As incomes of rich slid, tax take fell (VINDICATION!)

Houston Chronicle ^ | Sept. 26, 2003 | DAVID CAY JOHNSTON DAVID CAY JOHNSTON DAVID CAY JOHNSTON

[Action-America]

Sept. 26, 2003, 11:43PM

As incomes of rich slid, tax take fell

By DAVID CAY JOHNSTON

New York Times

The incomes of the top 1 percent of Americans fell 18 percent in 2001, as did their income taxes, shaving $66 billion off revenues and showing how dependent the federal government has become on its wealthiest citizens.

Overall, Americans had 2.8 percent less income in 2001 than in the previous year. But federal tax revenues fell 9.4 percent because the incomes of those at the top, who pay the highest tax rates, dropped so much more than the average.

The top 1 percent reported $1.09 trillion of income, down from $1.34 trillion in 2000, according to data posted by the Internal Revenue Service on the Internet on Friday without announcement.

The minimum income to reach the top 1 percent was $293,000 last year, down from $313,500 in 2000, but almost identical to the threshold in 1999.

The sharp decline in incomes at the top "is obviously due to the collapse of the stock market boom and the recession," said Bruce Bartlett, a senior fellow at the National Center for Policy Analysis, a lobbying group.

The combination of a sharp drop in income, if sustained for several years, and the tax cuts that were enacted this year could result in another sharp drop in taxes paid by the top 1 percent. The top rate on capital gains and dividends has been cut to 15 percent from 20 percent.

Taxes paid by the top group fell to $300.1 billion in 2001 from $366.9 billion in 2000. The decline accounted for the bulk of the $92.7 billion drop in individual federal income tax revenue in 2001.

The large drop in incomes caused the share of income taxes paid by the rich to shrink nearly a tenth. The share of total taxes paid by other groups consequently increased. The top group paid 33.9 percent of all income taxes, down from 37.4 percent in 2000.

The share paid by the next wealthiest group, the 4 percent of Americans just below the top group, grew slightly. The bottom half of Americans, the 64 million households making less than $28,000, accounted for a somewhat larger share of total taxes.

The biggest increase, however, was among those making $56,000 to $92,800, whose share of all income taxes increased to 18 percent from 16.7 percent. They accounted for a larger share of income taxes than the very wealthiest, the top tenth of 1 percent of Americans who paid 16 percent of the government's total income taxes.

Isaac Shapiro, an analyst at the nonprofit Center for Budget and Policy Priorities, said the tax rules set by Congress mean broad swings in revenues as the economy moves through good times and bad.

The IRS also released data on the top tenth of 1 percent, the most prosperous 129,000 households. This group had so much income that they made almost as much as the other nine-tenths in the top 1 percent.

This very top group, representing one in a thousand households, had $505 billion in income, for an average of $4 million each. To be counted among this group one needed an adjusted gross income of at least $1.3 million, down from $1.6 million in 2000.

This small group received almost $1 of every $12 earned by all 129 million U.S. households.

Bartlett, an advocate of lower taxes, noted that the Bush tax cuts in 2001 did not cause the drop in taxes by the wealthy.

"It is pretty clear that the tax cut played no role by the fact that the average tax rate paid by the top 1 percent actually went up slightly," he said.

This group paid 27.5 cents in taxes on each dollar of reported income, up a sliver of a penny from the previous year. This increase was caused by a drop in income from capital gains, which are taxed at a much lower rate than wages.

Overall, the tax rate fell, with Americans paying the government 14.2 cents in taxes on each dollar of income, down from 15.3 cents in 2000.

 

[visualops]

He was advocating change. He was advocating a particular method for changing the government.
This system is too big, too powerful and too corrupt to be brought down by any means other than the means that brought down the Soviet Union...Not by force of arms, but by the death of a million cuts, each cut being inflicted by another "person of ability" throwing in the towel
He was also complaining about the current system. A "socialist regime" he called it. So that's it- a complaint about the current system and a desire to change it. I'll stick with my assessment.

