25 Percent of Millionaires Pay Lower Taxes Than 10.4 Million Middle-Class Americans

[Hardball_Refuge]

If they pay on unearned income as capital gains or as interest or dividend income, or if they deduct large parts of their income for foundations which go to worthy charities, then yes a lower percentage rate, but many multiples more than the ordinary middle class American.

-Not when it comes to social security payroll tax: The report says moderate-income taxpayers bear the brunt of the Social Security payroll tax because it applies only to the first $106,800 in wages.

And that's fair because FICA is in reality not a federal income tax, it is funds paid into an account for the eventual benefit of the contributor. FICA means the "Federal Incurance Contribution Act," and it is an insurance premium paid to the feds for the eventual benefit of the payer.

If that contribution is to be considered as simply federal taxes there is a danger that the program could become regarded as just another welfare program, and subject to the same cuts or revisions as happened in the nineties with Clinton and the Republican congress. to welfare

There is a limit to how much a wealthy tax payer can draw and there needs to likewise be a limit to how much they are required to pay, or as I say, it becomes just another transfer of wealth welfare program. The politicians, even Democrat politicians, realize this and steer away from elimininating the ceiling on contributions for higher earners, up to now.

FICA is in reality not a federal income tax, it is funds paid into an account for the eventual benefit of the contributor. FICA means the "Federal Incurance Contribution Act," and it is an insurance premium paid to the feds for the eventual benefit of the payer.
-This is a good point, however, let's face it, since the program's inception there was never a guarantee that what one pays into the system will equal what one get's paid out.

There is a limit to how much a wealthy tax payer can draw and there needs to likewise be a limit to how much they are required to pay
-Agreed. That being said, It seems to me the cap should be increased...

 

[bigrebnc1775]

This is basically what Obama said: some millionaires pay a lower effective tax rate than some middle-class people. It's nice to have numbers, of course.

I think it's silly to tax "investment" income at a lower rate than wages. It's a textbook example of favoring capital over labor, and the public policy justification is growing more obscure. The notion is that "investment" should be encouraged over doing other things with one's money, labeled "consumption", because investment is better for the economy than consumption. Yet currently, the reverse is almost certainly true. Businesses have unused capacity, so investing in new businesses is generally a bad idea. Yet the reason they have unused capacity is because consumer demand hasn't returned-- so consumption is exactly what we need to be encouraging right now.

Favoring labor over capital is of course a left-wing argument, but there is a conservative one to be made as well. A free market purist would say that it wasn't the government's job to favor either, and so investment income should be taxed in exactly the same way as wages.

Let's use this as an example thanks to PLYMCO_PILGRIM

A guy making 50,000/year is paying 30% tax rate...that is $15,000
A guy making 1,000,000/year is paying a 5% tax rate that is $50,000

Who pay's more?

As a percentage, the guy making $50,000/year .

Who pay's more money?

 

[bigrebnc1775]

Let's use this as an example thanks to PLYMCO_PILGRIM




Who pay's more?

As a percentage, the guy making $50,000/year .

-Agreed...

Who pay's the more money in taxes?

 

[DontBeStupid]

the numbers aren't making me uncomfortable, it's the leftist spin.

The number are simple to understand - The latest IRS figures show that in 2009, taxpayers who made $1 million or more paid on average 24.4% of their income in federal income taxes, according to the IRS.

Those making $100,000 to $125,000 paid on average 9.9% in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3%.

There is no spin required. Facts.

The article claims that 25% pay at a lower rate. It doesn't claim ALL of them do. Using the averages and ignoring payroll taxes is how you are able to spin this.

That person making $100K and paying 9.9% in income taxes, actually pays 17.55% when you count in FICA and Medicare Hospital. Compare that with a millionaire who earned his money from dividends that are taxed at 15% and you start to see where the article is coming from.

 

[DontBeStupid]

Let's use this as an example thanks to PLYMCO_PILGRIM




Who pay's more?

As a percentage, the guy making $50,000/year .

Who pay's more money?

Obviously the guy making $1M a year. So what? In this example, that guy also earns 95% of all income.

 

[Mr Natural]

As a percentage, the guy making $50,000/year .

-Agreed...

Who pay's the more money in taxes?

Are you suggesting that we should all pay the same dollar amount?

 

[Hardball_Refuge]

The article claims that 25% pay at a lower rate. It doesn't claim ALL of them do. Using the averages and ignoring payroll taxes is how you are able to spin this.
-There it is...

