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Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016

74 points by spking 8y ago

getcrunk 8y ago
In other news, top 3% of us taxpayers earned the majority of income in 2016
- refurb 8y ago
  So you’re willing to concede that the rich pay their fair share?
  - greesil 8y ago
    Please define fair, and rich.
  - nevir 8y ago
    Isn't the other half of the statistic something like "the top 0.1% of U.S. taxpayers earned majority of income"?
  - coldtea 8y ago
    How did you come up with that? The article just says that top 3% of US taxpayers pay the majority of income taxes. If they pay 60% of all income tax paid, but have e.g. 80% of income, they're still paying "the majority of income taxes", but not a fair share of them.
    - harryh 8y ago
      Your hypothetical is not the case (as you can see in one of the graphs in the article). I don't know what "fair share" means exactly, but the 3% in question make far less a % of national income than they pay in income taxes.
      - coldtea 8y ago
        My hypothetical was an extreme example to show how this can be still fair. Besides this extreme example, you can get the 3% much lower in their share of income and still be justified for the taxes they pay. Say, a person makes 1M year and a 999999 people make 10K per year. The first person earns just 0,01% of the total income combined, but he might be the only one paying taxes if the others are below the taxable income level. So, he might pay e.g. 20% of 1M (and 100% of taxes), while he only makes 0.01% of the income -- and that could still be fair. Now add many dirt poor, many middle class, and a 3% of upper middle class, millionaires, billionaires and so on.
    - sintaxi 8y ago
      As someone else has pointed out the top 3% have about 30% of the income while paying 60% of the tax. https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ahY/v1/760x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ah... edit: downvoted for providing facts. I take it we have marxists here.
      - coldtea 8y ago
        >downvoted for providing facts. I take it we have marxists here. Well, speaking of facts, "I take it we have marxists here" shows a bias, and it's not exactly a fact in itself. Under a progressive taxation scheme, it can be perfectly normal to make "30% of the income while paying 60% of the tax". (In fact, more normal than being 3% of the population but making 30% of the income). And for many progressively harsher taxation is fairer -- for one because 20% for someone who makes $20K can leave them with difficulty even paying for rent, while even 50% for someone earning $1M will leave them with a very comfortable amount to have all kinds of luxuries. Below a point of poverty, even 10% or 5% is cruel. Whether 60% share of taxes is fair it depends. Perhaps they should pay even more than 60% of the tax.
        sintaxi 8y ago
        My comment corrected the assertion that the top 3% take home 80% of the income - and was written without bias (the marxist comment was added after the downvotes).
  - tankerdude 8y ago
    No chance. There are lies and there are statistics. It misses the point about local taxes and fees. If you flip it around, and ask, how much of your total income is used to pay taxes and fees for federal, state, and local taxes, the ones at the lower end will be paying a much higher percentage of their income. There is only so much you actually have to pay for when you become rich where the folks on the lower end must pay for certain things that take a larger part of their income. No chance it is “fair” and we know who is writing the tax laws.
    - harryh 8y ago
      If you flip it around, and ask, how much of your total income is used to pay taxes and fees for federal, state, and local taxes, the ones at the lower end will be paying a much higher percentage of their income. This is simply false. One can certainly argue that our tax code should be more progressive than it is, but denying that it is progressive at all is contradicted by the facts.
      - tankerdude 8y ago
        Progressive for federal income taxes, yes. But overall progressive, the answer is simply no. Many places switched from part of income tax to fees. Skyrocketed increase for fees to national parks this past year. Went up 300% for a weekly pass. You apply that over and over again in many parts of your life, and it adds up. It just simply costs more of the percentage of your income to live and because of it, it takes a bigger chunk of your income and thus isn’t progressive. Lastly, Social Security is a kicker for the one thing that is flat out regressive. Capital gains pays zilch for it, and it stops at 127K or so of income. That tax is burdened by the middle class. That’s chump change for the wealthy, but anyone hit by it is burdened less and less the more money they make. And don’t tell me it’s a “fund”. That’s not how the GOP acts with it.
        harryh 8y ago
        There are publicly available stats on this stuff. You can look them up on the IRS website. They disagree with your assertion.