That's great he's happy. I still can deplore the fact he's decided that joining the legions of leeches in this country is somehow a good thing.

[Cboldt]

I still can deplore the fact he's decided that joining the legions of leeches in this country is somehow a good thing.

He's paying as he goes. Anyway, as the saying goes, "knock yourself out."

[tortoise]

One of the primary reason that the incomes of the rich fell in 2001, is the fact that many of our wealthiest taxpayers left the United States in 2001 and took all of their wealth with them.

That's a load of nonsense for the most part, and illustrates that you have no clue what the more well-off people do with their money. Most of them, like me, have a highly variable income that we can control to suit the economic climate. Up until three years ago, I was definitely filing in the top 1% for several years because I had a lot of profit to bleed. When the economy went south, I sealed the hatches and focused on long-term business investments rather than letting the government rape me for my seed corn during this dry spell.

As a consequence, I have averaged $10k gross income for the last three years, which is just enough to cover my basic living expenses. All of my other resources have been dumped into startups and business ventures, all of which are starting to take off and gain value (something I'll pay for eventually).

So don't you worry about where my money is going. It's been paying the salary of class warfare idiots like yourself at companies I built, all without taking a dime of profit for the last few years while the economy has been tough because it would be taking money away from businesses that need it. I don't need closet communists masquerading as "conservatives" cheering every time Uncle Sam rapes me, because next time around I may decide not to play. Rather than putting my money in job producing investments I'll just live large through the bad economy so that you can see me write a fat check to the IRS. Just don't whine when you don't have a job.

[PatrioticAmerican]

In my situation, I didn't have to let them go, but making them happy was easy for the most part. I paid attention and helped ensure their professional careers. Some left every now and then bitching about something only they had control over. I quit because the profits weren't worth it. I can do something else and make half what the previous income was, but have twice as much time to enjoy it.

[Nebullis]

The biggest increase, however, was among those making $56,000 to $92,800, whose share of all income taxes increased to 18 percent from 16.7 percent. They accounted for a larger share of income taxes than the very wealthiest, the top tenth of 1 percent of Americans who paid 16 percent of the government's total income taxes.

An astoundingly meaningless bit of fact, yet, reported by David Cay Johnston and the New York Times to fuel resentment.

[Elliott Jackalope]

Here was my original statment:

"Find some other sucker to pay the big taxes, from here on I'm going out of my way to earn so little that if anything I'll get free money from the government."

Please explain how this translates to "deciding to join the legions of leeches in this country"? I'm not seeking out any aid whatsoever. I'm not applying for food stamps, or welfare, or public medical care, or anything else. I merely speculated that if I earn a small enough amount them maybe I'll get one of those "you didn't make enough money, here's some free cash" refunds from the IRS that I've heard others talk about. Goodness knows I'll probably never qualify for that, and I'll never apply for it, but maybe some bit will get flipped in some file somewhere and I'll get a few bucks from the IRS. And maybe pigs will fly.

I'm just amazed at how things get processed in your filter. I've decided that I have enough in my life, and that it is not worth the extra effort to try to acquire more when the government takes so much. I do believe that I have that right. Or would you prefer to force me to work so that I can continue to support our glorious socialist republic?

Just out of curiosity, do you work for the government?

[ancient_geezer]

I say, the system should be biased to favor that corporation at the EXPENSE of Stanley, not the other way around.

Can be done, but not through an income or tax, flat or otherwise in place.

On the otherhand,

Rep. Bill Archer, Chairman, House Ways and Means Committee:

• "A recent survey was done, in Europe and Japan, of the major corporations and I was astounded at the results. They were asked, 'If the US abolished its income tax and went to a sales tax, would that have any impact on your decisions?' Eighty percent of the corporations said they would build their factories in the United States of America. Twenty percent said they would move their international headquarters to the United States of America."