 

[PLYMCO_PILGRIM]

This is basically what Obama said: some millionaires pay a lower effective tax rate than some middle-class people. It's nice to have numbers, of course.

I think it's silly to tax "investment" income at a lower rate than wages. It's a textbook example of favoring capital over labor, and the public policy justification is growing more obscure. The notion is that "investment" should be encouraged over doing other things with one's money, labeled "consumption", because investment is better for the economy than consumption. Yet currently, the reverse is almost certainly true. Businesses have unused capacity, so investing in new businesses is generally a bad idea. Yet the reason they have unused capacity is because consumer demand hasn't returned-- so consumption is exactly what we need to be encouraging right now.

Favoring labor over capital is of course a left-wing argument, but there is a conservative one to be made as well. A free market purist would say that it wasn't the government's job to favor either, and so investment income should be taxed in exactly the same way as wages.

Let's use this as an example thanks to PLYMCO_PILGRIM

A guy making 50,000/year is paying 30% tax rate...that is $15,000
A guy making 1,000,000/year is paying a 5% tax rate that is $50,000

Who pay's more?

As a percentage, the guy making $50,000/year .

Like I said its all in how people look at the numbers.

On a personal income level the more you make the higher your percentage of income paid in taxes.

On a personal income level the more you make the higher your total dollar amount of income paid in taxes.

On a captial gains level you may pay more or less in taxes, as a percentage of income, than those making lower personal income levels then your gains on capital investment.

You guys are confusing capital gains tax rates, also knows as taxes on investments, with personal income tax rates.

 

[PLYMCO_PILGRIM]

-Agreed...

Who pay's the more money in taxes?

Are you suggesting that we should all pay the same dollar amount?

I would suggest that all americans making between $1.00 and all the way to the very top income earner should all pay the same income tax rate (same percentage of their income). There should also be zero exemptions or deductions for anything.

This would mean the more you make the more taxes you pay and would be completely fair to both the poor and the rich as no one gets special treatment. The rich couldn't find loopholes this way.

 

[Hardball_Refuge]

"You guys are confusing capital gains tax rates, also knows as taxes on investments, with personal income tax rates."
-Actually, I believe that some folks posting to the thread are attempting to obfuscate one of the points made in the first article I posted: As it stands today, a wealthy individual can take advantage of preferential tax treatment of investment income and various tax loopholes to drastically lower his or her tax rate and effectively pay lower taxes than middle-class families.

 

[DontBeStupid]

Who pay's the more money in taxes?

Are you suggesting that we should all pay the same dollar amount?

I would suggest that all americans making between $1.00 and all the way to the very top income earner should all pay the same income tax rate (same percentage of their income). There should also be zero exemptions or deductions for anything.

This would mean the more you make the more taxes you pay and would be completely fair to both the poor and the rich as no one gets special treatment. The rich couldn't find loopholes this way.

You can suggest it all you want, but that's not the system we currently have. Our system that is in place is supposed to be progressive, but clearly that isn't working in all cases. We need to fix some things to get it more progressive more often.

 

[Liability]

This is interesting. According to the info below, there aren't all that many millionaire business owners, therefore the effect of the so-called Buffet Rule on job creation would be negligible. As an aside, the tax rates have been pretty low for years and many business owners seem to be sitting on capital rather than creating jobs anyway...
------------------


Report: 25 Percent of Millionaires Pay Lower Taxes Than 10.4 Million Middle-Class Americans
by: Tanya Somanader

President Obama’s “Buffett Rule” is aimed at ensuring that wealthy Americans pay their fair share in taxes. As it stands today, a wealthy individual can take advantage of preferential tax treatment of investment income and various tax loopholes to drastically lower his or her tax rate and effectively pay lower taxes than middle-class families. To prove the point behind his namesake, billionaire Warren Buffett revealed to Republicans yesterday that he made more than $62 million last year while only paying a 17 percent tax rate.

It is not surprising that Republicans like GOP candidate Mitt Romney who slam the Buffett Rule as “class warfare” simultaneously benefit from the same sort of preferential treatment. In fact, a new report by the non-partisan Congressional Research Service finds that 25 percent of the nation’s millionaires have a lower effective tax rate than 10.4 million middle-class Americans:

About 25 percent of millionaires in the U.S. pay federal taxes at lower effective rates than a significant portion of middle-income taxpayers, according to a legislative analysis.

Preferential treatment of investment income and the reduced impact of payroll taxes on high earners lets about 94,500 millionaires pay taxes at a lower rate than 10.4 million “moderate-income taxpayers,” representing about 10 percent of those making less than $100,000 a year, according to the report by the non-partisan Congressional Research Service dated Oct. 7.

