Only Stupid People Don’t Understand that the Rich Already Pay Most of the Taxes
Just yesterday, I opined that one of the top priorities of a Democratic senate would be to pass a “millionaire’s tax.” Coincidentally, I just read this morning that downstate Assemblyman Micah Kellner is calling for the plan to be reintroduced as a way to pay for fare hikes on public transportation in New York City.
In sum, the idea is to levy a surcharge on any taxpayer making more than a million dollars. And this is on top of all the other taxes that that individual is already paying. This seems like a great opportunity to explain why a millionaire’s tax is a bad idea.
First, the rich already pay a lot of taxes. To give you some perspective, I recommend the article The Rich and Their Taxesby Steven Malango from the Manhattan Institute. He explains that for the most recent year that data was available, “our top 1 percent of filers were paying nearly 40 percent of the federal income tax bill, while those in the 2nd to 5th percentile paid another 20%.” In comparison, those “taxpayers in the 26th to 50th percentile (that is, with an adjusted gross income roughly between $31,000 and $62,000) paid 11% of all federal income taxes.” Thus, the top five percent pay 60% of all federal taxes, while the 25% in the middle pay only 11%.
The figures are similar here at the state level, where “the top income bracket represents just 0.4 percent of taxpayers, but they pay one-third of the state’s income tax.”
There will come a point where some of these wealthy folks will decide that too much of their income is being paid to the state of New York. And because they’re rich, they can simply move to some other state with a more favorable tax structure. This will leave the rest of us a bigger tax burden to pay. Whining socialists in hemp overalls will complain that this argument could be taken to extremes to justify all kinds of crazy handouts to the super rich. However, you are extremely naive if you do not understand that people have a tax burden tipping point.
I know that many of you - even those without the hemp overalls - are thinking “I’m not a millionaire…so this isn’t going to effect me….why do I care if some rich jerk pays more taxes.” The problem is that once a “tax surcharge” is created for a specific tax bracket, the temptation grows to create more tax surcharges on other tax brackets. For instance, the Working Families Party has proposed the following structure: 7% surcharge on those making more than 10MM; 5% surcharge on those making more than 5MM; 3.5% surcharge on those making more than 1MM; and 2.5% surcharge on those making 500K.
It will be hard to fight the temptation not to broaden the categories a bit once they’ve been created. There have already been proposals to bring the surcharge down to the 250K mark. Once you’re in that territory, you are going to be taxing a lot of two income families that are already taxed pretty hard. Think about it, an experienced nurse married to an experienced police officer make that kind of money….is that the ”super-rich” that we want to be targeting with special tax surcharges?
And by the way, once the state creates a surcharge that brings in all kinds of revenue, it will find creative - and often destructive - ways to spend all that money. Like Assemblyman Kellner’s idea to use the surcharge to artificially keep subway fares even lower (and to pay the unionized workers even more).
I think I can speak for all of Western New York when I say “PLEASE PLEASE DO NOT RAISE THE FARES ON THE NYC SUBWAY BY A QUARTER! DEAR GOD NO!!”
Oh wait…I guess I don’t give a rat crap about that … or most of the other schemes that my tax dollars are used for in this state.
I may not be rich, but I think I do have a tipping point.
5 Responses to “Only Stupid People Don’t Understand that the Rich Already Pay Most of the Taxes”
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Take a look at our local wealthy like the Wegmans, Golisano And RICH Dollinger. They use their wealth to create jobs (except for RICH D maybe he can pay more taxes). Wegmans is now in other lower cost tax states. How long before they start moving corporate functions and their jobs to other states?
Funny you mention how the top 1% pay 40% of the income tax. What you don’t mention is that they make 85% of the income in the US as well. If they paid there fare share, they’d be paying 85% of the income tax. If the money they made was broken out to $100K lots and compared to the lower brackets, the taxes the super wealthy pay are far less.
When you’re talking about people that are making 400 million a year , 8,000 times more than the average worker, I’m not surprised that they’re paying more in taxes. If the tax bracket were flat (no exceptions, no discounts or write offs, or loopholes), the super rich would being paying their fair share. Right now, they’re not.
And make no mistake: The super wealthy aren’t going to pull jobs because taxes go up. If anything they’ll make more to help divest their income. When they pay low taxes, they take it as income and store the wealth. When they pay high taxes they invest more into their corporation to grow it and make it worth more, while making their income less so they pay less in taxes. Notice how Dick has paychecks coming from Haliburton years after he was in office and not working for them? He “deferred his salary” for years to make the brackets line up more favorably to pay less tax. Ask any CPA that works with companies and you’ll get this advice.
