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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

Katara 3 years, 4 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.

Katara 3 years, 4 months ago

Another good link from the Tax Policy Center (the guys who did the research & the study) on how the 47% is being misused. http://taxvox.taxpolicycenter.org/2010/04/15/about-those-47-percent-who-pay-%E2%80%9Cno-taxes-%E2%80%9D/

"However, this class warfare-like rhetoric plays to a perception that the income tax is a chump tax: Only hard-working folks like us pay it. The welfare queens don’t. The super-rich don’t. It is a powerful emotional argument. It is also flat wrong.

So 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. "

Katara 3 years, 4 months ago

The above link does not appear to be working as posted.

Try this instead. http://tinyurl.com/3t52jhq

George Lippencott 3 years, 4 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.

Katara 3 years, 4 months ago

George, I don't believe you've read the actual study. It specifically says 47% of all households. Not tax payers. Not tax filers.

Moderate (George Lippencott) says… "However, we should recognize that seniors are at the end of their run and have earned or not everything thay probably ever will."

Yes, George. Seniors are one of the groups that people have told you have paid into the system and are now using it.

You are using low wage earning families for your examples of the 47% and they are not the larger portion of the 47% of all households. Seniors are.

You are too busy pointing fingers at people you believe to be the "moochers" or the ones that don't pay their fair share into the common pot but you are looking at the incorrect group. And the group you should focus on has already paid into the system over the years.

And that group is going to grow much larger.

George Lippencott 3 years, 4 months ago

I am sorry. I do not understand your logic. Why should people with a $44,000 income not pay into the system?

Katara says :" And the group you should focus on has already paid into the system over the years. "

Who exactly are they and what data do you have to substantiate your claim?

Katara 3 years, 4 months ago

George, please read the links. They provide the answers to your questions. As a side note, I've not made a statement as to who should pay and who should not. Do not attempt to put words into my mouth.

The group is the seniors, George. Do you dispute that they have not paid into the system over the years?

camper 3 years, 4 months ago

"I am sorry. I do not understand your logic. Why should people with a $44,000 income not pay into the system?".

They are paying into the system. They are paying social security/medicare taxes.

Regarding income tax, if you are that upset about it, write your senator and tell them to take away the home mortgage interest deduction.

George Lippencott 3 years, 4 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?

Katara 3 years, 4 months ago

George, that quote is from the Tax Policy Center. They are the ones who did the research that many (such as yourself) are misusing.

Please read the links I posted. They provide the answers to your questions.

George Lippencott 3 years, 4 months ago

Katara,

I did my own research by using the basic IRS data. Be happy to post it. I also did my own calculations using TurboTax and the results (above) supported the IRS data.

Who are these tax policy guys you reference and what is the URL?

Katara 3 years, 4 months ago

George, are you serious?

The Tax Policy Center is from where the 47% came from. It was their study. It was their data that was misused.

I've already posted the links. It is obvious that you have not looked at them. I'll respond to you when it is apparent that you have actually read the links.

George Lippencott 3 years, 4 months ago

What part of I did my own calcualtions did you not comprehend. I could care less what they argue. My date, previous provided and above supports that about half the tax paying population pays little or no federal income tax.

I don't use suspect data from right wingnuts!!

Katara 3 years, 4 months ago

George, I have said this before. The 47% that you are using comes from the Tax Policy Center. It is from their study that the media took and ran with "OMG 1/2 of the nation pays no taxes!11!!!!!"

The Tax Policy Center made a statement that the 47% figure was misused. You are still misusing that data with your personal calculations. You also are using the wrong demographic for your personal calculations. The largest group of that percentage is Seniors - people who have already paid into the system throughout their lives and are now using those benefits.

Please read the links I posted. Particularly this one by the Tax Policy Center.

http://tinyurl.com/3t52jhq

Personally, I find it hilarious that you consider your personal calculations (done using Turbo Tax!) to be superior to the Tax Policy Center.

http://www.taxpolicycenter.org/aboutus/index.cfm

jafs 3 years, 4 months ago

Good links.

It's always good to hear what the actual people who did the studies think of them.

itwasthedukes 3 years, 4 months ago

Which Bush tax cut are you speaking of? Please be specific. Never anything specific in the rhetoric. Just hate the rich and give money to the poor. This is a dangerous path and it wont fix a thing. http://www.youtube.com/watch?v=661pi6...

