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Guess Who is not Paying Taxes

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In a not to distant blog a number of the resident left challenged the data that suggested 47% of tax payers pay no federal income tax. My research suggests that that data is reliable and that between 30 and 60 million people do not pay federal income taxes over a long period of time. The following paragraphs expand on that assertion.

One argument asserted by the left is that people in the lower cohort of income earners are transitory and therefore contribute more at other times in their lives. There is some truth in that. But the referenced article (testimony by the Urban Institute) also states that that on average, about 70 percent of families receiving assistance at a given point in time have already received assistance for at least 24 months and 48 percent have received assistance for more than 60 months. If there are 39 million poor that amounts to between 19 and 25 million people with little or no income over the long haul. The lower two tax cohorts number over 100 million. If we excuse these truly poor, just what are the rest paying in taxes?

I used my TurboTax program to calculate actual taxes paid by two notional families. They were assumed to rent, to have two kids and to use the standard deduction. A family at the federal poverty level paid no tax at all (the federal refund exceeded any federal tax paid and all FICA and state contributions.) A similar family earning $44,000 paid no federal income tax, about $1000 to Kansas and $3000 in FICA.

Another argument by the left asserts that while these people may not pay federal income tax they pay state and FICA taxes. This argument equates money paid for the common good with money paid for a personal retirement program. I did a quick bit of research and determined that a working family earning the federal poverty level would earn a social security income of over $14K per year at retirement. They will get back all they contributed, all the employer contributed and the time value of that money in less than 10 years. This outcome is consistent for a family making $44,000 (twice the federal poverty level). It does not seem to me that we should be counting those contributions toward the common pot.

What the math above means is that the effective tax rate (all sources) on the family earning at the federal poverty level is negative. The effective tax rate on the family earning $44,000 (not counting FICA) is less than three percent (paid to the state). A family with an income of $44,000 earns 90% of median US family income. Poverty is defined as income below about $22,000.

In summary those with earned incomes below the median US family income pay almost no federal income tax and little to no state income tax. This grouping numbers somewhere between 30 and 60 million people over a long period of time. Counting FICA as an equivalent contribution to federal income tax is delusional unless the left plans to gut the low end of the program.

IMHO what the above means is that way to many people are not being asked to contribute to the common pot. Certainly we need to be considerate of those truly in need. In fact, I did not even address those who have no income (the 19-25 million first above) and draw average untaxed benefits somewhere between $9 and $18K each.

IMHO, we may be a bit too generous in our largesse and as we retrench we may need to cast our revenue net a big wider than the rich, corporations and the middle class. The half that is not paying taxes are not all poor, in fact, most are not. Just where has the guilt trip originated?

Comments

George Lippencott 2 years, 8 months ago

Well parrot, as is the case with so many bloggers in this space we deal with extremes. I want to take many times the $700 B from the rich.

I am not particularly after the “poor” as defined by our government. I want to take a small amount in federal income taxes from the large number of lower income households that are not in poverty. I have suggested 5%. If that turned out to be $100 per household, it would yield in revenue about $2 B. The issue is not revenue it is “skin in the game”. It is deplorable that 60 to 80 million people who are not poor have no “skin in the game”.

When I did the Quicken analysis, two factors dominate why no federal income tax is paid. For those making between the FPL and twice the FPL the standard deduction - not the tax rate - dominates. It has been increased significantly. For those under the FPL the EIC drives.

Just why should those making between $23K and $44K not pay a cent in federal income taxes? That places the full burden on those making between $50K and $250K – not the rich. That is grossly unfair and inappropriate.

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parrothead8 2 years, 8 months ago

Those dang greedy poor people. I hear 99% of poor people have the audacity to have refrigerators in their homes. Heck, 25% of them have dishwashers! Lazy moochers.

We'll only raise $700 billion over ten years by raising the marginal tax rate on the top 2 percent of wage earners. We could raise it much quicker by simply taking half of everything the bottom 50% of wage earners own.

