10 ms·

Top 1% of Income Earners pay 45% of California's Taxes

117 points by elsewhen 11y ago

mdorazio 11y ago
Of course they do! Just look at the chart here: http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178... and the referenced franchise tax info. I am really tired of seeing sensationalist headlines like these. The top 1% of income earners earn an absolutely massive portion of all income in the state, but only pay 45% of taxes. We should be asking if that's enough, not implying that the wealthy are somehow propping up the state's finances when inequality is accelerating every year.
- devereaux 11y ago
  Only pay 45% of the taxes? What do you want?? Should they pay 70% of the taxes??? At which point will you be happy precisely???? 90%????? When the top 1% pays for about 50% of the infrastructure, it is time for them to think about seceding. I mean, the top 50% move together, poof they can have something like half of what is provided by the state, without the 99% bothering them anymore.
  - quonn 11y ago
    I think he meant that if the top 1% has 99% of the wealth, we should expect them to pay 99% of the taxes. However, that wealth is not just income, so the argument is not quite correct. This is a democracy, so how much ones owes in taxes is decided by the people. As far as seceding is concerned, good luck with that.
  - ska 11y ago
    It is a surprisingly common fallacy to believe that income is generated in a way that is not deeply coupled to the system in which it was generated. This is just muddy thinking if you are talking about the "1%" or your own IRS bill. I think that the comment you were responding to was suggesting that the tax load should be directly proportional to the income fraction, which I suppose you could make a cogent argument of.
    - Mikeb85 11y ago
      Yup. As one of my economics professors likes to say (paraphrasing): There is no 'natural' equilibrium. The economy develops based on the set of laws already in place. People earn money based on the 'system' already in place. So the idea of 'fairness' is already an artificial construct. It's far easier to make a billion in a society like the US, than say, Vietnam, or Argentina, or Romania. So in a very real way, US billionaires do 'owe' something to the system that allowed them to attain that wealth in the first place (and that 'something' is pretty much 'everything'). If wealth could be attained completely independently of the 'system', then the distribution of billionaires would be completely different than it is right now.
  - orbitingpluto 11y ago
    Someone's been vigorously rubbing Ayn Rand novels against his privates again. The real question is how does wealth manage to concentrate so highly so quickly and by those who actually contribute so little. edit: this guy is literally pulling an Atlas Shrugged. If you think you as the owner of the company 'make all of the money', I heartily suggest you try going it alone.
    - solipsism 11y ago
      Just make sure you use the paperback!
    - janpieterz 11y ago
      I never got why people read and get this 'owner of the company makes all the money' narrative from the book. She is obviously glorifying these man, making them the 'hero', but don't we do exactly the same in every other fictional book? It's been a while since I read a book about John and Jane that details their virtuous lives that is not played out, one way or another, on a high level (either starting or becoming a hero etc). My take from the story was more that these people exist at every level. I remember parts (I might be grossly mistaken here, but this is what I took from it) where Rearden talks about and with his most valued employees, or where Dagny has her valued associates, where the train men that 'stand their ground' are praised. I'm not sure the 'owner makes the money' story is what she wanted to portray, or possibly I just took my biased view and ran with it while reading ;)
    - ArkyBeagle 11y ago
      "How" is that the people who make the money control the measurement methods for it. Governance is hard. CEOs once upon a time made "too much salary" so pay for performance was used. Now this.
  - EliRivers 11y ago
    I suspect that without having a 99% to take advantage of, they wouldn't earn so much.
  - deleted 11y ago
    [deleted]
  - p4bl0 11y ago
    > without the 99% bothering them anymore. Do you really believe the 1% richer would earn so much money without exploiting the work of the 99% others you want them to get rid of? That's ridiculous.
  - GavinMcG 11y ago
    Given that it's only those at the top that receive the benefits of economic growth (FTA: the bottom 80% of Californians saw no growth in their adjusted gross incomes between 1994 and 2013) higher is absolutely better. They're clearly skilled at harvesting the economic contributions of those worse off than them.
  - LeifCarrotson 11y ago
    If they secede, they will still need the goods and services provided by the 99% - I doubt that many janitors, mechanics, painters, secretaries etc. are in that 1%. They'd need to have these servicepeople commute in and out of "rich California" every day from far off, and they probably wouldn't want unsightly public transport, enormous highways, high-rises, or low-income housing cluttering up their little paradise, so commutes of an hour or more would become normal. That would never work.
    - ArkyBeagle 11y ago
      I know an electrician who has been close to, if not in the 1%. And then there's the bad years. I've had this conversation three times: "What'd it take to get you to move to California?" "More than you have." So there's that.
  - ska 11y ago
    http://www.angryflower.com/atlass.gif http://www.angryflower.com/atlass.gif
- auntienomen 11y ago
  What fraction of income do the top 1% of earners actually earn?
  - maxmcd 11y ago
    Looks like in 2013 the top 1% earned 21% and paid 41% of California's taxes. https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...
  - deleted 11y ago
    [deleted]
  - hammock 11y ago
    According to the data in the article, $281b out of $1,104b, or 25%.
    - danjoc 11y ago
