Thursday, September 22, 2011

Who Pays More...?

Who pays more in federal income tax, your grandma the plumber/teacher of the disabled and infirm, or Warren Buffett?  Take a look at this link (from Greg Mankiw's Blog) to the Effective Federal Tax Rates based on income.

The lesson: The wealthiest pay 30.4 of their income to their government.  The middle income distribution pays 14.1.  So...billionaires already pay more than secretaries.

28 comments:

Anonymous said...

The wealthiest Americans do pay a higher percentage in federal income tax but most of the wealthiest Americans earn their wealth through capital gains (investments). Capital gains are taxed at a much lower percentage than regular income.

http://www.irs.gov/taxtopics/tc409.html

-Jacob Clark

Michael Garrison said...

Exactly, but remember that tax is a disincentive toward whatever activity is taxed. Should we increase capital gains taxes?

Timothy Swonger said...

Even though the wealthiest of people pay more federal income tax than the middle class, I think the wealthy can find ways around paying a lot in taxes. I've read that some accountants, if not all, know how to record things just right and within the regulations of the law that when it comes time to pay taxes, they can write off just about every expenditure of a business owner or CEO, almost paying nothing in taxes. The middles class, non business owner, usually just doesn't have this luxury.

Anonymous said...

I'm guessing it would be a relatively marginal tax. A tax on the market for capital gains would negatively impact financing for major corporations who are a large employer of american people. It would be possible that it could worsen unemployment but if the tax was relatively small and the revenue were put directly toward creating jobs, like the American Jobs Act," it could possibly relieve unemployment and stimulate the economy.

American Jobs Act
http://www.whitehouse.gov/jobsact#overview

-Jacob Clark

KristinK said...

It is true that the rich do have to pay more towards taxes, and the poor are on the opposite spectrum. They usually get pretty decent amounts of money from the gov. during tax season. Certainly not all of them do, but I work at a credit union and you would not believe how many members came in during tax season that would be considered "poor" (they recieve some type of funding from government due to their living situations) and their checks would be ridiculous amounts. One member was always negative, delinquent, etc. and she came in with a tax refund U.S. Treasury check for about $34,000.00. How I have no idea, she never had money in her account, but she did something right.

Eng Hong Sin said...

The amount of taxes tell us that the wealthiest pay more. However, if you look to the percentage of taxes they paid over the money they earned, you might find that the percentage of a billionaire is lower than a middle income. Let's take some examples in my country, Malaysia. Most of the businessman will spend their money on buying new car to avoid taxes. For middle incomes, they cannot do so as their buying power is not as high as the wealthy businessman. I will say that the middle income pay more tax than the wealthiest.

Vickie Snell said...

The rich pays more in taxes, but the rich also earn more. Stephen Moore explains in his internet article "Guess who really pays the taxes" that the wealthiest Americans have seen a steady increase in their income over the past 25 years. Moore also explained that the income earned by the wealthiest 1 percent has more than doubled from 9 percent to 19 percent since 1980, but the share going to the poorest has declined. So yes, the rich pays more, but they earn more.

Anonymous said...

The wealthier pay more but they make more and have more to donate and spend on items that can be wrote off on their taxes. The middle class pay less of their taxes but usually can't write off verymuch In taxes so they have to pay all of them unlike the wealthy. The poor usually get money back from taxes because they don't make enough to take the taxes out.

Torie Fuller

Anonymous said...

I don't think it would be fair if the wealthy didn't have to pay more taxes than the poor. Obviously, if you make more money you should have to pay more money, but I do believe that there should be smaller tax brackets. I don't think it should be as wide scale as it is set up now. I also agree with what Timothy said, I know some very wealthy people who can pretty much get anything they want for free because they use all of their purchases as tax write offs.
Kelsey Chandler

Anonymous said...

I don't think it would be fair if the wealthy didn't have to pay more taxes than the poor. Obviously, if you make more money you should have to pay more money, but I do believe that there should be smaller tax brackets. I don't think it should be as wide scale as it is set up now. I also agree with what Timothy said, I know some very wealthy people who can pretty much get anything they want for free because they use all of their purchases as tax write offs.
Kelsey Chandler

Nikki said...

From what I noticed in the tax table provided in the blog, the first column is tax paid AFTER tax credits, which would mean total taxable income. The middle class is roughly 3%, while the wealthiest is roughly 18%. There is still a 15 point gap between what the wealthy pay, versus the middle class. Whether a billionaire can write off just about anything with the world's best accountant, the average paid in is still considerably higher than that of the middle class. I'm not quite sure I believe the wealthiest should be taxed more heavily than anyone else, because the more money they have to invest will ultimately result in additional taxes if gains are a result. Bottom line is they would still be putting money into the market, increasing everyone's odds of bettering their financial well-being.

Nikki Uselton

Danielle Verdin said...

The way that its suppose to work is that the wealthier people are to pay more in taxes. But in reality this not always happens. There are ways that the wealthy make it so when tax season comes they have a bunch of ways that they write off so much that they dont get penaltized as much. The rich have ways that they can shelter the money that they earn.

Erick Holzhausen said...

The wealthiest Americans pay a higher percentage in federal income taxes but a lot of their wealth is acquired through investments which the tax rate is 15% on capital gains I believe. The only way I can think of equalizing it a little more is by raising the capital gains tax. Federal income taxes for the most part don't hurt the wealthy as much as it does the average American. You can't blame the rich for doing this because if we are honest with ourselves we would all do as much in our power to avoid paying more in a legal manor if the opportunity presented itself. The middle and lower class normally have less investments which is the reason they are effected by the federal tax rate more than the wealthy. A lot of their surplus income goes towards necessities, mortgages, and if any is left over, retirement.

