Every time the issue of tax cuts comes up, Republicans trot out figures about the high percentage of their income that the rich pay in taxes. But really, this is only a theoretical figure; thanks to creative accounting, they avoid paying their share. There's an interesting article at http://www.globalpolicy.org/nations/launder/general/2002/0528rich.htm about how it's done and what reforms could be made to prevent it. Excerpts: "If all taxes are deducted from your paycheck before you see it, you may suspect that the IRS is collecting a bigger chunk of your income than it collects from corporations and the rich. And you would be right. These days, conniving lawyers hired by large companies and wealthy individuals utilize an array of tools to evade paying U.S. taxes. Some of the most common are offshore bank accounts, offshore trusts, and phony incorporations of U.S. companies in foreign tax havens. According to an IRS consultant, the U.S. loses $70 billion every year in revenue to this sort of tax evasion. All told, as much as $5 trillion of U.S. money is in offshore assets, $3 trillion of which is in offshore bank deposits." ... "It is wrong that people whose income is subject to withholding are carrying the brunt of the federal budget. Middle and lower income families end up paying higher taxes or having important programs cut, while the tax evaders enjoy our schools, hospitals, courts, national parks, clean water, safe food, our national defense, and even government contracts, without paying their share."22 responses total.
(employees are paid out of thin air?) (more specifically: isn't it the same companies that are responsible for withholding taxes from employee paychecks that pay the employees who pay the taxes, such that these companies are actually paying the taxes indirectly? I know that doesn't address the so-called "wealthy individuals" cited, but there's still a larger picture to see. do you really think we, as working-class individuals, would be better off if our paychecks *didn't* show how much was paid in taxes?)
If taxes were not so high, it would not be as profitable to avoid/evade them.
If people wouldn't avoid/evade them, they wouldn't have to be as high.
precisely. The use of abatements, shelters and tax breaks doesn't change the need for the government(s) to raise revenue: The burden is merely shifted elsewhere. Eliminating the breaks does raise more revenue, but corresponding legislation is required to reduce taxes elsewhere.
Of course, the real problem is that if you're rich, you can buy off enough politicians to get your own specially tailored tax loophole, or at least to get the IRS's enforcement funding cut.
And the whole scheme works so well that according to IRS statistics well over 90% of the total tax revenue collected is paid for by those "scheming tax evading rich people who pay no taxes". Yep, those evil people pay for most of what liberals think the government ought to be doing more of. I seems to recall there are also studies what show a flat tax of 10% across the board would also generate more revenue - go figure.
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(don't lobbyists pay taxes?)
Re #6: Two questions: How are they defining "the rich"? Are those actual revenue figures, or just a calculation of what they *should* be paying? I suspect there's a huge difference between what the rich pay in theory and what actually gets collected.
He did say "revenue collected," Mr. gull. Did he not?
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If the rich are successfully concealing their wealth and income,
it means that:
1.) A lot of the rich are hiding in the ranks of lower-income
taxpayers, at least according to the tax returns.
2.) Whatever they're screaming about paying, it is nowhere near
as large a fraction of their true income as either they claim
or government figures suggest.
And the IRS data which any citizen who bothers to can download and
analyze to their hearts content in order to determine the facts.
Yes it is absolutely true that any tax cut will benefit the "rich" more
than the "poor" - especially since the rich pay at a greater rate in the
first place. Even with a flat tax rate this is absolutely true. (Just
as a "decrease" in an "increase" can be seen as "cutting benefits"
which is another arguement that some folk use to demonize other folk)
If there was a flat tax of 10% and I make 1000$US and you make 100$US I
pay 100$US in taxes while you pay 10$US. If the rate is cut to 5% I
'benefit' 50$US to your 5$US. So what. We are both paying our equal
share.
(Its tragically comical that when the modern income tax was
"temporarily" imposed in 1913 is was originally intended to effect just
that upper 2% of income earners ("the rich") and both the form and the
relevent law fit on one page. Boy we've sure made a lot of progress
since then.)