      Meanwhile, Apple alone has > $190b sheltered offshore. I suspect these numbers are skewed in the 1%'s favor.
      - baddox 11y ago
        It's not "hiding." They can't bring it back (i.e. spend it in the US) without paying taxes.
        Retric 11y ago
        Until then it does not show up as income, so it really is hiding. Further, you can send money off shore by paying off shore subsidiary's for arbitrary costs, in no way does that money purely represent off shore profits outside of pure accounting magic.
        Goronmon 11y ago
        It seems strange that your definition of "hiding" is "not present in the US". Is most of the population of the world then a "hidden" group of people? That sounds a bit condescending.
- deleted 11y ago
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- Thriptic 11y ago
  Did you read the article? If anything it talks far more than it should about income inequality. Frankly I find the tax disparities astounding: 45% paid by 1%? 90% paid by 20%? That is crazy.
  - sp332 11y ago
    Do you think tax should not be tied to income? Maybe each person should owe the same amount in tax or something?
  - mdorazio 11y ago
    Yes I did. My comment was specifically in reference to the headline (which doesn't even match that of the article), not the article itself.
  - aidenn0 11y ago
    From the article I get that the top 1% pays tax at 2x the rate per dollar earned than the bottom 99% does in aggregate. That seems like a reasonably progressive rate to me.
- Randgalt 11y ago
  "earn an absolutely massive portion of all income in the state" - it's not as if the money is just sitting there and 1% are taking most of it. Wealth is _created_. The top 1% _create_ most of the wealth in California. How is it just that they are required to pay so much in taxes? Before I left California, my marginal tax rate (including Federal) was over 52%. Super-high earners in California have marginal rates over 60%. How is that just?
  - jsprogrammer 11y ago
    Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to increase it is to originate more bank loans.
    - Randgalt 11y ago
      Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.
      - jsprogrammer 11y ago
        Yes, but where does $300 come from in the first place?
        Randgalt 11y ago
        I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
        jsprogrammer 11y ago
        Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
- entee 11y ago
  Wow that chart is astonishing, and in the context makes the headline a little misleading. Having a such a small percent pay such a huge share is toxic. I've heard people who pay high taxes say incredibly entitled things about "paying for" things. It destroys a sense of shared investment and purpose. Clearly the solution has to be to ensure income is more evenly distributed, though I don't know how to do that exactly. Education and learning skills necessary for high paying industries would certainly help, but every time I hear that it feels like kind of a weak solution. That said, I don't really have a better one. What are some interesting off the wall ideas for reducing income disequilibrium?
  - kspaans 11y ago
    Remember that the chart only deals with income, not the net wealth of tax filers. It's probably harder to get reliable statistics on call Californians' net wealth, but I bet that would be a much more interesting graph. (I am not suggesting a California wealth tax.)
    - oldmanjay 11y ago
      Would it be interesting mainly for how much rationalization of envy it would provoke? I can't imagine what else could be drawn from it.
      - JauntTrooper 11y ago
        There'd be a lot of overlap, but it would also highlight the very wealthy that pay low taxes (likely landowners and retirees) and high earners with few assets that pay high taxes - the top 5% to 0.5% - that are often politically vocal and frustrated at their relative tax burden and the difficulty they face to accumulate wealth despite high income.
  - solipsism 11y ago
    There's no magic bullet. Runaway disequilibrium takes concerted and relentless effort across a wide array of arenas. This goes for income inequality as much as it does for climate greenhouse effects. In both cases the alternative is that it goes until we hit a breaking point. The millionaires and billionaires of today are betting that this breaking point won't happen in their lifetimes. They're probably right.
- 11thEarlOfMar 11y ago
  What is missing is that the total income in the state in 2012 was $1.1 Trillion. So the top 1% earned 28% of the income, but paid 45% of the total taxes: https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...
  - daveguy 11y ago
    As they should. That's what happens when you have a progressive tax structure. Do you think we should we shift some of that tax burden onto people who make less than $25k per year?
    - aantix 11y ago
      I never understand why the term "progressive" gets painted in a positive light? If I eat a steak, the restaurant doesn't come to me and say "Hey, you make 10% more than the guy two tables down, so you'll pay 10% more for your steak". Why did this sliding rule ever get enacted for taxation? If you use something, you pay for it at the established price.
      - matthewmacleod 11y ago
        Oh, come on. I know you get it. Taxation is a generally accepted necessary evil way to fund projects and services for the common good. A progressive tax policy recognises that a person with a high income can bear a greater burden; taxing a minimum wage earner 30% of their income would have a much higher proportional effect on quality of life that someone earning, say, 200k. We seem to accept progressive taxation as fair, in the sense that it causes no more inconvenience to low earners than high earners. The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice.
        msandford 11y ago
        > The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice. That's exactly what a lot of people are up in arms about, they get taxed hugely but get no real say in how the money is spent. Sure they get a vote, but if your candidate loses it's not as though you're exempt from paying taxes. In some way these people are right; if they choose to engage in commerce they aren't being forced to do anything and as such "whatever the market will bear" is a good metric. Taxes aren't about "whatever the market will bear" though because you don't have a choice to not consume and therefore not pay.