George Lippencott 3 years, 4 months ago

Hi,

See my several earlier blogs on how the rich get away with murder. We are in vilolent agreement. I want the Pre-Reagan rates. The Pre-Bush rates favored by Mr. Obama do little to restore tax equity (let alone raise revenue). Also need to end the capital gains dodge.

notaubermime 3 years, 4 months ago

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

George Lippencott 3 years, 4 months ago

The latter. We certainly should not ask much from those who have litte. But, IMHO asking some from all is appropriate. The middle is not poor and should contribute.

notaubermime 3 years, 4 months ago

Here is who pays according to the Tax Policy Center: http://www.taxpolicycenter.org/taxtopics/federal-taxes-households.cfm

According to them, the middle pays taxes. Less than 1% of taxpayers make more than $20,000 and don't pay federal taxes. I'm all for an explanation of why they don't, but that hardly seems a number to be outraged about.

Katara 3 years, 4 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.

jafs 3 years, 4 months ago

George just recently sent me a rather confrontational private message via e-mail - if I can figure out how to post it on here I will.

As a result, I have asked him to stop sending me private messages and to stop responding to my posts.

He seems to have little interest in changing his combative attitude.

jafs 3 years, 4 months ago

Well, for one thing, he said in the message "If you want to post this, fine" or words to that effect.

And, for another, I see no reason that this sort of thing should be kept secret - as far as I know, there's not a reasonable expectation of privacy here.

But I understand your point - I may simply let it go, or send it to the moderators.

George Lippencott 3 years, 4 months ago

OK, I took your comment to heart and reread the above. I was not intending to be confrotational and do not believe eithere of us was. How about highlighting the posts you felt were confrotational.

camper 3 years, 4 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) .

George Lippencott 3 years, 4 months ago

Actually FICA is SS. I included it and discussed my perception of what that means. I did not include Mediicare and medicaid as they are generally in the same catagory as SS only smaller - a personal contribution for a personal return.

camper 3 years, 4 months ago

If you include SS, then it you cannot say 47% do not pay Federal Income Taxes. If you make minimum wage and earn atleast one paycheck a year, you are paying federal taxes via SS/Medicare taxes.

tomatogrower 3 years, 4 months ago

"It does not seem to me that we should be counting those contributions toward the common pot."

Yet, it appears to me that the federal government considers it all one big pot.

overthemoon 3 years, 4 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.

George Lippencott 3 years, 4 months ago

Yes I do. We need to tax the rich a lot more and the lower middle some. If you are paying taxes you are not in the group I am targeting. It is almost criminal when a quarter of the the population above the poverty level pays no federal income tax.

madameX 3 years, 4 months ago

The poverty level is actully way below what a person or family can realistically live on. You can be above the poverty level and still be poor or struggling, particularly if you live in a high-cost-of-living community. If being above the poverty level actually meant that you weren't poor, I'd agree with you, but it doesn't.

camper 3 years, 4 months ago

Everyone who works pays social security/medicare taxes. Why are you focused only on Income Tax George?

Katara 3 years, 4 months ago

Because George doesn't believe those monies go into the common pot.

Alceste 3 years, 4 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/

Jean Robart 3 years, 4 months ago

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

Alceste 3 years, 4 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.

jafs 3 years, 4 months ago

And Texas is facing a $27 billion deficit.

And, the jobs are mostly low paying low quality jobs, as far as I know.

jafs 3 years, 4 months ago

Source/evidence for that claim?

But, even if true, I'm sure we could balance the budget by lowering the quality and wages of all jobs available.

That's just not a great way to do it, in my opinion.

jhawkinsf 3 years, 4 months ago

"And the jobs are mostly low paying low quality jobs, as far as I know" Reminds me of the old funny joke - Question: What's the difference between a recession and a depression? Answer: A recession is when your neighbor is out of work, a depression is when you're out of work. I suspect that of the 262,000 jobs created in just two years, some were in fact low paying, entry level jobs. But isn't that exactly what one would expect of newly created job? Over time, one would expect that some of the jobs will evolve into higher paying jobs, some workers will move on to higher paying positions while these newly created jobs will then be filled with currently unemployed people, and we might even expect that all this activity will encourage even more business activity, some of which will succeed and some of which will fail. Isn't that the way it's supposed to be?

jafs 3 years, 4 months ago

If it works that way, sure.

