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This is what you get when the majority of tax revenue comes from a small tax base. For example, according to Pew Research (http://www.pewresearch.org/fact-tank/

This is what you get when the majority of tax revenue comes from a small tax base. For example, according to Pew Research (http://www.pewresearch.org/fact-tank/2016/04/13/high-income-americans-pay-most-income-taxes-but-enough-to-be-fair/ http://www.pewresearch.org/fact-tank/2016/04/13/high-income-...): > In 2014, people with adjusted gross income, or AGI, above $250,000 paid just over half (51.6%) of all individual income taxes, though they accounted for only 2.7% of all returns filed, according to our analysis of preliminary IRS data. Their average tax rate (total taxes paid divided by cumulative AGI) was 25.7%. By contrast, people with incomes of less than $50,000 accounted for 62.3% of all individual returns filed, but they paid just 5.7% of total taxes. Their average tax rate was 4.3%. In the state of California, "New figures from the Franchise Tax Board show that the wealthiest 1% of Californians paid 50.6% of the state income tax in 2012 — up from 41.1% in 2011. It means that of nearly 15 million tax returns, about 150,000 generated more than half the revenue." (http://www.latimes.com/local/la-me-cap-taxes-20140505-column.html http://www.latimes.com/local/la-me-cap-taxes-20140505-column...) It's not very healthy to collect taxes this way. As the LA Times article indicated, California's tax revenue fluctuates based on the incomes of a pretty small number of people. When a small number of people provide most of the tax revenue, yet the political discourse constantly accuses them of not paying a fair share, it's not hard to see why they feel persecuted and try to hide their money. It's also hard to say that they aren't paying their "fair share" when they provide more than half of the government's tax revenue. Anyone who wants them to pay more ought to provide some kind of objective way to calculate what someone's "fair share" of tax is, and that's probably impossible.

