The successful pay plenty of taxes

For many years, the Tax Foundation has published figures on shares of federal income taxes paid by percentiles of income. They always showed those at the top of the income distribution paying an overwhelming share of all taxes. This was powerful refutation of the traditional liberal argument that the rich don't pay their fair share. These data went mostly unnoticed until 1978, when Paul Craig Roberts, then working for Sen. Orrin Hatch, R-Utah, published an article about them in the March issue of Harper's Magazine. Back then, Harper's was a highly respected publication -- it has since gone downhill -- and his article got a lot of attention.

Roberts showed that the top 1 percent of taxpayers -- those earning more than $59,338 in 1975 -- paid 18.7 percent of all federal income taxes, up from 17.7 percent 5 years earlier. A similar increase was shown by the top 5 percent, top 10 percent and top 25 percent of taxpayers. The top half of taxpayers paid 92.9 percent of all income taxes in 1975, meaning that the bottom 50 percent paid just 7.1 percent.

Interestingly, the reaction of liberals to the Roberts article was to deny it. They simply refused to believe that the data were correct. House Majority Leader Jim Wright, D-Tex., was especially incredulous. He demanded that the Congressional Research Service give him the correct data.

The CRS response was written by Donald Kiefer, now head of the Treasury's Office of Tax Analysis. Although quibbling with some of Roberts' interpretations, he confirmed that the data were accurate. He had little choice because the original figures came straight from the Internal Revenue Service's statistics of income report.

In the years since, the annual publication of the IRS's tax shares data has been eagerly awaited by those opposed to class envy. The most recent figures became available on Jan. 10 and were released by the Joint Economic Committee of Congress. Amazingly, they show that the share of total federal income taxes paid by the top 1 percent of taxpayers has doubled since 1975. In 1999, they paid 36.2 percent versus 18.7 percent in 1975, the latest available when Roberts wrote his article.

Other upper-income groups have also seen a sharp increases in their share of the tax burden. Between 1975 and 1999, the top 5 percent of taxpayers went from 36.6 percent to 55.5 percent of taxes, the top 10 percent went from 48.7 percent to 66.5 percent, the top 25 percent went from 72 percent to 83.5 percent, and the top half of taxpayers went from 92.9 percent to 96 percent. The bottom 50 percent of taxpayers now pay just 4 percent of federal incomes taxes.

To put these numbers into perspective, it should be noted that the top 1 percent of taxpayers reported just 19.5 percent of adjusted gross income. Thus, their share of the tax burden exceeded their income share by almost 17 percentage points. For the top 5 percent, the spread was even greater -- more than 21 percentage points. By contrast, for those in the bottom 50 percent, the difference between the percentage of total taxes and total income was minus 9.25 percent. That is, their income share greatly exceeded their tax share.

On a chart, these data form a kind of "yield curve." For economists, the yield curve measures the spread between short-term interest rates, which are normally low, and long-term rates, which are normally higher. The slope of this curve is an important indicator of monetary policy and future economic conditions. A tax yield curve would show how steeply progressive federal income taxes are.

Those in the top 1 percent of the income distribution paid a 27.5 percent effective income tax rate in 1999. Polls show that this exceeds the highest percentage of taxation that most Americans believe anyone should pay, no matter how large their income. The latest, a Fox News/Opinion Dynamics poll taken in March 2001, found that a majority of Americans think 20 percent is the most anyone should pay.

However, polls also show most people greatly underestimate how much the rich actually pay. That is why liberals usually get a receptive audience when they say that the rich aren't paying their fair share and should be denied the benefits of any tax cuts. One study found that most people think that the rich don't pay more than 20 percent now.

For these reasons, greater knowledge about how much the wealthy actually pay in taxes is a powerful antidote to class warfare. Most Americans are fair-minded and don't envy those with incomes higher than they have. But if they are misled about the facts, they can make mistakes and vote for demagogues who hate the rich simply because they are rich.

And a bit further down on the thread I notice one of the liberal Democrat disruptor wannabees trying to make believe that if a corporation does not pay taxes it must be doing something not allowed by the income tax laws.

I don't know for the gentleman of whom you speak, but you, I am sure, would be interested in the following, from Neal Boortz's exquisite little book, The Terrible Truth About Liberals...

"BUSINESSES DON'T PAY TAXES"

Haven't you heard Liberal politicians talk about businesses needing to carry more of the tax burden? You probably think that's a good idea, don't you? After all, those huge, rich, evil multinational corporations should pay more taxes so that the little people can keep more of their own money to spend.

If those thoughts have seriously crossed your mind then you have fallen victim to a massive Liberal con job.

For starters, consider these points:

1. There is absolutely no limit to the government's desire for your money. Liberal politicians want as much of your money as they can possibly get their hands on, and they will keep reaching into your pocket and grabbing your cash right up to the point where they start to seriously fear you are about to cut their hands off.