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tbaker 2 years, 8 months ago

"I’m not in favor of fairness. I’m in favor of freedom, and freedom is not fairness. Fairness means somebody has to decide what’s fair.”

“The society that puts equality before freedom will end up with neither. The society that puts freedom before equality will end up with a great measure of both.”

Milton Friedman

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gogoplata 2 years, 8 months ago

I like people who don't pay taxes.

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Carol Bowen 2 years, 8 months ago

Hmmm. Check out this link. Have we really heard wealthy people complain about potential increased taxes? Or, do we have idealogues with faulty economic theories

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

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pace 2 years, 8 months ago

what is weird, is we pay a lot more than 0, and we only make about $45,000. could Mr. Lippincott be just wrong. Yes, or he is purposely making false statements. . Still begs the question why he jumps on the permanently disabled or elderly poor but insists the wealthiest should not be included in "who is not paying taxes?" As for not counting sales, property tax, fees, utility taxes, etc, that is just precious.

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jayhawxrok 2 years, 8 months ago

CHIBW, you're thankfully in charge of absolutely nothing. Spend a weekend at KNI and take your buddy Brownback with you. I guess you'd prefer the parents of such children just hack them up like that idiot in LA did recently. Real compassionate conservative there, dude, you're patently unAmerican and a disgrace to everything this country was founded upon and stands for.

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George Lippencott 2 years, 8 months ago

Well

Quite a set of comments. Lots of straw men/women. Many off topic URLs. Lots of protestation. Red herring a plenty. If the wishes of many here were fishes the world would not be hungry tonight.

  1. I did not use some tax policy presentation
  2. I did my own research on irs.gov using tables available to anyone who wished to find them. They suggest that the bottom two cohorts of citizens pay little or no federal income taxes – that would be households comprising 120 million people.
  3. I used Turbo tax and the assumptions presented above to calculate the tax burden of an average household in those cohorts. There were no federal income taxes required of households with salaried income up to twice the federal poverty level or about $44,000 a year.
  4. That represents a family income 90% of the median.
  5. It is generally recognized that there are about 39 million people in households below the federal poverty level (poor).
  6. I suggested that given the data, households with about 60 to 80 million people were not paying federal income tax and were not poor and opined that maybe they should be contributing to the common pot
  7. I have in the past suggested 5% but that is not important. What I opined as being important is that we not have a majority of our citizens protected from the impact of federal government spending because they do not contribute to paying for it.

I did not call anybody a malingerer I did not castigate those not paying federal income taxes. I have written other blogs about the tax load of the rich and the middle. I wrote another blog addressing the argument that payroll taxes are equivalent to federal income taxes I by no means suggested that the rich or anybody else for that matter should be relieved from paying the progressive federal income tax.

With this I am done.

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George Lippencott 2 years, 8 months ago

All

According to my e-mail at least 30 comments came in since I last posted here. I will try to respond after I do my chores for the day.

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Charlie Bannister 2 years, 8 months ago

Two things to fix this. Either a flat tax, or the fair tax (consumption tax). Either way the IRS is eliminated from the equation and America is better off.

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camper 2 years, 8 months ago

"are not part of the same pool" I meant to say they are in the same pool. My bad.

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camper 2 years, 8 months ago

George, you continue to avoid the fact that Income Taxes and Payroll taxes (Social Security.Medicare) are not part of the same pool. You then criticise middle income earners for paying little if any Federal Income tax.....even though they pay payroll taxes (along with their employers). All one must do is look at their last w-2 form:

Federal Income Taxes - Box 2 Federal Payroll Taxes - Box 4 & 6

While box 2 is refundable for many. Box 4 & 6 are not. Anyone who receives a paycheck contributes to box 4 & 6.

