America divided by Democrats: "The Non-Paying Class"

Wall Street Journal ^ | Nov 20, 2002 | Editorial

[The Raven]

The stars look to be in perfect alignment for tax relief. With a GOP majority in both houses of Congress, the Bush Administration is making eager and energetic noises, and the economy is in what Fed Chairman Greenspan calls a soft spot.

[Republic of Texas]

When the Dims successfully create a country where a voting majority pays NO taxes, and we may already be there, we will never be able to reduce taxes or government because that voting majority will always choose to raise the burden on those who pay for their free lifestyle.

[Republic of Texas]

" All of which suggests that the last thing the White House should do now is come up with more exemptions, deductions and credits that will shrink the tax-paying population even further. "

The key point. Reduce taxes, AND loopholes so that more people pay a lower percentage of taxes. That way more people have a vested interest in lower taxes.

[Leto]

NO VATS!!! They are a tool of the socialist.

[The Raven]

>>NO VATS!!! They are a tool of the socialist.

You're referring to the graduated income tax???

[Leto]

I want to get rid of it too!

[eno_]

If government were, say, only 15% of GDP, nobody would much care HOW they were taxed - VAT, flat tax, etc., would all be pretty much OK, since the overall hit would not be so bad. Plus it would be easier to make the switch from income tax to VAT (much less intrusive) because the stakes would be lower and people would not be so suspicous of a hidden tax increase. Tax reform should not just be about HOW we are taxed, but that, fundamentally we are taxed WAY TOO MUCH.

[dljordan]

This will never happen. Washington DC would have to become a swamp again before they would release their stranglehold on the taxpayer.

[ancient_geezer]

From the CBO link in reply #2 you can find the tax shares with respect to family income shares, as well as many other applicable measures presented in time series tables.

http://www.cbo.gov/showdoc.cfm?index=1545&from=4&sequence=0

To answer your question in 1999 the

Top 5%:

accounts for 27% of the total family income and

paid 37% of total federal taxes(individual, payroll, corporate, estates etc.)

Top 1%

accounts for 15% of the total family income and

paid 21% of total federal taxes.

Another statistical source more detailed tax, income, expenditure, home ownership etc. information arranged in annual ftp folders for 1984 through 2000 though the narrowest slice is quintile data:

ftp://ftp.bls.gov/pub/special.requests/ce/standard/

[ancient_geezer]

Plus it would be easier to make the switch from income tax to VAT (much less intrusive) because the stakes would be lower and people would not be so suspicous of a hidden tax increase.

The fundamental purposes of VATs is to assure payment and allow unperceived increases in tax rates. They always rise and the individual still pays them, the taxes are just hidden from the electorate's view in the price of goods and services as inflation.

Secondly VATs impose the greatest burden on the economy through overhead costs associated with planning, accounting, litigation, and payment of such taxes increasing such taxes by more than 65% of what they generate in revenues, not even counting the increased administration costs that hits the government budget.

Last, I really hate to be the one to inform you but for all practical purposes, our corporate tax is a VAT.

http://www.taxfoundation.org/foundationmessage03-00.html

"Under the WTO definition of the term, a sales tax is an indirect tax, as is an European-style VAT. The economic equivalence of an European-style VAT and a subtraction-method VAT is well-established. A subtraction-method VAT is essentially identical to a business income tax except that all purchases of plant and equipment may be expensed, rather than depreciated as under current U.S. law."

And every man woman and child in the nation, pays federal taxes through that VAT.

DO YOU PAY YOUR INCOME TAX
AT THE SUPERMARKET?
by D. Sherman Cox J.D. L.L.M. Taxation

The idea is to get rid of it and to remove the blinders over the electorates eyes, not to hide taxes even more than we do already.

To remove taxation of the individual, is to remove the goad which assures accountability of government to the electorate. Federal tax rates are high because a majority of the electorate do not proportionately perceive burden their demand for largesse imposes on the minority of citizens.

The siren call for representation without taxation is the formula that got us where we are at today. The ability to hide or disguise taxation from the view of large sectors of the electorate allows the Congress to get away with the creation of the evergrowing monster that it fosters.

A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw

Liberty and freedom have a price, responsibility. If that price is avoided there are no brakes on the growth of government, the ultimate result is the end of freedom through creeping socialism.

Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamors for more from government looking for the top 40% of income earners/producers to foot the bill. That perception continues to grow ever stronger by eliminating even more participants from the Federal Individual Income Tax rolls as proposed in the tax reduction proposals through changes in personal exemption limits and other mechanisms such as the EITC, transfer of taxation into corporate(i.e. hidden sales) taxes.

