Surprise, surprise! Rich pay less in income taxes

In today’s “oh really” department, the Internal Revenue Service tells us that the rich pay less taxes than they used to and about half of all American households pay no income taxes whatsoever.

The average federal income tax rate for all taxpayers fell from 9.9 percent to 9.3 percent from 1992 through 2007 while the tax rate paid by the 400 richest Americans dropped from 26 percent to 17 percent for the same period.

Few taxpayers ever reach the top rate of 35 percent because the tax laws provide so many breaks and loopholes.  You get tax breaks for having children, a mortgage, paying other taxes and you pay only 15 percent on capital gains.

In fact, with so many tax breaks, the IRS says at least 45 percent of American households will pay no income taxes at all for 2010.

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Comments

  1. bogofree

    As far as I can determine corporations that pay zero are not breaking any laws. If someone makes a pile of money and uses the existing tax code to pay less that is fine with me since enough don’t pay squat. Seems that the “rich” have become somewhat defined as evil since many are a success based on their own hard work. Seems that the penalty for success is that some look at it as an opportunity to install confiscatory taxes or to use it for political leverage.

    The problem is not new revenue (taxes) that progressives (liberals) constantly scream for but to reform spending and debt habits rather than to continually go to the fiscal well.

    I love the capital gains at it’s current rate. Leave it alone unless you wish to expand my abilities to take losses.

  2. Siannan

    Sorry. You didn’ t piss me off. The first asshat did. You were merely accepting data as complete when it isn’t, something frequently done by the Hannity’s and Beck’s of the world to prove their ludicrous points. You cannot wave your hands and claim the rich pay most of the taxes and then exclude most of the taxes that everyone pays. No one in this country gets a refund of SSI, Medicare, UI, and DI and precious few people (in NJ only those who earn less than $10,000 or married couples earning less than $20,000) get a full refund of state withholding tax. In addition, that model does not take into account sales tax, gas tax, and excise tax which we all pay as well.

    • Almandine

      What I failed to connect in my hurried reply to provide a datapoint to ponder was the corporate taxes that most likely had already been paid on Buffett’s income before he took his “personal” cut. Being his business, that would make a big difference, but who knows, maybe he paid none of that either. Either way, I reiterate… we pay enough, and the system has to change.

      But, for a real eye opener, it seems you can’t get too far afield of the monied powers:

      http://usawatchdog.com/war-in-libya-is-there-more-to-the-libyan-war-than-the-removal-of-gadhafi/

      • b mcclellan

        Thank you Al for an eye popper for sure. No wonder Pop said all he wanted in life was to be able to pass the Bank and have the freedom to thumb his nose at them.

          • b mcclellan

            Welcome to the Twilight Zone , backwards, forwards.
            Spinning bodies tend not to drip, or trickle down.

            If I had a boat to name,
            Sunk I thunk her claim to fame
            Her once eloquent frame
            Rusting in legislature inane….

              • b mcclellan

                Last train to the Garden
                Abel is not home.
                Mad dogs leave a carcass breathing without peril
                get your share of the bare bottom of the barrel. Hoo hoo…!

  3. Siannan

    Almandine, if you paid attention you would note that Buffett’s tax rate includes ALL taxes, not just Federal income tax data, and the fact is, that when you include SSI, Medicare tax, state taxes, UI tax, and all other payroll taxes, Buffett’s employees pay a higher tax rate than he does. A significant portion of Buffett’s investment income is tax differed, sometimes for years, and some income such as hedge fund and capital gains are not taxed as regular income but are taxed at the much lower rate of 15%, which significantly lowers a rich person’s tax rate. Most ordinary people don’t have hedge fund and capital gains income.

