T Nation

The Rich Don't Pay Taxes: Myth Debunked


#1


Tax Burden of Top 1% Now Exceeds That of Bottom 95%

Newly released data from the IRS clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes.

Indeed, the IRS data shows that in 2007�¢??the most recent data available�¢??the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government. This is the highest percentage in modern history. By contrast, the top 1 percent paid 24.8 percent of the income tax burden in 1987, the year following the 1986 tax reform act.

Remarkably, the share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined. In 2007, the bottom 95 percent paid 39.4 percent of the income tax burden. This is down from the 58 percent of the total income tax burden they paid twenty years ago.

To put this in perspective, the top 1 percent is comprised of just 1.4 million taxpayers and they pay a larger share of the income tax burden now than the bottom 134 million taxpayers combined.

Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.�¢??not France or Sweden�¢??has the most progressive income tax system among OECD nations. We rely more heavily on the top 10 percent of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation.

We are definitely overdue for some honesty in the debate over the progressivity of the nation's tax burden before lawmakers enact any new taxes to pay for expanded health care.

Edit: Here's the original link:
http://www.taxfoundation.org/blog/show/24944.html


#2

The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.


#3

source?


#4

[quote]orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.
[/quote]

I’m assuming this is income tax?

If that’s the case, the taxes payed by corporations wouldn’t be included (though lots of smaller business would).


#5

[quote]orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.
[/quote]

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html


#6

Letâ??s see who pays the greater percentage after we factor in all taxes, not just Federal Income tax. Things like Gas taxes (some states) taxes on groceries, state tax, and sales tax, all the taxes and fees on cable and phone bills, I could go on .


#7

[quote]pittbulll wrote:
Letâ??s see who pays the greater percentage after we factor in all taxes, not just Federal Income tax. Things like Gas taxes (some states) taxes on groceries, state tax, and sales tax, all the taxes and fees on cable and phone bills, I could go on .[/quote]

The rich are still going to pay a higher amount of taxes like sales, property, capital gains, est.


#8

[quote]Loose Tool wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html[/quote]

Yes, it is about income taxes. And income is defined by the tax code.

If you however plough your money back into your company and only take out a relatively small part of that as “income” you only pay taxes on that “income”.

Your company however may be worth more a few million dollars, tax free. You would only pay taxes when you sell your company and at least in Europe even that can be avoided easily.


#9

[quote]DoubleDuce wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

I’m assuming this is income tax?

If that’s the case, the taxes payed by corporations wouldn’t be included (though lots of smaller business would).[/quote]

The point was that even corporate taxes are paid by the consumer. The fact that the company sends the treasury the money does not change that.

So corporations do not really pay any taxes at all.

So, those that do not need an “income” because they own “corporations” can only be taxed insofar as they need money to spend.

Compared to their assets that can be very little.

So, in case of the really “rich” the progression of the income tax is irrelevant. They don’t care, they will just make sure not to have “income” as defined by the tax code.

All that a welfare state really does is shifting money around in the middle class.


#10

[quote]orion wrote:
Loose Tool wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html

Yes, it is about income taxes. And income is defined by the tax code.

If you however plough your money back into your company and only take out a relatively small part of that as “income” you only pay taxes on that “income”.

Your company however may be worth more a few million dollars, tax free. You would only pay taxes when you sell your company and at least in Europe even that can be avoided easily.
[/quote]

The percentages I quoted are only with regard to individual income taxes, not corporate. So what bearing does the corporate bias have on the percentages?


#11

If you want to learn something about the entire U.S. fiscal system, including federal, state and local taxes, and which households benefit from spending, read:

“WHO PAYS TAXES AND WHO RECEIVES GOVERNMENT SPENDING? AN ANALYSIS OF FEDERAL, STATE AND LOCAL TAX AND SPENDING DISTRIBUTIONS, 1991-2004”:

http://www.taxfoundation.org/files/wp1.pdf


#12

[quote]orion wrote:
DoubleDuce wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

I’m assuming this is income tax?

If that’s the case, the taxes payed by corporations wouldn’t be included (though lots of smaller business would).

The point was that even corporate taxes are paid by the consumer. The fact that the company sends the treasury the money does not change that.

So corporations do not really pay any taxes at all.

So, those that do not need an “income” because they own “corporations” can only be taxed insofar as they need money to spend.

Compared to their assets that can be very little.

So, in case of the really “rich” the progression of the income tax is irrelevant. They don’t care, they will just make sure not to have “income” as defined by the tax code.

All that a welfare state really does is shifting money around in the middle class.