A flat tax is inherently *un*fair because the the rich benefit more from the infrastructure paid for by taxes. It would essentially be the poor, who are less able to pay, subsidizing the rich. Which leads to part of another article: http://www.prospect.org/print/V14/8/lakoff-g.html "Conservatives have worked for decades and spent billions on their think tanks to establish their frames, create the right language, and get the language and the frames they evoke accepted. It has taken them awhile to establish the metaphors of taxation as a burden, an affliction and an unfair punishment -- all of which require "relief." They have also, over decades, built up the frame in which the wealthy create jobs, and giving them more wealth creates more jobs. "Taxes look very different when framed from a progressive point of view. As Oliver Wendell Holmes famously said, taxes are the price of civilization. They are what you pay to live in America -- your dues -- to have democracy, opportunity and access to all the infrastructure that previous taxpayers have built up and made available to you: highways, the Internet, weather reports, parks, the stock market, scientific research, Social Security, rural electrification, communications satellites, and on and on. If you belong to America, you pay a membership fee and you get all that infrastructure plus government services: flood control, air-traffic control, the Food and Drug Administration, the Centers for Disease Control and so on. "Interestingly, the wealthy benefit disproportionately from the American infrastructure. The Securities and Exchange Commission creates honest stock markets. Most of the judicial system is used for corporate law. Drugs developed with National Institutes of Health funding can be patented for private profit. Chemical companies hire scientists trained under National Science Foundation grants. Airlines hire pilots trained by the Air Force. The beef industry grazes its cattle cheaply on public lands. The more wealth you accumulate using what the dues payers have provided, the greater the debt you owe to those who have made your wealth possible. That is the logic of progressive taxation. "No entrepreneur makes it on his own in America. The American infrastructure makes entrepreneurship possible, and others have put it in place. If you've made a bundle, you owe a bundle. The least painful way to repay your debt to the nation is posthumously, through the inheritance tax. "Those who don't pay their dues are turning their backs on our country. American corporations registering abroad to avoid taxes are deserting our nation when their estimated $70 billion in dues and service payments are badly needed, for schools and for rescuing our state and local governments."
> A flat tax is inherently *un*fair because the the rich benefit more from > the infrastructure paid for by taxes. It would essentially be the poor, > who are less able to pay, subsidizing the rich. Are you talking about a flat tax here or a head tax? The rich still pay more than the poor under a flat tax -- if they make twice as much, they pay twice as much and if they make four hundred times as much they pay four hundred times as much..
What he said. I am strongly opposed to a tax that is a constant number of dollars regardless of income. A tex system ought not create a situation where it's possible to owe more in tax than one can generate. However, a tax where dollars_owed == dollars_earned * constant is acceptable, and fair, so long as the constant is less than 1. Earn nothing, pay nothing; and it is a simple matter to predict exactly what a gross wage of so much per hour actually means. The incentive-to-earn is still present, and so is the extra charge to the "rich".
I guess it depends on whether you think the benefit one gets from government is directly related to income. I think it increases much faster than that, personally.
Judging from his enormous contributions to the Bush campaign, one might infer that Ken Lay would agree with you.
For what it's worth: When all taxes are taken into account (income, sales, payroll, property, etc), both the top and bottom fifth income groups pay about the same percentage of their income (that is, 19 percent). The middle 60 percent pay between 15 and 17 percent, if memory serves.
Could you provide the source for that statement?
Sure. NYTimes, 1/21/03, page 1 of section C (the business section). The article itself is no longer available on the web (for free, anyway), but the accompanying chart is: http://tinyurl.com/5019
Thank you. Very interesting. Shouldn't they have included the employer's share of the SS tax, too? Do you know of any similar study which evaluates the amount of direct government benefits (e.g., health care) and payments to individuals by the individual's income level?
You have several choices: