Those who claim the to 10% don’t pay their fair share of income taxes need to consider the following chart.
Allegedly, the top 50% pays 10.5% of the taxes and the bottom 50% pays 2.8% of the taxes. This is mathematical idiocy.
Nonetheless, that chart is making the rounds.
I believe this is what they mean, but I did not verify.
Cross Check
| Category | Percent Taxes Paid | Running Tax Summation | Running Category Summation |
|---|---|---|---|
| Top 1% | 39.5% | 39.5% | 1.0% |
| Next 5% | 20.5% | 60.0% | 6.0% |
| Next 25% | 15.9% | 75.9% | 31.0% |
| Next 10% | 10.9% | 86.8% | 41.0% |
| Next 9% | 10.5% | 97.3% | 50.0% |
| Bottom 50% | 2.8% | 100.1% | 100.0% |
Allowing for a small rounding error, the numbers cross check in two ways, both totalling 100%.
I recall HowMuch (or someone else) approaching me a while back with that or a similar chart. I would not post it because it was mathematically incorrect. Instead, it is now floating around, flaws and all.
Note to HowMuch: Fix your chart because your presentation looks ridiculous.
Nonetheless, the key idea is the top 6% pay 60% of income taxes and the bottom 50% pay 2.8% of income taxes. Is that fair?
Mike “Mish” Shedlock
We always hear how the rich don’t pay enough, but never hear about how much the lazy leeches take from the govt. They need to do a chart of how the bottom take from the government. All entitlements need to be looked at and audited. People on disability, food stamps, section 8, Medicaid, etc grew substantially under Obama and they should be requalified under the new administration to see if they actually deserve these benefits.
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We always hear about federal income tax, but we never hear that it only accounts for about 1/3 of total government revenue (incl state and local).
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To add to what webej said, we should look at the money taken out for SS and medicare and then also how much of the income the top gets vs the bottom. (Really the other important factor missing from this chart.)
We also need to do a chart of how the top take from the government. All the entitlement programs in government come no where close to the money that is doled out on government contracts and grants.
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And something like 40% of US households pay ZERO in Federal Income Tax.
Just an unfortunate side-effect of obliterating the middle class.
Since only a tiny fraction of the population are paying the vast majority of Federal Income Tax (and they are the ones that OWN this government), you can rest assured that it won’t be long before the Federal Income Tax is repealed and replaced with a nice, highly regressive Value Added Tax.
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“it won’t be long before the Federal Income Tax is repealed and replaced with a nice, highly regressive Value Added Tax.”
In the unlikely event that the Federal Income Tax is replaced and not augmented by a VAT, it won’t be long before we have both.
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But Mish…doesn’t the top 1% control over 50% of the wealth? From that perspective, they are not paying their “fair share.”
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“Control”. You pay tax on what you ‘control’? Is THAT what you want? Then you get to pay tax on your net worth over and over and over again? BS.
You pay tax (now) on what you GAIN each year. Way mo better’n paying taxes over and over again on what you already have paid….
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How about a chart that includes the FICA payroll taxes and correlates each category to what each pays as a percentage of their income. That still leaves off the direct and indirect property taxes, sales taxes, local, and State taxes. Posts like this one push an agenda and try to validate the viewpoint. By the way I am in the top 10% in income and would not trade places with the bottom 50% for anything. I am blessed and what I pay as a percentage of my income is as low right now as anytime in my 50 years or working.
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You are one of the few who actually understand this. There is also the matter of actual living expenses. Regardless of income, everyone is charged equally for food, healthcare, housing, transportation, clothing, education, recreation, etc. I would not trade places with the bottom 50% just to pay less tax either. It’s self defeating.
The gov could cut my tax burden to zero and I still would not have much more than I already have. In fact, I would expect prices of goods and services to rise in lockstep with cuts in taxes, possibly leaving me with less.
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Great post Garry. I’m in the same situation. I probably put in savings what the average Joe makes a year, because I don’t really want to buy anything. You could double my taxes and it wouldn’t impact me in any way.
