Rich Pay More Taxes, Poor Pay Less

According to Bruce Bartlett, at the National Center for Policy Analysis:The poor paid half as much of the federal tax burden in 2001 as they did in 1984, while the rich paid about 50% more. Those in the middle paid a third less.One would thnk that those on the left would be happy about this trend.Instead, they constantly demagogue the wealthy as deadbeats unwilling to bear their "fare share" of the tax burden, and berate the Bush tax cuts for having "slashed" taxes for the wealthy, while the rest of us pay more.As so often is the case, the truth is exactly the opposite of that portrayed in the liberal world view. In simple language, lowering or flattening taxes causes more money to be invested or put to work in our economy, generating more profits, generating more taxes. (It's kind of like buying wholesale: it costs less per unit, so you get more for your money.) The more profit, the more collected in taxes, overall, although at a lower rate. Raising stuatory rates on the rich, as John Kerry propses, likely would reverse this trend, causing taxes on the poor and middle class to rise.From a column by Bruce Bartlett in the 04-07-2004 of Investors Business Daily.

John,Even with a flat tax the rich would pay more than the poor.The other fact is that the middle class is disappearing and the incomes of the super-rich are skyrocketing. That should be of as much concern as the fact that the rich are paying more taxes than the poor.Most people that argue for a flat tax ignore the effects of the payroll taxes, which, when considered in conjunction with income taxes make the federal taxes much "flatter" than they are willing to admit. Combine the SSI, Medicare and Income tax and THEN flatten it and you will have accomplished something.

I don't know enough to have an opinion on the flat tax. You made good points. Thanks.

From what I have heard or read, the top 5 % of money makers make 17 % of all the income in this country and pay 37% of all the taxes. Thats "fairness" as defined by democrats.

The article states the rich pay about 50% more in taxes now than the rich did 20 years ago. The poor pay about 50% less than they did, and the middle class pays about a third more.As the previous poster, whose name I've already forgotten in my old age (my apology), also said, the rich (who are a minority percentage of the general population) pay almost all of the taxes in this country. Rush Limbaugh's website has additonal info on this topic, near the end of the first page, bottom left hand corner.

As a middle class taxpayer and a homeowner with children, I feel like a moocher in our tax system. I get a deduction for my mortgage interest, I get credits for my two children under age 17, and I get a credit for my college tuition payments. My real estate taxes are high, but not high enough to pay the full cost of my children's education at the local school. In fact, the amount I pay (more than $4000) is less than what it would take to educate ONE of my kids, and I have three in school. I, in turn, along with my husband, are forced to give up a significant part of our compensation in order to support current retirees and their medical care. I would much prefer to pay my own way through life, and to be allowed to choose whether to help others in their need. All talk of soaking the rich to help the middle class is evil. The middle class has it good, if they have children.

quote:All talk of soaking the rich to help the middle class is evil. The middle class has it good, if they have children.

I suppose you're OK with paying 13% (yes 13%, the part the employer pays is yours too!) of your income to support SS payments to a retired executive with a 6 figure pension who paid almost nothing into the system?All the while the top 5% have most of their income that is largely exempt from the same requirement?Also I think your definition of middle class is a little skewed. Most of us would like to think we're middle class, but most of us are now LOWER-middle class due to the huge shift of wealth to the rich and dismal wage growth since the 70's. I'll bet those with AGI of $100K-$150K don't think they are "moochers", and they are still part of the "middle class" (barely).

I remember seeing something posted on this board a while back about a radical change in our tax system that would eliminate all current taxes and replace them with a value-added tax. I haven't seen anything on this since. Anybody have any opinions on this? I really have no idea if it is a good plan or not.

Get your facts straight Randy. Those who earn over $87,000 pay no SS tax and thus earn no credits which allow them to collect retirement benefits. They do pay Medicare tax (1.45%).