But, there's no evidence that will happen - it seems to me that TX is a perfect example of what happens in a very "business friendly" environment - businesses do well, pay people low wages and poor benefits, and the government doesn't take in enough in tax revenues.

I'd be very happy if the jobs were decent ones wi

jhawkinsf 3 years, 4 months ago

I can't tell you how many times I've read in reference to Brownback that's all about jobs, jobs, jobs. Well here is an example where jobs are created and we find out it's not really about jobs, it's about good jobs with good pay and good benefits and what about the deficit and what about so many illegal immigrants taking those lower wage jobs and and and. Maybe they're not the greatest jobs around, But they were good enough for 262,000 people to take them. While we in Lawrence pass on jobs that appear to pay too little, they are creating jobs. Not every job is going to be a high paying job with good benefits. Not every job should be. Entry level jobs should be just that, entry level.

jafs 3 years, 4 months ago

Sure.

When people are desperate, they'll take anything they can get for work - that's hardly something to be pleased about.

People are talking about TX, and the governor there, as some sort of model for good economic situations.

I think that it is a poor model for that - a good model would include good jobs with decent benefits, and a state budget that is balanced.

jhawkinsf 3 years, 4 months ago

Your model is a great model. And if it were that easy, there would be one guide to get from here to there and we'd all follow that guide. But there are many models to follow, all with some good and some bad. We need to be willing to balance some good with some bad. we need to be flexible. We need common sense. Just holding out for a perfect model will lead to just holding out.

jafs 3 years, 4 months ago

Thanks!

I didn't say it was easy to get there - it isn't, especially when we have conflicting ideologies, and many different interests at work in our political process.

But I think it's a sign of our times, and the fractured way in which people look at things, that they would flock to praise the TX model, without looking at the whole picture.

I'd look for states with more of the features we want, and see how they do it, if they exist, if we're looking for a model to follow.

jhawkinsf 3 years, 4 months ago

So what state is producing large numbers of high paying jobs with good benefits and doesn't have a deficit? And if you can identify such a state, how are they accomplishing it? And even if you can answer those questions, will that model translate to Kansas with it's own personality? Good Luck :-)

madameX 3 years, 4 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.

George Lippencott 3 years, 4 months ago

Interesting view. It would justify our current tax policy toward the bottom half. Of course, it is a matter of opinion as to when one should start to contribute something. I do not see any signifcant chage in that distribution any time soon. From data I have seen it never got that good under soviet style communism??

The problem is that taxing the rich just does not return enough revenue because there are so few of them. The only way we can raise significant revenue is to raise taxes significantly on the two wage earber proifessional families with incomes between $100K and $350K. Sound like a lot but it represents a teacher married to a police officer in many of our cities. By the by, they already pay around 40% of their income in taxes not counting FICA

Alceste 3 years, 4 months ago

"By the by, they already pay around 40% of their income in taxes not counting FICA". Nonsense:

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.

If our Nation doesn't act to end the ever growing chasm between the "haves" and the "have nots", our Nation will see rioting very similar to what is presently going on in Great Britain. Them riots are all about the closed and locked doors to the non-existent middle class.

George Lippencott 3 years, 4 months ago

Hi

Try Federal Income Tax State Income Tax Real Property tax Sales Tax Personal Property Tax Utility Taxes

There are a lot of taxes. Add yours up. If you have income in the range specified and are not paying that much you are lucky (good deductions).

madameX 3 years, 4 months ago

I'm not proposing any partiticular solution at this time, I just find it aggravating that "the rich" (I'm talking about multi-million dollar CEOs here, not the $100k professionals), seem to want to have it both ways. They're far and away more likely to be in a position where they have control over the income available to a large number of other people, make business decisions that minimizes said people's income while maximizing their own. But at the same time they complain that those same people don't shoulder a higher proportion of the tax burden, even though they really can't afford it due to decisions that were not their own. I just think it's unreasonable; either pay people enough that they can reasonably contribute to the national revenue stream, pay higher taxes yourself, or shut up. (Not you personally, more like the "royal you")

Lane Signal 3 years, 4 months ago

I think it should be pretty obvious that the middle class is carrying the majority of the load. I don't think anyone is arguing that taxing the extremely wealthy a little more is going to solve all of our problems, but I also think it should be obvious that the tax system is setup with so many loop holes and exemptions to make it possible for the wealthy (and larger corporations) to avoid paying much in taxes. Increasing taxes on the wealthy and removing pet exemptions and subsidies is an important step towards fairness. It will help a little with the debt and make tax increases to the middle class a little easier to swallow. The lower class is already going to see an increase in financial stress from the big drop in entitlements. I can see the family of 4 earning $44K kicking in a token amount more taxes, but not before the wealthy start paying their fair share. I'm not talking about them having to pay 70% on their income in taxes, but it would be nice to see them pay as high a % as the middle class (or a couple % higher). That would have to include capital gains, inheritance, removal of most ways the rich can protect their money from taxes.