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You can give money to the government any time you want.
What’s stopping you?
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AMEN, BROTHER !! If it makes YOU feel better, and you can afford it, PAY MORE. Do NOT make the mistake that YOUR FEELINGS should dictate MY finances/life/taxes. THAT is utter BS and elitest thinking.
Case in point: Buffett could live VERY comfortably if he were taxed at 99.9%. What would you say to him if he suggested THAT?
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Why would I?
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The fact that the top 10% pay so much of the overall dollars says more about the wealth of the top 10% than equity of what they pay out. I’m in the top 10% and my effective tax rate was 13.2% last year, it was in the 8-10% range for years but it got bumped up due to being in a new tax bracket in 2015. I don’t see what I pay in federal tax as being overly unfair. As Garry said, it is the lowest federal taxes have been for workers in the last 50 years.
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Even if the chart is wrong, and even if the rich pay a huge amount of taxes, theres nothing saying they cant pay more. It is the price you pay to not have people dying of hunger and exposure on your front lawn, your front sidewalk or in front of your business. When you get to the point where you are paying 75% of the income in taxes, THEN we can talk.
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It is the price you pay to not have people dying of hunger and exposure on your front lawn, your front sidewalk or in front of your business.
Who cares, just hang a lamp from their frozen rigor mortis stiffened arm and pretend its a lawn jockey.
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You can pay more, too. In fact, invite some of those who are starving into your home.
Sadly, you would rather force others to your will. Kinda like a psychopath.
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I will agree that it is always someone else’s problem. Maybe we need to REWARD the rich for giving voluntarily, instead of always trying to punish them.
that probably doesn’t put them in a charitable mood, and, in fact, they may want to hide their money.
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Charity apparently worked in the Roman Republic.
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Taxes were never intended as redistribution. We have allowed a system of corruption to take over which reinforces the notion that everything is unfair….Which rationalizes even more corruption and theft. If society represented the propagandized values we supposedly hold, we would be doing so voluntarily, NOT with force of law.
Most are scared shitless of freedom and liberty as it would expose who we truly are, and most worry that their illegitimate gains would disappear.
Corruption at this massive level exists because most people believe they profit from it. The simple fact that we look the other way rather that face the fact that our government’s profligate debt and fed balance sheet expansion have preserved our illusions of solvency thus far.
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Is that fair? Mish
Are government privileges for private credit creation fair given the rich are the most so-called credit worthy of what is then, in essence, the public’s credit but for private gain?
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A chart showing how many each % group employs.
For instance, how many of the top 10% run their own company with how many employees and what overall tax take because of the risk taking of that person.
Taxes collected from their employees, business profit tax, sales tax etc.
A good entrepreneur is worth a hell of a lot more than their individual tax contribution.
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“Nonetheless, the key idea is the top 6% pay 60% of income taxes and the bottom 50% pay 2.8% of income taxes. Is that fair?”
Perhaps it would be a little more fair (and more efficient) if members of the House and Senate Appropriations Committees were chosen by taxpayers on the basis of how many dollars they paid.
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So, you’re saying it is fair then?
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The chart is obviously incorrect, even with the second version. If the band of people from 6% to 31% paid 15.9% of the taxes, I guarantee than the band from 31% to 41% paid far less than 10.9%.
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I don’t don’t doubt that – but I fixed the numbers so they at least add up
They approached me with the chart some time ago and I told them to fix it.
Now that stupid thing is making the rounds
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You misinterpreted the picture. Not that it’s anything to be ashamed of. It’s too 1%, next 4%, next 5% (orange, out of position), next 15%, next 25%, remainder (50%). To be consistent, the “bottom 50%” should have said “top 100%”. The key hint to resolving this riddle is “Each income group excludes the previous”.
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Given that businesses pay taxes I am not sure that any of these charts are right when they say “pay x % of ALL federal income taxes.”
