US Progressive Income Tax System

PhantomOG

I was reading the local paper the other day and a reader wrote in arguing against an editorial complaining about tax cuts for the "rich". The letter went on stating some pretty dramatic stats on how its mainly only the rich that are paying taxes so you can't really cut taxes for the poor anymore. I thought his stats seemed unreasonable so I googled it and found this very interesting Congressional document detailing the various income groups and how much they pay...

For 2003:
the bottom 50% of taxpayers only paid 3.46% of the total federal income taxes collected.

the top 1% of taxpayers paid 34.27% of the taxes collected.

the top 5% paid 54.36%

I find this truly amazing. I had no idea the federal income tax system was THAT progressive. Without actually doing much research, I had always liked the idea of a flat tax, but after seeing these numbers I just don't see how a flat tax could even be possible considering how much taxes are collected from the most wealthy.

Warning, PDF link:
http://www.house.gov/jec/publications/109/rr109-36.pdf

Please don't turn this political, just wanted some discussion on tax systems/economics.

jdhdiggs

I'm glad another person realizes it. I would take a guess that a good majority of the people on this board are in the top 5-10% bracket and they aren't too evil are they?

The fair tax, I think it's currently proposed rates are too low but I'm really starting to get behind it. It would be a huge tax break for us personally and it would help out companies immensely (Unfortunately most accountants would be put out of work). So far, it's the only proposal that doesn't penalize the poor or overburden the rich. So many other props are just more of the same.

Demiurge

Only in America can you get punished for hard work and wise decision making and rewarded for laziness and poor decision making.

bobman1235

I believe Rush Limbaugh first came up with that argumen tin that form....

Demiurge

bobman1235 wrote:

I believe Rush Limbaugh first came up with that argumen tin that form....

It's not really an argument exactly, but fact. His numbers come directly from the IRS. Beyond that it's just a philosophical issue as to what most people think is fair. Unfortunately many people in this country are rich and don't even realize it. It's not the guys with multi-million dollar mansions that are paying the taxes, it's the doctors who put themselves through 10-15 years of schooling, risk taking small and large business owners, etc.

jdhdiggs

Shoot, if you have two average teachers working in a household, that alone would probably put you solidly in the top 10%.

Unfortunately, they are the same people who don't think that the rich are paying enough and vote to raise they're own taxes to penalize the rich (ie: themselves)

PhantomOG

bobman1235 wrote:

I believe Rush Limbaugh first came up with that argumen tin that form....

Please don't turn this political. The link I posted originally is an official government document. Regardless of whichever political pundits/extremists may have argued these points before, I don't think it is relevant and I'd rather not see this thread locked or deleted.

bobman1235

Demiurge wrote:

It's not really an argument exactly, but fact. His numbers come directly from the IRS.

I wasn't trying to insinuate rightness or wrongness by using the word argument, it's just what came to mind. I mostly agree with his points.... up to a reasonable point.

PhantomOG wrote:

Please don't turn this political. The link I posted originally is an official government document.

Sorry, I wasn't trying to make it political, just saying I had heard it before, and who from. I actually had that page bookmarked, cuz I find it entertaining to read and show to some people...

Sami

You have to consider that the bottom 50% include all the students, part-timers and minimum wage workers who really don't earn that much.

Based on that chart I am on the top 9% that pay 67% of the taxes and I certainly have no complaints about the tax system. The maximum % that you can pay taxes is still fairly low and those who earn a lot can certainly afford to pay them. And I think they also are on the receiving side when you compare what you get for your money. The old truth is money comes to money so I don't see progressive tax system being bad or unfair for the rich, they pay to keep their money machine alive.

irishaz

What amazes me is how many times our dollars are taxed. First, you have witholding taxes, then income taxes, capital gains taxes (God forbid you make a good investment with your post-tax dollars), sales tax, gas tax, and then finally when your in the ground they try to tax you again (at one point those rates topped out around 50%). Unbelieveable.