If it bothers you so much that someone making 40k is not paying income taxes, here are the main reasons, maybe you should write your congressman to eliminate them:

1) Home Mortgage Interest Deduction. 2) Personal and Spousal Exemption. 3) Dependent (Child) Deduction(s).

Do you think that these are deductions are not fair?

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gatekeeper 2 years, 8 months ago

Here are examples of tax issues and the wealthy to think about.

The owner of the company I work for bought Lexus SUV's for his family, using a tax credit designed to drop taxes on delivery vehicles for companies. These are their personal SUV's.

The rich don't pay much in taxes because of all the loop holes they've paid off congressmen to get.

My elderly parents, living on a fixed income, pay more in taxes some years than some corporations. For example, GE paid no income tax last year. My parents did pay in a little over $1K.

Back in the 50's, corporate income tax was around 47%. If they invested profits back into the company, they didn't pay taxes on it. Now, the tax rate is much lower and the head honchos want to keep the money instead of reinvesting in their companies.

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beatrice 2 years, 8 months ago

rockchalk on Texas: "But most of that deficit is related to teacher wages and benefits. Once again, the constant whining, lazy unions are to blame."

So the deficit under Perry is because of teachers, since Texas apparently didn't have teachers before Perry. It is always a little scary to see what some on the right think of teachers these days.

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jayhawxrok 2 years, 8 months ago

The moronic right refuses to acknowledge what's paid via payroll deductions. Science scares them, math makes them flip out and make up their own numbers, anything but home ec and religious studies not cause them to foam at the mouth?

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George Lippencott 2 years, 8 months ago

Well, I see that we are moving into denial and George bashing again.

If you believe it is OK for 60 million people who are not "poor" to pay little or no federal income tax, just say so. I kind of think you have.

If you really believe that people are not motivated by their own self interests so be it. I think you might be in a very narrow minority - but that is my opinion.

It has been my annecdotal observation that those arguing most for increased taxes are not those receiving the actual benefits but those who draw their income from the public purse providing those benefits. Could I be sparing with such? Oh, wait a minute, confronting such.

Your have posted absolutely nothing refuting the data. Your argue I msintrepreted it - opinion. You drag in some right wing group and link me to it. You post links that I have refuted above. FICA is not federal income tax and it buys the payee a very good retirement program for the money contributed.

Personally, I fear for the country as we increasingly expand dependency on the various governments while narrowing the burden of paying for it to fewer and fewer people.

Rant on.

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jafs 2 years, 8 months ago

This ultra molecular level of concern about who pays what is hard for me to really understand.

I've paid my whole life into the public school system, and have no children in public schools, and am extremely unlikely to ever have them there.

But I don't mind - I support the idea of public education, and I'm glad that it's there for those that use it. I wouldn't advocate that those with children in public schools should pay for them, and that I shouldn't.

My concerns are quite different - I want things to work as they're designed to work, and to work well. So my concerns about public schools are whether or not children are getting a good education.

That holds for all of our systems - I want the fire, police, emergency services to work as intended, and I want the Social Security and Medicare systems to work as intended, etc.

I don't complain that my neighbor gets more out of the police services if somebody robs their house and not mine, or that the guy in the next neighborhood over gets more use out of the fire department if his house catches fire, etc.

When did we become so focused on a small and selfish vision of what our society should be?

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beatrice 2 years, 8 months ago

George, in addition to the NYTimes article I provided a link to earlier, here are other sources supporting the fact that the poor live shorter lives than the rich.

"New research on Social Security-covered males1 indicates that the increase in longevity for older participants occurred mostly among those in the top half of the earnings distribution." http://www.epi.org/economic_snapshots/entry/webfeatures_snapshots_20080116/

From the Congressional Budget Office (it is a pdf, just fyi): http://www.cbo.gov/ftpdocs/91xx/doc9104/04-17-LifeExpectancy_Brief.pdf

Between rich and poor countries (not just US counties), the gap is 30 years in life expectancy!: http://www.independent.co.uk/life-style/health-and-families/health-news/thirty-years-difference-in-life-expectancy-between-the-worlds-rich-and-poor-peoples-401623.html

And strictly for entertainment purposes, a Beatles cartoon segment about Robin Hood and the Taxman! http://www.youtube.com/watch?v=_hYpAY...