- LoSboccacc 11y ago
  are those numbers including all the tax dodging?
- judah 11y ago
  >> "but only pay 45% of taxes. We should be asking if that's enough" How much is enough? We often hear that the wealthy should "pay their fair share." But we rarely hear a concrete figure. Look. I work 3 jobs and bring in about $200,000 per year. I work hard and diligently for that money. I use it to provide for my wife and kids and our future. And I paid nearly $60,000 in taxes in 2015. I don't want to pay any more. I'm fed up with how much of my hard-earned income disappears by way of taxation. More taxes subtract from my kids' future. More taxes subtract from dates with my wife. More taxes subtract from my retirement when I am old and unable to provide for myself. How much tax is enough? What, exactly, is my "fair share"? Everyone likes to demonize the rich 1%, but few concede the reality that we in technology are all rich. Heck, even the poor in the US are rich by the world's standards. We "rich" people are not all demons whose money is an infinite fountain waiting to be sapped by those without. No: we work hard for that. And we have families. Some of us hold multiple jobs in order to provide for ourselves and our kids. So I ask, how much is enough? Give a specific tax percentage you think I, as a husband and dad of 2 children, ought to pay to the federal government, and please tell us compellingly why you feel entitled to take my hard-earned money away from me and my wife and kids.
mtgx 11y ago
And how much is their income compared to the total? 80%? What matters if the percentage, not the total amount. Of course someone who earns $1 million a year would pay "more" in taxes than someone who earns $100,000 (at least I would hope they do).
- dustcoin 11y ago
  Using the numbers in this article[1], 1% of the taxpayers make only about 24% of the total income in CA, not 80%. [1] http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178...
  - YPCrumble 11y ago
    A better question would be what percent of the wealth do they own? That would be much, much higher. If your investment portfolio doubles, are you richer? Of course. But it doesn't count as income. You're just making money off the backs of the poor whose wages are being depressed in favor of giving more money to capital.
  - adwf 11y ago
    Disposable income would be a better metric in this case. They may earn only 24% of the income, but how much of that is excess? ie. beyond providing their needs. For the other 76%, all of that income may be spent on just food/rent/other essentials. Whereas the 1% have excess that they can save, or spend on luxuries. That's why tiered tax regimes exist. NB. The definition of "needs" is obviously very debatable. The top 1% in California is defined as ~$90k, but given a median rent of >$4000/mth in SF, that skews the needs/excess taxable money argument considerably.
apitaru 11y ago
This is grossly misleading. What I'd love to see is a chart that shows tax-paid-per-dollar-earned. I know it won't tell the whole story, but it'll tell a straight story.
- criddell 11y ago
  Yeah, you really do need more information to decide if that's fair or not. I don't really see a problem with tax brackets though (I'd rather see a formula though rather than discrete ranges). I'd argue that a lower income bound and upper taxation rate should be established - say $20,000 and 60%. That means that no person earning less than the lower bound will be taxed and no person will pay more than the upper bound in taxes. Then it's just a matter of describing a curve that satisfies those two constraints.
- lukeschlather 11y ago
  http://www.itep.org/whopays/states/california.php http://www.itep.org/whopays/states/california.php
ben_jones 11y ago
There's ten people in a room and you are tasked with distributing $1000 among them. The catch is you have to get everyone to vote on the distribution. Seems easy right? Everyone get's $100. But wait somebody has a suggestion. Why don't we give $500 to the two handsomest people in the room? Everybody votes yes. Eight people leave shocked and angry. Edit: this wasn't intended to be a 1:1 analogy of wealth distribution. It's just something interesting I think of about human nature when the topic is brought up. A lot of people outside the 1% will defend the 1%, there's nothing wrong with that, but I wonder if those people count themselves among the future 1% or even feel some connection to it for one reason or the other. I wonder if this skews our perception of wealth inequality and if wealth inequality is actually a graver threat because of such a shroud.
- Randgalt 11y ago
  The better analogy is you have 10 people in a room and only a few of them are producing anything yet they are forced to give a portion of their production to everyone else in the room.
  - ben_jones 11y ago
    You're right. Thank god Mark Zuckerberg produced ~$40 billion dollars of value with his contributions to Facebook..
    - Randgalt 11y ago
      Facebook wouldn't exist without Zuckerberg. He deserves every penny of it.
      - p4bl0 11y ago
        Facebook wouldn't exist without the loads of engineers developing it. If it was only for Zuckerberg it may never have left his dorm room.
        11y ago
bko 11y ago
For those curious about how the percentage of taxes paid in relation to percentage of income earned, these statistics shed some light on the issue: > According to a projection from the non-partisan Tax Policy Center, the top 1 percent of Americans will pay 45.7 percent of the individual income taxes in 2014—up from 43 percent in 2013 and 40 percent in 2012 (the oldest period available)... In 1979, the top one percenters earned 8.9 percent of pretax income and paid 18 percent of federal income taxes. In 2011, the top 1 percent earned 14.6 percent of income and paid 25.4 percent in 2011 of federal income taxes. http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede...
evanpw 11y ago
New Jersey tax authorities are worried about the drop in revenue from one guy moving to Florida: http://www.bloomberg.com/news/articles/2016-04-05/tepper-s-move-may-affect-new-jersey-budget-forecaster-warns http://www.bloomberg.com/news/articles/2016-04-05/tepper-s-m....
- hyperliner 11y ago
  That's when you know NJ spends way too much money. "Hey, look, this rich guy moved in to NJ! Let's hire more bureaucrats!... Oh, now he left! What should we do!?"
- joesmo 11y ago
  New Jersey is an utterly incompetent state when it comes to fiscal matters, as the last paragraph starts to hint. If this state wasn't propped up by its proximate location to other big cities and states, I imagine it'd be a backwater comparable to Mississippi.
- nugget 11y ago
  California officials are aware of these risks also. I give a lot of credit to Gov Brown for constantly reminding the state legislators that the good times won't last forever. The challenge with a tax system that draws so heavily from top earners is that you have greater ups (during boom times, like the current) and greater downs (during recessions, like 2008-2010). Moreover, such a huge amount of California's tax haul is due to one-time events such as stock and real estate sales which are even more amplified during boom times.
cynoclast 11y ago
And what, 80% of the income? Nationally they have like 80% of the wealth: https://www.youtube.com/watch?v=QPKKQnijnsM https://www.youtube.com/watch?v=QPKKQnijnsM
- dustcoin 11y ago
  Using the numbers in this article[1], 1% of the taxpayers make only about 24% of the total income in CA, not 80%. [1] http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178...
- elsewhen 11y ago
  the top 1% earned 28% of the income and paid 45% of the taxes: https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...
jcoffland 11y ago
This is ridiculous. Of course the top income earners pay the most taxes. When you are uber rich the trick is convert all your income to capital gains to avoid the taxes. There are a lot of tricks to further reduce your capital taxes to a fraction of what you would pay were it income.
- elsewhen 11y ago
  California taxes capital gains at the same rate that they tax income as you can see in the table on the following page: http://taxfoundation.org/article/high-burden-state-and-federal-capital-gains-tax-rates-united-states http://taxfoundation.org/article/high-burden-state-and-feder...
  - deleted 11y ago
    [deleted]
  - jcoffland 11y ago
    But there are many more loop holes (or call them creative financing tricks) that allow you to avoid paying taxes on capital gains.
- fiatmoney 11y ago
  California taxes capital gains and dividends heavily.
rdl 11y ago
A lot of that is because in California capital gains are taxed as income; the set of people who have meaningful capital gains in a given year is small (a core of people in that set every year, and another set who are in it some years due to infrequent sales of assets like houses, businesses, major equity stakes from stock grants or options, etc.)
poke111 11y ago
One of the interesting explanations I've seen for income inequality is that globalization has massively increased the size of the market. So the top end for incomes has massively expanded along with it. But on the bottom end, the floor of 0 never changes. So an increase in income inequality is a natural consequence of globalization.
- undersuit 11y ago
  It's always been a problem with the floor. You can only be so poor, so hungry, or so cold. You can never be too rich, too sated, or too comfortable.
fedups 11y ago
Having society dependent so heavily on such a tiny fraction of the population makes it particularly vulnerable to events that affect that tiny slice. Especially for governments that are bad at long term planning for tougher times.
- lintiness 11y ago
  if we had government that spent as a function of some trailing average of tax receipts (it could be a greater than 1 multiplier), we'd have built in responsibility with a counter-cyclical kicker. makes way too much sense for politicians who want control.
TheCoelacanth 11y ago
The title is inaccurate. The article says that the top 1% of earners pay 45% of income taxes. It says nothing about what percent of total taxes that they pay. Since income tax is 68% of California's taxes, they could pay anywhere from 30% to 62% of the taxes.
brainbug_alpha 11y ago
Equal is unfair. http://www.amazon.com/Equal-Is-Unfair-Misguided-Inequality/dp/125008444X http://www.amazon.com/Equal-Is-Unfair-Misguided-Inequality/d...
blazespin 11y ago
This stat be based on the marginal utility. Tax paid on 100k is much more painful for a family than tax paid on 1 million.
lukeschlather 11y ago
The headline is inaccurate. The headline should read "Top 1% of Income-Earners pay 45% of California's Income Taxes." The rest of the data don't really give a meaningful view either since they ignore California's 10% sales tax. According to IETP, California's tax system is proportional or even slightly regressive. (Higher-income earners pay a smaller share of their income as tax.) http://www.itep.org/whopays/states/california.php http://www.itep.org/whopays/states/california.php
mikeash 11y ago
The HN title continues the proud American tradition of conflating "taxes" with income taxes, ignoring all others. And of course this makes it look like wealthy people bear more of a burden than they really do, since other taxes hit the poor far more. This happens constantly. I can't remember ever seeing a statement of the form "the top X% pay Y% of taxes" which didn't ignore a substantial set of taxes that hit the poor the most. I think someone is out there manipulating public opinion on tax policy, and doing an amazing job of it.
brosky117 11y ago
I'm not very up to date with tax policy or politics but it sounds reasonable to me that everyone pay a fixed percentage. That or just have a consumption tax. Are there good reasons not to do it that way??
awqrre 11y ago
This is the top 1% that doesn't use loopholes?
mchahn 11y ago
As a die-hard liberal I think the top 1% should pay 99% of the taxes. The numbers add up (to 100%).

117 points by elsewhen 11y ago

Of course they do! Just look at the chart here: http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178... and the referenced franchise tax info. I am really tired of seeing sensationalist headlines like these. The top 1% of income earners earn an absolutely massive portion of all income in the state, but only pay 45% of taxes. We should be asking if that's enough, not implying that the wealthy are somehow propping up the state's finances when inequality is accelerating every year.

devereaux 11y ago
Only pay 45% of the taxes? What do you want?? Should they pay 70% of the taxes??? At which point will you be happy precisely???? 90%????? When the top 1% pays for about 50% of the infrastructure, it is time for them to think about seceding. I mean, the top 50% move together, poof they can have something like half of what is provided by the state, without the 99% bothering them anymore.
- quonn 11y ago
  I think he meant that if the top 1% has 99% of the wealth, we should expect them to pay 99% of the taxes. However, that wealth is not just income, so the argument is not quite correct. This is a democracy, so how much ones owes in taxes is decided by the people. As far as seceding is concerned, good luck with that.
- ska 11y ago
  It is a surprisingly common fallacy to believe that income is generated in a way that is not deeply coupled to the system in which it was generated. This is just muddy thinking if you are talking about the "1%" or your own IRS bill. I think that the comment you were responding to was suggesting that the tax load should be directly proportional to the income fraction, which I suppose you could make a cogent argument of.
  - Mikeb85 11y ago
    Yup. As one of my economics professors likes to say (paraphrasing): There is no 'natural' equilibrium. The economy develops based on the set of laws already in place. People earn money based on the 'system' already in place. So the idea of 'fairness' is already an artificial construct. It's far easier to make a billion in a society like the US, than say, Vietnam, or Argentina, or Romania. So in a very real way, US billionaires do 'owe' something to the system that allowed them to attain that wealth in the first place (and that 'something' is pretty much 'everything'). If wealth could be attained completely independently of the 'system', then the distribution of billionaires would be completely different than it is right now.
- orbitingpluto 11y ago
  Someone's been vigorously rubbing Ayn Rand novels against his privates again. The real question is how does wealth manage to concentrate so highly so quickly and by those who actually contribute so little. edit: this guy is literally pulling an Atlas Shrugged. If you think you as the owner of the company 'make all of the money', I heartily suggest you try going it alone.
  - solipsism 11y ago
    Just make sure you use the paperback!
  - janpieterz 11y ago
    I never got why people read and get this 'owner of the company makes all the money' narrative from the book. She is obviously glorifying these man, making them the 'hero', but don't we do exactly the same in every other fictional book? It's been a while since I read a book about John and Jane that details their virtuous lives that is not played out, one way or another, on a high level (either starting or becoming a hero etc). My take from the story was more that these people exist at every level. I remember parts (I might be grossly mistaken here, but this is what I took from it) where Rearden talks about and with his most valued employees, or where Dagny has her valued associates, where the train men that 'stand their ground' are praised. I'm not sure the 'owner makes the money' story is what she wanted to portray, or possibly I just took my biased view and ran with it while reading ;)
  - ArkyBeagle 11y ago
    "How" is that the people who make the money control the measurement methods for it. Governance is hard. CEOs once upon a time made "too much salary" so pay for performance was used. Now this.
- EliRivers 11y ago
  I suspect that without having a 99% to take advantage of, they wouldn't earn so much.
- deleted 11y ago
  [deleted]
- p4bl0 11y ago
  > without the 99% bothering them anymore. Do you really believe the 1% richer would earn so much money without exploiting the work of the 99% others you want them to get rid of? That's ridiculous.
- GavinMcG 11y ago
  Given that it's only those at the top that receive the benefits of economic growth (FTA: the bottom 80% of Californians saw no growth in their adjusted gross incomes between 1994 and 2013) higher is absolutely better. They're clearly skilled at harvesting the economic contributions of those worse off than them.
- LeifCarrotson 11y ago
  If they secede, they will still need the goods and services provided by the 99% - I doubt that many janitors, mechanics, painters, secretaries etc. are in that 1%. They'd need to have these servicepeople commute in and out of "rich California" every day from far off, and they probably wouldn't want unsightly public transport, enormous highways, high-rises, or low-income housing cluttering up their little paradise, so commutes of an hour or more would become normal. That would never work.
  - ArkyBeagle 11y ago
    I know an electrician who has been close to, if not in the 1%. And then there's the bad years. I've had this conversation three times: "What'd it take to get you to move to California?" "More than you have." So there's that.
- ska 11y ago
  http://www.angryflower.com/atlass.gif http://www.angryflower.com/atlass.gif
auntienomen 11y ago
What fraction of income do the top 1% of earners actually earn?
- maxmcd 11y ago
  Looks like in 2013 the top 1% earned 21% and paid 41% of California's taxes. https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...
- deleted 11y ago
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- hammock 11y ago
  According to the data in the article, $281b out of $1,104b, or 25%.
  - danjoc 11y ago
    Meanwhile, Apple alone has > $190b sheltered offshore. I suspect these numbers are skewed in the 1%'s favor.
    - baddox 11y ago
      It's not "hiding." They can't bring it back (i.e. spend it in the US) without paying taxes.
      - Retric 11y ago
        Until then it does not show up as income, so it really is hiding. Further, you can send money off shore by paying off shore subsidiary's for arbitrary costs, in no way does that money purely represent off shore profits outside of pure accounting magic.
        Goronmon 11y ago
        It seems strange that your definition of "hiding" is "not present in the US". Is most of the population of the world then a "hidden" group of people? That sounds a bit condescending.
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Thriptic 11y ago
Did you read the article? If anything it talks far more than it should about income inequality. Frankly I find the tax disparities astounding: 45% paid by 1%? 90% paid by 20%? That is crazy.
- sp332 11y ago
  Do you think tax should not be tied to income? Maybe each person should owe the same amount in tax or something?
- mdorazio 11y ago
  Yes I did. My comment was specifically in reference to the headline (which doesn't even match that of the article), not the article itself.
- aidenn0 11y ago
  From the article I get that the top 1% pays tax at 2x the rate per dollar earned than the bottom 99% does in aggregate. That seems like a reasonably progressive rate to me.
