Comments on: 1% of Taxpayers Pay Nearly 40% of All Income Taxes http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/ Mutual Funds, Investing, Retirement, Economy, Personal Finance Mon, 15 Mar 2010 12:15:24 +0000 http://wordpress.org/?v=2.3.1 By: Steve http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-306 Steve Fri, 26 Oct 2007 03:04:53 +0000 http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-306 This is a frustrating and heated topic, for sure. Interestingly, the data over time doesn't seem to change that much. And historic tax burdens on "the rich" had been much higher decades ago. What I find frustrating is how low the bar is for being considered rich. Now I understand that the term "low" is subjective...that someone in rural Kansas will think that a household income of more than $200,000 is huge. But here in San Carlos, you can have a plumber and a 3rd shift nurse bringing in more than $200,000. According to John Edwards, they're rich, and their taxes should increase. Yet their burden on income tax alone is probably about 40% with deductions. And if one talks about this, they're a heathen. Worse, they're a....a...Republican! This is a frustrating and heated topic, for sure. Interestingly, the data over time doesn’t seem to change that much. And historic tax burdens on “the rich” had been much higher decades ago. What I find frustrating is how low the bar is for being considered rich. Now I understand that the term “low” is subjective…that someone in rural Kansas will think that a household income of more than $200,000 is huge. But here in San Carlos, you can have a plumber and a 3rd shift nurse bringing in more than $200,000. According to John Edwards, they’re rich, and their taxes should increase. Yet their burden on income tax alone is probably about 40% with deductions. And if one talks about this, they’re a heathen. Worse, they’re a….a…Republican!

]]> By: Kurt Brouwer http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-308 Kurt Brouwer Fri, 12 Oct 2007 23:38:34 +0000 http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-308 These are good and important questions. I'm not trying to control the answer, but to make sure we start from the same factual framework. The post indicates that only 1% of taxpayers are paying 40% of tax revenues. That is hard information--a fact. What it means is a matter of opinion, but it is a fact that hopefully we can agree on. Could that 1% pay more than 40%? Maybe. If we change policy to do that, what are the unintended consequences? And if a large group pays no effective income taxes, what are the long-term consequences of that? No matter what proposal we consider, it is important to think through the assumptions that underlie the proposal. For example, Chris, you seem to be assuming that taxes need to be raised on some group and you would opt for doing so on high income earners. Fine. What would the consequences of that kind of change be? Also, we need to ask if it is true that taxes need to be raised at all. After all, the budget deficit is low (1.2% of GDP) and getting lower so it may be that all we need is a bit of spending restraint. Or, perhaps policies need to be updated to help the economy grow so that more tax revenues are generated. In short, most discussions on taxes are fraught with implicit, but unstated assumptions. To get anywhere, we need to deal with our assumptions--those we have in common and those that are different--before we can actually get anywhere in creating solutions. These are good and important questions. I’m not trying to control the answer, but to make sure we start from the same factual framework.

The post indicates that only 1% of taxpayers are paying 40% of tax revenues. That is hard information–a fact. What it means is a matter of opinion, but it is a fact that hopefully we can agree on. Could that 1% pay more than 40%? Maybe. If we change policy to do that, what are the unintended consequences? And if a large group pays no effective income taxes, what are the long-term consequences of that? No matter what proposal we consider, it is important to think through the assumptions that underlie the proposal.

For example, Chris, you seem to be assuming that taxes need to be raised on some group and you would opt for doing so on high income earners. Fine. What would the consequences of that kind of change be? Also, we need to ask if it is true that taxes need to be raised at all. After all, the budget deficit is low (1.2% of GDP) and getting lower so it may be that all we need is a bit of spending restraint. Or, perhaps policies need to be updated to help the economy grow so that more tax revenues are generated.

In short, most discussions on taxes are fraught with implicit, but unstated assumptions. To get anywhere, we need to deal with our assumptions–those we have in common and those that are different–before we can actually get anywhere in creating solutions.

]]> By: Chris http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-307 Chris Fri, 12 Oct 2007 18:30:51 +0000 http://www.fundmasteryblog.com/2007/10/08/1-of-taxpayers-pay-nearly-40-of-all-income-taxes/#comment-307 The social consequences of over taxing low income earners would be much greater and damaging to a society than taxing its greatest income earners. It would erode the incentive of low income earners to work, who are an indispensable part of society. As the study proves, the rich are already getting richer, and at a faster rate than low income earners, so why would it be necessary to rebalance tax rates to favour high income earners moreso? The social consequences of over taxing low income earners would be much greater and damaging to a society than taxing its greatest income earners. It would erode the incentive of low income earners to work, who are an indispensable part of society.

As the study proves, the rich are already getting richer, and at a faster rate than low income earners, so why would it be necessary to rebalance tax rates to favour high income earners moreso?

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