Those are just a few. I'm sure you can find more.

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Alceste 2 years, 8 months ago

Moderate has asserted for some time that he's merely middle-class. My contention is he is wealthy.....that goes back several months. "FOUL!!!!" was being howled by Moderate in that he believed he was being taxed out of his $438,500.00 house and living on a "fixed income" he "earned" and that everyone who dared to suggest the two pensions in the Moderate household made him, in the eyes of many, wealthy was in reality merely envious of all the goodies Moderate done did earned for hisself. Ok for the history lesson. Which brings me to the following:

Over time, the United States has expected less and less of its elite, even as society has oriented itself in a way that is most likely to maximize their income. The top income-tax rate was 91 percent in 1960, 70 percent in 1980, 50 percent in 1986, and 39.6 percent in 2000, and is now 35 percent. Income from investments is taxed at a rate of 15 percent. The estate tax has been gutted.

These numbers are staggeringly correct. 35% in 2011.

When Moderate speaks about entitlement programs, I'm sure he's referring to these hapless income tax rates above; I'm sure he's referring to the price supports and price sudsidies and crop insurance doled out by Uncle Sam to Agribusiness. Too, I'm sure he's meaning the huge entitlements given out to veterans via the VA and other sacred cows and on and on and on.

Hatred of the poor is fueled by the middle class's fear of falling during hard times. Americans don't understand how the poor are victimized by a lack of jobs, inefficient schools, and unsafe neighborhoods People ignore the structural issues - jobs leaving, industry becoming more mechanized. Then they point to the poor and ask, 'Why aren't you making it?' "

In hard times, Americans blame the poor. Ain't that right "Moderate"?

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George Lippencott 2 years, 8 months ago

A response to Bea:

First of all Bea, how come you live on average 3 years more than I do? Perhaps women should pay more for their SS than men. Even Minority women live longer than white men. The real hardship case is black men.

The data I could find shows average life expectancy today at 79.5. It shows the most deprived live about 3.5 years less than the least deprived. You can not just subtract that because you do not know how many were in each set so you can not legitimately subtract from the average. But in a gross sense the last deprived, still live long enough to recover what they and their employer paid into SS at current retirement requirements.

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ImAllThat 2 years, 8 months ago

Yaaaaa...Yaaaaaahhhhaaaa this is getting heated now!

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Jimo 2 years, 8 months ago

Oh, but wsj.com has the quote of the day, this time from Romney:

"Corporation are people, my friend." - Mitt Romney, Thursday, in response to hecklers, explaining why he's against stopping the massive decline in corporate tax revenues.

Note: increasing revenue from corporations would take some pressure off raising revenues on your millionaire buddies, George.

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George Lippencott 2 years, 8 months ago

I appreciate the liveliness here and I will try to respond when I can. It seems that at least one category of comment is that it is OK for half the population to not pay little or no federal income tax. That, of course, is a political decision.

I object because I recognize in human nature some fundamental shortfalls – one of which is greed. If you receive benefits, (all the goodies the feds provide) and you do not have to pay for them, than you will seek more benefits at the expense of others. This is particularly true when you owe your livelihood to those benefits be it as a teacher, professor, police officer, social workers et al.

If you think that through you realize that cannot work. Soon you are taking so much from so few that they will finds ways to avoid your grasp – be it by falling back on the largess themselves or moving somewhere that does not “eat their lunch”. There is a fair apportionment of the public dept burden. That said, nobody but the really poor should be exempt and all should feel the cost of providing the goods and services that government provides. Progressive taxation is fine but not truncated progressive taxes where the bottom half pays little or nothing (remember only about 15% are deemed “poor”) and the top 5% avoids progressivity.