cloudjacker 10y ago
If you are concerned about people paying their "fair share" at all then you are playing by the wrong set of rules. Governments funding themselves by income tax is a 100 year old phenomenon. That particular form of passive revenue generation isn't an absolute. Governments subsidized roads and schools before then, whether it was from property taxes, nationalized industries, bond programs, outright expropriation or any other form of revenue generation. Compliance with passive taxation literally requires indoctrination, and there are people that reach a place in society where they can opt out of it. This isn't a "stance" I subscribe to, it is a reality I can perceive. It would be disingenuous for me to say I don't understand what is going on, or hand waive it away as saying these people neglect their "civic duty".
afterburner 10y ago
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... >Currently, the richest 1% hold about 38% of all privately held wealth in the United States. while the bottom 90% held 73% of all debt. According to The New York Times, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent". Your stats don't sound so crazy when you put it in context. Please feel free to peruse the economic history of states where the rich eventually dodged taxes and left the crushing burden to the middle and poor: ancient Rome, modern Greece, etc.
- bpodgursky 10y ago
  Very few people would consider taxation based on "wealth" to be a fair system. Most people accept income taxes fair enough, but a taxation system based on wealth feels like (and is) simple confiscation. You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Even better, if you subtract out debt (as you suggest), this gives me an incentive to spend my money, rake up debt, and pay nothing -- wealth is now a liability, didn't you hear?
  - modeless 10y ago
    On the contrary, taxation based on wealth would be much fairer than taxation based on income. Unfortunately a wealth tax is pretty much impossible to implement. The closest thing we have is property taxes. > You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Yes, that is fair! How about this scenario instead: I hold $100,000, but suddenly make $300,000 this year because I sold my startup. Trump holds $1,000,000,000, spends $1,000,000, and loses money on a stupid investment so his net income is negative. I pay $120,000 tax, over a quarter of my net worth, while he pays nothing. Is that fair?
    - dpark 10y ago
      You think it's fair that the government should punish the frugal for not spending every dime they make? If you and I earn the same but I spend all of my money on alcohol and pot, while you set aside to pay for your kids' college, how is it fair that you pay more tax?
pmorici 10y ago
Income tax rates for high earners in the US are near historic lows. https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#/media/File:Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...
- refurb 10y ago
  Two things, plenty of tax relief measures existed back then. Actual tax rates were much lower. In fact, the top earners pay more of the total tax pie than they did back then. Also, if you adjust the brackets based on inflation, the highest bracket is the equivalent of $5M plus. Hardly anyone paid it back then.
- twblalock 10y ago
  > Income tax rates for high earners in the US are near historic lows. That doesn't prove much. Many people would argue that all this means is that taxes were unfairly high then, and more fair now. Others would argue the opposite. If we are interested in defining a fair rate of tax, I don't see how historical data will help. What's fair needs to be based on something more objective.
Alupis 10y ago
There needs to be a massive, institutional and cultural, dramatic shift in thinking. Instead of seeing wealthy folks and thinking we should charge them more and more in taxes, because "they can afford it" - rather, we need to go after our government for run-away spending! The US federal government collects more money in tax revenue alone, than ever before in the history of any country that has ever been. It's ridiculous that so many citizens have this mindset that it's still "not enough", and worse, that people more successful than oneself should foot the bill so that you can enjoy more nice things.
- twblalock 10y ago
  > The US federal government collects more money in tax revenue alone, than ever before in the history of any country that has ever been. Even if expenses did not increase, that statement would always be true because of inflation.
pierrebai 10y ago
If you first substract the amount needed just to get by from the income, then you'll find that the people with income below 50k$ actually pay tax off money they need, while people with high-income pay tax off discretionary money. You can arrive at different conclusion when you start from different data. Starying from raw income and ignboring everything else serves a simple political purpose: to paint low-income people as priviledged and high-income as harassed. Any discourse which yield outlook that any common-sense person would see doesn't match who is downtrodden and who is priviledged should be taken with a grain a salt and huge scrutiny.
gok 10y ago
Why are you so convinced that lower income people wouldn't also find ways to avoid taxes if theirs were higher?
Spooky23 10y ago
7/10 Americans have less than $1000 in savings. How do you suggest squeezing blood from the rock?
andmarios 10y ago
What about VAT? Lower earners have to spend all their income just to live by, so VAT for them is essentially an additional income tax.
tmnvix 10y ago
> It's also hard to say that they aren't paying their "fair share" when they provide more than half of the government's tax revenue This doesn't really hold water. Consider a situation where 99% of income goes to 1% of the population. Would it be fair for them to provide just 1% of the total tax revenue? Or should they provide 99%? Or is 'fair' somewhere in-between? In other words, if they get more than half of all income, is it not fair that they pay more than half of all income tax? Personally, I think taxing income is the wrong approach anyway. In my opinion we should be taxing wealth (LVT, that sort of thing). This is becoming more important due to capitalism's tendency to devalue 'earned income' (e.g. labour) in favour of 'unearned income' (e.g. rent). We are going to face a situation sometime in the not-too-distant future where the vast majority of people will have no means of contributing anything meaningful in the way of income tax. We are probably already there.

cloudjacker 10y ago

If you are concerned about people paying their "fair share" at all then you are playing by the wrong set of rules. Governments funding themselves by income tax is a 100 year old phenomenon. That particular form of passive revenue generation isn't an absolute. Governments subsidized roads and schools before then, whether it was from property taxes, nationalized industries, bond programs, outright expropriation or any other form of revenue generation. Compliance with passive taxation literally requires indoctrination, and there are people that reach a place in society where they can opt out of it. This isn't a "stance" I subscribe to, it is a reality I can perceive. It would be disingenuous for me to say I don't understand what is going on, or hand waive it away as saying these people neglect their "civic duty".

afterburner 10y ago

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite... >Currently, the richest 1% hold about 38% of all privately held wealth in the United States. while the bottom 90% held 73% of all debt. According to The New York Times, the "richest 1 percent in the United States now own more wealth than the bottom 90 percent". Your stats don't sound so crazy when you put it in context. Please feel free to peruse the economic history of states where the rich eventually dodged taxes and left the crushing burden to the middle and poor: ancient Rome, modern Greece, etc.