Randgalt 11y ago
"earn an absolutely massive portion of all income in the state" - it's not as if the money is just sitting there and 1% are taking most of it. Wealth is _created_. The top 1% _create_ most of the wealth in California. How is it just that they are required to pay so much in taxes? Before I left California, my marginal tax rate (including Federal) was over 52%. Super-high earners in California have marginal rates over 60%. How is that just?
- jsprogrammer 11y ago
  Money is created from bank loans. Wealth may be slightly different, but at any given time there is a fixed amount of money in existence and the only way to increase it is to originate more bank loans.
  - Randgalt 11y ago
    Money changes hands in exchange for something of value. I give Apple $300 and I get an iPhone. Apple takes that $300 and gives it to someone else in exchange for something they value. Money is merely a medium of exchange. The wealth is the products we produce and trade for.
    - jsprogrammer 11y ago
      Yes, but where does $300 come from in the first place?
      - Randgalt 11y ago
        I got it by trading with someone else. You seem fixated on the money supply, which is (mostly) irrelevant in a discussion of wealth and income.
        jsprogrammer 11y ago
        Wealth and income are denominated in dollars, or other bank currency generally, so they are bound by their availability. For example, you cannot have $2,000,000,000,000,000 in annual income, simply because $2,000,000,000,000,000 do not exist. >I got it by trading with someone else. If you examine the transaction in its historical context, there will be a chain of trades going back to a bank loan (or multiple). You seem fixated on the trade of dollars, while seeming unconcerned about how dollars come to exist.
entee 11y ago
Wow that chart is astonishing, and in the context makes the headline a little misleading. Having a such a small percent pay such a huge share is toxic. I've heard people who pay high taxes say incredibly entitled things about "paying for" things. It destroys a sense of shared investment and purpose. Clearly the solution has to be to ensure income is more evenly distributed, though I don't know how to do that exactly. Education and learning skills necessary for high paying industries would certainly help, but every time I hear that it feels like kind of a weak solution. That said, I don't really have a better one. What are some interesting off the wall ideas for reducing income disequilibrium?
- kspaans 11y ago
  Remember that the chart only deals with income, not the net wealth of tax filers. It's probably harder to get reliable statistics on call Californians' net wealth, but I bet that would be a much more interesting graph. (I am not suggesting a California wealth tax.)
  - oldmanjay 11y ago
    Would it be interesting mainly for how much rationalization of envy it would provoke? I can't imagine what else could be drawn from it.
    - JauntTrooper 11y ago
      There'd be a lot of overlap, but it would also highlight the very wealthy that pay low taxes (likely landowners and retirees) and high earners with few assets that pay high taxes - the top 5% to 0.5% - that are often politically vocal and frustrated at their relative tax burden and the difficulty they face to accumulate wealth despite high income.
- solipsism 11y ago
  There's no magic bullet. Runaway disequilibrium takes concerted and relentless effort across a wide array of arenas. This goes for income inequality as much as it does for climate greenhouse effects. In both cases the alternative is that it goes until we hit a breaking point. The millionaires and billionaires of today are betting that this breaking point won't happen in their lifetimes. They're probably right.
11thEarlOfMar 11y ago
What is missing is that the total income in the state in 2012 was $1.1 Trillion. So the top 1% earned 28% of the income, but paid 45% of the total taxes: https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...
- daveguy 11y ago
  As they should. That's what happens when you have a progressive tax structure. Do you think we should we shift some of that tax burden onto people who make less than $25k per year?
  - aantix 11y ago
    I never understand why the term "progressive" gets painted in a positive light? If I eat a steak, the restaurant doesn't come to me and say "Hey, you make 10% more than the guy two tables down, so you'll pay 10% more for your steak". Why did this sliding rule ever get enacted for taxation? If you use something, you pay for it at the established price.
    - matthewmacleod 11y ago
      Oh, come on. I know you get it. Taxation is a generally accepted necessary evil way to fund projects and services for the common good. A progressive tax policy recognises that a person with a high income can bear a greater burden; taxing a minimum wage earner 30% of their income would have a much higher proportional effect on quality of life that someone earning, say, 200k. We seem to accept progressive taxation as fair, in the sense that it causes no more inconvenience to low earners than high earners. The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice.
      - msandford 11y ago
        > The comparison with a private commercial service is flawed, in the sense that engagement with it is an entirely personal choice. That's exactly what a lot of people are up in arms about, they get taxed hugely but get no real say in how the money is spent. Sure they get a vote, but if your candidate loses it's not as though you're exempt from paying taxes. In some way these people are right; if they choose to engage in commerce they aren't being forced to do anything and as such "whatever the market will bear" is a good metric. Taxes aren't about "whatever the market will bear" though because you don't have a choice to not consume and therefore not pay.
LoSboccacc 11y ago
are those numbers including all the tax dodging?
judah 11y ago
>> "but only pay 45% of taxes. We should be asking if that's enough" How much is enough? We often hear that the wealthy should "pay their fair share." But we rarely hear a concrete figure. Look. I work 3 jobs and bring in about $200,000 per year. I work hard and diligently for that money. I use it to provide for my wife and kids and our future. And I paid nearly $60,000 in taxes in 2015. I don't want to pay any more. I'm fed up with how much of my hard-earned income disappears by way of taxation. More taxes subtract from my kids' future. More taxes subtract from dates with my wife. More taxes subtract from my retirement when I am old and unable to provide for myself. How much tax is enough? What, exactly, is my "fair share"? Everyone likes to demonize the rich 1%, but few concede the reality that we in technology are all rich. Heck, even the poor in the US are rich by the world's standards. We "rich" people are not all demons whose money is an infinite fountain waiting to be sapped by those without. No: we work hard for that. And we have families. Some of us hold multiple jobs in order to provide for ourselves and our kids. So I ask, how much is enough? Give a specific tax percentage you think I, as a husband and dad of 2 children, ought to pay to the federal government, and please tell us compellingly why you feel entitled to take my hard-earned money away from me and my wife and kids.