Alceste 3 years, 4 months ago

Can the Middle Class Be Saved? The Great Recession has accelerated the hollowing-out of the American middle class. And it has illuminated the widening divide between most of America and the super-rich. Both developments herald grave consequences. Here is how we can bridge the gap between us.

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

For those interested in a cogent understanding and analysis of what's what......read the Atlantic article.

kansanbygrace 3 years, 4 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.

pace 3 years, 4 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.

George Lippencott 3 years, 4 months ago

Go get them corporations. That does not change the math above. It will not solve our debt crisis.

verity 3 years, 4 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.

jafs 3 years, 4 months ago

Ok.

And how many millionaires are looking to trade places with people who qualify for the EITC, a program for low to moderate wage earners?

Katara 3 years, 4 months ago

Fun fact time!

The EITC was created by a Republican (Ford). Its biggest expansion was also under a Republican (Reagan).

To get the EITC, one must be earning income (i.e. be employed). Both Ford & Reagan believed that the EITC encouraged people to work.

Alceste 3 years, 4 months ago

American economists on both the right and the left have long advocated subsidizing low-wage work as a means of social inclusion—offering an economic compact with everyone who embraces work, no matter their level of skill. The Earned Income Tax Credit, begun in 1975 and expanded several times since then, does just that, and has been the country’s best anti-poverty program. Yet by and large, the EITC helps only families with children. In 2008, it provided a maximum credit of nearly $5,000 to families with two children, with the credit slowly phasing out for incomes above $15,740 and disappearing altogether at $38,646. The maximum credit for workers without children (or without custody of children) was only $438. We should at least moderately increase both the level of support offered to families by the EITC and the maximum income to which it applies. Perhaps more important, we should offer much fuller support for workers without custody of children. That’s a matter of basic fairness. But it’s also a measure that would directly target some of the biggest budding social problems in the United States today. A stronger reward for work would encourage young, less-skilled workers—men in particular—to develop solid, early connections to the workforce, improving their prospects. And better financial footing for young, less-skilled workers would increase their marriageability.

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

George Lippencott 3 years, 4 months ago

I went through that phase too, I still lie peanut butter

jhawkinsf 3 years, 4 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.

verity 3 years, 4 months ago

". . . it does become counterproductive at a certain point."

Yes, it does as I pointed out in my post about raising sales tax. However, in the past it seemed to work at a much higher rate on upper incomes than we have today.

tbaker 3 years, 4 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.

jhawkinsf 3 years, 4 months ago

And if I, as a very, very wealthy person choose to spend say 100 million on a new yacht, won't I be encouraged to purchase said yacht in some off-shore country? And won't I be encouraged to register said yacht in some off-shore marina? And won't I be further encouraged to fly in my private jet to said off-shore country so I might enjoy my new yacht and spend even more money in said off-shore country? And to facilitate my off-shore spending spree, won't several off-shore countries try to entice my spending there with banking laws and tax codes that are much friendlier to my enormous bank account? If no very wealthy people and no country will behave as I suggested above, then your idea is great.

George Lippencott 3 years, 4 months ago

The problem with the "Fair Tax" is that the wealthy would pay a lot less and the rest of us quite a bit more, if the level of revenue we are at is to be sustained. Be careful of Right Wingnuts arguing the contrary - they do not hold revenue constant.

gatekeeper 3 years, 4 months ago

The person that would do that is unAmerican, selfish and a traitor.

If you can afford a yacht, you can afford taxes on it.

Jerks want to do that, then that Yacht, airplane, etc... can never enter US waters or airspace without paying fines or tarriffs.

jafs 3 years, 4 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?

Katara 3 years, 4 months ago

Agnostick, those groups are already doing those things now and we are getting tax revenue from them now.

What happens now is no different from what you are proposing with a national sales tax.