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Jimo 2 years, 8 months ago

Sorry George - I can't keep up with your one-man disinformation campaign. I literally have had meetings most of the day with your "job creators" planning strategies on avoiding taxation! (Although, not American taxation.) Maybe more later this week if I get time.

But may I suggest you focus on the Bush tax cuts and why they failed to live up to any of the selling points made in passing them? That's failure isn't going away and you're not going to convince a public skeptical of your theme of "tax the poor."

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ImAllThat 2 years, 8 months ago

I like to just take money from the pot and give nothing back...it seems to work better for me.

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kugrad 2 years, 8 months ago

Great article George. I think everyone who is not in extreme poverty should contribute something to what you term the "Common pot." I am not certain if it is fair to attribute all arguments against this to the left - after all, the tax codes were not written by the left, but your point is well taken. There are those who make many arguments in favor of excluding people with the ability to pay, but none of them add up to a fair shake for those of us in the middle class who are called upon to pay for others, be it through taxation or 'sliding scales' at medical, mental health, and daycare facilities. It is frustrating to work hard, make good choices, then watch friends who perhaps chose less wisely collect $3-5k refunds at tax time at the expense of the work of others. Yes, everyone pays some property taxes in rent or whatever, but those are not going to the federal government to shore up the 'common pot.'

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beatrice 2 years, 8 months ago

George stated, "They will get back all they contributed, all the employer contributed and the time value of that money in less than 10 years. This outcome is consistent for a family making $44,000 (twice the federal poverty level). It does not seem to me that we should be counting those contributions toward the common pot."

The average life expectancy in America is 78.7 years. If people retire between 66 to 67, if what they paid in covers them for "less than 10 years" then the difference, on average, is a matter of payment of a couple of years.

However, that is the average life expectancy. Life expectancy for the poor is much lower. When you take into consideration the difference in life expectancy of wealthy and poor individuals, then that less than 10 years amount paid out might actually be covered by the amount paid in. "The difference between poor black men and affluent white women was more than 14 years (66.9 years vs. 81.1 years)." http://www.nytimes.com/2008/03/23/us/23health.html

Sorry George, perhaps I misread your intent, but it appears that when you bring in additional factors you should be counting the lower income contributions to FICA after all.

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tbaker 2 years, 8 months ago

jhawkinsf:

Will people evade the FairTax? Of course. Name a tax system that hasn't been, but yachts? Really? Wealth envy much? Some people will evade taxes no matter what the tax system, but there is NO evidence – empirical or analytical – to suggest that a national sales tax would not be complied with to the extent it would not be revenue neutral with the current system. If you have research that indicates this is wrong - I'm waiting for it.

Oversight for tax evasion will still reside under the Treasury Department but the government's responsibility will be over a far smaller "universe" of tax collection points making compliance oversight far less costly and far more effective than the current system which costs $265 billion a year in compliance costs and still comes up $350 billion a year short of what is owed. In short, the FairTax is an order of magnitude easier for the government to enforce compliance with than the current system.

Jafs:

Try this on: http://www.fairtax.org/PDF/FairTaxThumbnailSketch.pdf

After reading this, ask yourself this question: Had we been living under the FairTax all of our lives and some member of congress introduced a bill to replace it with our current 70,000+ page income tax system complete with all the corruption and waste it causes, which of these two would look like it was full of "...few good ideas with a bunch of bad ones, and some strange ones."

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jafs 2 years, 8 months ago

The fair tax is an odd combination of a few good ideas with a bunch of bad ones, and some strange ones.

One of the ideas is that the government should get a share of revenue from illegal drug sales - how on earth would that be feasible to do?

And, of course, I see no particular reason that a sales tax is inherently more fair than any other sort - why is taxing consumption any better than taxing property or income?