I have been very clear that I prefer a pay-as-you-go system instead of what we have now. I do not want to pay for my neighbor's retirement or medical care, but neither do I want my neighbor to be forced to pay for my children's education, no matter how much income my neighbor earns. I don't want to force anyone, no matter how rich, to help me pay for my house or my son's college tuition. Let everyone keep what they earn and pay their own way, I say.The fact is, middle class families with children get all kinds of tax breaks, the better to win our votes. We are moochers. Very few families in Maine pay in property taxes anything close to the per-pupil cost of their children's education. And guess what: when I do my federal return, I get a deduction for what I paid in property taxes. Together my husband and I earn approximately $80K. Add our and our employers' shares of FICA and medicare to the amount we pay in property tax, and we still have not paid as much as it costs to educate our three public school kids (at least $21,000). I know the FICA doesn't go to education, but I'm looking at our overall tax obligation compared with what we "get." Only after adding in our state and federal income tax do we finally reach the point where we pay more than the cost of our kids' education at the local school. Still, we get a federal child tax credit of $1000 for our two under-17s. We don't do child care, so we don't get that credit, but a lot of families do. Who is subsidizing my family? Not other middle class families with children, that's for sure. There are some legitimate government activities that are funded with taxes, to which I would gladly pay a part of my income: courts, law enforcement, national defense. But the rest should be pay-as-you-go.We are all moochers.
Except wealthy producers.

Well, MM, you know what they say...
When politics becomes a career,
democracy becomes a sewer.Ever noticed how widespread (and accepted)the use of the term "class" has become in the past few decades? Dividing American into class warfares has been one of the greatest successes of the democrat party.It really would be quite possible to educate your kids for a lot less than $7000 each.

quote:Originally posted by hubertfinch:
I remember seeing something posted on this board a while back about a radical change in our tax system that would eliminate all current taxes and replace them with a value-added tax. I haven't seen anything on this since. Anybody have any opinions on this? I really have no idea if it is a good plan or not.

It is only a good plan if the constitution is changed to make it impossible to renew the income tax. Every place the VAT has been established it was with a low rate (2 or 3%) and was established to "reduce" another tax. The problem is, within a decade or so, the VAT is double digit and the tax being reduced is larger than ever.

JustSayNo,
You're right, my kids can be educated for less than $7000. I used that figure because it's what the budget hawks use when they look at the school budget and divide it by the number of pupils. Of course it includes spceial ed and debt service and guidance and the school nurse, etc.But the fact is, I do send my kids to public school and that's each pupil's share of the cost.

quote: Get your facts straight Randy. Those who earn over $87,000 pay no SS tax and thus earn no credits which allow them to collect retirement benefits. They do pay Medicare tax (1.45%)

Wrong, they pay tax on the first 87K.Fact: Anyone making $87000 or more earned income pays SS tax on that amount and is eligible for the maximum Social Security Benefit if they do it for the required number of quarters. Regardless of whether they have a large pension or not , they are still eligible for this welfare plan, financed mostly by contributions of working class people. The Social Security Tax Rate on a person earning $87,000 a year is 13%.The Social Security Tax Rate on an executive earning $2 Million a year is 0.56%.They both get the same benefit.

mm:And where would our poor kiddies be without a staff of full time guidance counsellors, and assistant principals and secretaries and ed techs and paid sports coaches and Apple toys for all?Under your (interesting) plan, how would we get a fellow making 30,000 to come up with the 21,000 for his three kids in public school?[ 04-09-2004: Message edited by: JustSayNo ]

FAIRTAX

quote:Originally posted by JustSayNo:
mm:And where would our poor kiddies be without a staff of full time guidance counsellors, and assistant principals and secretaries and ed techs and paid sports coaches and Apple toys for all?Under your (interesting) plan, how would we get a fellow making 30,000 to come up with the 21,000 for his three kids in public school?[ 04-09-2004: Message edited by: JustSayNo ]

Check your premises.
In a pay-your-way system, there would be nothing that resembles the all-things-to-all-kids schools we have today. As you pointed out before, you can educate your kids for much less than $7000. Extras would be - extra. If you were paying for it, you'd be picky about what you were getting for your dollar. You'd shop around to find the right sschool or the right teacher for your child. Imagine such a world!