I took a shot at the individual side of this using the latest available IRS tax stats found at
https://www.irs.gov/uac/soi-tax-stats-individual-statistical-tables-by-size-of-adjusted-gross-income
using
“Table 1.2. All Returns: Adjusted Gross Income, Exemptions,
Deductions, and Tax Items, by Size of Adjusted Gross Income
and by Marital Status, Tax Year 2014 (Filing Year 2015)”
I don’t know how they get it down to nice round percentages as the tables are not that neat. This is based on number of returns, not people. A return obviously can cover more than one person. Also, not everyone is required to file. But assuming I did not make any mistakes this is what I see in terms of percentage payment of individual income taxes:
$500K and up (top 0.84%) paid 37.33%
$200K to under $500K (next 3.35%) paid 20.2%
$100K to under $200K (next 11.78%) paid 21.92%
$75K to under $100K (next 8.63%) paid 7.79%
$50K to under $75K (next 13.05%) paid 7.07%)
Returns with AGI under $50K (remaining 62.35% of returns ) paid 5.68%
The bulges at the $100K to under $500K region stand out. To compare this with all the groups above them:
$100K to under $500K had total AGI of $3.78 trillion and paid 42.12% of the taxes.
$500K and up had total AGI of $1.93 trillion and paid 37.33% of the taxes.
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Thanks for providing actual usable information. A few thoughts:
1. Those making above $500k/year are probably much better at sheltering their income than those in the next group. So their overall tax payments are probably lighter than anticipated.
2. The $100 – $500k class is the real middle class. If you are coming in under that, you probably should not consider yourself middle class.
3. Those on the bottom include millions of voluntary part timers whose primary income comes from a working spouse or parents. The bottom number would be higher without these folks.
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I do not think you will have much disagreement in your article with those in the top 5%. but from everyone else, I’m not so sure.
If wealth inequality in America were an Industry, it would be the fastest growing Industry in existence today.
We can start by taxing ALL short term capital gains (less than 1 year) at 50%. That will leave the bottom 50% of our citizens exactly where they are.
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@Mish – how does % of wealth paid for tax contribution compare between the different groups? Wondering if it is more even from that perspective??
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Murray Rothbard makes an interesting observation in Power and Market, chapter 4 about public servants themselves paying taxes:
Bureaucrats are net tax consumers [, and] bureaucrats cannot pay taxes. … [T]he bureaucrat who receives $8,000 a year income and then hands $1,500 back to the government is engaging in a mere bookkeeping transaction of no economic importance (aside from the waste of paper and records involved). For he does not and cannot pay taxes; he simply receives $6,500 a year from the tax fund.
Furthermore, taxes are involuntarily extracted from the public, the lucky benefactors of the service provided. It is hard to deny that in other relationships where someone is demanding money from someone else, we do not refer to the demander as a servant. “Internal Revenue Service” is the name of the tax agency. Who is it serving?
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excellent comment!
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The top few percent control the vast majority of the wealth. The bottom 50% has almost nothing.
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By definition.
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it would be more interesting to see what portion of the collected taxes are spent by which groups ( by income brackets).
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Stupidest analysis ever. I’m a screaming libertarian capitalist, but even I understand that you can’t get blood from a stone. Let’s have a little more intelligent analysis. You sound like Hillary Clinton with those words.
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Mish I am disappointed that you are pounding the small buggers who have already lost the class war. You really need more facts to make any meaningful comparison such as: what is their total income; what preferred deductions do they get such as homeowner deductions for interest and taxes, a $500,000 exclusion of any capital gains, a cap of 20% on long term capital gains and dividends, and the dozens of other deductions and loopholes that have allowed a very small percentage of people to accumulate and hoard unconscionable amounts of cash.
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Good grief
I posted a chart, horribly flawed, and corrected it (or at least attempted to correct it).
You have no idea what I consider fair.
I started to write up my own “fair tax” proposal a couple weeks ago and never posted it. I will get back on that idea.
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Every single thing you point out has been in the tax code for years. Put there by elected representatives from populations where there are vastly more voters in the bottom 50% than the top 10%. Those on the bottom obviously hope to be in the top some day.