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tbaker 2 years, 8 months ago

Pass HR 25, the FairTax. Income taxes are moronic, to say the least.

The FairTax plan is a comprehensive proposal that replaces all federal income and payroll based taxes with an integrated approach including a progressive national retail sales tax, a prebate to ensure no American pays federal taxes on spending up to the poverty level, dollar-for-dollar federal revenue neutrality, and, through companion legislation, the repeal of the 16th Amendment.

The FairTax Act (HR 25, S 13) is nonpartisan legislation. It abolishes all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.

The FairTax taxes us only on what we choose to spend on new goods or services, not on what we earn. The FairTax is a fair, efficient, transparent, and intelligent solution to the frustration and inequity of our current tax system.

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jhawkinsf 2 years, 8 months ago

"Should five percent appear too small, be thankful we don't take it all" A line from the Beatles' song "Taxman" (written interestingly by George, the thoughtful one). Britain took a sharp turn to the left in those years and began taxing the very wealthy at rates as high as 95%, leaving the earners with the above mentioned 5%. The Beatles, with their enormous success, fell into that category of very wealthy. What was their response? They all moved out of the country. They moved their assets to places with friendly tax codes. As did the Rolling Stones and many other very wealthy people. Whenever I hear people advocate raising the taxes on the rich or on corporations, I always imagine them moving their assets to other places. As Britain found out, getting 95% of nothing nets less than taxing at a reasonable rate while encouraging assets to stay here. I hope those who advocate for increased taxes on the wealthy remember there is a point of diminishing returns and that while it may sound good to "sock it to 'em", it does become counterproductive at a certain point.

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Paul R Getto 2 years, 8 months ago

I am waiting for those blessed enough to make good incomes (and pay income taxes) to switch households with those who "pay no taxes." Not too many takers so far. Might make an interesting reality show. "Honey, I'm so glad we don't pay any income tax. Please pass the peanut butter and crackers."

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verity 2 years, 8 months ago

Sales tax on necessary items is very regressive.

I remember some decades ago when the sales tax on luxury items was raised---can't remember to what percentage. It seemed a good way to raise revenues as it was thought that the wealthy would continue to buy the same amount of things, but what happened is that the number of luxury items being bought went way down. Kansas was hit because the small plane industry was badly hurt and people were laid off. Luxury yachts also took a hit.

I know that I would certainly calculate that into the price of what I buy---I already do.

Sometimes what seems common sense has some very unintended and bad consequences.

Our economy is based on growth and people buying things. You may think people shouldn't buy excessively, and on a personal level they probably shouldn't, but it hurts the economy when they don't.

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pace 2 years, 8 months ago

I guess someone didn' t want to list the corporations that paid less than the 90 year old widow, or the billionaires that paid a lower percentage than a family of two who makes $40,000 A year. How stupid do you have to be, to only define taxes paid, as income tax, not consider every other tax and fee and fine and cost levied against even the poorest. It must be a some sort of myopia or just plain old fashion," lets spin it", paint the dying as just lazy.. We don't have to guess who isn't paying taxes and who's income is growing bigger and fatter every year. We don't have to argue they are "job creators" because they aren't job creators, they are given a break, like the movie star who never has to pick up a check, while they don't tip the waitress.

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kansanbygrace 2 years, 8 months ago

Return the Customs House (duties and tariffs) as the principal source of income, as in the first century and a half of our nation. Not punitive or excessive, just enough to balance the appeal to use domestic productivity to compete with other nations' slave wages, and to pay for the environmental benefits we enjoy and for conscientious regulation of commerce. Then, tax income. Tax the lowest at 1%. Tax those up to the 22K at 5%. Tax everyone else, corporate, individual, family at that rate (around 20%) that would pay the bills for government, for locally provided education, and emergency services. Remove the cap on FICA. Tax every person the same number of hours of work for the benefits that every one of us enjoy. Tax monetary estates at a greater rate than inherited farms or businesses that the inheritors continue to run. (Andrew Carnegie, no socialist, insisted 100% tax on inheritance. I think that may be too much.) Lower the regressive taxes on purchases of food, clothing and shelter to regain a fair share paid by all.

