p>

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<p>Thank you, pmlrcomm, for looking up the data. The very modest degree of progressivity in the federal income tax is more than offset by the regressive nature of virtually all other taxes - sales tax, FICA, etc. And yes, the “bottom 50%” of taxpayers includes deadbeats like my 3 kids, who file returns but pay no income tax. In our household the top 25% of taxpayers pay 100% of the taxes!</p>

<p>As a point of reference - according to their publicly released tax returns, the federal income tax paid by Dick and Lynne Cheney last year was less than 24% of their income of $2.5 million. Is it really a “burden” that they were forced to scape by on the measly $1.9 million left after taxes?</p>

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<p>If you really wanted to you could make it so, in the end, everyone had the same after-tax income. That would be good for the economy…not. Think about it. They paid a half a million dollars in taxes. It would take me and 40 folks like me to earn the 2.5 million dollars they earned. If you took what I paid in taxes and the taxes of the other 40 folks it wouldn’t even add up to $50,000. So my 40 closest friends and I will end up paying 2% in income tax while one individual with the same income will pay 24%. Yeah, you are right. They aren’t paying their fair share…</p>

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<p>Nothing could be further from the truth. The amount of sales tax depends on the amount you spend. Those with higher incomes and assets spent far more than those with lower incomes and assets.</p>

<p>FICA taxes increase that increase based on income. Those taxes determine the amount of benefit you receive. Once your salary is over 101K, you no longer pay FICA taxes but you no longer receive any FICA tax supported benefits. </p>

<p>How about real estate taxes? Those with homes and second homes pay real estate taxes and those who cannot afford homes do not pay any real estate taxes, yet they receive all of the state and local services paid for by real estate taxes. </p>

<p>How about Medicare taxes? Medicare taxes are based on a percentage of income and have no limit. That means a wealthy person can pay a tremendous amount of money over his or her life time yet receive only the basic benefits someone who paid next to nothing in Medicare taxes.</p>

<p>The bottom line is that lower income people in American get a hugh free ride when it comes to government services.</p>

<p>BTW, as soon as the discussion is about the disparity in income taxes, those who love soaking the rich simply try to change the subject to sales taxes, etc. That is the best evidence that they are wrong – they can’t handle the truth.</p>

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<p>razor, so glad you stopped in. I could use the help…lol Very well said.</p>

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<p>Actually, “Razorsharp”, virtually every statement you made was objectively false. </p>

<p>Nothing could be further from the truth. The amount of sales tax depends on the amount you spend. Those with higher incomes and assets spent far more than those with lower incomes and assets.</p>

<p>Okay - quick seminar in what “progressive taxation” means. It means that those with higher income pay a higher percentage of their income in taxes. “Regressive taxation” means that those with less income pay a higher percentage of that income in taxes. A person who spends 100% of his earned income on sales-taxed items pays a higher percentage of his income for that tax than does a person who only spends 50% of his income on items subject to that tax. What percentage of the Cheney’s $2.5 million income was subject to sales tax? 5% maybe? What percentage of Joe Sixpack’s $50,000 income is subjected to sales tax? 20%? Figure it out. Sales tax is highly regressive.</p>

<p>FICA taxes increase that increase based on income. Those taxes determine the amount of benefit you receive. Once your salary is over 101K, you no longer pay FICA taxes but you no longer receive any FICA tax supported benefits. FICA tax is imposed without deductions or exemptions on all earned income, from dollar 1 up to the limit. It is not imposes on unearned income at all. The bulk of the income of the wealthy is unearned and not subject to any FICA tax. Working people pay FICA tax on 100% of their income. A significant part of the FICA tax doesn’t go to paying FICA benefits at all, but is used to paper over a part of the annual deficit. And in terms of who receives SS benefits, wealthier people live longer than poor people - that means they get a bigger payout from their contributions than others.</p>

<p>How about real estate taxes? Those with homes and second homes pay real estate taxes and those who cannot afford homes do not pay any real estate taxes, yet they receive all of the state and local services paid for by real estate taxes. Saying that tenants don’t pay property taxes is like saying that people who buy clothes from Walmart don’t pay sales tax - Walmart does. Property taxes are paid by tenants - collected by their landlords and paid over to the state. It’s just disguised a little more than sales tax. And the rent paid by tenants which includes their share of property tax is a bigher percentage of their income than the property tax paid by homeowners.</p>