The only thing that “trickles down” is yellow. Regan-omics didn’t work in the 80s, and it’s not working now. The fact that you can’t see that makes you the stupid one.
Hey Woody….thanks for the response.
I’m not sure why I’m the stupid one for stating that the rich pay the majority of our taxes. You even agree with that assessment. Your only concern is that the rich aren’t paying their “fair share.” Which is, apparently, signifigantly more than the majority that they already pay.
And by the way, I never said that the rich should not pay the majority of the tax burden. I am simply stating that people (like you) who vaguely argue that “loopholes,” “discounts,” and “write-offs” allow the rich to escape their responsiblity to pay taxes are simply ignorant. Instead of making pee jokes, perhaps you should have read the article to which I directed you. It states that:
“The portion of taxes paid by the top filers continue to grow throughout the 1990s and into the new century, pausing only for recessions, which are generally periods in which the share of taxes paid by the rich falls because their incomes tend to decline the most. By 2005, the most recent year data are available, our top 1 percent of filers were paying nearly 40 percent of the federal income tax bill, while those in the 2nd to 5th percentile paid another 20 percent. Every other group saw its share of the tax bill decline, sometimes substantially. Those taxpayers in the 26th to 50th percentile (that is, with an adjusted gross income roughly between $31,000 and $62,000) paid 11 percent of all federal income taxes, down from 20 percent back in 1980, while those in the 11th to 25th percentiles (earning between $62,000 and $104,000 today), paid 16 percent of the federal tax bill, down from 24 percent in 1980. ”
Also, I tire of people whining about “loopholes” in the tax code. It is elementary that the tax code serves two purposes: 1. raise revenue; and 2. modify behavior. In almost every case, so-called loopholes are created to influence filers to act in a way that is deemed beneficial to the society at large. For instance, if you invest money in stocks, you don’t pay long term capital gains until you divest yourself of the investment. In other words, it is more beneficial to society for you to have your capital invested in the market, where it can be used productively to create jobs and such, so the tax code is written in such as way as to encourage you to keep you money there.
Finally, you need to frame your argument in a more honest manor. The poor and middle class pay relatively little in taxes, both as a percentage of tjotal taxes collected and as a percentage of individual income. When you cry for the rich to pay their “fair share,” what you are really doing is whining that you want rich people to pay for more stuff for you. I want free health care….the rich aren’t paying their fair share. I don’t want to pay for housing…the rich aren’t paying their fair share. I want to go to college for free…the rich aren’t paying their fair share. I don’t want to have to pay for transportation…the rich aren’t paying their fair share.
It gets tiring after a while. Please, just be honest about what you want: someone else to pay for your essential needs so that you have more disposable income to spend on video games, wizard shaped bongs, or a Toyota Prius.
Furthermore, Woody, your comments are just completely false. Since 2000, the top 1% of earners in the US have accounted for 15-20% of the total income in the US, while paying anywhere from 30-40% of the taxes. That means they are averaging about double the tax burden of the average worker, or, as you might put it, paying roughly 200% of their “fair share”. A true flat tax would result in the top 1% paying about half of the income tax they are paying today. Get your facts straight.
You want to do the math MisterF? Here’s the link to the IRS tables. You’ll find that the “high income” gainers (in this case top 8%) are making 35% of the income, and paying 40% of the income tax. Given our current law though (not flat but graduated) they’re not paying their share, not nearly what they would be paying without all the loopholes.
@Occam: I’m not just whining about loopholes. From the same tables, you can see that the top 10% take 45% of the tax write offs. The average write-off for people in that top 10% is three to four times that of any group below them. Want some raw numbers for 2006 (the latest you can get from IRS)?
Write offs by the top 8%: $286,505,663
Representing tax revenue of: $103,142,038
Tax revenue for lower 56% before credits:$103,640,881
So the upper 8% write off enough tax revenue to pay the entire tax debt for the lower.
And that’s not even considering things like deffered income, 104k drop outs, unexercised stock options, and other tricks the rich use to prevent money from showing up as income to start with. This is just on what they’re reporting as income (AGI), which doesn’t take into account pre-tax deductions and the like.
So don’t tell me the super rich aren’t taking tax breaks… The numbers are there. You’re entitled to interpret them as you see fit, but you can’t refute the facts I’ve stated, since they’re just that… facts.