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And yet we live in a time where class mobility is at the lowest level in American history.
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If you’re a screaming libertarian capitalist you should realize that too much money is already going to, and being wasted by, the government and that giving them more is not the solution.
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I never saw anywhere he proposed giving the government more money. The point of charts like these is to get people riled up at the “freeloaders” and further an agenda of tax breaks for the wealthy at the expense of said freeloaders. I believe he was merely asking for a sensible debate vs broadcasting a highly perverse statistic.
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The very first line in the article:
“Those who claim the to 10% don’t pay their fair share of income taxes need to consider the following chart.”
The implication is that this is a response to those claiming the rich are not paying enough and need to cough up more.
Phil’s response:
“… but even I understand that you can’t get blood from a stone.”
Using the chart to “show” that the rich are paying their fair share is not the same asking those beneath them to pay more nor is it stating that the rich’s taxes should be reduced. So why the “blood from a stone” comment unless one believes the government needs more? The chart shows data. The spin comes from those who interpret it and in the articles I have seen a lot of it happens in the reader comments.
“:The point of charts like these is to get people riled up at the “freeloaders” and further an agenda of tax breaks for the wealthy at the expense of said freeloaders.”
People may indeed take the charts produced and interpret them that way but the above is nothing more than your belief of the intent of those that produced them. There may be specific examples of where this is done, but it cannot be made as a blanket statement.
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Off Topic: Mish I’m sorry but now that Russia, Putin has drawn a line in the sand and will respond with force if Syria “Red Lines” crossed again you r finally going to have to talk about “force” something I have been trying to get you to do for almost a week now!
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Every single one of us on your blog knows that Putin is not going to behave like Obama with threats, then backing down and drawing more and more linds in the sand. So if Russia allows Assad to gas Syrian civilians again I don’t believe Trump is going to back down either!
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http://www.zerohedge.com/news/2017-04-08/former-cia-officer-intelligence-confirms-russian-account-syria
Giraldi told Scott Horton’s Webcast: “I’m hearing from sources on the ground in the Middle East, people who are intimately familiar with the intelligence that is available who are saying that the essential narrative that we’re all hearing about the Syrian government or the Russians using chemical weapons on innocent civilians is a sham.”
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So you have proof Assad gassed them.
Kindly elaborate.
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And you call yourself “Truth Seeker”? What a laugh! With absolutely no evidence, Assad apparently did it?
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Obviously Assad did not gas the civilian population. But even if he did, how is that any of our business? The Israeli’s keep an entire population imprisoned and we don’t even talk about it.
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“Imprisoned”…? THAT’s the term you would call it? Cannot imagine who that would be. You mean the Arabs? The ones that vote – and get seats in the Knesset and can come and go whenever and almost wherever they want to (except war zones). Helluva prison……
On a side note….I wonder how many Jews sit in the governmental decision bodies of the Arab/Persian governments…….
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The West Bank and Gaza.
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That’s BullShit! They can leave those hellholes anytime they want. And BTW, they are hellholes because their leadership WANTS them to be…. THAT is NOT a prison. The Jews just don’t let the terrorists come into their houses.
Kinda’ like YOU don’t invite all the thugs on the street into YOUR house. Is your house a prison? You are so warped in your thinking on this. Sad.
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Garry Gentry- Does it concern you, just a little, that our Government may not be managing these funds in the most prudent manner? Given that the federal budget is $3.8 trillion, it’s likely that they don’t have a good grasp of where these funds are being spent. Think about it, it’s $10.4 billion per day, every day. or $433.78 million per hour, I could keep dividing, but you take my point. There’s a minimum of 5% excess in any large budget and I’d wager that there’s MUCH more here. They whined for months about the sequester but in the end, things went along just fine. They can do it for less.
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Reducing taxes does not reduce federal spending. It will for state and local governments, but not the federal government. It just increases bond issuance. I understand the President has his son-in-law, a Mr. Kushner, on this inefficiency problem as we speak. So that will likely no longer be an issue in the near future.