Lower income folks rarely pay any taxes nowadays and many of them don't even file. The funny thing is that many of the people that don't file would receive refunds. The upper classes pay all of the taxes - because it is deemed that they can afford it. Interesting concept in a capitalistic society....

shack

Sami wrote:

You have to consider that the bottom 50% include all the students, part-timers and minimum wage workers who really don't earn that much.

Based on that chart I am on the top 9% that pay 67% of the taxes and I certainly have no complaints about the tax system. The maximum % that you can pay taxes is still fairly low and those who earn a lot can certainly afford to pay them. And I think they also are on the receiving side when you compare what you get for your money. The old truth is money comes to money so I don't see progressive tax system being bad or unfair for the rich, they pay to keep their money machine alive.

Since you enjoy paying taxes so much, you can pay mine too.

BRING ON A FLAT TAX STRUCTURE!

Sami

irishaz wrote:

Interesting concept in a capitalistic society....

The way I see it, in 100% capitalistic society you wouldn't pay taxes at all. All the services government offers would instead be corporations and they would only exist if there was demand for them, and they could gather revenue. I'm not sure how many of us would really want that. Even then I am sure the rich would spend much, much more money on the services than those with a lower income.

Sami

shack wrote:

Since you enjoy paying taxes so much, you can pay mine too.

Sorry, no freeloaders, you pay yours and I pay mine.

shack

Sami wrote:

Sorry, no freeloaders, you pay yours and I pay mine.

Seems like the majority of the US taxpayers ARE freeloaders....

the bottom 50% of taxpayers only paid 3.46% of the total federal income taxes collected.

jdhdiggs

Flat tax would be an improvement but it still "punishes" the poor. By the time you try and set it up to make it not punish them, the system looks like the current one.

I'd support a flat tax. Fair tax is a bit better as it doesn't tax your income at all but your consumption and helps the poor.

As for the capatilism argument, wouldn't it be nice if all the government did was build roads, tanks, and help support the nerds?

Sami

shack wrote:

Seems like the majority of the US are feeloaders....

No, they pay their taxes. Federal and state taxes are not the only taxes you pay so they still have to pay sales tax. It's the same for everyone so they pay much more in taxes for basic living than the rich compared to what they make.

Rich people complaining about taxes, that's nothing but greed. They still get more for their money so it's not like you're paying for nothing.

ohskigod

factor in the earned income tax credit, and the poor arent just not paying taxes, they actually profit.

PhantomOG

Sami wrote:

They still get more for their money so it's not like you're paying for nothing.

What do you mean? The rich definitely have a better lifestyle, but that's the incentive to work hard and make money. There are a ton of government sponsored programs that take away alot of the incentive for the poor to work. Why should they go get a low paying job when they can get most of that money without working from Uncle Sam?

shack

Sami wrote:

No, they pay their taxes. Federal and state taxes are not the only taxes you pay so they still have to pay sales tax. It's the same for everyone so they pay much more in taxes for basic living than the rich compared to what they make.

Rich people complaining about taxes, that's nothing but greed. They still get more for their money so it's not like you're paying for nothing.

Spoken like a socialist....

Skynut

shack wrote:

BRING ON A FLAT TAX STRUCTURE!

If we had a flat sales tax and no income tax then everyone pays taxes when they spend.
The rich will still pay more in taxes than the poor and all the illegals and foreign visitors help feed our system.

I agree

ohskigod

Sami wrote:

No, they pay their taxes. Federal and state taxes are not the only taxes you pay so they still have to pay sales tax. It's the same for everyone so they pay much more in taxes for basic living than the rich compared to what they make.

Rich people complaining about taxes, that's nothing but greed. They still get more for their money so it's not like you're paying for nothing.

not every state has a sales tax. and most states dont charge sales tax on essentials such as food or clothes (unless you live in NY, the most taxed state) The fed Government does not see a dime of any sales tax whatsoever.

and the rich, getting more government services per dollar than the poor? brotha, your gonna have to expand and back that up a little more.

krabby5

How many illegal aliens pay taxes? get free benefits?

that is a much larger problem

irishaz

How in the world is it greedy to want to hold on to your own money?? In our society - ingenuity, hard work and effort should be rewarded. Noone should be punished for succeeding. That's nuts. Lifestyle, spending habits and income have nothing to do with it. Everyone should pay their share - not a penny more because in someone else's opinion they can afford it. Except for maybe Barbara Streisand- they can tax the hell out of her and I wouldn't have a problem with that. She was one of the celebs that was saying she wants to pay higher taxes during the last election. Go ahead Babs...and pay mine (and Shack's) while your at it.

