It is not a coincidence that the Estate tax and the Income tax are the ones the conservatives whine about all of the time.
Other taxes like state taxes and municipal taxes are regressive. So are excise taxes, sales tax, tariffs, drivers licenses, license plates, ad valorem taxes, utility taxes, tariffs and other government fees.
Conservatives also like to talk about fair taxes and flat taxes. These are synonyms for regressive taxes. Take a look at a graphic from the web site of a well know right winger:
It looks like the rich are really getting shafted, but this graphic is looking at one tax tree in a bigger tax forest. What most people pay in Social Security tax, Medicare tax, which are collectively called the Federal Insurance Contributions Act (FICA) tax, is equivalent to Federal Income Tax. Don't forget that other regressive tax, real estate. Now the tax burden of the rich and the middle class is not so different.
How do you tell that someone is lying about how much tax the rich pay in the US? They say the words "income tax". Warren Buffet came out before the 2008 election and said the obvious -- he doesn't pay that much tax:
Imagine that. Why would he want to do that? Perhaps because income tax is, so far as I know the only federal tax where the rich pay more as a percentage of their income than the poor do. Remember how Buffett said "payroll and income tax?" Well he said that because it matters. Take a look at the pair of charts from the Congressional Budget Office:
How very very -- interesting. Social Security Taxes account for almost as much in terms of federal receipts as income tax. And, although I'm sure most readers are aware of it, how much of their income do the rich pay for Social Security? Hmmmm
All of this is before we even get into the fact that state taxes tend to be quite regressive, and that municipal taxes which are primarily based on land-taxation and fees, are almost completely regressive.
So no, the top 1% don't pay 39% of all federal tax revenue. Not even close. And if you were to add in all state and municipal taxes and fees (fees are just taxes called something else) the number would continue to drop.
That chart showing that in 2015 the share of income tax will have increased? There are two things going on there -- one is that, theoretically, most of Bush's tax-cuts will be rescinded by that point. The second is that if the rich keep getting richer faster than everyone else, well, they're going to be paying more taxes and since income tax is (still) somewhat progressive, that means more money coming into federal coffers.
As for Martin Regalia's laughable "if you were to impose [the Democrats'] tax increases, you would see the US go into a recession", well, that's like saying "if [the Democrat's] tax increases were to occur, I predict the sun would rise tomorrow".
The US is [now in a] recession and what the Democrats do or don't do in terms of taxes won't make any big difference, especially not what amount to the fairly marginal changes of the Rangle plan (he isn't planning to, say, get rid of the unequal treatment of capital gains or anything else very radical, after all).
But for the record, the last time the right squealed about tax raises like this was when Clinton raised taxes. It was going to send the country into a spiral of recession. What happened, instead, was a record-setting expansion.
Bottom Line: Whenever someone talks about the income tax like it's the only tax, and uses that to say how hard-done-by the rich are, they're lying by omission and you should grab your wallet. Because every dollar the top 1% doesn't pay someone else is going to have to pay.
Federal expenses don't go down. Absent ending a major war (WWII, not some police action in a backwater), they never do. There's no free lunch. If the rich don't pay, you will, and if neither you nor they have to pay, then you'll pay later with interest and your kids and grandkids will pay.
And, just as they were in the age of FDR, when they opposed virtually everything he did, the Chamber of Commerce is, has and will continue to shill for the interests of the obscenely rich over those of ordinary Americans. And if that means a little, or a lot, of lying is required, they can afford to pay men like Martin Regalia very well to do so.
Warren Buffett, the famous investor known as the "Sage of Omaha", has complained that he pays a lower rate of tax than any of his staff - including his receptionist. Mr Buffett, who is worth an estimated $52bn (£25bn), said: "The taxation system has tilted towards the rich and away from the middle class in the last 10 years. It's dramatic; I don't think it's appreciated and I think it should be addressed."
During an interview with NBC television, Mr Buffett brandished an informal survey of 15 of his 18 office staff at his Berkshire Hathaway empire. The billionaire said he was paying 17.7% payroll and income tax, compared with an average in the office of 32.9%.
"There wasn't anyone in the office, from the receptionist up, who paid as low a tax rate and I have no tax planning; I don't have an accountant or use tax shelters
I just follow what the US Congress tells me to do," he said.Of course the usual suspects came out and screamed. And by usual suspects I mean Republicans and the deeply reactionary US Chamber of Commerce, who trotted out their bought and paid for economist to mislead by misdirection:
Meanwhile, Mr Buffett's remarks drew a robust response from the US Chamber of Commerce, which said the top 1% of US earners accounted for 39% of tax revenue - and the highest earning 25% of the population delivered 86% of the tax-take.