[ancient_geezer]

Tax reform should not just be about HOW we are taxed, but that, fundamentally we are taxed WAY TOO MUCH.

Patrick Henry, Virginia Ratifying Convention June 12, 1788:

• "the oppression arising from taxation, is not from the amount but, from the mode

Until you make the taxes visible to all, there will be no incentive to reduce the size of government, nor to reduce taxation.

Milton Friedman as quoted by Northwest Florida Daily News, 10-16-2000:

• "If we're to have an income tax, it's a good thing for everyone to pay at least a nominal amount," he said. "If non-taxpayers become a majority in society, what would restrain them from voting for ever higher taxes on others?"

We wonder why over 60% of the voters PERCEIVE no problem with the taxrates and vote for polidiots that promise to bring home the most bacon because they are the only ones that benefit from higher taxes with more spending on socialistic "gimme" programs. As this continues under Bush or anyone else for that matter, expect a liberal tax and waste congress for many years to come.

We are all paying through the nose, rich and poor while politicians play the tune of envy and resentment that Americans continue to respond to not understanding the full picture what is happening to them. The NRST is a means to open VOTERS eyes to the reality.

[eno_]

My point, exactly. You are going to get just as passionate a response to flat tax proposals in that they do not get rid of IRS intrusion into our personal lives. But ANY type of reform is going to be easier if you get the level of government spending down.

[ancient_geezer]

My point, exactly.

Nice attempt a spin, but not quite, you expect that government will magically go on a reduction diet while the majority of the electorate perceives little tax burden. History demonstrates quite the contrary is true.

But ANY type of reform is going to be easier if you get the level of government spending down.

Easier tax reform perhaps. Just how do you intend to get government spending down with the majority of the electorate pushing for more largess from government on the backs of the minority of citizens.

70% of the voting public clamors for more from government looking for the top 40% of income earners/producers to foot the bill.

Getting Spending down is by far the more difficult tax under such conditions.

Sir Alex Fraser Tytler (1742-1813). Scottish jurist and historian:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.

Government spending is not going down until the majority of citizens perceive the tax burden that is placed on them.

You've got the cart before the horse.

You are going to get just as passionate a response to flat tax proposals in that they do not get rid of IRS intrusion into our personal lives.

Which is precisely a good reason to be against such proposals, as well as the fact the Flat Tax increases the majority of folks who do not perceive taxes by increasing the personal exemption bracket.

Furthermore, the Flat Tax maintains a VAT component which hides the tax burden from the view by embedding it in inflation.

I'll stick with going to an NRST that meets the standard of visibility as well as getting government intrusion our of our financial privacy.

H.R.2525
SPONSOR: Rep Linder, John (introduced 07/17/2001)
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer: http://www.fairtax.org & http://www.salestax.org

[lepton]

bookmark bump

[RWG]

paid 37% of total federal taxes(individual, payroll, corporate, estates etc.)...corporate taxes should be removed from the totals I am interested in. My taxes reflect the activities of my sole proprietorship and my farm because I am the account by which all of the reckoning is done. Corporations may be 'persons' but I am only interested in 'natural persons'.

[ancient_geezer]

corporate taxes should be removed from the totals I am interested in.

You pay corporate taxes through consumption purchases as all business taxes are derived from and paid out of sales revenues. Only individual citizens can ultimately pay taxes, corporations are merely associations of individuals as stockholders, employees and customers.

Howeve,r In the CBO report corporate taxes amount to 2.9% of gross family income, distributed in proportion to family capital income on the theory that corporate taxes decrease investment returns.

See the following more detailed study of the same information for distribution tables as a function of tax type:

http://www.cbo.gov/showdoc.cfm?index=3089&sequence=11#tableG-1a

 