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Yes of course it does and since I worked as the Lean Manufacturing Coordinator for a large Corp I am always concerned about identifying and eliminating waste. I am just not a person who believes everything gov’t is bad nor do I believe gov’t is the answer to every issue. If the private sector is so darn efficient then why do we have a multi-Billion dollar industry in Lean Management? Why on those gov’t departments and agencies we choose as citizens to keep can’t we apply those same techniques?
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How do you know they don’t? My local county, Brevard County, Florida, has a whole lean/Six Sigma project. So does the city I live in. I don’t know about the federal government, but I’d assume they do.
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Jon, whether it is a private Corp or gov’t agency (glad to hear your local gov’t does use those techniques) I see more focus by the consultants they use on eliminating head count of employees than the processes used. I believe in the techniques our industry uses but find it misapplied many times.
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I have read that report. This kind of narrative has been going on for quite some time now. Something controversial comes up, then reliable sources report a fake news story based on intelligence from operatives on the ground so that one gets to choose which ever story they want to believe.
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Here is a theoretical exercise.
Let’s say the people above 99% income pay federal income tax 99 % marginal rate. People above 98% pay income federal income tax 98 % marginal rate. People above 97% pay federal income tax 97 % marginal rate and so on.
Who is affected by this system and Is it fair?
This will not result in any changes to the relative pecking order in the Forbes list of zillionaires. Somebody, who owns 100 shares of xyz will continue to be richer than somebody else, who owns 99 shares of xyz. Only thing, that changes, will be the 100 shares of xyz will end up with market value in thousands in stead of in millions.
Only the bragging rights of owning zillions in stead of millions will be affected.
The unintended consequence of this will be the federal debt will be lot lower and fed reserve will have a saner monetary policy.
This has nothing to do with how the federal budget is spent across different cross sections of the society.
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Since every year more and more Americans have no income to tax, the income tax will soon be repealed and replaced with a VAT.
The VAT (highly regressive) could be sold to the masses as a “means of funding Universal Healthcare”, thus killing two birds with the same stone.
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I’m certainly for the US going full retard socialist.
So it will collapse into a bolivarian cesspool faster.
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Anything that speeds up the collapse is okay in my book too. I’m still trying to grasp the concept of “fair taxes.” What’s fair about some butt wipe at the IRS jabbing a gun in my ribs and stealing my money??
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Back in Roosevelt’s day the rich paid high tax think they coped quite well! In the 50’s taxes were high for the top , America at that time was flourishing for everyone!
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Is correlation causation?
Back in Roosevelt’s day, more people smoked.
Is that the reason things flourished?
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Yes correlation is causation. It’s clear that taxing the rich and capital provides economic incentives to the poor. Econ 101. Those who recommend low taxes on rich are simply oligopolists/fascists/tsarists plagued by short term thinking.
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You forgot the /sarc tag.
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Read an article some time ago that said exactly that. Higher taxes on the rich caused them to seek higher and more risky returns on their capital. So instead of parking their wealth in shares of AT&T, they actually had to build and operate employment creating businesses.
Speculative, but similar to everyone’s belief that the current malaise is a result of low interest rates.
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And we want to pretend that it is not the rich that own the businesses we buy our goods and services from and rely on for our very jobs.So lets just tax away. I’m sure that will solve our economic problems, especially our companies going offshore with our production and jobs. Absolutely no correlation to causation.NONE.
Taxes are a BURDEN on society and when those stolen funds are used to incentivise malinvestment, and general non productive DEPENDENCY ON THEFT, the system FAILS. It’s NOT just the amount stolen and wasted, but more importantly what those stolen funds are used for. If they were not wasted, if they were spent on truly prosperity building infrastructure and education, taxation would be a positive input. But when it is simply used to perpetuate ongoing poverty and loss of production, when it is used to indoctrinate an entire society on dependency and self hate, it is creating destruction.