Under a retail sales tax,

• Costs of tax compliance are reduced to a small fraction of what it is under an income tax regime, and the taxes paid are not embedded into the price of goods and services,
• Anything being exported goes out without taxes embedded providing as much as a 23% lowering in export pricing, while
• Anything being imported the retail sales tax must be collected adding to import prices. The differential acts as an exceptional advantage to companies with the United States.

Thomas Hobbes from Leviathan

• It is fairer to tax people on what they extract from the economy, as roughly measured by their consumption, than to tax them on what they produce for the economy, as roughly measured by their income.

[gatex]

"I think you mean Delaware."

You are correct --- I realized it later when I checked Halliburton's annual report.

[StriperSniper]

Here in Jersey, we do have quite a few drug companies though. ;-)

[visualops]

Well, I was talking about your speculation. I just didn't find it amusing. I know all about that "free" money. It ain't really free.
You can earn whatever you like. I never questioned that. I spoke to your comments about the current system and what to do or not do, about it.
No, I don't work for the government.
I waited tables for about 10 years, spent 3 years at home for pregnancies/babies, worked as a screen printer for about 6, and mostly computer graphics for the last 8 years or so. Does that help you figure me out?

[visualops]

I'll admit my leeches comment was just a jab because I was peeved.

[visualops]

Yep :)

[Elliott Jackalope]

Fair enough. I'm glad that you don't work for the government. I too worked in computer graphics (23 years doing I.C. layout design in Silicon Valley). Now I'm trying to put together a small business based on video production, just to make a few bucks so I'm not always drawing down on savings.

Once I wanted to make a million, now I just want to make do. That's what getting beat up by the government every day will do for a person. Best of luck to you.

[SSN558]

One of the primary reason that the incomes of the rich fell in 2001, is the fact that many of our wealthiest taxpayers left the United States in 2001 and took all of their wealth with them.

Many of the wealthiest taxpayers in America are or were foreign investors. Putting your money in America was viewed as a safe stable place to stash your wealth away from the greedy fingers of foreign politicians and countries that did not have a 4th ammendment. That situtation does not exist anymore due to the patriot act. For all the FICA taxes we pay, your money is no more safe in the bank than if you burried it in the yard in a cookie jar. The interest rates of a cookie jar (0%) are competitive with those set by the federal reserve.

Even Bill Clinton has established a residence in a foreign country (Ireland) to sheild his wealth.

[visualops]

It's not a rebate. It's an advance on the difference between next year's deduction and the last. The money will be subtracted when one files in 2004.

[yankeedame]

Perhaps a drastic cut in Government spending would create more job's here instead of them going overseas.

Ah, but only to a point. The other major factor causing companies to go "overseas" is the current anti-business/tort lawyers runamuck condition we're got today. For example:

I just read in Forbes that Nike, attacked, by civil rights groups, sought to explain itself and its policy, etc.- in print. (newspaper I believe)

Nike was immediatly sued by these CR people for false advertising...and the judge agreed! He stated that Nike, by explaining itself in print, was, in essence, advertising. And since the CR people still charge that Nike is a bloody-sucking, child-exploiter, corporate s.o.b. well then, Nike is guilty of false advertising.

This is not the healthiest enviroment for a business, of any size.

[ItisaReligionofPeace]

While the death tax does many things, it doesn't take all of his money. Everything above 1 million is taxed.

[ItisaReligionofPeace]

Actually, doing nothing is a way to change things...

[visualops]

so I'm not always drawing down on savings

Be glad you have savings.

I don't think the kind of work you did is quite what I do. (I don't know what "I.C." is although if explained I'd probably say "doh!" lol)

[visualops]

so I'm not always drawing down on savings

Be glad you have savings.

I don't think the kind of work you did is quite what I do. (I don't know what "I.C." is although if explained I'd probably say "doh!" lol)