Anonymous said...

The wealthy of course on paper pay more in taxes because they are making more money. But when you look at the percentages I think that they are paying less compared to the percentage and income the the lower income people are paying. The wealthier have much more right offs on their taxes then do the less wealthy ones. But again the less wealthy get tax breaks and more back when it comes to filing because they are not making enough. There does seem to be alot of tax breaks and incentives for people though when they are filing and the less wealthy tend to get back alot more from taxes then those that are making more money.

-Keith Kaczocha

Lauri Hess said...

I agree with Torie - The wealthy pay more in taxes but they do make more and have more to donate and spend on items that can be wrote off on their taxes and can find loop holes. The middle class pays taxes but doesn’t have very many right offs and the poor – well they usually get a lot of money back from the government bc they do not make enough, so they get incentives.

Shirley Paris said...

Of course the rich pay more taxes because they earn more. But i wonder just how much they also, get back? I really do not know alot about taxes i just know they suck.

C'Anne Reichert said...

On paper the wealthy pay more because of how much income is taxed for them. However I think after all the tax breaks and write offs the wealthy get, the middle class ends up getting the short end of the stick. Now I don’t think the middle class should start crying over this because during tax season the middle class and lower class are typically, for a lack of better words, excited to get their taxes done because they get refund checks (I know I am!). The wealthy however are far from excited and dread tax season because they are always going to be out of pocket (writing the government a check). They too shouldn’t cry either because they can afford to buy a new car and use it as a “business” write off.. Or take a “business” trip to see the “real estate investment opportunities” and write off their expenses, unlike the middle class. At the end of the day though I think the middle class is most affected by the federal income tax because they have less capital to work with in the first place and so any dollar taken is more noticeable to them than to someone who makes millions a year and wipes their nose with a hundred dollar bill. But hey we could all use that as an incentive to want to work our asses off and become a part of the upper class.

Mary Beth Renz said...

The wealthy pay more in terms of dollar revenue to the federal government than the middle class. The biggest issue is that the wealthy can benefit from tax exemptions for dividends and tax exempt interest income. In addition, the wealthy pay a lower percentage on capital gains. The rich take advantage of the tax laws. The tax code is set up and the reason is that there are different tax codes to entice people to expand a certain area of the economy. If they had high tax rate on capital gains, they would not sell capital assets. The percentage of your income that you pay taxes on is not always the same because of tax codes and ways of getting around the system.

Faith Evans said...

I do not think there is anything wrong with the wealthier paying a higher tax perdecentage since they have a higher income if the government uses this to fund programs appropriately.

Anonymous said...

The wealthier class is taxed at a higher percentage. They also have more opportunities to creatively spend their money in ways where they will be able to write off much of their spending. I think it makes sense that the more you make the more you pay, but people who are at the bottom of the large tax brackets (especially the one for the middle class) get screwed. There should be more tax brackets to prevent that from happening.- Arianna Findlay

Ahmed AL Hassan said...

Well, I think the federal income tax pays more since the wealthiest people pay the federal income tax. In fact, some rich people seeking for some ways around to avoid paying the federal income tax. In this case, what my grandma has is much greater!

madeline newton said...

lol i could not find any article just a table i could not focus enough on to try and figure out how to read.
But i have heard other article and heard debates on this issues before and heard my own father rant and rave about this issue. And it is common knowledge that the wealthy do pay more in taxes but they also make more and usually in general have money coming in for all different types of investments, there fore they are taxed at a high precent got their "net income" and the "poor" people are taxed at a percentage of what they earn which usual is just their sole income not through other sources like investments. Honestly it doesn't bother me because Im usre i will never be making that much money to be taxed at that rate, it sucks for the "rich" and "poor" you both have money taken away from you that you work for

Melinda Spitzmiller said...

The wealthy pay a higher tax because they make more. The problem is when you tax people for being successful, you discourage them. Why would you want to grow your business and profit if you are only going to be penalized with a higher tax? On the other end if you tax the middle to lower class are you not just taking what little they do have? I believe just like with celebrities and photographers, its part of the game. Clearly wealthy people are not getting taxed so hard that they have to give up their sports cars or 8 million dollar homes.

Chris Yang said...

Its obvious the wealthier pays more in taxes because they have a higher income, or are they? Might consider that the percent the wealthy are getting taxed is equivalent to the percent the middle and lower class are getting taxed based on their income. And also like everyone else has said, the wealthy is able to find loop holes benefiting them, paying less in taxes such as write offs.

Dana Bartels said...

I agree with the majority of those who commented on this blog, the rich do pay more in taxes than middle or low income wage earners. However it sickens me to personally know a CEO will buy a piece of expensive art for his office to get away from paying taxes and we have our senior citizen population who struggle to pay for their medication or groceries. yes our lower income wage earners do receive a Federal tax rebate but it doesn't compare to the rich who pay more taxes.

Andrew S. said...

We need to look at the amount of money left over after taxes and bills, or disposable income. The wealthy have a surplus of disposable income so they can bear the burden of a higher tax than those with less disposable income

Austin McNatt said...

Of course the upper class should have to pay a higher tax. Because they have the means to pay. They can always find write off such as donations, acclerated depreciation, Capital gains. The middle and lower classes need the tax returns to continue their standard of living and or survival in general.

Ryan Schick said...

http://www.collegehumor.com/video/6633406/we-are-the-1

I feel like they can pay some more... They will just write it off some how.