Table G-1a. Effective Federal Tax Rates for All Households, by Income Quintile, Using Comprehensive Household Income Adjusted for Household Size, 1979-1997 (In percent)
												1997
Income Categorya		1979	1981	1983	1985	1987	1989	1991	1993	1995		Under 1997 Law			Under 2000 Law
Total Effective Federal Tax Rate
Lowest Quintile		8.1	8.3	8.1	9.7	8.9	8.5	7.9	7.6	6.0		5.6			5.3
Second Quintile		14.0	14.2	13.0	14.5	14.3	14.3	14.2	13.5	13.6		13.9			12.8
Middle Quintile		18.2	18.7	17.1	17.7	17.3	17.6	17.3	17.3	17.6		17.5			16.7
Fourth Quintile		21.2	21.9	19.9	20.2	20.0	20.3	20.2	20.4	20.8		20.5			20.0
Highest Quintile		27.8	27.1	23.7	23.7	25.4	25.1	25.2	26.8	28.3		27.7			27.4
	All Quintiles	22.3	22.4	20.2	20.6	21.3	21.3	21.1	22.0	22.9		22.8			22.3
Top 10 Percent		30.0	28.4	24.7	24.4	26.8	26.2	26.3	28.5	30.4		29.4			29.1
Top 5 Percent		32.2	29.6	25.3	24.9	27.9	27.0	27.3	30.1	32.3		30.9			30.5
Top 1 Percent		37.3	31.8	26.8	26.0	29.9	28.2	28.9	33.3	36.4		33.3			32.7
Effective Individual Income Tax Rate
Lowest Quintile		-0.4	0.3	-0.1	0.3	-0.7	-1.1	-1.9	-2.3	-4.5		-5.0			-5.3
Second Quintile		3.9	4.5	3.5	3.9	3.4	3.5	3.1	2.4	2.2		2.4			1.3
Middle Quintile		7.3	8.0	6.6	6.5	5.8	6.1	5.9	5.5	5.5		5.6			4.8
Fourth Quintile		10.1	11.0	9.1	8.9	8.2	8.4	8.2	8.0	8.0		8.1			7.5
Highest Quintile		15.9	16.7	14.1	13.8	14.6	14.4	14.1	14.7	15.5		16.1			15.8
	All Quintiles	11.1	12.0	10.2	10.1	10.2	10.2	9.8	10.0	10.4		11.0			10.5
Top 10 Percent		17.7	18.3	15.5	15.2	16.4	16.0	15.7	16.7	17.6		18.1			17.8
Top 5 Percent		19.4	19.7	16.8	16.4	18.1	17.4	17.1	18.6	19.6		20.0			19.5
Top 1 Percent		22.4	22.0	19.1	18.5	20.7	19.5	19.7	22.5	23.4		23.0			22.3
Effective Social Insurance Tax Rate
Lowest Quintile		5.3	5.8	5.8	6.5	6.6	7.2	7.0	6.8	7.2		7.4			7.4
Second Quintile		7.3	7.8	7.6	8.4	8.6	8.7	9.0	8.8	8.8		9.2			9.2
Middle Quintile		8.3	8.9	8.7	9.2	9.1	9.4	9.3	9.5	9.6		9.7			9.7
Fourth Quintile		8.4	9.0	8.9	9.4	9.5	9.7	9.9	10.2	10.3		10.2			10.2
Highest Quintile		5.6	6.2	6.3	6.5	6.6	6.7	7.4	7.5	7.5		6.7			6.7
	All Quintiles	6.8	7.5	7.4	7.8	7.9	8.0	8.4	8.5	8.6		8.1			8.1
Top 10 Percent		4.5	5.1	5.2	5.2	5.4	5.4	6.3	6.2	6.4		5.4			5.4
Top 5 Percent		3.2	3.8	3.8	3.8	4.1	3.9	5.0	4.8	5.1		4.2			4.2
Top 1 Percent		1.4	1.6	1.6	1.5	1.7	1.5	2.2	2.0	2.7		2.1			2.1
Effective Corporate Income Tax Rate
Lowest Quintile		1.0	0.6	0.5	0.5	0.5	0.5	0.5	0.6	0.5		0.5			0.5
Second Quintile		1.4	0.8	0.6	0.6	0.9	0.8	0.6	0.8	0.8		0.7			0.7
Middle Quintile		1.6	1.0	0.9	0.9	1.2	1.1	1.0	1.1	1.2		1.1			1.1
Fourth Quintile		1.8	1.2	1.1	1.1	1.4	1.3	1.2	1.3	1.4		1.4			1.4
Highest Quintile		5.6	3.6	2.7	2.8	3.6	3.5	3.1	3.9	4.7		4.4			4.4
	All Quintiles	3.4	2.2	1.8	1.8	2.4	2.3	2.0	2.5	2.9		2.9			2.9
Top 10 Percent		7.1	4.6	3.4	3.5	4.4	4.3	3.8	4.9	5.9		5.4			5.4
Top 5 Percent		9.0	5.6	4.2	4.3	5.4	5.3	4.7	6.0	7.2		6.3			6.3
Top 1 Percent		13.0	7.9	5.7	5.6	7.2	6.9	6.6	8.2	10.0		8.0			8.0
Effective Federal Excise Tax Rate
Lowest Quintile		2.1	1.6	1.9	2.5	2.5	1.9	2.3	2.5	2.7		2.8			2.8
Second Quintile		1.3	1.1	1.2	1.5	1.5	1.3	1.5	1.6	1.8		1.6			1.6
Middle Quintile		1.1	0.8	0.9	1.1	1.1	1.0	1.1	1.2	1.3		1.1			1.1
Fourth Quintile		0.9	0.7	0.8	0.9	0.9	0.8	0.9	0.9	1.1		0.9			0.9
Highest Quintile		0.7	0.6	0.6	0.6	0.6	0.5	0.6	0.6	0.7		0.5			0.5
	All Quintiles	1.0	0.8	0.8	0.9	0.9	0.8	0.9	1.0	1.0		0.9			0.9
Top 10 Percent		0.7	0.5	0.5	0.5	0.5	0.5	0.5	0.6	0.6		0.4			0.4
Top 5 Percent		0.6	0.5	0.5	0.5	0.4	0.4	0.5	0.5	0.5		0.4			0.4
Top 1 Percent		0.5	0.4	0.4	0.3	0.3	0.3	0.3	0.5	0.3		0.2			0.2
SOURCE: Congressional Budget Office.
NOTES: Effective tax rates are calculated by dividing tax liabilities by adjusted comprehensive household income.
A household consists of the people who share a housing unit, regardless of the relationships among them.
Comprehensive household income equals pretax cash income plus income from other sources. Pretax cash income is the sum of wages, salaries, self-employment income, rents, taxable and nontaxable interest, dividends, realized capital gains, cash transfer payments, and retirement benefits plus taxes paid by businesses (corporate income taxes and the employer's share of Social Security, Medicare, and federal unemployment insurance payroll taxes) and employee contributions to 401(k) retirement plans. Other sources of income include all in-kind benefits (Medicare, Medicaid, employer-paid health insurance premiums, food stamps, school lunches and breakfasts, housing assistance, and energy assistance). Households with negative income are excluded from the lowest income category but are included in totals.
Individual income taxes are distributed directly to households paying those taxes. Payroll taxes are distributed to households paying those taxes directly or paying them indirectly through their employers. Federal excise taxes are distributed to households according to their consumption of the taxed good or service. Corporate income taxes are distributed to households according to their share of capital income.
a. Income categories are defined by ranking all people by their comprehensive household income adjusted for household size--that is, divided by the square root of the household's size. Quintiles, or fifths, of the income distribution contain equal numbers of people.