mtgx 11y ago

And how much is their income compared to the total? 80%? What matters if the percentage, not the total amount. Of course someone who earns $1 million a year would pay "more" in taxes than someone who earns $100,000 (at least I would hope they do).

dustcoin 11y ago
Using the numbers in this article[1], 1% of the taxpayers make only about 24% of the total income in CA, not 80%. [1] http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178...
- YPCrumble 11y ago
  A better question would be what percent of the wealth do they own? That would be much, much higher. If your investment portfolio doubles, are you richer? Of course. But it doesn't count as income. You're just making money off the backs of the poor whose wages are being depressed in favor of giving more money to capital.
- adwf 11y ago
  Disposable income would be a better metric in this case. They may earn only 24% of the income, but how much of that is excess? ie. beyond providing their needs. For the other 76%, all of that income may be spent on just food/rent/other essentials. Whereas the 1% have excess that they can save, or spend on luxuries. That's why tiered tax regimes exist. NB. The definition of "needs" is obviously very debatable. The top 1% in California is defined as ~$90k, but given a median rent of >$4000/mth in SF, that skews the needs/excess taxable money argument considerably.

apitaru 11y ago

This is grossly misleading. What I'd love to see is a chart that shows tax-paid-per-dollar-earned. I know it won't tell the whole story, but it'll tell a straight story.

criddell 11y ago
Yeah, you really do need more information to decide if that's fair or not. I don't really see a problem with tax brackets though (I'd rather see a formula though rather than discrete ranges). I'd argue that a lower income bound and upper taxation rate should be established - say $20,000 and 60%. That means that no person earning less than the lower bound will be taxed and no person will pay more than the upper bound in taxes. Then it's just a matter of describing a curve that satisfies those two constraints.
lukeschlather 11y ago
http://www.itep.org/whopays/states/california.php http://www.itep.org/whopays/states/california.php

ben_jones 11y ago

There's ten people in a room and you are tasked with distributing $1000 among them. The catch is you have to get everyone to vote on the distribution. Seems easy right? Everyone get's $100. But wait somebody has a suggestion. Why don't we give $500 to the two handsomest people in the room? Everybody votes yes. Eight people leave shocked and angry. Edit: this wasn't intended to be a 1:1 analogy of wealth distribution. It's just something interesting I think of about human nature when the topic is brought up. A lot of people outside the 1% will defend the 1%, there's nothing wrong with that, but I wonder if those people count themselves among the future 1% or even feel some connection to it for one reason or the other. I wonder if this skews our perception of wealth inequality and if wealth inequality is actually a graver threat because of such a shroud.

Randgalt 11y ago
The better analogy is you have 10 people in a room and only a few of them are producing anything yet they are forced to give a portion of their production to everyone else in the room.
- ben_jones 11y ago
  You're right. Thank god Mark Zuckerberg produced ~$40 billion dollars of value with his contributions to Facebook..
  - Randgalt 11y ago
    Facebook wouldn't exist without Zuckerberg. He deserves every penny of it.
    - p4bl0 11y ago
      Facebook wouldn't exist without the loads of engineers developing it. If it was only for Zuckerberg it may never have left his dorm room.
      - 11y ago

bko 11y ago

For those curious about how the percentage of taxes paid in relation to percentage of income earned, these statistics shed some light on the issue: > According to a projection from the non-partisan Tax Policy Center, the top 1 percent of Americans will pay 45.7 percent of the individual income taxes in 2014—up from 43 percent in 2013 and 40 percent in 2012 (the oldest period available)... In 1979, the top one percenters earned 8.9 percent of pretax income and paid 18 percent of federal income taxes. In 2011, the top 1 percent earned 14.6 percent of income and paid 25.4 percent in 2011 of federal income taxes. http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-income-taxes.html http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-fede...

evanpw 11y ago

New Jersey tax authorities are worried about the drop in revenue from one guy moving to Florida: http://www.bloomberg.com/news/articles/2016-04-05/tepper-s-move-may-affect-new-jersey-budget-forecaster-warns http://www.bloomberg.com/news/articles/2016-04-05/tepper-s-m....