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Agnostick 2 years, 8 months ago

Surprisingly, I'm finding a bit more agreement here than usual with you, Moderate.

Still think national sales tax is the way to go, and giving low-wage earners and impoverished an opportunity fo file a "refund" for some of their taxes through the IRS. Those that earn more, and are not entitled to a refund, just pay their taxes at the cash register. IRS can monitor/audit retailers, rather than individuals. Would that be easier, since there are far fewer retailers/businesses than individuals?

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madameX 2 years, 8 months ago

$44,000 may be 90% of the median income in the US, but that's not much to support a family of 4. Maybe the problem is not so much that people at that level end up with no net taxes paid and more that we have so many people at a non-taxable income level at all.

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Alceste 2 years, 8 months ago

Couldn't agree with you more, rockchalk1977. ILK and that swarmy sense of entilement knows no political party. The wealthy include left wingers and right wingers; Republicans and Democrates; Black and White; Men and Women; etc. High earners should pay considerably more in taxes than they do now. Top tax rates of even 50 percent for incomes in the seven-figure range would still be considerably lower than their level throughout the boom years of the post-war era, and should not be out of the question—nor should an estate-tax rate of similar size, for large estates.

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rockchalk1977 2 years, 8 months ago

Another example is President Downgrade's Treasury Secretary, tax cheat Timothy Geithner, didn't pay Social Security and Medicare taxes for several years and he employed an immigrant housekeeper who briefly lacked proper work papers.

http://online.wsj.com/article/SB123187503629378119.html

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Jean Robart 2 years, 8 months ago

How does "from each according to his abilities, to each according to his needs" sound"

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Alceste 2 years, 8 months ago

Over time, the United States has expected less and less of its elite, even as society has oriented itself in a way that is most likely to maximize their income. The top income-tax rate was 91 percent in 1960, 70 percent in 1980, 50 percent in 1986, and 39.6 percent in 2000, and is now 35 percent. Income from investments is taxed at a rate of 15 percent. The estate tax has been gutted.

High earners should pay considerably more in taxes than they do now. Top tax rates of even 50 percent for incomes in the seven-figure range would still be considerably lower than their level throughout the boom years of the post-war era, and should not be out of the question—nor should an estate-tax rate of similar size, for large estates.

As a society, we should be far more concerned about whether most Americans are getting ahead than about the size of the gains at the top. Yet extreme income inequality causes a cultural separation that is unhealthy on its face and corrosive over time. And the most-powerful economic forces of our times will likely continue to concentrate wealth at the top of society and to put more pressure on the middle. It is hard to imagine an adequate answer to the problems we face that doesn’t involve greater redistribution of wealth.

Reference: http://www.theatlantic.com/magazine/archive/2011/09/can-the-middle-class-be-saved/8600/4/

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overthemoon 2 years, 8 months ago

Every day that goes by without action on job creation or economic stimulus worsens this problem as the taxpaying middle class sink further into the lower tax brackets. And it should be noted as the majority of Americans' income has stagnated or decreased over the past 10 years while the 10 percent at the top of the heap have increased their wealth dramatically. The result means that our economy is only functioning at the very top, while all of the workers and consumers that helped the rich to build their wealth are left holding the burden of the collapsing economy. And George wants these people to pay up out of their dwindling resources. It makes no sense.

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camper 2 years, 8 months ago

George, again no mention of payroll taxes. Why is it that medicare and social security taxes are often excluded from analysis. There are two parts to Federal Taxes:

1) Federal Income Tax - Subject to Deductions and Credits (Box #2 on W-2 form) 2) Social Security / Medicare Taxes - Everyone pays (Box #4 & #6 on W-2 form)

The fact is, even if you are making minimum wage, you pay SS / Medicare taxes. I hear this 50% of us pay no taxes stuff all the time from my conservative friends. In fact, the reason many do not is because of a generous tax code, that allows deductions (ie mortgage interest and credits) .