---

 

You may adjust as you see fit.

[anymouse]

Something about two wolves and a sheep deciding what's for dinner. :)

[The Old Hoosier]

Athread with a discussion on the corporate income tax.

[guywithnoshoes]

"The most recent data from the IRS, in 2000, show that the top 5% coughed up more than half of total tax revenue. Specifically, we are talking about folks with adjusted gross incomes of $128,336 and higher being responsible for 56% of the tax take."

Are you meaning the same top 5% that owns 90% of the wealth in this country? 56%/90%=62.22%. That means that the top 5% are only paying 62% of what the average American pays as a fraction of income; the rich are 38% undertaxed *by your own figures*. The American system is regressive, not progressive. The top 5% vote for lower taxes for themselves, for the exact same reasons as you claim that the lower income brackets would vote for higher taxes for other people-- to make the middle class pay for the rich, as they already do.

[Republic of Texas]

" If we're to have an income tax, it's a good thing for everyone to pay at least a nominal amount," he said. "If non-taxpayers become a majority in society, what would restrain them from voting for ever higher taxes on others?" "

NOTHING. (in fact they are doing that now)

[Republic of Texas]

First, Mr. Socialist (Socialism Always Fails. tm), where do you get this 90% statistic? The 56% statistic is from the IRS, year 2000. Where is YOUR number from?

Second, Wealth is not the same as income, so they cannot, logically be compared. Wealth is your net worth, most of which you have ALREADY paid taxes on. Income is what you made this year.

I know that socialists must avoid logic at all costs, lest their house of cards collapse, so I expect your retort to contain some name calling and no facts. That's ok, I don't get mad when my 4 yr old neice throws a fit either, it's just the way 4 yr olds are.