hyperliner 11y ago
That's when you know NJ spends way too much money. "Hey, look, this rich guy moved in to NJ! Let's hire more bureaucrats!... Oh, now he left! What should we do!?"
joesmo 11y ago
New Jersey is an utterly incompetent state when it comes to fiscal matters, as the last paragraph starts to hint. If this state wasn't propped up by its proximate location to other big cities and states, I imagine it'd be a backwater comparable to Mississippi.
nugget 11y ago
California officials are aware of these risks also. I give a lot of credit to Gov Brown for constantly reminding the state legislators that the good times won't last forever. The challenge with a tax system that draws so heavily from top earners is that you have greater ups (during boom times, like the current) and greater downs (during recessions, like 2008-2010). Moreover, such a huge amount of California's tax haul is due to one-time events such as stock and real estate sales which are even more amplified during boom times.

cynoclast 11y ago

And what, 80% of the income? Nationally they have like 80% of the wealth: https://www.youtube.com/watch?v=QPKKQnijnsM https://www.youtube.com/watch?v=QPKKQnijnsM

dustcoin 11y ago
Using the numbers in this article[1], 1% of the taxpayers make only about 24% of the total income in CA, not 80%. [1] http://www.sacbee.com/site-services/databases/article9349178.html http://www.sacbee.com/site-services/databases/article9349178...
elsewhen 11y ago
the top 1% earned 28% of the income and paid 45% of the taxes: https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...

jcoffland 11y ago

This is ridiculous. Of course the top income earners pay the most taxes. When you are uber rich the trick is convert all your income to capital gains to avoid the taxes. There are a lot of tricks to further reduce your capital taxes to a fraction of what you would pay were it income.

elsewhen 11y ago
California taxes capital gains at the same rate that they tax income as you can see in the table on the following page: http://taxfoundation.org/article/high-burden-state-and-federal-capital-gains-tax-rates-united-states http://taxfoundation.org/article/high-burden-state-and-feder...
- deleted 11y ago
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- jcoffland 11y ago
  But there are many more loop holes (or call them creative financing tricks) that allow you to avoid paying taxes on capital gains.
fiatmoney 11y ago
California taxes capital gains and dividends heavily.

rdl 11y ago

A lot of that is because in California capital gains are taxed as income; the set of people who have meaningful capital gains in a given year is small (a core of people in that set every year, and another set who are in it some years due to infrequent sales of assets like houses, businesses, major equity stakes from stock grants or options, etc.)

poke111 11y ago

One of the interesting explanations I've seen for income inequality is that globalization has massively increased the size of the market. So the top end for incomes has massively expanded along with it. But on the bottom end, the floor of 0 never changes. So an increase in income inequality is a natural consequence of globalization.

undersuit 11y ago
It's always been a problem with the floor. You can only be so poor, so hungry, or so cold. You can never be too rich, too sated, or too comfortable.

fedups 11y ago

Having society dependent so heavily on such a tiny fraction of the population makes it particularly vulnerable to events that affect that tiny slice. Especially for governments that are bad at long term planning for tougher times.

lintiness 11y ago
if we had government that spent as a function of some trailing average of tax receipts (it could be a greater than 1 multiplier), we'd have built in responsibility with a counter-cyclical kicker. makes way too much sense for politicians who want control.

TheCoelacanth 11y ago

The title is inaccurate. The article says that the top 1% of earners pay 45% of income taxes. It says nothing about what percent of total taxes that they pay. Since income tax is 68% of California's taxes, they could pay anywhere from 30% to 62% of the taxes.

brainbug_alpha 11y ago

Equal is unfair. http://www.amazon.com/Equal-Is-Unfair-Misguided-Inequality/dp/125008444X http://www.amazon.com/Equal-Is-Unfair-Misguided-Inequality/d...

blazespin 11y ago

This stat be based on the marginal utility. Tax paid on 100k is much more painful for a family than tax paid on 1 million.

lukeschlather 11y ago

The headline is inaccurate. The headline should read "Top 1% of Income-Earners pay 45% of California's Income Taxes." The rest of the data don't really give a meaningful view either since they ignore California's 10% sales tax. According to IETP, California's tax system is proportional or even slightly regressive. (Higher-income earners pay a smaller share of their income as tax.) http://www.itep.org/whopays/states/california.php http://www.itep.org/whopays/states/california.php

mikeash 11y ago

The HN title continues the proud American tradition of conflating "taxes" with income taxes, ignoring all others. And of course this makes it look like wealthy people bear more of a burden than they really do, since other taxes hit the poor far more. This happens constantly. I can't remember ever seeing a statement of the form "the top X% pay Y% of taxes" which didn't ignore a substantial set of taxes that hit the poor the most. I think someone is out there manipulating public opinion on tax policy, and doing an amazing job of it.

brosky117 11y ago

I'm not very up to date with tax policy or politics but it sounds reasonable to me that everyone pay a fixed percentage. That or just have a consumption tax. Are there good reasons not to do it that way??

awqrre 11y ago

This is the top 1% that doesn't use loopholes?

mchahn 11y ago

As a die-hard liberal I think the top 1% should pay 99% of the taxes. The numbers add up (to 100%).