  4. Almandine

    Here’s the 2008 income tax data (latest available). Buffett’s employess must make a ton o’ money, since 33% is the top rate. They also must deduct nothing. Anyway, those of us who work pay more than we should, given the number of tax consumers we support. Why not switch to the Fair Tax?

    http://www.taxfoundation.org/news/show/250.html

  5. Siannan

    Bite me Mickey. My husband and I work hard for our money and spend frugally. Furthermore, my husband sent 20 years serving his country in the US Air Force, so don’t start crap with me aboaut the top 10% paying 90% of all tax revenues because that’s bull. They may pay Federal Tax at that rate, but their SSI tax stops at $106,800, and that doesn’t take into account state and other taxes either. Warren Buffett himself has said his OVERALL tax rate is lower than that of his secretary. Buffett stated that he only paid 19% of his income for 2006 ($48.1 million) in total federal taxes (due to their being from dividends & capital gains), while his employees paid 33% of theirs, despite making much less money.

    Quite frankly, I’d trust Buffett’s word before I’d take yours about how much tax the wealthy pay. I doubt you really have any clue, as you’re probably spouting numbers Sean Hannity reads every day as proof the rich pay more.

  6. Paul

    Hell, my wife and I haven’t cleared a combined $40k annually in ten years and have only cracked $30k once in the last five. Yet, life goes on, we pay our bills, the kids are happy, and life is good.

    I think that, speaking class-wise, it is perfectly common sense that the class of people who hold more than 90% of the wealth should be paying more than 90% of the taxes. It also only makes sense that the group of people who are in the position(s) to benefit the most from what our country offers are the ones who pay the most to help it continue.

  7. Mickey C

    One thing is for certain in this contentious debate. Those that didn’t or don’t currently make alot of money feel no compassion whatsoever for those that worked just as hard as the mailman above, but who took advantage of an idea or had a plan of attack throughout their lifetime as to how their money would be spent or saved.

    I know many people in higher income brackets (like myself), and I see huge amounts of inherent waste with little in the way of thrift or savings. These people will end up just like their lower incomed brethren who, for a variety of reasons, will not have a comfortable living in their retirement years.

    I also know many people who went through high school only, never bothering to upgrade themselves with further studies or educational opportunities available to them, who bemoan the fact that they never made more than $_____(fill in the blank). Those that could, did, and ended up far better than they ever thought possible. Those that went to college and ended up with 4, or even, two year degrees, ultimately did better than those that didn’t. No secret there.

    No one is asking anyone else to “feel sorry for the rich.” But it would be nice if those less fortunate individuals still in the workplace could give credit to those who worked just as hard as you did, but found themselves in the enviable position financially they now hold. Fact is; the folks who make up the Top 1% of wage earners pay 41% of all taxes collected. The Top 2% pay 62% of all tax revenues. The Top 10% pay 90% of all tax revenues. With that said, and with the fact that 47% of Americans pay no federal taxes at all, how then are the “rich” NOT paying their fair share?

    Oh, and Siannan? Whose fault is it that you and yours only bring in $92k a year? Not that that combination of wages is all that bad. I can think of a myriad of places where that kind of money would allow you to live pretty damn well, as long as it’s name didn’t start with NYC, LA, or BSTN.

  8. Al

    I retired from the USPS after 30 years of service to the public (as a Postmaster, I even went in on Christmas and delivered Express and Priority Mail myself and charged the USPS nothing, nada, zero, zilch for my services on those Christmases. I just cared about my patrons.) I then finished enough quarters to qualify for Social Security. I pay, out of my Social Security, for Medicare for both my wife and myself. I get $123 per month from Social Security, while my wife, who gets Social Security off my Social Security gets $133 per month. So don’t tell me that I didn’t earn every penny I did get. My USPS retirement is under $2,000 net. We filed on $30,097 last year, and the Office of Personnel Management didn’t take out enough Federal Tax, so I owe the Feds $230 this year.

    Meanwhile, GE doesn’t pay one penny in taxes, and from what I hear, BP paid less than we do in taxes. And I’m supposed to feel sorry for the rich, who pay less than I do? Gimme a break!