Katara 3 years, 4 months ago

Actually, it would have been a local & a state sales tax that you paid.

Either way, under your system or the current system, those groups are already paying taxes on the things that they buy. Your 1:02pm post suggests that they do not at all.

jafs 3 years, 4 months ago

Sure.

But we're already getting that sales tax - my understanding of the fair tax idea is that they want to get sales tax from drug deals, which seems absurd and impossible to do.

Katara 3 years, 4 months ago

It hasn't stopped states from requiring drug dealers to have a tax stamp.

So assuming the drug dealer gets caught, they also are in violation of state tax laws and the state can collect the taxes then.

jafs 3 years, 4 months ago

That also seems odd, doesn't it?

How would we ever know how much sales have taken place, in order to calculate the taxes owed?

The whole thing is silly - if we want to collect taxes on drug sales, we should just legalize drugs - it's a much simpler way to do that.

Katara 3 years, 4 months ago

I absolutely agree. If we want to tax it, then legalize it.

They calculate the sales taxes based on the street value of the confiscated drugs.

tbaker 3 years, 4 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."

tbaker 3 years, 4 months ago

Jafs: That answer means you know very little about either tax system.

jhawkinsf 3 years, 4 months ago

We need a balance between knowing some people will try to evade taxes with not having a system that encourages people to evade taxes.

tbaker 3 years, 4 months ago

Like I said, if you have research that indicates tax evasion would be greater under the FairTax, then by all means, put it out here. There is plenty of research to the contrary.

beatrice 3 years, 4 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.

George Lippencott 3 years, 4 months ago

Bea

Your have some data to back up your asertion that the poor live much shorter lives and who those poor are? For your argument to be accurate all poor would have to live quite a bit less less than average life expecatncy. I don't think there is any data to support that.

Katara 3 years, 4 months ago

Bea provided you that, George. There is a link she posted right after the quote about poor black men and affluent white women. It is in blue. Can you not see that?

Here. I'll re-post it so that you can see it.

http://www.nytimes.com/2008/03/23/us/23health.html

Click on the blue and it will take you to the article and the data she was referencing.

George Lippencott 3 years, 4 months ago

i did and several othercites including the census. See note below

kugrad 3 years, 4 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.'

Jimo 3 years, 4 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."

Jimo 3 years, 4 months ago

An offline reader here chuckles at your "tax the poor" suggestion and quips,

"It's the opposite of Willie Sutton's line about robbing banks. Except it's the opposite: Why not tax the poor? Because that's not where the money is."

To which I can only add my own take: The poor are quite unlike the rich in one respect: they hire much worse government lobbyists.

George Lippencott 3 years, 4 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.

Jimo 3 years, 4 months ago

"OK for half the population to not pay little or no federal income tax. That, of course, is a political decision."

No, it's a practical decision.

Income taxes are taxes on wealth.

In a society of extreme wealth concentration (currently the greatest in the U.S. since the 1920s), one cannot escape that a tax on wealth will leave half the population not paying any. That's because there literally isn't any wealth in the hands of that one half, for which part of that explanation in turn is that so much of the poor's income goes to paying other taxes!

Newsflash: 95% of the population doesn't pay estate taxes. Do you suppose it has anything to do with not having estates? 99.9% of the population doesn't pay taxes on yachts. I bet you there's a connection to the fact that almost no one can afford a yacht -- except for the wealthy tax moochers who aren't paying their income taxes!

George Lippencott 3 years, 4 months ago

Glad you have an opinion. How about the rest of my comment.

Katara 3 years, 4 months ago

I see your problem.

Moderate (George Lippencott) says… "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. "

There was a conversation between you and jafs not too long ago regarding whether or not renters vote for increased property taxes and you used this same type of thinking and it concluded with you acknowledging that there was no way to prove that if someone receives benefits and they do not have to pay for them that they will seek more benefits at the expense of others. Your response to jafs was "They might". http://www2.ljworld.com/weblogs/loyal-opposition/2011/jul/9/tax-facts/#c1692360

You are basing all of your assertions on here on something someone might do. How about providing evidence that these groups you talk about actually do what you think they might do?

This is what your assertions are starting to sound like.

George: The moon is made of green cheese.

Others: We've sent men to the moon and found no green cheese.

George: There might be green cheese under the moon dust.

Others: Tests have been done and based on those tests, the moon is not made of green cheese.