Pay your way system? You are describing the middle ages. Are you going to assess people road taxes based on the number of miles they drive and how much their car weighs? Better yet, build your own damn roads. Are you going to assess people who live near the border extra for the border patrol? Better yet, patrol it yourself. How much are you going to pay for B2 bombers?; No thanks, I don't need any. And I'll pass on the missile defense too.How about an exponentially increasing tax based on age to cover the exponentially increasing cost of health care for the elderly?I don't suppose you believe in the concept of risk sharing through insurance either.We can disagree on what services the government should attempt to provide, but at some level there are common "goods" that we have to be willing to fund collectively. If we have a system where people can "opt out" the whole enterprise collapses into Lords and Serfs. Come to think of it, maybe we're close already.

I won't spend the time now, but there is so much distorted thinking going on here that it's unbelievable. On the other hand, it's not...it shows why we have what we have.Imagine...someone making
$87K gets as much in pension as someone who's made twice that much. Sounds like the former is getting a far better deal than the latter.

If the rich are really getting soaked with taxes, how do they just keep getting richer?

quote:The rising economic tide of the late 1990s lifted the boats of almost all American families but also sharply increased the wealth gap between the rich and the rest of society, according to a survey released yesterday by the Federal Reserve.

The benefits of the soaring stock market and the tight labor market were felt both at the top and far down the economic ladder as the median income among the poorest families jumped 14.4 percent between 1997 and 2000. The median for black families rose more than twice as fast as the median increase for all American families, which was 9.6 percent. The net worth of most families -- the value of their assets minus their debts -- also rose strongly, with the median climbing 10.4 percent, to $86,100, over the three-year survey period. Among blacks it rose 13.1 percent, to $19,000 from $16,800. But the net worth of the wealthiest families climbed even more. The median among those in the top 10 percent leapt to $833,600 from $492,400, while the mean soared to $2.26 million, from $1.68 million three years before. These families' median income leapt 19.3 percent, to $169,600, during the same period. The median is the midpoint for a group; the mean is the arithmetical average. The Fed's Survey of Consumer Finances, conducted every three years since 1983, is one of the most detailed looks at the financial condition of American families. The one released yesterday was based on more than 4,000 interviews conducted in the latter half of 2001 and contains data on assets held by families at that time and on their income in the previous calendar year. Fed officials acknowledged that much has changed in the economy since the interviews, with the stock market plunging and unemployment rising. One Fed economist involved in the study noted that employment is a key driver of income, especially at the lower end of the economic ladder. Thus it is not clear whether the gains achieved by lower-income families in the period covered by the survey remain in place. The study examines not only income, but families' net worth, saving and investment patterns, debts, and banking habits. The data is of great interest to researchers in and out of government who study what is going on at the individual level of the economy. Among the study's findings: • The number of American families owning stock, either directly or through mutual funds, retirement accounts or other indirect means, topped 50 percent. This was up from about a third at the beginning of the 1990s and is the highest level ever recorded by this series of surveys, as well as by a 1963 Fed study that looked at the same issue. It may be the highest level ever, though Fed economists said data from the 1920s is limited. • Even after their gains, median income of the poorest 20 percent of families was only $10,300, up from $9,000 three years earlier, and the net worth of these families rose only to $7,900, from $6,300. The median income for black families was $25,500, compared with $21,200 in 1997. • Despite the gains by blacks, non-whites and Hispanics together fared much worse than whites. Hispanic families' median income declined to $24,700 from $25,600, and median net worth rose only to $11,300, from $10,700. Fed officials cautioned that the numbers might be skewed by the way Hispanics identified themselves in the survey, since their study came up with fewer Hispanics than did the 2000 U.S. census, which asked more probing questions about ethnic origin. Fed economists said it is possible that some Hispanics did not identify themselves as such, perhaps resulting in what appeared to be a larger number of lower-income Hispanics. • Families' debt grew rapidly over the three years in the survey, but assets grew more rapidly, resulting in a decline in the ratio of debt to assets. The survey found that debt equaled 12.1 percent of assets, down from 14.3 percent in 1998. The decline is by far the largest since 1992, the survey found. The share of families with "home-secured debt" -- a mortgage, home-equity or similar loan -- rose slightly, to 44.6 percent, but rising home prices outran their increase in debt, so owners' equity rose as well. Median home equity among those with home-secured debt rose 9 percent, to $58,100, in 2001, from $53,300 in 1998. • The share of families borrowing on credit cards rose. The increase was small, 0.3 percentage points, but it ended a decline that began in 1995 and shaved three full points off the proportion of families borrowing on plastic. In addition, credit card borrowing rose only among middle- and lower-income families; for higher-income families, it fell. The average balance among those borrowing on plastic was $1,900, unchanged from 1998. • The number of families without a checking account declined slightly, to 12.7 percent from 13.2 percent. Asked why, 28.6 percent of those families said they didn't write enough checks to make it worthwhile, while 22.6 percent said they do not like dealing with banks. Several private analysts cautioned against drawing overly optimistic conclusions from the Fed data. William G. Gale of the Brookings Institution noted that while "the gains of the 1990s were real," the longer-term comparisons in the Fed report went back only to 1992. Looking back to the 1989 survey, he said, would make some of them less impressive. "There was a big drop in wealth from 1989 to 1992 . . . and for a couple of age groups the current numbers are not that much better than they were in 1989," he said. Gale also noted that while the survey provides data on how many families own stock, it does not show how much they own. "Although it's true that more and more people hold some stock, it's also true that the vast proportion of stock is concentrated in a relatively small portion of the population," he said. Changes in the nation's pension system may also be causing wealth figures to appear to rise more than they have. The value of workers' rights in traditional pensions are not included in the wealth figures, in part because they are so difficult to value. But 401(k) and other types of plans are included. Thus, if a worker's company switches from a traditional pension to a 401(k), the worker might seem wealthier in the survey though in fact he has simply substituted one pension asset for another. Some experts also found the leap in wealth among the wealthiest troubling. Jared Bernstein of the Economic Policy Institute noted that in 1992, the net worth of the families in the top 10 percent was 13 times that of the families in the next-to-lowest 20 percent. That ratio was about the same in 1998, he said, but by 2001 it had climbed to 22.4. "I think the increase in inequality that's evident in this report is really pretty alarming. It should really alert those who are thinking about implementing aggressive tax policies right now," he said. "This report should tell you we've got enough inequality in the system now without aggressive tax cuts." © 2003 The Washington Post Company