Greed is good..... - Gordon Gecko

ohskigod

I dont get upset at the progressive nature of the tax code per say. I do get upset when I'm considerred rich , and pol's say that because I am god forbid paying a little less on my taxes, I am getting a "tax break for the rich" apparently I'm rich because I own a house and do not live paycheck to payckeck?????

I-SIG

irishaz wrote:

What amazes me is how many times our dollars are taxed. First, you have witholding taxes, then income taxes, capital gains taxes (God forbid you make a good investment with your post-tax dollars), sales tax, gas tax, and then finally when your in the ground they try to tax you again (at one point those rates topped out around 50%). Unbelieveable.

Lower income folks rarely pay any taxes nowadays and many of them don't even file. The funny thing is that many of the people that don't file would receive refunds. The upper classes pay all of the taxes - because it is deemed that they can afford it. Interesting concept in a capitalistic society....

Also God forbid you live in area that has a hot housing market with skyrocketing property taxes too! :eek:

Wes

jdhdiggs

Skynut wrote:

If we had a flat sales tax and no income tax then everyone pays taxes when they spend.
The rich will still pay more in taxes than the poor and all the illegals and foreign visitors help feed our system.

I agree

I think you got the FLAT tax and the FAIR tax mixed up a bit (Idid this for a month or two as well). For the record: Flat tax is on income, fair is on sales.

scottnbnj

beyond obvious countless greedy schemes like sin, utility and gas taxes, the federal gov't collects more sales tax than anyone can possibly imagine. it's just buried so deep that the true cost to consumers is incalculable.

everything you buy is made by a company that pays taxes and has employees who pay taxes. the raw materials, insurance, law firms, utilities, freight, accountants, subcontractors and so on that they use also pay taxes and employ people who pay taxes and they pass the cost of those taxes on to the first company. also, those secondary companies buy from other companies who have employees and on and on and on. when you buy the product, *you* pay all of those taxes, every cent,.. not those companies, or their employees, or their suppliers or the suppliers' suppliers and so on.

look at every item on your desk, in the room and building that you're in, the paint on the walls and the nails that hold it all together... every one of those items was taxed this way by the federal gov't innumerable times.

)

jdhdiggs

That "hidden" tax is around 20% of the cost of every item purchased in the US.

Sami

ohskigod wrote:

and the rich, getting more government services per dollar than the poor? brotha, your gonna have to expand and back that up a little more.

The tax system provides the society we live in, and that society favours the rich who can continue to make more money. Without the low income workers they wouldn't, without the security the government provides they wouldn't. If you don't think the system is fair and favours the low income workers or the social security bums, hey, it's a free country and you can always switch to that side. (not that you realistically would)

Flat tax rate at 25%, shortsighted that would sound good to me. Would lower my taxes by 10% and I could also stop paying property tax, at least the ISD portion which is about 70% of them here IIRC. I don't have kids so why the heck should I pay for education for someone elses? I still don't think the families with kids are freeloaders. I just think that in the long run I would end up with lower net income as a result of where it would bring this country. You might think otherwise but in any case it's a complicated matter, not just how much money it would bring in every year.

Shizelbs

The estate tax can kiss my ****.

bobman1235

My tax complaints usually don't go to how much I'm paying in total, just how much of it goes to the FEDERAL government. The Fed is supposed to take care of the things that ONLY a federal government CAN take care of (mostly, national security, maybe some highway infrastructure, among a few other necessities). I would be much happier throwing 2% of my pay at the federal government for security purposes, and throwing the rest at my state and local governments, whihc is kind of hte way it's supposed to be, according to that Constitution thing a few people have brought up.