Observations on life

Latest data from the Tax Foundation

Over the next year you are going to hear a lot of rhetoric about taxes, the rich, fair share and all the rest. Here are the facts, I will leave it to you determine what is fair. 

What appears clear is that half of Americans do not pull their financial weight. What is not clear is this because of choice, chance or circumstance. 

To gain a perspective on income levels, here is a calculator to determine your income percentage. Note: the 1% generally starts at about $400,000 per year; pretty good but hardly millionaires and billionaires. Do you think having an income of $400,000 or more is unfair?

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    • In 2013, 138.3 million taxpayers reported earning $9.03 trillion in adjusted gross income and paid $1.23 trillion in income taxes.
    • Every income group besides the top 1 percent of taxpayers reported higher income in 2013 than the previous year.
    • All income groups paid higher taxes in 2013 than the previous year.
    • The share of income earned by the top 1 percent of taxpayers fell to 19.0 percent in 2013. Their share of federal income taxes fell slightly to 37.8 percent.
    • In 2012, the top 50 percent of all taxpayers (69.2 million filers) paid 97.2 percent of all income taxes while the bottom 50 percent paid the remaining 2.8 percent.
    • The top 1 percent (1.3 million filers) paid a greater share of income taxes (37.8 percent) than the bottom 90 percent (124.5 million filers) combined (30.2 percent).
    • The top 1 percent of taxpayers paid a higher effective income tax rate than any other group, at 27.1 percent, which is over 8 times higher than taxpayers in the bottom 50 percent (3.3 percent).

    Source: The Tax Foundation 

      

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    3 replies »

    1. Income taxes can never be “fair.” The word fair is too subjective to mean anything. To most people things are fair if it benefits them but unfair if they see it as a burden.

      I don’t think federal income taxes should be viewed separately, but should be viewed combined with social security and Medicare taxes to see who pays what in total taxes.

      What matters with income taxes is not how much income you make but how much you get to keep. Everybody focuses on the top marginal rate but it’s your effective rate that counts.

      How much marginal rates are, and how many of them there are, is only half the story. The other half is at what levels do these rates kick in.

      One person gets his health insurance from his employer and pays no tax on the benefit. The employer writes it off as an expense. Another person has to pay for his own health insurance with his after tax dollars because he doesn’t get health insurance from an employer.
      WHAT’S FAIR ABOUT THAT?

      One person borrows money to buy a home or (homes) and gets to write off the interest, (a subsidy provided by the tax code). Another person rents his home and is not subsidized.
      WHAT’S FAIR ABOUT THAT?

      The mortgage interest deduction is also responsible for distorting prices in the housing market making it harder for first time home buyers to afford a home.
      WHAT’S FAIR ABOUT THAT?

      One person saves for his retirement by investing in stocks. When he cashes them in, he pays capital gains tax on the entire amount. Another person saves for retirement by buying a house. When he cashes it in he gets the first 250K or 500K if married tax free.
      WHAT’S FAIR ABOUT THAT?

      I could go on and on but you see my point. I’m sure people who get a benefit will say that it is fair and those who don’t will say it’s unfair.
      The only thing I can say that is definitely unfair is the deficit spending and debt we are passing along to our children and the unborn.

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    2. I do not know what is fair but I do know what is not fair. Why should one person who works 40 hours a week get to keep all of his pay and another person who works 40 hours a week is only allowed to keep about 60% of his pay and if you in New Jersey you are only allowed to keep 51% of your pay?

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