bpodgursky 10y ago
Very few people would consider taxation based on "wealth" to be a fair system. Most people accept income taxes fair enough, but a taxation system based on wealth feels like (and is) simple confiscation. You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Even better, if you subtract out debt (as you suggest), this gives me an incentive to spend my money, rake up debt, and pay nothing -- wealth is now a liability, didn't you hear?
- modeless 10y ago
  On the contrary, taxation based on wealth would be much fairer than taxation based on income. Unfortunately a wealth tax is pretty much impossible to implement. The closest thing we have is property taxes. > You hold $100. I hold $1. We live the same life, live the same services, make the same income, and you pay 100x the taxes, if you base it on wealth. Does this really feel fair? Yes, that is fair! How about this scenario instead: I hold $100,000, but suddenly make $300,000 this year because I sold my startup. Trump holds $1,000,000,000, spends $1,000,000, and loses money on a stupid investment so his net income is negative. I pay $120,000 tax, over a quarter of my net worth, while he pays nothing. Is that fair?
  - dpark 10y ago
    You think it's fair that the government should punish the frugal for not spending every dime they make? If you and I earn the same but I spend all of my money on alcohol and pot, while you set aside to pay for your kids' college, how is it fair that you pay more tax?

pmorici 10y ago

Income tax rates for high earners in the US are near historic lows. https://en.wikipedia.org/wiki/Income_tax_in_the_United_States#/media/File:Historical_Marginal_Tax_Rate_for_Highest_and_Lowest_Income_Earners.jpg https://en.wikipedia.org/wiki/Income_tax_in_the_United_State...

refurb 10y ago
Two things, plenty of tax relief measures existed back then. Actual tax rates were much lower. In fact, the top earners pay more of the total tax pie than they did back then. Also, if you adjust the brackets based on inflation, the highest bracket is the equivalent of $5M plus. Hardly anyone paid it back then.
twblalock 10y ago
> Income tax rates for high earners in the US are near historic lows. That doesn't prove much. Many people would argue that all this means is that taxes were unfairly high then, and more fair now. Others would argue the opposite. If we are interested in defining a fair rate of tax, I don't see how historical data will help. What's fair needs to be based on something more objective.

Alupis 10y ago

There needs to be a massive, institutional and cultural, dramatic shift in thinking. Instead of seeing wealthy folks and thinking we should charge them more and more in taxes, because "they can afford it" - rather, we need to go after our government for run-away spending! The US federal government collects more money in tax revenue alone, than ever before in the history of any country that has ever been. It's ridiculous that so many citizens have this mindset that it's still "not enough", and worse, that people more successful than oneself should foot the bill so that you can enjoy more nice things.

twblalock 10y ago
> The US federal government collects more money in tax revenue alone, than ever before in the history of any country that has ever been. Even if expenses did not increase, that statement would always be true because of inflation.

pierrebai 10y ago

If you first substract the amount needed just to get by from the income, then you'll find that the people with income below 50k$ actually pay tax off money they need, while people with high-income pay tax off discretionary money. You can arrive at different conclusion when you start from different data. Starying from raw income and ignboring everything else serves a simple political purpose: to paint low-income people as priviledged and high-income as harassed. Any discourse which yield outlook that any common-sense person would see doesn't match who is downtrodden and who is priviledged should be taken with a grain a salt and huge scrutiny.

gok 10y ago

Why are you so convinced that lower income people wouldn't also find ways to avoid taxes if theirs were higher?

Spooky23 10y ago

7/10 Americans have less than $1000 in savings. How do you suggest squeezing blood from the rock?

andmarios 10y ago

What about VAT? Lower earners have to spend all their income just to live by, so VAT for them is essentially an additional income tax.

tmnvix 10y ago

> It's also hard to say that they aren't paying their "fair share" when they provide more than half of the government's tax revenue This doesn't really hold water. Consider a situation where 99% of income goes to 1% of the population. Would it be fair for them to provide just 1% of the total tax revenue? Or should they provide 99%? Or is 'fair' somewhere in-between? In other words, if they get more than half of all income, is it not fair that they pay more than half of all income tax? Personally, I think taxing income is the wrong approach anyway. In my opinion we should be taxing wealth (LVT, that sort of thing). This is becoming more important due to capitalism's tendency to devalue 'earned income' (e.g. labour) in favour of 'unearned income' (e.g. rent). We are going to face a situation sometime in the not-too-distant future where the vast majority of people will have no means of contributing anything meaningful in the way of income tax. We are probably already there.