George. The moon's core might be made of green cheese. I did my own calculations using NASA's data and a space website that I found and my research supports that the moon may have a core made of green cheese. I also recognize the nature of space and it definitely involves dairy products.

Others: facepalm

beatrice 3 years, 4 months ago

I like cheese, therefore I am in favor of funding NASA to send more people to the moon. I'll bet that moon cheese is really tasty.

jafs 3 years, 4 months ago

:-)

To be fair, greed is a part of the human condition.

It's just not located in one place or another along the socioeconomic spectrum, or in renters rather than homeowners, etc.

Katara 3 years, 4 months ago

Exactly. People can be greedy but it does not mean that all people are greedy and that they will act upon that emotion.

beatrice 3 years, 4 months ago

It is space cheese, and because it is so cold in space it was "frozen fresh," so it is still good. It is a new variety and the taste is said to be "out of this world." Apparently Buzz Aldrin (or was it Buzz Lightyear?) is said to have had some, but is keeping quiet about it because he is trying to secure the rights to sell it.

Fund NASA now! We need that cheese before Buzz gets his hands on it!

Jimo 3 years, 4 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.

George Lippencott 3 years, 4 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.

Alceste 3 years, 4 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"?

beatrice 3 years, 4 months ago

The answer is obvious. The poor just need to live off their investments.

jhawkinsf 3 years, 4 months ago

"Over time, the United States has expected less and less of its elite". I think it's also true that we've expected less and less of the poor. With the financial burden falling more and more on the middle class.
And what is probably true for everyone, we expect less and less of everyone in terms of things not financially related. Things like individual responsibility, honesty, integrity. Those things are in short supply at all levels.

Alceste 3 years, 4 months ago

Again, produce the numbers of NON working poor, deadbeat, WELFARE recipients. You'll find it is a MINISCULE number.

The number of phat kats getting price supports, price subsidies, tax abatements; capital gains relief; income tax breaks, etc., etc., etc., far out number, vastly, the NON working poor. As for the WORKING poor....let's get back to the guaranteed annual income days.

jhawkinsf......here's the memo (please don't ever say you didn't get it): The "middle class" in the U.S. of A. is a MYTH. It's shrunk to an incredibly small number and continues to shrink. It's the truth and the truth hurts, eh?

How does one catapult from poverty to being wealthy when there is no middle class handle to grap on to in order to get to the top? Sell dope or stolen cars or whatever the new game is of the day??? Ponder it.

Cant_have_it_both_ways 3 years, 4 months ago

I'll bet you make a terrible employee, thus part of your problem.

George Lippencott 3 years, 4 months ago

I love you too. What part of the data do you dispute. What I do or do not pay is my business. I still have a right to an opinion.

beatrice 3 years, 4 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.

jafs 3 years, 4 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?

George Lippencott 3 years, 4 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.

Katara 3 years, 4 months ago

I am not sure who you are addressing but please stop playing the victim.

George, people have provided links that refute your "personal calculations". I have no idea who this right wing group you are talking about is. If you are referring to the Tax Policy Center, you are most incorrect as to their political leanings and it is extremely obvious that you've not bothered to read any of the links I posted or bothered to learn who they are or what they do.

It is not only my opinion that you have misinterpreted the data. It is also the people who did the study that had the 47% figure in it that state you are misinterpreting the data.

FICA is not an income tax but it still is a Federal tax and it is one based on what you have earned (until you hit the wage cap). It still goes into the common pot. You seem to have this strange idea that there are separate pots in existence. There are not. There is a general fund. All monies go into it and the Feds disburse to whichever bill (program) they need to pay.

Your anecdotal evidence is not sufficient to prove your point. You are not even looking at the correct demographic as to who is not paying federal income taxes.

Your anecdotal observation? You have not provided a single thing to show 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." At best, your one time answer from another blog was "They might."

You haven't refuted anything. You've just played around with Turbo Tax and decided that your results trump all. People have posted links that provide statistical evidence. They have posted links from tax experts who explain the statistics. You've ignored those links.

A close friend of mine has this saying that I think fits perfectly for you. "People judge others by your their own level of corruptness."

George Lippencott 3 years, 4 months ago

Katara

The data above comes from TurboTax, an IRS approved tax calculation software, and from IRS tables avalable to all. Go to IRS.gov. Not one of your references refutes that at all - they can not.