<p>How about Medicare taxes? Medicare taxes are based on a percentage of income and have no limit. That means a wealthy person can pay a tremendous amount of money over his or her life time yet receive only the basic benefits someone who paid next to nothing in Medicare taxes. No Medicare tax at all is paid on unearned income, which is the bulk of the income of the wealthy.
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The bottom line is that lower income people in American get a hugh free ride when it comes to government services.* Baloney. Every working person in America pays a higher portion of their overall income in taxes than the very wealthy.</p>

<p>BTW, as soon as the discussion is about the disparity in income taxes, those who love soaking the rich simply try to change the subject to sales taxes, etc. That is the best evidence that they are wrong – they can’t handle the truth. This is so unintentionally self-revealing as to be hilarious. The income tax is the only even slightly progressive tax in America. All other taxes take a bigger share of the worker’s income than they do of the income of the wealthy. Anytime anyone points that out, the obfuscators start blabbering about income tax.</p>

<p>pmlrlcomm, you don’t need “help” - you just need facts and common sense. Unfortunately, Razorsharp dealt out the usual raft of smoke and mirrors. And your straw man argument is bogus - nobody’s talking about having everyone end up with the same income. When someone comes up with something like that it’s a pretty good indicator of a lack of actual, on-point argument.</p>

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<h1>30 re Bill Gates</h1>

<p>I wonder what type of tax deduction he is getting on his charitable donation?</p>

<p>Why has the price of his stock been so low since he officially resigned?</p>

<p>How does the capital gains tax Microsoft pays on it’s dividends figure in with the stock Gates is selling off? I imagine he has to pay capital gains tax on his dividends.</p>

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<p>Good book on taxes with the premise that our tax structure is progressive - “The Greedy Hand” by Amity Shlaes. She also wrote “The Forgotten Man,” a book about the 1930s depression.</p>

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<p>There are tax cheats in every income category. Those who make more money have more with which they cheat. To blatantly say that investment bankers or any category of people are ALL tax cheats is WRONG. When I worked with small business owners, many of whom are considered “wealthy”, they paid a lot in taxes and many, many other things. What they took in to spend for themselves and family was small compare to what they gave to taxes, expenses for the business and for others’ salaries. It is certainly true that the more you make, the smaller one’s basic needs are in relation to income. That is one of the incentives to make more money. If the result is diminishing returns, it would erode the very foundations of capitalism. </p>

<p>I do believe, however, that the investment fields need a good course of ethics and strong reminders of the penalties of fraud. It seems to me, with some of the high profile cases that have ended up with the culprits being jailed, that examples are being made of those who are perpetrating fraud.</p>

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<p>kluge, facts aside, it seems you believe the rich should pay proportionaly more of their income. I disagree. I believe the rich pay quite a lot. Everything someone of wealth does or is involved in spends a lower percentage of their income per capita. I’m not an economist or a CPA. I’m not even a college graduate so don’t think this is coming from someone with all the advantages. More people should get off their butts and work harder. There is always going to be an element of society that needs help and assistance…we all, to some degree help those folks but if you are going to tell me someone making 50k a year help more you are wrong. My parents income this last year was 2 times higher than mine and their tax bill was 10 times higher. How is that right?</p>

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<p>The below link would appear to fall more in line with the opinions of
pmlrcomm and the razor. For arguments sake, i’d like to see links that back your position.</p>

<p>[Townhall.com::Who’s</a> paying the taxes?::By Frank Pastore](<a href=“http://www.townhall.com/content/abc91156-236d-494f-a708-a3818eb6edde]Townhall.com::Who’s”>http://www.townhall.com/content/abc91156-236d-494f-a708-a3818eb6edde)</p>

<p>While I am neither rich nor poor, I certainly don’t begrudge those that are attempting to “shelter” their assets if they are paying a disproportionate amount of taxes and receive less from the government in the way of benefits.
From my readings, income tax in part, was levied initially to garner revenues from the rich. We all know how that’s turned out.</p>