[/quote]

Yeah, I was actually reading some pretty interesting stuff on how industrial taxation/regulation benefits the larger corporations. Taxes, compliances, fines, codes are more easily weathered by larger corporations eliminating the competition of smaller business while they pass on costs to consumers. Though I hadn’t really thought of individuals in the same light.


#13

[quote]Loose Tool wrote:
orion wrote:
Loose Tool wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html

Yes, it is about income taxes. And income is defined by the tax code.

If you however plough your money back into your company and only take out a relatively small part of that as “income” you only pay taxes on that “income”.

Your company however may be worth more a few million dollars, tax free. You would only pay taxes when you sell your company and at least in Europe even that can be avoided easily.

The percentages I quoted are only with regard to individual income taxes, not corporate. So what bearing does the corporate bias have on the percentages?[/quote]

None, but people present it as if the “rich” pay an extraordinarily high percentage of taxes, which they don’t and never will.


#14

One of the things you don’t understand, as you proceed to inform Americans about what is the case in America, is that to Congressmen and Senators of the type that love increasing taxes as well as to Obama, “rich” doesn’t start at anything like I would guess, from what you write, that you used the term for. (Magnates and investors with assets of $100 million or something like this.)

To them, a professional couple that has nothing but some equity in their home, whatever amount their cars are paid off, some personal possessions, and a modest amount in a retirement account but between the two of them make $250,000 per year is rich and supposedly is “not paying their fair share of taxes.” Though their total tax payments may be $100K or more.

The small business owner who has say 3 modest sized retail stores, which in total could sell for a couple million perhaps but he has no intent to sell, and is making a profit of a few hundred K per year is “rich” and his taxes need to be increased.

He was considering opening a 4th store, which of course would create new jobs if successful, but now he’s thinking to himself, if it’s successful, such a high percentage of resulting increased income would just go to taxes, but if it’s not successful, the losses are out of his own pocket. (No, he does not get to deduct the lost amount from the dollar figure he would otherwise owe in taxes, which would mean no risk. He simply “gets” to pay the same rate on his new, lower net income.) So what with all the coming tax increases – on top of what is already very heavry – and demands that he pay health care for even part time employees and so forth, hmmm: not worth the risk when taxes are like this.

Oh sure, someone like John Kerry and his wife for example (she’s a billionaire) manage to make what is undoubtedly tens of millions of dollars per year in true income come out on paper to less and pay (using his 2003 figures) $700K in taxes, which was only about 10% of even their tricked-out-by-accounting claimed income.

That does go on.

But with regard to millions of Americans who in fact pay horrendous tax rates and dollar amounts for being “rich” – in other words about 99% of the time – what you write has zero applicability.


#15

What’s rich? The top 1% pays a very high percentage of income in taxes. Don’t know that I would consider that rich. The top .1% pay a surprisingly low percentage of income in taxes compared to the top 1% as a result of tax shelters, writeoffs and various other financial arrangements.


#16

[quote]orion wrote:
Loose Tool wrote:
orion wrote:
Loose Tool wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html

Yes, it is about income taxes. And income is defined by the tax code.

If you however plough your money back into your company and only take out a relatively small part of that as “income” you only pay taxes on that “income”.

Your company however may be worth more a few million dollars, tax free. You would only pay taxes when you sell your company and at least in Europe even that can be avoided easily.

The percentages I quoted are only with regard to individual income taxes, not corporate. So what bearing does the corporate bias have on the percentages?

None, but people present it as if the “rich” pay an extraordinarily high percentage of taxes, which they don’t and never will.
[/quote]

That is not the point. The point is that people that make a nice living and have a good income are falsely categorized as ‘rich’ and pay a high percentage of income tax. Maybe the percentage is justified. Maybe not. But the top 1% cannot truly be categorized as rich. A nice lifestyle sure. But after paying for college and various other things, there is really not a huge amount of surplus money floating around. The truly rich do not pay a high percentage of income tax.


#17

To the owner class everything is a tax write off. Their personal income is nil compared to the revenue their enterprises bring in. So to the extent that they pay consumption taxes it is almost completely made up for by the fact that they can write off most of their business and living expenses.

I agree with Mr. Robert’s assessment: there is “well off” and then there is mega rich. The mega rich probably do not even know how much they are worth but at least they keep lawyers, accountants, and countless other professionals, and laborers employed – even if they are not paying income taxes.

The middle class (most of us whom are employed by the owner class) pay the bulk of of our incomes out via income and consumption taxes. The more well off we are the more we will pay in taxes as long as we remain outside of the owner class.


#18

[quote]Bill Roberts wrote:
One of the things you don’t understand, as you proceed to inform Americans about what is the case in America, is that to Congressmen and Senators of the type that love increasing taxes as well as to Obama, “rich” doesn’t start at anything like I would guess, from what you write, that you used the term for. (Magnates and investors with assets of $100 million or something like this.)