    And yeah, Siannan, I agree with you and others, we ain’t dancin’ any jigs with our “extra” money, while gasoline is now over $4.00 a gallon in NY State.

  9. Siannan

    Yeah. You expect me to feel bad that rich people pay more of the tax burden? Boo frikken hoo. My husband and I will go take our piddling $92K a year and go live it up and dance a merry ass jig with all the extra scratch we have… oh wait, we don’t have any. Sorry, no dancing her.

  10. Jon

    Well, yes, they do pay more tax than others. They also have a whole helluvalot more money than others. And by proportion, they pay less taxes.

    Cry me a river, waves.

    J.

  11. bogofree

    Two college age professionals in their own businesses. Combined income of about $300,000 for which they both work 70 hours per week for 50 weeks a year. They have six employees between them. Sometimes the hours are expanded. They have two kids in college and receive no financial aid since their income is too high. Naturally they pay their own health insurance. Naturally they have their own retirement plans. Their net income after all taxes is about $200,000. They are both in their early 50s. They have a nice home valued at $500,000 with a mortgage of under $200,000. They have a vacation condo that they rent and it has no mortgage and with income and expenses it breaks even. They have two cars – a Sonata and a Chevy Monte Carlo.

    I run with the male portion of this pair and he says in the long run it is not worth it. Their businesses are not a real sellable item since it is run primarily off their intellectual capabilities. Yet the government continues to make more roadblocks. The frustration level with taxes, government mandates and regulations and the continued viability of working long hours with diminishing rewards paints a lousy picture. Both feel that their collective hard work for 25 years has just not been worth it. They are better off financially than probably 95% of the population so it is tough to feel pity but they are tired of seeing their taxes finance alternate lifestyles and fund a government that operates contrary to sound business practice.

  12. Almandine

    So what’s the point here, Doug? Why excoriate the golden geese?

    The income taxes paid by the bottom 50% of earners are about 3% of all taxes collected… and their census numbers so outpaces those of the “rich” that the average percentage paid for all taxpayers is all but meaningless – without weighting for that fact, which you fail to do. That 45% who pay no taxes are not the rich… those who will, in fact, pay most of the income taxes collected… but the 45% does include the majority of those who will benefit most from tax breaks, earned income credits, etc. They are tax consumers.

    I though you quit politics.

    • Michael Griffith aka Griff

      It’s so the entire tax “debate” can be framed in the tried and true, simplest of partisan terms – the Republicans hate the poor and love the “rich,” while the Democrats love the poor (because they’re easy votes and they’re so used to being poor that they don’t have any idea that the Democrats haven’t helped them one bit) and need to tax the “rich” in order to help them.

      Note to poor folks…All those Democrat Congresspeople are rich, and they don’t pay their “fair” share. And the “rich” folks they mean to tax aren’t really the super-rich, but the just-rich-enough to have worked hard to achieve the “American Dream” but not rich enough to have the influence or means to avoid paying their “fair” share. They also happen to be the folks that may be able to supply you with a job, had they not been so busy with all the regulations, fees, taxes and other bureaucratic flaming hoops this government throws in their paths.

  13. Waves

    Yeah, don’t bother with the fact that the so called rich people pay well over 90% of the entire US tax burden and are the job creators for the rest of us, whereas about 49% of the people in this country deemed the so called poor people don’t pay any taxes at all. As a matter of fact, many poor people get tax refunds without ever paying a dime. This is simply socialism and redistribution of wealth. Talking about tax loopholes! Remember, a tax loophole is something that benefits the other guy. Tax reform is when it benefits you. As Juan Williams (Democratic Fox News Contributor) recently put it, “Rich people are scoundrels.” BTW, how many poor people create jobs? None you say? Good answer. Additionally, as rich people are taxed into oblivion and take their money and businesses out of this country, who do you suppose is going to pay that 90 plus % of taxes? The Democrats don’t have any answers for that, do they? Just for the record, I’m not a rich guy. I’m just one of the 51% working stiffs paying too much in taxes.