2. These liberal politicians will use any subterfuge, any lie, any trick they can to keep you from realising just how much the government is really costing you.

An example: During Bill Clinton's 1998 State of the Union speech, he bragged that America had the smallest government in decades. The Liberals in the House Chamber dutifully applauded this lie. Then Clinton went on to propose a federal budget that would consume 20.1 percent of the Gross Domestic Product, the total value of all goods and services produced in the United States in that year. Not once since the end of World War II had our government consumed that much of the GDP.

Just how, dear attentive reader, do you square Clinton's claim to the smallest government in decades with the reality of his budget proposal?

Let's go back to businesses supposedly paying taxes.

When politicians think they have pushed the individual taxpayers to the breaking point, they will start to talk about raising taxes on businesses and those evil corporations.

Washington politicians, especially the Liberal ones, believe that the average American actually thinks that businesses and corporations pay taxes. Unfortunately, sadly, these people are right; the average American thinks just that.

But the average American is dead wrong.

Here is a lesson that Liberals do not want you to learn. They know it's true but they don't want you to find out. The following paragraph is pornography to a Liberal.

The only entity in this country that pays taxes is the individual! Corporations and businesses do not pay taxes. They collect taxes from individuals and pass them on to the government.

Virtually every economist in this country who is not working for the government will concur with this statement. (An important distinction. Government economists are being paid to preach the government mantra. They shoot straight with you and they are suddenly looking for jobs in the private sector.)

On second thought, maybe I had better expand on that. Let's try again: Virtually every economist who is not working for the government or teaching in a college or university will concur with this statement.

When a business or corporation takes money out of corporate earnings to send to the government in the form of taxes, that money isn't created out of thin air. If the money had not been paid to the government as taxes, it clearly would have been used for some other purpose. The money could have been used to pay salaries, give employees raises, pay stockholder dividends, pay profits to owners, buy raw materials, have a company barbecue, put new leather upholstery on the corporate jet...you get the general idea. Sending that money to Washington means it isn't going to be spent by that company somewhere else.

Now, if the money paid to the government was going to be used for salaries, just where did that money actually come from? Those dollars came right out of the pockets of the employees who would have received a raise or of the new employees who would have been hired.

OK, so what if no raises or new hiring were in the picture? Then the money might have been paid to stockholders as dividends, or to the owners as profit. Either way, when the money is diverted to taxes, it has to come out of the pocket of some individual - the individual stockholder, or the owner.

Whenever a dollar is spent, it eventually filters down to an individual somewhere. The person who provided the beef or the plastic forks for the employee barbecue. The worker who built the stomach pump used on half the staff the night of the company barbecue. The man who stitched the new leather upholstery in the corporate jet. Or the farmer who raised the cow that gave up its life for the cause of hamburgers and comfortable corporate posteriors.

Our economy operates for the benefit of individuals. All profits and earnings are eventually spent to benefit individuals, and all costs of doing business are eventually paid by individuals.

The individual is the basic unit of our economy. This is where all bucks stop.

So, when a corporation pays a dollar in taxes, that dollar ultimately comes from some individual's pocket.

When taxes are raised on corporations or businesses, those taxes are paid by individuals somewhere. The employee who goes without the raise. The person who doesn't get hired. The stockholder who sees his dividend increase. The farmer who can't get a good price for his cow.

Somewhere an individual human being pays. The business or corporation collects the money, and off it goes to Washington.

So, when you hear some Liberal yammering about the need to raise taxes on businessmen and rich corporations, that politician is talking about raising your taxes.

Just for the hell of it, you should drop him a line and let him know that you're on to him.

We understand, needless to say, that such liberals are not restricted to the Democratic Party.

More and more people are being pushed into the AMT calculation. Unbelieveable, even the ordinary citizen now has to compute his taxes in two different ways to determine what tax they owe! And just try to determine AMT liability if you own a "tax free" municipal fund.

The tax code in this country has become a bizarre knot of twisty little mazes.

A truely awesome, and sometimes humorous, testament to the authorities' absurdity is the "reduction of paperwork" notice one finds on practically every form -- a paragraph or two explaining how this particular form has complied with the "reduction of paperwork" legislation and advises one as to how much time one might have to spend on gathering information and filling out the form. Totally stupid -- they don't include the time one spends scratching one's butt or picking one's nose! What's that, free time?

Certainly good for a chuckle! Well, I get my thrills by trying to generate as much paper as I can, using my trusty computer, when I file my tax return. Bury them in paper, I say. Fie to the electronic filers, I say. Stuff it up their a$$es!

All we show is that the rich have gotten richer by 200%(twice as rich) while paying only a 157% increase in taxes. IMHO, What the author did was maybe try to fool us by giving us the increase in the share of taxes paid by rich, while leaving out the increased share of income. We will not know for sure unless we know all factors. Am i right here? parsy.

What you are not taking into account is the "Rich" that are not really "rich".