In direct conflict with a favorite Republican talking point, the report also found that very few business owners are millionaires and “played down the impact of higher tax rates on job creation.” “The small share of taxpayers with small-business income in the millionaire category suggests that tax reform policies designed to ensure adherence to the Buffett Rule will affect few small businesses,” it said. This bolsters the claims from economists and business owners alike that higher tax rates on the rich make “zero difference” in hiring.

Numerous polls continually show that Americans support raising the tax rate on millionaires. But rather than raise the rates on those who should pay their fair share, Republicans respond with even more tax increases on the middle class. “Class warfare,” indeed.

Originally published on ThinkProgress
Report: 25 Percent Of Millionaires Pay Lower Taxes Than 10.4 Million Middle-Class Americans | ThinkProgress

Did you realize that paying a lower rate is not the same thing as paying less in taxes?

Nice fairy tale headline, though.

 

[PLYMCO_PILGRIM]

"You guys are confusing capital gains tax rates, also knows as taxes on investments, with personal income tax rates."
-Actually, I believe that some folks posting to the thread are attempting to obfuscate one of the points made in the first article I posted: As it stands today, a wealthy individual can take advantage of preferential tax treatment of investment income and various tax loopholes to drastically lower his or her tax rate and effectively pay lower taxes than middle-class families.

Exactly what I said

 

[Mr Natural]

Are you suggesting that we should all pay the same dollar amount?

I would suggest that all americans making between $1.00 and all the way to the very top income earner should all pay the same income tax rate (same percentage of their income). There should also be zero exemptions or deductions for anything.

This would mean the more you make the more taxes you pay and would be completely fair to both the poor and the rich as no one gets special treatment. The rich couldn't find loopholes this way.

You can suggest it all you want, but that's not the system we currently have. Our system that is in place is supposed to be progressive, but clearly that isn't working in all cases. We need to fix some things to get it more progressive more often.

It's the word "progressive" that scares them.

 

[DontBeStupid]

I would suggest that all americans making between $1.00 and all the way to the very top income earner should all pay the same income tax rate (same percentage of their income). There should also be zero exemptions or deductions for anything.

This would mean the more you make the more taxes you pay and would be completely fair to both the poor and the rich as no one gets special treatment. The rich couldn't find loopholes this way.

You can suggest it all you want, but that's not the system we currently have. Our system that is in place is supposed to be progressive, but clearly that isn't working in all cases. We need to fix some things to get it more progressive more often.

It's the word "progressive" that scares them.

Don't be scared

 

[bigrebnc1775]

-Agreed...

Who pay's the more money in taxes?

Are you suggesting that we should all pay the same dollar amount?

Answering a question with a question. How pathetic.
Who pays more money?

 

[Mr Natural]

Who pay's the more money in taxes?

Are you suggesting that we should all pay the same dollar amount?

Answering a question with a question. How pathetic.
Who pays more money?

Not nearly as pathetic to expecting an answer to a stupid question.

 

[bigrebnc1775]

As a percentage, the guy making $50,000/year .

Who pay's more money?

Obviously the guy making $1M a year. So what? In this example, that guy also earns 95% of all income.

no matter what your percentage rate is your not going to pay more then the phyical ammount of money you have.

 

[PLYMCO_PILGRIM]

I would suggest that all americans making between $1.00 and all the way to the very top income earner should all pay the same income tax rate (same percentage of their income). There should also be zero exemptions or deductions for anything.

This would mean the more you make the more taxes you pay and would be completely fair to both the poor and the rich as no one gets special treatment. The rich couldn't find loopholes this way.

You can suggest it all you want, but that's not the system we currently have. Our system that is in place is supposed to be progressive, but clearly that isn't working in all cases. We need to fix some things to get it more progressive more often.

It's the word "progressive" that scares them.

No fear here. Heck progressive taxes are good for me I don't even make $50,000/year....still I don't support the concept.

I'm a big fan of things being fair and equitable so I'd rather pay the same rate, as a percentage of my income, that a millionare pays. I would also like to pay the same rate, as a percentage of my income, as someone who makes 50% less than I do pays.

I just like things being fair is all.

 

[DontBeStupid]

Who pay's more money?

Obviously the guy making $1M a year. So what? In this example, that guy also earns 95% of all income.

no matter what your percentage rate is your not going to pay more then the phyical ammount of money you have.

Uhm ... obviously.