<p>For those interested: </p>
<p>[Political</a> Diary - WSJ.com](<a href=“http://online.wsj.com/article/SB121555916730437401.html?mod=opinion_journal_political_diary]Political”>http://online.wsj.com/article/SB121555916730437401.html?mod=opinion_journal_political_diary)</p>
<p>Saying the richest 1% of taxpayers pays 40% of the taxes can be deceptive - what % of their income are they paying relative to the % that middle income tax payers would be a better comparison. We are not particularly rich, but half of our income is in dividends and capital gains, and we pay much lower taxes compared to others with similar total incomes.</p>
<p>The 40% is the overall tax burden; income tax (labor), capital gains tax (which is lower than income (labor) tax), etc.</p>
<p>So if you derive more income from capital gains, you can potentially pay less taxes compared to someone with the same income, but the income is derived from labor.</p>
<p>Maybe I missed it, but what is the % of total income the richest 1% makes ? </p>
<p>IMO, if the richest 1% make 60% of total income but pay 40% of the taxes can mean they are underpaying their share. </p>
<p>I can’t find that stat anywhere.</p>
<p>They should be paying more, MUCH more. They received a half TRILLION dollar tax giveaway in the past eight years, and now is the time to pay it back.</p>
<p>We can use it to rebuild infrastructure, become energy independent, pay for health care, shore up social security, and pay for their unnecessary war in Iraq. And they will benefit greatly through trickle up.</p>
<p>I know this is nit-picking but “high income” does not necessarily mean “rich.” We now return you to your regularly scheduled ritual class argument.</p>
<p>^^^ I suppose that is true. I know of people who make $300,000+ but spend $500,000 + and consequently poor. I am not sure anyone have sympathies for that kind of poor people.</p>
<p>Washdad–“high income” may not mean “rich”, but “richest 1%” probably does.</p>
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<p>Statistics for calendar year 2005:</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>
<p>In 2005, the average tax rate for the top 1% of taxpayers was 23.13%. For the top 2-5% of taxpayers, the average tax rate was 17.36%.</p>
<p>See Table 1: [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 morning on my way to work there was an economist on NPR talking about the difference in McCain and Obama’s tax proposals.</p>
<p>For those in the top 1% (whose incomes were more than $500K) under McCain they would get an additional 700K tax break but under Obama they would have to pay an additional 300K.</p>
<p>For those making between $40K and $70K, under McCain they would get an additional $1200 tax break but under Obama they would get an additional $2100 tax break. </p>
<p>I know how I’m voting!!!</p>
<p>Inthebiz, your numbers don’t make sense. How can someone with an income of $500,000-$1,000,000 get a $700,000 tax break? According to the percentages in Mapesy’s post, someone with an income of $1,000,000 is paying an average of $230k. How can they get a $700k tax break? Again, using the 23% number, a person would have to earn $2.7(ish) million even to be paying $700k in taxes. (I would like to make a snarky comment here about the economics expertise of NPR, but I’ll refrain.)</p>
<p>In any event, whacking people earning $400k-plus with extra taxes might make the class-warfare types feel better, but it won’t make any real impact on federal income, and to the extent that it will re-invigorate the tax-avoidance activities of the very-high-income people, it might even have a negative impact on tax revenues. </p>
<p>Why has tax policy become a methodology for instituting social justice, anyway? Here’s a radical idea – look at taxes as a way of raising money for necessary government services and not as a way to punish people for making too much money or rewarding the “correct” behavior of the present. I know, I’m just talking crazy.</p>
<p>Wash"Not in the top 1% by the way"Dad</p>
<p>Thanks mapesy ! What does AGI stand for ?</p>
<p>This answered a long held question in my mind.</p>
<p>Adjusted Gross Income</p>
<p>Here’s a link to the chart “Breaking Down the Numbers” that shows how our tax bills would change if McCain’s and Obama’s tax plans were implemented:</p>
<p>[How</a> McCain and Obama will change your tax bill - Jun. 11, 2008](<a href=“How McCain and Obama will change your tax bill - Jun. 11, 2008”>How McCain and Obama will change your tax bill - Jun. 11, 2008)</p>
<p>Thanks, Mapesy. So, up to $600,000 AGI both candidates promise tax cuts. McCain might be a tool of the right-wing establishment, but Obama doesn’t come off as a socialist leveler either. Since they both promise to cut my own taxes, I might have to vote twice.</p>
<p>It’s worth mentioning that the 40%/21% figures above are for income taxes only, and do not include Social Security taxes (or any state taxes – income, property, sales, etc.). For most wage earners, Social Security taxes are much more significant than income taxes. And Social Security taxes make up about 34% of all federal tax receipts, vs. 45% for individual income taxes (and the balance corporate and excise taxes). The highest-income 1% aren’t paying anything close to 40% of Social Security taxes, which decline sharply at around $90,000 of annual income. The bottom 95% by income collectively pays far more in federal individual taxes than does the top 1%.</p>
<p>You get your social security taxes back though so are they really taxes?</p>
<p>^^ I have read that social security is going to have an income/means test in the future. :(</p>
<p>Good point, JHS.</p>
<p>Effective social security tax rates are much lower for the top 10% of households than for other groups:</p>
<p><a href=“http://www.cbo.gov/publications/collections/tax/effective_rates.pdf[/url]”>http://www.cbo.gov/publications/collections/tax/effective_rates.pdf</a></p>
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<p>You’re right. I mis-typed. I meant incomes of $5M. (Not salary . . . income.) And it wasn’t based solely on income tax . . . it was social security tax, capital gains, etc.</p>