[ 04-09-2004: Message edited by: Randy ]

quote:Imagine...someone making
$87K gets as much in pension as someone who's made twice that much. Sounds like the former is getting a far better deal than the latter.

It's not a pension, it's an entitlement just like welfare...Now is it clear?

Randy: Because they know how to make or earn large amounts of money?

quote:Randy: Because they know how to make or earn large amounts of money?

That is one possible explanation, but not the only one.

quote:Originally posted by Randy:
Pay your way system? You are describing the middle ages. Are you going to assess people road taxes based on the number of miles they drive and how much their car weighs? Better yet, build your own damn roads. Are you going to assess people who live near the border extra for the border patrol? Better yet, patrol it yourself. How much are you going to pay for B2 bombers?; No thanks, I don't need any. And I'll pass on the missile defense too.How about an exponentially increasing tax based on age to cover the exponentially increasing cost of health care for the elderly?I don't suppose you believe in the concept of risk sharing through insurance either.We can disagree on what services the government should attempt to provide, but at some level there are common "goods" that we have to be willing to fund collectively. If we have a system where people can "opt out" the whole enterprise collapses into Lords and Serfs. Come to think of it, maybe we're close already.

Randy,
Roads: gas tax = user fee = pay as you go
Defense: as I previously wrote, national defense is one of the government activities that I agree should be funded through broad based taxes.
Medical care and insurance: I do believe in insurance and I'd like to see "health insurance" become true insurance, bought and paid for by individuals as they become adults. No employer involvement, so you're no longer tied to a company for its "benefits." YOU own your insurance just as you own your life.
Law enforcement, fire protection, courts: all are services I agree should be paid for collectively through some form of taxation.The fact that you can't even conceptualize such a world is evidence of how we have all been indoctrinated to beleive we are responsible for each others' needs before our own. We are all moochers.