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I wasn’t stating what I said as fact, just that I read an article to that effect. The question in the article was “why was economic growth in the ’50’s and ’60’s so high, and so weak now”. The author’s answer was what I wrote above. That doesn’t mean I agree with it however.
Other than that, I generally agree with your assessment on dependency. If the private sector cannot employ the entirety of the population that needs work, then I would have no problem with the government stepping in and providing healthy, skills-creating, hard work at low pay. We need to be a society of makers, not takers.
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Comparing taxes paid is not appropriate without comparing the income in each group. If the top 1% grabs 90% of the income, shouldn’t they pay 90% instead of 39.5%? I am not saying they make 90% of all income but I’m sure they make over 39.5%. Worse yet, the top 0.1% use part of that income to buy Washington so government works for their own benefit instead of the whole nation.
Just discussing taxes alone shows your bias against hard working people who aren’t ultra rich.
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Disincentize the top 10% and the bottom 50% become poorer.
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Good point to Misch he is right and it would be far worse in a european socialist country like France for instance taxes are not concentrated on the 1 % but on higher average group class of population not rich billionaires but richer than working or popular groups
Everyone should pay his her fair share of taxes but everyone should to his her best efforts to become richer and not live at the expense of the welfare state ie the taxman contributors
People being ill or disabled or retired etc should be paid by the welfare state and I do not include these people in my reasoning sure enough.
However I am fed up reading on american blogs things such as rich don t pay enough taxes or there is a bubble or millenials have to pay back their college fees borrowings etc..
American citizens keep complaining but they live in the richest country in the world for opportunities there is low unemployment 5 % high living standards etc… lower taxes than in Europe
If you want to set up your own business you have fewer regulations than in europe
You can study for free gratis on the internet in the best universities EDX/ COURSERA/ etc..
You can invest in stock exchange with online brokers etc…
The truth is most people is lazy average american citizen becoming more like european
but for freedom of speech still exists in this country to confess it people are couch potatoes watching football or basketball games entertainment movies and unwilling to make big sacrifice to win big so they earn less than the 25 ù hard working people and they complain against the so called 1 % allegedly responsible for their own failure
I do not care about the 1 % who they are what they do I m trying to set realistic goals for myself and try to reach them not being a genius
If great people become billionaires managing IT firms then I am happy for them but I won t blame them for my situation and do not expect them to pay taxes for me to retire early
I wanna eat my own cooking what is called in american english the american dream I think
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60,000 millionaires have left France since yr2000, 12000 in yr2016.
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fingerhole- Assad probably did it but at this point I don’t think that really matters. I would say that Russia knows who did it and so if Syrian civilians are gassed again, Trump will have to either respond or back down. I don’t think he will back down, do you?
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And I can say that you are probably a government troll. That doesn’t make it true in any way.
I think people like you must lack a conscience – you can justify death and destruction without any qualms.
Please go live in the animal world with your own kind.
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interesting wording stephane, but I like your point.
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Statistics lie and liars use statistics… not that Mish is lying, he’s just reporting… and honestly so. However, in my book The Science of Liberty, I point out the tax burden (using 2004 IRS data but I don’t think its changed that much), in what I call the “Population Tax Rate”, which aligns tax burden with each strata of wealth percent (%) income of the whole US income pie to our place in the population… and the results are startling. NOTE: The rating reads worse treatment as the number value decreases and the burden become greater.
Having shared this, my analytics are: Top 1%, 19% of income; .51 rating: next 4%, 14% of income; rating .175 (a lot worse): next 5%, 11% of income .2 (paying a bit more): top 85% to 75%, 21% of income, rating .12 (starting to really get screwed): 50% to 75% get 12% of income and are getting royally skull screwed then eviscerated, stripped to the bone and hung out to dry… and then micturated upon with a rating of .0075!!! The bottom 50% get 3% of income and rating of 1.282 (treated easiest by tax code). Bon appetit’ America (hey, can I get some Cherrios with my glyphosate?) Serfs Up America!
