Posted on 08/14/2007 8:48:36 AM PDT by shrinkermd
Edited on 08/14/2007 8:53:27 AM PDT by Admin Moderator. [history]
Non-business bankruptcy filings in the United States quintupled during the 1980s and 1990s, to over 1.5 million annually by 2004 from 300,000 in 1980. To address the problem of soaring bankruptcy filings during this period of unprecedented prosperity, two years ago Congress enacted comprehensive, bipartisan bankruptcy reform legislation.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 tightened bankruptcy laws to weed out chronic problems of fraud and abuse -- and to restore public confidence in the integrity of the bankruptcy system. Since that time, bankruptcy filings have plummeted to about half of their prior levels, and reports indicate ...
The claim that that average people pay little or no federal income tax does not take into account the extroardinary flat tax of almost 15% on a workers earned income.
In Minnesota the taxes are as follows. First for payroll taxes. Remember, employers withhold both state and federal income taxes as well as Social Security and Medicare.
For the average worker what is crucial for their understanding is know how high the Social Security and Medicare Taxes are.
Employer and Employee pay 6.2% of pretax wages for Social Security.
Employer and Employee pay 1.45% of pretax wages for Medicare.
And, the Medicare tax is unlimited while the Social Security tax stops at a gross income of $94,200.
Essentially the average worker is paying 15.3% of his gross wages as an enforced saving to pay for current retirees. This means the present generation is taxed for the older generation and everyone hopes that the generation following theirs can pay the freight for them as they had for their parents.
Even worse, in Minnesota we have a state income tax.
In Minnesota the rates are as follows: There are three rates: 0, low of 5.35% and high at 7.85%. These are steep. The low rate starts at $20,510 and the high rate starts at $67,360. FOR MINNESOTANS THE TOP RATE BEGINS AT $67,360—YOU ARE RICH IN THE VIEW OF THE STATE LEGISLATORS.
I have not added in sales, gasoline, luxury taxes nor the myriad of fees and real estate taxes the average person pays.
And then families have to grovel before government officials to beg for some of that money back to pay for the children's college educations, which are skyrocketing every year.
So if neither notes it, where did you get the information from?
Some of the other expenses (voluntary) that people have now that they didnt in the 70’s are monthly cell phone bills, internet access bills, huge cable bills, antivirus monthly computer bills, pay for radio service, lawn care by illegal aliens, pagers, satelitte dish fees, home warranty bills, huge credit card bills, etc...
I like that graphic. It shows the truth and the unfortunate thing is that to a lot of people it seems like a good idea.
The effective tax rate is 75%. You live on a quarter. If there were only Constitutional government, you would be four times richer. Your income would double, and prices would drop by half.
It would be higher if you factor in the payroll taxes your employer pays on your behalf. It’s a shell game to say that the employer is being taxed and not the employee. When determining employees salaries employers are very aware of the resulting tax liability, and act accordingly.
All taxes are paid ultimately by the American public. Even corporate income taxes.
It won't be long--especially if the Rats gain control of DC in 2008--before we are completely in that same situation.
The annual increase in the earnings cap for SS [Medicare has no cap], is more of the culprit than increases in the tax rate. In 1970 the earnings cap was $7,800. In 2000 it was $76,200 and today it is $97,500.
History of the OASDI contribution and benefit base
The Social Security & Medicare Tax Rates have not gone up as steeply. In 1970 the OASDI rate was 4.2% for the employee and HI was .350. From 1990 onwards, it is 6.2% and 1.45% respectively. You can bet that Congress will be pushing for another tax increase given the financial crisis both Medicare and SS are in.
One tax that would not be borne by the US taxpayer is a tax on remittances from illegal aliens to Mexico.
In such cases a "tax-cut" on non-existent or greatly reduced income is not of much help in avoiding bankruptcy, I'd rather see modification of the tax code to encourage the second wage owner to save and invest (in the form of increased contribution limits to private managed investments vehicles such as IRAs) and to fund a program of privately managed "bridge" insurance against catastrophic health-case costs for families of previously employed individuals who are out of work but seeking employment, with coverage costs based on previous work history.
Good Post. Links are wonderful. Thanks.
Including the Payroll tax as a 15% “flat tax on earned income” is misleading unless you take the position that SS and Medicare will be canceled without paying any benefits to the contributor.
SS/Medicare is a separate tax and a separate trust fund (even if it is full of IOU’s, it is still a separate trust fund) that buys an insurance plan which “guarantees” benefits in return for the insurance premiums paid.
In fact, the rate of return on your SS insurance “investment” goes from about 10% if you earn minimum wage down to a -2% if you earn at or above the SS earnings cutoff.
An individual with an income up to about $30K will do about as well as if the money was put in an annuity. Up to $50K/yr, he will on average get back all of the money contributed to SS, like he stuffed it in his mattress. Not a good rate of return, but he’ll get it back. Above $50K, he’ll get a negative rate of return.
You could argue that all government taxes give back benefits to the people in the form of roads, security, judicial system, etc. and SS is no different. But the SS benefit is tied directly to the amount contributed, so I would argue that it is really a government mandated savings plan and should not be counted as a “regressive flat tax on earned income.”
I wonder why they predict Interest Expense to fall so dramatically (to almost nothing) between 2010 and 2040.
That argument assumes that you are guaranteed to get the money you put in back. With Social Security, you are not, and if you are under 30, you're guaranteed NOT to.
A person could pay into SS for 50 years, die before age 67 and if single with no dependents, get nothing back except for a small burial allowance. Your contributions [taxes] don't belong to you per Flemming vs Nestor
Like most Ponzi schemes, those receiving SS now are getting back much more than they have paid in. That won't be the case for the under 30s.
Not so. It is based on your average earnings, not contributions.
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