Some experts also found the leap in wealth among the wealthiest troubling. Jared Bernstein of the Economic Policy Institute noted that in 1992, the net worth of the families in the top 10 percent was 13 times that of the families in the next-to-lowest 20 percent. That ratio was about the same in 1998, he said, but by 2001 it had climbed to 22.4. "I think the increase in inequality that's evident in this report is really pretty alarming. It should really alert those who are thinking about implementing aggressive tax policies right now," he said. "This report should tell you we've got enough inequality in the system now without aggressive tax cuts."

quote:

Is it possible that the wealth of the top 10% is earned? Is it possible that these are people of brains and ability and courage who are the engines of our economy? Is it possible that our envy of them, which emboldens us to confiscate a good chunk of what they earn, will damage the engine and slow us all down? With a gun to his head that says, "you're working for us, hand over X% of what you earn," at what point does a man of achievement stop producing? If equality is our aim, you know where the target is. At the bottom, not the top.

quote:NEW YORK (CNN/Money) - Renewing his criticism of the dividend tax cut laid out by the Senate last week, Berkshire Hathaway's Warren Buffett called the proposal "voodoo economics" that uses "Enron-style accounting." The Senate's plan for dividends to be 50 percent tax free in 2003, 100 percent tax free in 2004 through 2006 and then face the full tax in 2007 would "further tilt the tax scales toward the rich," Buffett wrote in an opinion piece in the Washington Post. Buffett posed a hypothetical situation in which Berkshire Hathaway, which does not currently pay a dividend, paid $1 billion in dividends next year. Through his 31 percent ownership of the company, Buffett said he would receive an additional $310 million in income that would reduce his tax rate from about 30 percent to 3 percent, while his office secretary would still have a tax rate of about 30 percent. "The 3 percent overall federal tax rate I would pay -- if a Berkshire dividend were to be tax free -- seems a bit light," Buffett wrote. Instead of the Senate's tax cut plan, Buffett proposed that it provide tax reductions to those who need and will spend the money in the form of a Social Security tax "holiday" or a tax rebate to lower-income people. "Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets," Buffett added. He closed the piece by saying that the "government can't deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party."

quote:Originally posted by mainemom:
Check your premises.
In a pay-your-way system, there would be nothing that resembles the all-things-to-all-kids schools we have today. As you pointed out before, you can educate your kids for much less than $7000. Extras would be - extra. If you were paying for it, you'd be picky about what you were getting for your dollar. You'd shop around to find the right sschool or the right teacher for your child. Imagine such a world!

Ok, assume in a pay-your-way system, we get the cost down to $3,500 (which is about where it should be). How do we get that fellow to fork over $10,500 a year for his three kids in public school? And what do we do if he won't or can't?

quote:Ok, assume in a pay-your-way system, we get the cost down to $3,500 (which is about where it should be). How do we get that fellow to fork over $10,500 a year for his three kids in public school? And what do we do if he won't or can't?

We'll as educated land owners, we'll send his kids out to work with him in the fields, just like all the other serfs do. After all, we can't have just anybody getting an education. :eek:

quote:Originally posted by Randy:
We'll as educated land owners, we'll send his kids out to work with him in the fields, just like all the other serfs do. After all, we can't have just anybody getting an education. :eek:

No, we'd rather extract $10 or $12K per kid from people mostly without kids to provide a crappy education.Now that is a real plan!

quote: Ok, assume in a pay-your-way system, we get the cost down to $3,500 (which is about where it should be). How do we get that fellow to fork over $10,500 a year for his three kids in public school? And what do we do if he won't or can't?

Check your premises again.
You are having trouble imagining an education “system” that does not look like public schools, and that’s understandable. My vision for a pay-your-way education system includes an abundance of school types, none run by the government.
For instance, parents might form a cooperative school where they do much of the administrative work themselves and employ a few professional teachers. There already are nursery schools like this, and they are able to keep costs low.
A couple such cooperatives (or other privately run school) could be located in the different wings of a town’s present elementary school building. They’d pay rent to the town or to a private sector entity who may have bought the building from the town. Or they may be located elsewhere, but I wanted to point out that existing facilities would not go to waste. So you still ask, what of the family that refuses to buy education services for their kids?
I have a better opinion of people. Even without compulsory schooling laws, people want their kids to learn. Lose the public school free education paradigm, gain parents who are willing to pay for their kids’ schooling. There is always a way. And I guarantee you that if people are paying for their schooling, they will pay more attention to what they are getting, and there will be no taking it for granted.