To them, a professional couple that has nothing but some equity in their home, whatever amount their cars are paid off, some personal possessions, and a modest amount in a retirement account but between the two of them make $250,000 per year is rich and supposedly is “not paying their fair share of taxes.” Though their total tax payments may be $100K or more.

The small business owner who has say 3 modest sized retail stores, which in total could sell for a couple million perhaps but he has no intent to sell, and is making a profit of a few hundred K per year is “rich” and his taxes need to be increased.

He was considering opening a 4th store, which of course would create new jobs if successful, but now he’s thinking to himself, if it’s successful, such a high percentage of resulting increased income would just go to taxes, but if it’s not successful, the losses are out of his own pocket. (No, he does not get to deduct the lost amount from the dollar figure he would otherwise owe in taxes, which would mean no risk. He simply “gets” to pay the same rate on his new, lower net income.) So what with all the coming tax increases – on top of what is already very heavry – and demands that he pay health care for even part time employees and so forth, hmmm: not worth the risk when taxes are like this.

Oh sure, someone like John Kerry and his wife for example (she’s a billionaire) manage to make what is undoubtedly tens of millions of dollars per year in true income come out on paper to less and pay (using his 2003 figures) $700K in taxes, which was only about 10% of even their tricked-out-by-accounting claimed income.

That does go on.

But with regard to millions of Americans who in fact pay horrendous tax rates and dollar amounts for being “rich” – in other words about 99% of the time – what you write has zero applicability.[/quote]

Of course it has, because even the small business owner can decide what “income” and whether he has an income at all.

If he wants to he can pay himself 50000$ a year and thats it.

Plus, unless American tax laws are very extra special this is really fundamental stuff.


#19

[quote]jsbrook wrote:
orion wrote:
Loose Tool wrote:
orion wrote:
Loose Tool wrote:
orion wrote:
The obvious bias of this clearly escapes you, huh?

The top tax payers pay the most taxes, huh?

Corporate taxes, like the VAT are payed by the customers, not the owner of the company. If they pay their dividends into a trust fund or do not pay them out at all the rich do not pay anything at all, except for the relatively small amount they need to live off, because they cannot escape consumption taxes and capital gains taxes.

Who pays the taxes is mostly the middle class, i.e. those who actually have, an need, an income.

And yes, the really “rich” pay very little taxes, relatively speaking. Their tax rate is actually regressive.

The top-earning 25 percent of taxpayers (adjusted gross income over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent). The top 1 percent of taxpayers (adjusted gross income over $410,096) earned approximately 22.8 percent of the nation’s income, yet paid 40.4 percent of all federal income taxes. That means the top 1 percent of tax returns paid more in federal individual income taxes than the bottom 95 percent of tax returns.

Follow the link for the data tables.

http://www.taxfoundation.org/research/show/250.html

Yes, it is about income taxes. And income is defined by the tax code.

If you however plough your money back into your company and only take out a relatively small part of that as “income” you only pay taxes on that “income”.

Your company however may be worth more a few million dollars, tax free. You would only pay taxes when you sell your company and at least in Europe even that can be avoided easily.

The percentages I quoted are only with regard to individual income taxes, not corporate. So what bearing does the corporate bias have on the percentages?

None, but people present it as if the “rich” pay an extraordinarily high percentage of taxes, which they don’t and never will.

That is not the point. The point is that people that make a nice living and have a good income are falsely categorized as ‘rich’ and pay a high percentage of income tax. Maybe the percentage is justified. Maybe not. But the top 1% cannot truly be categorized as rich. A nice lifestyle sure. But after paying for college and various other things, there is really not a huge amount of surplus money floating around. The truly rich do not pay a high percentage of income tax. [/quote]

I agree.


#20

[quote]LIFTICVSMAXIMVS wrote:
To the owner class everything is a tax write off. Their personal income is nil compared to the revenue their enterprises bring in. So to the extent that they pay consumption taxes it is almost completely made up for by the fact that they can write off most of their business and living expenses.

I agree with Mr. Robert’s assessment: there is “well off” and then there is mega rich. The mega rich probably do not even know how much they are worth but at least they keep lawyers, accountants, and countless other professionals, and laborers employed – even if they are not paying income taxes.

The middle class (most of us whom are employed by the owner class) pay the bulk of of our incomes out via income and consumption taxes. The more well off we are the more we will pay in taxes as long as we remain outside of the owner class.[/quote]

That is because you are vulnerable because you need to market your skills.

“Rich” people live off of their money and they can invest it somewhere else if the government starts to fuck with them.

This is not about fairness but about who you actually can rob without repercussions.