They try to explain it but they do not refute it. I leave the adequacy of the explanations to the reader. If you would like to emphasize a point, feel free. Perhaps you would like to clarify which reference does because I have read all of them and disagree with your assertion. Kind of like your assertion that I am being confrontational but when called on it you can provide no support for your assertion.

WE are running in circles. I post hard date and you post URLs that at best address explanations for what I post. And i might note many of your URLs come from reference known to reflect a left of center philosophy.

60 million people pay little or no federal income tax. Tax paid into the social,security trust fund to establish eligibility for old age insurance are not in the general fund (the cash is but in exchange for bonds).

Those paying payroll tax can expect under current law to get back what they put in (even if "poor") and the 60 million I reference are not poor.

  1. The data

Alceste 3 years, 4 months ago

I am not saying anything other than perhaps it's time you re-define your own view of your own living circumstances instead of bashing on the poor. Entitlements? What about VA benefits or TRICARE/CHAMPUS? Aren't these MASSIVE entitlement programs? The current military ALL signed up for the Big Show. I say the fact they've been sent to the Big Show for several deployments is all they get (it's what they wanted; somewhere along the road part of being a REAL man means you got to kill people and blow stuff up)....it's what they wanted and it is what they were given. (However, we must also factor in the reality many, many, many enlistees do so because there ARE NO JOBS in this Nation. I don't know what to do about that for the immediate future. I DO know what to do about it for the long term. Being drafted is entirely different set of circumstances.

There, essentially, is no "middle class" in the U.S. of A. anymore, Moderate. Read the article I've posted several times; and here it is again for your ease of use:

http://www.theatlantic.com/magazine/archive/2011/09/can-the-middle-class-be-saved/8600/ = Can the Middle Class Be Saved?

Alceste 3 years, 4 months ago

Let's focus on "I" statements and NOT "YOU" statements, um kay?

Discuss YOUR situation....not the situation of the disenfranchised....at least not from a 1st person perspective. A $500,000.00 valued home and we claim "middle class status"?????

Ok...fine by me....but that then places you in the group who Blame The Poor. Why is that?

beatrice 3 years, 4 months ago

Alceste, I don't believe a $500,000 home (which appears to have gained in value by more than $60K since your 2:54 pm post) necessarily means George is above the middle class. Depending on how one saves money, their credit rating and what type of financing is / was available at the time of a home was purchased plays a big part. When I moved a few years ago, I was being offered loans of more than $500K. I chose not to purchase that expensive a home, but I could have. It wouldn't have made me anything other than middle class in a larger home.

My guess is George is at the lower end of upper-middle (if that makes any sense). I doubt he has ever made $250K a year (that rate that gets bantered around for raising taxes on the wealthy).

Just my two cents. Ignore me if you want.

Alceste 3 years, 4 months ago

Rounding UP from the official county appraisal is just habit. If it makes anyone feel better....call it a $400,000.00 house. It's still the same thing. Living large is living large. Ain't no getting around it.

My blunt contention is that ANYONE in a $400+K house is NOT middle class. Nosireebobcat tail....that's a wealthy person....or a poser. Moderate ain't no poser. He knows what he's doing......but he isn't transferring his tax obligations to this "envious" poster however.....(...Moderate likes to use the term "envious" whenver frank, hard core dollar figures are being utilized....). Thanks.

beatrice 3 years, 4 months ago

In many regards, I'm sure it depends on where you live. I can't at all agree that anyone living in a home valued at $400K is more than middle class. I know too many people in homes of that value or more and they work daily, make a paycheck, try to save, and aren't making $100K a year. They are middle class. Maybe not at the lower end, but when you consider what real wealth really means you may want to change your definition of middle class.

beatrice 3 years, 4 months ago

George, people do things that do not appear to be in their own self interests all the time. Take the tax cuts that help the top 1%. Why 99% of the people aren't against this would appear at a glance to be against their self interests. It is the whole "What's the Matter with Kansas" scenario argued in Thomas Frank's book.

And if you are allowed to rant (write a blog) others deserve to respond however they feel is in their own self interest even if it comes in rant form.

Katara 3 years, 4 months ago

I think George equates people's self-interest with greed and they are not the same thing. One is perfectly able to be for one's self-interest without being greedy.

George Lippencott 3 years, 4 months ago

Of course you can rant - I do. Thanks for the response to mr. A.

jayhawxrok 3 years, 4 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?