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If the chart is correct, it matches up well with your data. The people who are the worse off are those between 50% and 70%. Curiously, the people from 7% to 31% are significantly better off.
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It says right in the chart that “each income group excludes the previous one.” As in, top 5% does not include top 1%. Top 10% does not include top 5 etc…. I agree it’s an awkward way of presenting things intended for public consumption, but it’s not “mathematically incorrect..”
Pretty irrelevant anymore, though. Since 1) it excludes all manners of other levvies (mandatory Obamacare, Social Security what have you….) 2) An at least as lopsided pyramid, would describe the beneficiaries of the wealth redistribution orchestrated by the Fed and feds, via debasement, laws and and regulations.
The Government, by way of Yellen’s machinations, handing you a $billion worth of hedge fund bonuses, then taking $400 million back, still leaves you with a net of $600 million. So it’s not as if you’re making some sort of “contribution” to anything.
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Great point. I have a relative who is way up in the echelons of Lockheed. He has been made a multi-millionaire working on fighter jets. I’m sure he pays a lot in taxes. And he is an avowed Libertarian.
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In my opinion the first step to ‘fair’ taxation would eliminate all deductions and tax avoidance loop holes. The second step would be a flat tax that applies only after income exceeds the poverty level. Of course, like jury duty, each one of us can justify why we should be exempted so thankfully, ‘fair’ taxation will never see the light of day.
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I ascribe to the Willie Sutton (famous bankrobber) theory of taxation. When they asked Willie “why he robbed banks?” He answered “That’s where the money is”.
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Tax the rich. That’s where the money is.
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The top 1% makes approximately 22% of all the income (see http://inequality.org/income-inequality/). This seems like an important element of the conversation if we are talking about income tax, no? I mean if we were talking about beer tax and someone noted with alarm beer drinkers are paying nearly 100% of the beer tax it would generated a puzzled shrug, who else would pay a tax on beer? If there’s a tax on NFL teams that win the super bowl teams like the Jets would make out like bandits while others like the Giants and Patriots would be paying.
Up next, Mish discovers non-smokers aren’t paying their fair share of tobacco taxes!
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Here’s data for 2014 from the National Taxpayers Union
Percentage Adjusted Gross Percentage of
Ranked by Income Share Federal Personal
AGI (%) Income Tax Paid
Top 1% 20.58% 39.48%
Top 5% 35.96% 59.97%
Top 10% 47.21% 70.88%
Top 25% 68.91% 86.78%
Top 50% 88.73% 97.25%
Bottom 50% 11.27% 2.75%
Bottom 75% 31.09% 13.22%
Bottom 90% 52.79% 29.12%
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Sorry for the format. The columns are the following:
Percentages Ranked by AGI
Adjusted Gross Income Share (%)
Percentage of Federal Person Income Tax Paid.
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You should have a column for percentage of income left over after paying for the basics.
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The WSJ claims the top 20% pay 84% of the taxes.
https://www.wsj.com/articles/top-20-of-earners-pay-84-of-income-tax-1428674384
The WSJ’s numbers make sense because they follow the Pareto Principle:
“The Pareto principle (also known as the 80/20 rule, the law of the vital few, or the principle of factor sparsity)[1] states that, for many events, roughly 80% of the effects come from 20% of the causes.”
https://en.wikipedia.org/wiki/Pareto_principle
The questioning whether natural ordering is fair, is like questioning if natural selection is fair: fair doesn’t play a big role in life.
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FICA, sales tax, property tax passed through to rent, gas tax … income tax disproportionately becomes less significant. We certainly are overtaxed, but not as disproportionately as the income tax-only pyramid suggests.
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FICA, sales tax, property tax passed through to rent, gas tax … income tax disproportionality becomes less significant. We certainly are overtaxed, but not as disproportionately as the income tax-only pyramid suggests.
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REPLY
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The entire notion of an income tax is unfair. End of discussion.
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+ at least one googol.