I work my glutteus maximus off in a medical practice earning my living one account receivable at a time. Yet, I pay the same top rate for every Dollar I earn in the latter part of the tax year as does a Bill Gates or a Warren Buffet or a Michael Jordan.

The example you used was in the $1 million/ year club. The one account receivable at a time "working rich" will never see that level of earnings.

When I used to make around $X/year, I paid around $25,000/ year in taxes. Now that I earn slightly above double that amount of income, I paid $96,000 in taxes in 2001.

Personally, once I hit the time of the year where Uncle Sam takes 39.1% of every Dollar I earn, I would love to take the rest of the year off and take time to enjoy life. Unfortunately, you can't tell your patients that you are not going to see them until the next tax season starts.

The real "Rich" can afford to pay 39.1% on their millions of Dollars of income that they get each year.

For us "working rich" that put in 55 hour work weeks that also include dragging ourselves out of bed at all hours of the night for emergencies, the 39.1% rate is a stake through our hearts.

There is something developly flawed in this article. It assumes that one who is wealthy must pay more to the government. The figures are staggering, but odious since there are dems out there with the same numbers.

How dasterdly is this system, hailed by Alexander Hamilton, who believed government must take care of us, and to this day is sucoured by the likes of liberals. Is the IT legal? It cannot be if one accepts the basic tenets of our constitution.

Amendment 16: Income taxes

(This amendment was proposed on July 12, 1909, and ratified on Feb. 3, 1913.)

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

In 1894, Congress passed an income tax law, but the Supreme Court declared it unconstitutional. This amendment authorized Congress to levy such a tax.

This amendment: HIGHWAY ROBBERY

Tell me, what exactly is your point? Are you for more taxes?

I'm for NO taxes, but for everyone not just a select few who happen to make bilions.

Eliminating corporate or any other taxes will only further shift the tax burden to the individual taxpayer. Which taxpayer the burden is shifted to would be up to Congress. Presently, like it or not,(though it's never pointed out before) this thread is about a Republican Congress' tax laws.

Spending is increasing 11% this year, eliminate the tax on one group the other makes up the difference. It's not complicated.

It's more than just a little strange that you approve of an obvious shyster corporation once raking in billions paying no tax, yet chastise, even want to suppress the lowest wage earner from getting ahead by what?...shifting the tax burden DOWN to them.

Lower prices for a new Ford or Chevy made in Mexico (they can't afford), or lower prices for Nikes (they can't afford) not only won't happen, it won't help them to advance themselves with the heavier tax burden shifted to them either.

No one else notices the GOP tax debate/mantra has deteriorated from "middle class tax cut" to eliminate taxes on those poor corporations and high wage earners?...as if earning high wages means you're a producer of some kind.....

Even the phony "sales tax" scams, in their own words, "replace" the corporate income taxes with a phony sales tax.

If you really want to see business expansion, eliminate the taxes on individuals and tax ONLY corporations...then let THEM go begging to congress for tax relief year after year after year.

I have read about some CEOs making millions per year and when you stop to figure out how much they make to show up for 8 hours, it is nearly obscene. I am beginning to think we need to bring back the 70% rates again. parsy.

So what? Why do liberals like yourself think that because someone makes a lot of money, they should pay more for the government they live under?

I already know the answer. You are a statist. You believe that somehow life is intrinsically, inherently unfair. You believe in Robin Hood collectivism and that "somebody" should take money from the rich, who don't work some number of hours elitists like you deem necessary, or suffer enough for their labor, and give it to others.

I'm hear to tell you that I probably qualify as one of the "rich" and to get that way, I worked like a dog for 5 years, putting in 80 hours a weak and facing total bankruptcy in those early years. I recently sold my business, and the government, which did nothing to contribute to the business but asked for its share nonetheless during the entire time, gets to come along and take a huge percentage of my efforts. I also gave bonuses to my loyal employees who stayed with me even when things looked bleak, and they are now finding out what it means to be "rich." 5 figure bonuses cut in half because of government taxes. I paid tens of thousands of dollars to lawyers and accountants because if you make one little mistake in interpreting the tax laws, the IRS will come back for more money in 2-3 years because you "failed to pay" your fair share in not adhering to some miniscule, entrapping regulation they issue.

Fairness in taxation should mean that everyone pays their fair share...which means no person should pay taxes on a progressive scale. Taxes should be consumption based, not income based. Progressive taxation is a blank check for socialists to expand government.

When 10% of the population pays the majority of income taxes, and 50% of the population not only gets "free" government but gets money back from the government, it is manifestly unfair. The government does not create wealth, it only confiscates and redistributes it. Why the hell work hard if a bunch of 8-5 government kleptocrats think, as do you, they have some claim on my labor?

We have too much government, and it is because of people who think as you do. I only hope I live to see the day when the milk cows for the federal gigantocracy, the engines of the economy, tell like-minded parasites like you to go to hell and just quit working. Pay your own damn fair share.

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