Katara 3 years, 4 months ago

George, your latest blog is an excellent example of your strawman arguments. This time you are actually lying about what people said.

There is no further discussion with one that is willing to lie about what others' said.

beatrice 3 years, 4 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.

gatekeeper 3 years, 4 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.

commuter 3 years, 4 months ago

Part of debating that GE paid no taxes last year, is you and I do not know the whole story about GE tax return. They had a lot of income but the income could have been earned outside of the US and there could have been credits to offset the taxes, or it could be that there was no balance due on their return because the paid it already? Don't know.... I do not prepare GE tax returns.

Just think if we removed allowing deduction for giving to charities, how quickly do you think churches would be lobbying to oppose this?? Pretty quick.

People worry about how much corporations and the wealthy are paying in taxes. I worry about how much churches, unions, KU Athletic Corp type groups & Endowment groups pay in federal taxes.... ) since they are exempt.. maybe we should start taxing them 5%.

camper 3 years, 4 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?

camper 3 years, 4 months ago

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

Charlie Bannister 3 years, 4 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.

camper 3 years, 4 months ago

I think this may be a great idea though it may be imperfect or somewhat regressive. I'm on board if what is now considered capital gain transactions like stock are also considered a sale and subject to the consumption tax.

George Lippencott 3 years, 4 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.

unite2revolt 3 years, 4 months ago

George,

I don't know about most of the responses you are getting here, but I can tell you I have paid little to no taxes since I got married and had children. So far this year I have had 647.89 withheld in total but I will see much more than that as a federal refund.

gatekeeper 3 years, 4 months ago

To many of us, that is an issue. Why do people get money for having children, who end up costing everyone money (schools, etc...)? It's your decision to have kids and because you wanted them, you end up paying no federal taxes and take money from others when you get a refund.

Many of us have to pay to support the services all these kids need, even though many of us don't have children.

There is no reason for people to not pay taxes simply because they decided to breed.

My husband and I usually owe more at tax time. So far this year, I've paid $1900 in federal taxes. My husband will be about the same. Talk about unfairly taxing the population. Since when did being able to have kids make one not have to pay their fair share?

George Lippencott 3 years, 4 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.

Cant_have_it_both_ways 3 years, 4 months ago

Sucks George. Freeloaders are just that. Sad thing, they just keep wanting more.

We should line up all the people on assistance, whether it be unemployment all the way to disability and welfare on the corner every morning and take them someplace where they can put into the system, whatever they can do. I'll bet within a week half of them would find a better life. To disabled to work, but can crawl on the old lady and crap out another child for us to pay for.

God Bless America.

Carol Bowen 3 years, 4 months ago

Quite a stereotype you have there. How do you know this is typical of people on assistance?

jayhawxrok 3 years, 4 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.

pace 3 years, 4 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.

George Lippencott 3 years, 4 months ago

Hi

You are a population of one. What I presented represents a class of taxpayers numbering in the millions. If you fit the case presented in my methodology discussion, you should pay no federal income tax. If you do, you might want to invest in a copy of TurboTax.

No, I did not discuss all the other taxes because the discussion was about federal income tax. The fact that you and a whole lot of other people pay a lot of other taxes IMHO should not become an argument against paying federal income tax. By the by, I do not mean withholding that you get back when you file your taxes.

pace 3 years, 4 months ago

so you admit you are lying about a family making $40,000 not paying income tax.

George Lippencott 3 years, 4 months ago

pace

OK.

How did you come up with that notion?? The methodology was a family of four at 2x FPL ($44K). They had no federal income tax due.

When someone bandies about words like lying, I presume I am dealing with a juvenile or an ideologue.

Carol Bowen 3 years, 4 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

George Lippencott 3 years, 4 months ago

Not sure who you are addressuing this to but after reading it I am even more firmly committed to taxing the rich at pre-Reagan rates and eliminating the capital gains dodge.

tbaker 3 years, 4 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

George Lippencott 3 years, 4 months ago

I tend to disagree, In a democracy, in extracrting pain the society must be perceived as "just" or there will be a loss of faith in that society.

If the progressivity of the tax code increases by 20 % over the $200K between an income of $50K and $250K than it should increase by the same percentage for each $200K of income. Either we drop the steep progressivity in the range specificed or raise the progressivity on the more affluent.

parrothead8 3 years, 4 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.

George Lippencott 3 years, 4 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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