Those poor rich people

[entirelysonja]

The Tax Foundation announced Wednesday that in 2007, more taxes were paid by the top 1% (40% of total income tax revenues) than the bottom 95% (39% of total income tax revenues). They claim that this data "clearly debunks the conventional Beltway rhetoric that the "rich" are not paying their fair share of taxes

Comments

[gsh]

Bet you ten bucks they don't count in payroll taxes in their calculations.

[entirelysonja]

Good point. I might see if I can find the data to work up those figures...

[xerhino]

I pretty much agree with this, except for one line. I think saying things like "Sounds to me like there was still plenty of money left over after paying taxes." detracts from the argument that this tax system is fair because it seems to imply that the tax system doesn't have to be fair so long as rich people have enough money left over. I realize that this is a blog entry and as such it is entirely appropriate to have opinions like that, but it's a pet peeve of mine because I think it weakens the overall argument and galvanizes opponents. Sorry for the soap box rant.

[entirelysonja]

I'm not entirely sure what you're getting at. Perhaps you could explain in more detail?

The reason I said that is because the folks who think our progressive tax system is unfair always seem to be implying that it places an unfair burden on the rich. That it's somehow not appropriate for people who have more to be paying a greater percentage of their income. My point about rich folks still having plenty of money left over after paying their taxes is intended to convey that the tax system is not impoverishing them. It's not as though someone who makes $450,000 a year is being taxed to such an extent that their net income is similar to the net income of someone making, say, $250,000 a year.

[xerhino]

Ah, it comes from a philosophical belief on my part that taxation is only legitimized by benefits or services to the taxee. The rich pay more because they use more services and reap more benefits, either directly or indirectly. Someone who makes a lot of money may only drive the same amount as I do, but to make that kind of money they indirectly utilize the highway systems for corporate deliveries, installations, sales, etc. Added up it is a much higher usage, so paying more transportation tax makes sense. I think that holds for most things that taxes par for (military, education, disaster recovery,...). The more you earn the more you benefit from the services and investments that were paid for by taxes

[entirelysonja]

Ah, it comes from a philosophical belief on my part that taxation is only legitimized by benefits or services to the taxee.

Hmm, I must admit that I've never considered this angle before, and some of the benefits in question are pretty remote. Taxes paid by the rich go, for example, to provide WIC payments for poor mothers and their children. This benefits the rich person only insofar as it benefits that rich person to live in a society where poor mothers and children don't starve to death. We hope, of course, that preventing those children from starving or those parents from pursuing a life of crime will benefit us all. But it's not a very direct relationship.

It seems to me that a lot of people don't perceive that it benefits all of us when everyone has decent health care, food, and housing.

[electroweak]

As gsh pointed out in comments, there are also payroll taxes to be considered, which include 7.65% for social security and medicare, or 15.3% for the self-employed.

The tax is also 15.3% on the other-employed, since that "extra" 7.65% is paid by your employer and therefore - if it weren't levied - it would either go into your salary (making it a ghost tax) or would go into keeping the business strong (thus making your job more secure).

[entirelysonja]

Yes, I was oversimplifying -- of course the employer pays the other part. I focused on what the individual pays because that was the emphasis of the report I was discussing.

I take it you are in favor of lower taxes?

[electroweak]

I take it you are in favor of lower taxes?

Oh, heck no. I believe in the lesson that was taught two centuries ago by Alexis de Tocqueville ("Grant me thirty years of equal division of inheritances and a free press, and I will provide you with a republic"). In modern terms, don't allow wealth to condense in the upper classes and don't allow money to bend the political process.

Therefore, high taxes are required to sustain freedom and to keep oligarchies from forming. And I say that as a "greedy" capitalist who is self-employed and working to get his own company off the ground - high taxes are good for democracy and good for capitalism. Allowing money to concentrate forever in the hands of the few destroys innovation and damages the flow of trade; both of these things would destroy capitalism. The people who want low taxes on the rich aren't in favor of capitalism, they're in favor of oligarchy.

[entirelysonja]

Oh, good -- for a minute there I thought I might have entered the twilight zone. :-)

[cos]

This prevalent use of "taxes" to refer to "income taxes" distorts all discussions of taxes beyond all recognition of reality. The income tax is the most progressive tax. When it is reduced, government makes up the difference by increase regressive taxes such as sales and property, and further makes up the difference with user fees on various things, like higher tuition at community colleges, or higher prices for public transit. Hardly any of these summaries of "taxes" consider the full picture. And the ones that try to show how much rich people are paying their share tend to do the very very worst, by pretending that "tax" means "income tax". The resulting numbers mean nothing and can be used only for deception.