Any tax that necessitates the taxman knowing the most intimate details, of even the simplest exchange of goods and services between ostensibly free people, is nothing more than an unlimited license for Leviathan to spy. And to set people up against eachother, by encouraging them to rat their neighbors out. All activity taxes fall under that umbrella. Income as well as sales ones.
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The entire notion of involuntary servitude is unfair.
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Although the 1% pay 39.5% of the taxes, their net wealth has increased disproportionately and unconscionably to everyone else. The fairest rate for the 1% from the wealth perspective would more likely be in the range of 93.5%. Let’s see if that evens things out a bit.
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I agree with your point. But the graphical representation of those statistics is ludicrously biased in your chart.
The base of the pyramid should only be approx 15x bigger than the top, not the >350 times bigger it is drawn as.
No need to distort a sound argument with a heavily biased graphical representation which tries to make it look like the low earners pay nothing at all.
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Why ruin perfectly good BS?
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According to wikipedia, the top 20% own 80% of all financial assets and received 90% of the gains since the end of 2009 recession.
From this perspective, it seems they should also be paying 80% of all taxes so it looks like they aren’t paying enough.
Since the top 20% also make the decisions on who gets paid what, it seems to me they have set themselves up for this.
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Noone should pay income taxes. And no Fed should underwrite financial assets. Nor government write laws that prevent people from buying drugs they need from the cheapest source they can find. Ditto for cars, and anything else. And even more importantly, ditto for slapping together living quarters where then want to live for as little as they can. Problem solved.
All of the above serve no purpose, other than forcing those not well connected to pay usury rent to those who are connected.
Printing dollars, bailing out banks and enforcing regulation driving up the cost for regular people, for the benefit of the 1%, is infinitely worse for the remaining 99% of Americans, than something as comparatively benign as Hank Paulson’s supposed tanks in the streets.
For now, the pervasive indoctrination of those 99% may prevent them from recognizing this obviousness, but the sooner they do so, the sooner the Paulsons of the world will run out of imaginary hobgoblins to scare them into submission with.
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The higher up the income chain you are, the more likely it is that you have control over how your income comes in. For example, stock options can get capital gains treatment and you pay only the capital gains rate ( I think its 20%) instead of the income tax rate which might be 39%. The people in the 100k to 500k of earned income are the ones who take a hit on taxes.
Someone above mentioned welfare recipients. Is the CEO of Boeing a welfare recipient? They lobby for and then heavily use the Export/Import bank. Why can’t they use a regular bank? If the Em/Im bank helps Boeing make $5 billion more a year and thus the CEO gets an extra 100 mill in compensation did he just get 100 mill of welfare? I think he did.
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The chart says very clearly “Each income group excludes the previous one.” Seems like a good think to acknowledge.
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The rich pay money to support federal wars. The poor pay with their lives.
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It does not seem like the headline is correct. The two numbers only add up to less than 11 percent for 100 percent of taxpayers. But I do get it….
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It truly is comical how the progressives and the lefties like this setup … Yeah, let’s soak the rich and get true and honest redistribution once and for all. They want the government to come and save their sorry derriere, in other words, let’s have someone else use guns and do the stealing for us … the double standards inherent in such thinking: Stealing is fine as long as it is done to others.
The worst part of it is the naivety of it all: For their childish dream to be true, the interests of government would need to be aligned with them. This is the eternal problem of the armchair central planner or self-appointed world improver: Those in power shouldn’t have plans of their own, they should implement HIS plan … it only takes seconds of clear thinking to realize what a preposterous idea it is to assume that those in power will do what YOU want with the money THEY rob at gunpoint … Clear thinking is a rarity these days.
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If the job participant rate is only 63% then 37% don’t work.
So it’s easy to see why the bottom 50% of Americans only pay 2.8%.
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No, Mish, it isn’t fair. The government avenges death to its own benefit–but the JOB of the government is to defend property. It can’t defend life.
So if you propose switching to a tax on property only, flat across the board, you won’t get an argument from me. But then you’ll find the wealthy are paying far more, not less.
Nonetheless, the wealthy will make sure that doesn’t happen.
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