Many of you are not from America. As such, I somewhat apologize for today’s topic- but, from what I have seen of my travels, this is true worldwide.
My folks came to America for political (religious) freedom. That freedom is relative; as I have written elsewhere, people hated us because of our religion. Not for anything we may or may not have done.
Others came to America because they believed the streets were paved with gold. Nowadays, they’d be lucky if they were paved at all.
The myth of America was that if you worked hard, you would be able to get ahead. A myth that could be true for some- enough to render that belief credible. No longer. As I have written here, the gap between the rich and the poor is now a chasm; the ability to grow richer- not rich, just richer- is nigh impossible.
Now, there’s a report from the Congressional Research Service that debunks another myth. The myth about tax rates and who pays what. It makes no sense to quote the maximum tax rates if no one really pays them.
By examining all the FEDERAL taxes people pay- taxes on investment income, corporate profits (from flow-through entities), and on wages, 25% of those who TAXABLE income exceeded $1 million paid less than 24% of their income to taxes. And, remember, taxable income is determined after deductions for charity, mortgages, state taxes paid, property taxes and the like. So, these folks clearly made more than $ 1 million.
In reality, these 94,500 individuals (or families, if they filed jointly) paid a lower percentage of taxes than 10 million individuals (or families) who had taxable income of $ 100,000 or less. On average, the millionaires paid 30% of their income in federal taxes. Those paying more taxes were those who had no capital gains, which is taxed at a rate of 15% or less.
Oh, and that claim that small business will be hurt if a surtax is imposed- or the rates are raised? Only 1% of business’ tax returns lead to individuals (or families) having taxable income of $ 1 million or more. So, those claims about jobs being hurt? Malarkey. Most new jobs are generated by startup firms- those that rarely achieve high income during their first years, as they are generating all those new jobs.
I’m so glad to see you writing this series, Roy. It needs to be said and written about and blogged on and then again, then some more. Many of my good friends are still not seeing the facts in front of their faces. This is inequitable!
I feel very strongly about these issues, as you know, and am pleased that a man as knowledgeable as you sees things through similar glasses. It helps me not mind the near-insults from friends so much. Thanks for the posts.
Great post, Roy, and somehow I’m not surprised by it at all. It’s very disheartening and I am one of those start up businesses that has not achieved a high enough income to be hurt. Thank you for the info! ~ Suerae
Well, Suerae…
We need to work to get your income up there so you can complain how much this tax surcharge will be hurting your feelings, then!
Roy
Bravo! Excellent post, Roy.
I love your remark about the streets not being paved at all. In the part of the country where I reside, taxes are sky high. And a portion of those monies is supposed to be designated for highway maintenance.
Hogwash. That’s what I say.
The condition of the highways is so bad, I’m buying new tires every time I sneeze. I’m one of those folks who has a long commute to the workplace every day. I’d REALLY like to know where my tax dollars are going.
I’m starting to think “someone” is enjoying lobster for dinner every night while I’m chowing down on my Ramen noodles.
Great post!
Melanie:
This entire problem results because folks were sold trickle-down economics. And, the salesman are still at it.
Those in the know clearly understand two things about trickle-down. One, any water that trickles down is riddled with pollutants, rendering it unfit for drinking. Or, the other kind of trickle-down which is unfit to be described in a document that may be read by children.
Thanks for adding your comments about our highways and byways. That is supposed to be the key factor in local and state government responsibilities. The problem is that repaving and replacing does not lead to an opportunity to cut a rope or name the structure. So, the politicians don’t want to be bothered to perform their duties, the work they were elected to do, since there are no photo-ops.
Roy
People who are not in business for themselves (or have an intent of making money in one) work until July just to pay their taxes. Trading time for money will never make anyone rich nor will it allow for write-offs.
What people do not know they do not know hurts them every time in every area of life–paying taxes is no exception.
Ali- that truism about working five months, six months, or more for nothing- is just not true.
Let’s pick the median income in the US. That’s 50K (actually 34 to 64, but I’ll pick the middle). Assuming, as you did, they are employees, and not self-employed.. Their social security/medicare taxes for the year are about $3500. Assuming they don’t own a house (which will lower their taxes, typically), they have standard deductions of $ 11400 (married) and exemptions (assuming 2 kids) of $ 13600. That means their taxable income is down to $ 25K (50K-11400-13600). and their income taxes are $ 2516. That does NOT include any child credit, or other special circumstances. So, the total taxes they paid is $ 6016 (plus state- but there are 45 different variations, so I’ll skip them). That means by February 15, they have paid their full federal taxes for the year. Most state taxes collect about 1/2 to 2/3 of the federal tax, making the state component $ 1400. That adds 10 more days. So, before February- taxes are paid.
We need to stick to facts- and not the chicanery that certain politicians want you to believe!
Anna:
I feel his and your pain! I have either created or been involved with the creation of about 70 entrepreneurial start-ups. From the INC500 to the tombstone entries found in the Wall Street Journal. Never once were our projects or enterprises centered about how much taxes we would be paying (oh, they were part of our plans, all right)- but on the mission to change the world, to bring that better mousetrap to the marketplace, and, in more than a few instances, to the changed lives of the employees of these enterprises.
Thanks for dropping in- please come back often!
Roy
The primaries do, indeed, cater to the party activists. They are the ones most committed enough to trudge out and vote a second time during the year. It’s not just the Republicans (although they do seem to attract the red meat eaters more than most), but the Democrats who attract their own fringes.
Thanks for the visit AND the comment.
Roy
Thanks for the visit and the comment!
As I’ve posted before, everyone is always right and they can prove it.
It will always be the case because it is Law.
Regardless of how you look at the numbers, the government and all the rich people know perfectly well that the government if funded by the rich in absolute dollars and cents.
That is why the state (and even federal) governments will step in keep the very rich from leaving their state (or the county).
It is also why the government officials do what the rich people want them to do.
But all of that aside, it really comes back to the Universal Laws that regulate everything based on where you put your dominant attention and where you are vibrationally.
Often times, some of the wealthy people I know frame the cancelled checks of the millions of dollars they pay to the IRS so that people can see just how much it really is.
Kathy
Kathy Hadley recently posted..Thoughts Become Your Destiny – Day 9 of 31 Days of A New Life
How can you assert such statements, Kathy?
I’ll allow you that 70% of the income taxes collected are paid by the rich. But, that’s 70% of 45%- which makes it 31.5% of the total collected. Since I just used the 70% that covers the rich, which means the top 10% of earners, I will even grant you that they all pay social security. (They don’t- it’s not collected on dividends, capital gains, etc.) And, given that – assuming ALL did pay social security, that would be 85 million in payroll taxes. Which is only 2% of the payroll taxes collected. So, the percentage collected from the RICH is at BEST 34%. With 10% paid by corporations, that least 56% paid by the non-rich.
They can frame the checks all the time- which would let folks know that folks like the Romney’s (only picking on them because that data is public) who got the right to put a ridiculous sum in tax-free pensions by chicanery (putting in “cheap stock” that is really worth billions) that the rest of us can’t and shelter that from taxation Which is why the percentage paid by them- including all taxes- was lower than more tan 60^ of all Americans- including the other rich…