The chamber's chief economist, Martin Regalia, said: "Mr Buffett has made an awful lot of money and if he wants to pay more taxes, I think that's fine. But I think he should get his facts straight."
He added: "There's no question in my mind: if you were to impose [the Democrats'] tax increases, you would see the US go into a recession."Ok, so let's start with the "1% of US earners accounted for 39% of tax revenue". Let's put this into context. The numbers he's getting come from this study by the Tax Foundation:
This year's numbers show that both the income share earned by the top 1 percent and the tax share paid by the top 1 percent have reached all-time highs. In 2005, the top 1 percent of tax returns paid 39.4 percent of all federal individual income taxes and earned 21.2 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of AGI and paid 36.9 percent of federal individual income taxes.So Regalia, who is certainly well enough educated to know the difference between "39% of tax revenue" and "39.4% of all income tax revenue" is lying by omission.
Imagine that. Why would he want to do that? Perhaps because income tax is, so far as I know the only federal tax where the rich pay more as a percentage of their income than the poor do. Remember how Buffett said "payroll and income tax?" Well he said that because it matters. Take a look at the pair of charts from the Congressional Budget Office:How very very -- interesting. Social Security Taxes account for almost as much in terms of federal receipts as income tax. And, although I'm sure most readers are aware of it, how much of their income do the rich pay for Social Security? Hmmmm
This contribution or tax is 6.2% of an employees' income paid by the employer, and 6.2% paid by the employee. This tax is paid only on earned income and, as noted above, only up a threshold income for calendar year 2006 of $94,200 called the "Social Security Wage Base" (SSWB).
The SSWB increases every year according to the national index average of wages which also indexes the bend points in the Primary Insurance Amount (PIA) computations.
Unearned income like interest from bonds, money market and bank accounts and dividends from REITs, common stocks and rents are not subject to the Social Security tax. Wages are defined in the United States Code 42 USC Section 409. Thus, by simple arithmetic higher earners pay a lower average tax rate than those with earned income at the upper end.So, after the first about hundred thousand, you don't pay any more social security taxes. That, ladies and gentlemen, is the very definition of a regressive tax. A person earning $94,200 and a person earning $100 million pay exactly the same amount of tax. For the person earning $94,200 (who isn't even close to being in the top 1%) the tax rate is 6.2%. For the person earning $1,591,711 (the average amount earned by the top 1% in 2005), it's about 0.36% (rounding up). IE. so small they hardly even notice it. And yet that tax raises almost as much money as the income tax because it hits everyone, even down to people who are earning minimum wage. (Note: the Social Security cutoff for 2009 is $106,800).
All of this is before we even get into the fact that state taxes tend to be quite regressive, and that municipal taxes which are primarily based on land-taxation and fees, are almost completely regressive.
So no, the top 1% don't pay 39% of all federal tax revenue. Not even close. And if you were to add in all state and municipal taxes and fees (fees are just taxes called something else) the number would continue to drop.
That chart showing that in 2015 the share of income tax will have increased? There are two things going on there -- one is that, theoretically, most of Bush's tax-cuts will be rescinded by that point. The second is that if the rich keep getting richer faster than everyone else, well, they're going to be paying more taxes and since income tax is (still) somewhat progressive, that means more money coming into federal coffers.
As for Martin Regalia's laughable "if you were to impose [the Democrats'] tax increases, you would see the US go into a recession", well, that's like saying "if [the Democrat's] tax increases were to occur, I predict the sun would rise tomorrow".
The US is [now in a] recession and what the Democrats do or don't do in terms of taxes won't make any big difference, especially not what amount to the fairly marginal changes of the Rangle plan (he isn't planning to, say, get rid of the unequal treatment of capital gains or anything else very radical, after all).
But for the record, the last time the right squealed about tax raises like this was when Clinton raised taxes. It was going to send the country into a spiral of recession. What happened, instead, was a record-setting expansion.
Bottom Line: Whenever someone talks about the income tax like it's the only tax, and uses that to say how hard-done-by the rich are, they're lying by omission and you should grab your wallet. Because every dollar the top 1% doesn't pay someone else is going to have to pay.
Federal expenses don't go down. Absent ending a major war (WWII, not some police action in a backwater), they never do. There's no free lunch. If the rich don't pay, you will, and if neither you nor they have to pay, then you'll pay later with interest and your kids and grandkids will pay.
And, just as they were in the age of FDR, when they opposed virtually everything he did, the Chamber of Commerce is, has and will continue to shill for the interests of the obscenely rich over those of ordinary Americans. And if that means a little, or a lot, of lying is required, they can afford to pay men like Martin Regalia very well to do so.
Ian Welsh November 1, 2007 - 5:00am
Source: http://agonist.org/ian_welsh/20071031/the_income_tax_lie
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