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Katara 2 years, 8 months ago

And stop phrasing things in such confrontational terminology. There is no battle and the only battle in the past is the one in your own head.

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notaubermime 2 years, 8 months ago

Is this a question of who is contributing or how much a person is able to contribute?

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ShePrecedes 2 years, 8 months ago

Koch (you SOB), it is time to pay up!! Kansas needs the taxes you will pay!!

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ShePrecedes 2 years, 8 months ago

I just read this, a very interesting short read:

Honoring the authors and source of the news item, noting that the bullets do not translate in copy-and-paste: http://www.epi.org/p...ons/entry/7419/

The facts support raising revenues from the highest-income households Andrew Fieldhouse Isaac Shapiro August 5, 2011

"Meager revenues and Bush-era tax cuts contribute greatly to the deficit. The top one percent of households benefited disproportionately from the Bush-era tax cuts. Recent income gains for the highest-income one percent have far exceeded gains for everyone else, leading to dramatic income concentration at the top of the scale. Now, more than ever, the highest-income households are in a better position to pay taxes. Wealth is even more concentrated at the top than income, and the main wealth tax—the estate tax—has been sharply reduced in recent years. Reasonable proposals for taxing the highest-income households can raise significant amounts of revenue. By not taxing the highest-income households, deficit reduction relies too heavily on spending cuts that harm low- and middle-income Americans. Raising taxes on the highest-income households reduces the deficit without having much impact on the economic recovery or job growth. Few small business owners have exceptionally high incomes, and thus few would be affected by these tax increases on the highest-income households. Even if taxes on those with the highest incomes are substantially increased, income gains at the top over time would still dramatically outpace gains among the rest of the population.

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George Lippencott 2 years, 8 months ago

KaTARA posted

o who are these folks who pay no federal income taxes? Mostly, they are people who don’t make very much money. Many are elderly: Think a widow living only on Social Security benefits. Others are parents earning less than $20,000. Only about 5 percent are non-elderly households making more than $20,000. "

Moderate: I think the data above agrees with your point except for the 5%. I am assuming that the "poor" do not pay much tax and should not and excluded them from the analysis above. What trouble me is that familes with incomes at or near the median also do not pay a lot of tax (other than FICA). Care to explain? Are you considering people at that income level "poor". That might explain your post?

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George Lippencott 2 years, 8 months ago

Katara sayd: Oh and it is not 47% of taxpayers. It is 47% of all households. "

Moderate : Actually it is tax filers - nobody really know how many do not file at all.. Some are single some are familes of 6. You have argued a disconnect with dependents.. care to explain. It is not obvious to me what you mean?

The rest I will read. May take a while as it took from our last battle.

Not sure how you book seniors. About half live on little more than SS and are part of your low income 40%. Some are in the wealth pot I think we should tax - don't know how many. However, we should recognize that seniors are at the end of their run and have earned or not everything thay probably ever will. You would expect that those near the end of a career would make more - like full professors.

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Katara 2 years, 8 months ago

You know who's not paying taxes?

The elderly.

http://www.urban.org/uploadedpdf/1001547-Why-No-Income-Tax.pdf (You may need to copy and paste this into a different tab).

Oh and it is not 47% of taxpayers. It is 47% of all households. This means that dependents are included in the percentage. That skews the numbers and makes the data unreliable. It does make for fabulous sound bites though!

This also provides further explanation. http://www.nytimes.com/2010/04/14/business/economy/14leonhardt.html

I doubt you will take the time to read either of the links but for those who actually care about accurate data and want to understand something beyond the sound bite, the links are there for them.

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