  - kylestlb 8y ago
    Do you think marginal utility factors into fairness?
  - deleted 8y ago
    [deleted]
- foota 8y ago
  That doesn't actually follow, since average tax rates increase as you earn more.
  - trhway 8y ago
    I dont think it's true. Remember Buffet saying that his tax is less than his secretary's? Specifically top 1% average rate is 27% while top 0.001 - 24%.
    - bluedevil2k 8y ago
      His effective tax percentage he meant. Since he has so many tax write-offs, capital gains distributions and carried interest, he was referring to the taxes he paid divided by the total money he earned. One can assume his secretary had only her income and the standard deduction.
    - MR4D 8y ago
      That’s mostly irrelevant. If you had a trillion dollars in muni bonds and no other income, your federal tax rate would be zero. (And that’s a constitutional thing, too). The other aspect is long term capital gains rate. Raising that has historically hurt capital formation, which, while it hurts those at the top, creates situations like the late 70’s for the rest of the population.
    - wdn 8y ago
      Buffett said that because he wants other to pay more tax. If he so wants to pay more tax as law requires it, then all he has to do is lobby Washington get rid of the “Dividend Received Deduction” or DRD, which he is the biggest beneficiary. DRD is when a company, in this case Bershire Hathaway, received a dividend payment from a company they owned, Bershire can exempt up to 80% of the dividend from the income tax. I love Buffett dearly and I think he is a great person. But when it come to tax, he is a hypocrite.
      - JamesBarney 8y ago
        The drd doesn't effect his personal tax rate, it only affects Berthshire Hatheways tax rate.
- zxcvvcxz 8y ago
  The top 1% earned 23% of all income. They also paid 40% of all income taxes.
- cperciva 8y ago
  Not true. If you read the article, you'll find a graph which shows the fractions of income: https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ahY/v1/760x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ah... The top 3% of US taxpayers had a combined ~28% of income. You have to go up to the top ~12% of US taxpayers to accumulate 50% of income.
  - danvoell 8y ago
    What % of discretional income did the top 3% have?
    - cperciva 8y ago
      Not sure what you mean by "discretional". Disposable (after-tax) income? Or discretionary income (which depends on where you draw the line for a "basic standard of living)? In either case, this is irrelevant to the fact that getcrunk made a false claim.
  - andrewvc 8y ago
    The NY times recently ran a story about Jared Kushner paying no, or almost no taxes after showing a loss by using some legal, but creative accounting around depreciation. I've heard the same thing about owners of sports teams. So, when it comes to the 1% it can be hard to measure who's actually in it.
    - refurb 8y ago
      There is a big difference between cherry picked examples and what happens on average. We’ve all heard of millionaires paying no taxes, yet the top 0.1% pay an effective rate of 36% on average (too lazy to look up source again).
    - djrogers 8y ago
      Asset depreciation is at best a temporary game - for example I racked up depreciation on a rental property, and during the years I did so, I paid less in taxes. When I sold the property I had to account for that depreciation and pay taxes on all of it.
- branchless 8y ago
  "earned" in a world of rentier activity. Some earn it, some appropriate it.
zxcvvcxz 8y ago
"Pay their fair share" 3% of us are floating 50% of the population. How much more "fair" can we get?
- chrisbennet 8y ago
  ”When a man tells you that he got rich through hard work, ask him: 'Whose?'” -Don Marquis
  - refurb 8y ago
    “When a topic is complex, offering quotes adds little to the conversation” - Anonymous
    - jjaredsimpson 8y ago
      Sentences lose meaning over time?
      - neom 8y ago
        True, Don Marquis will lose meaning after reparations.
    - droopybuns 8y ago
      “Quotation is a serviceable substitute for wit” - Somerset Maugham
- tomarr 8y ago
  Nothing stopping you moving to a low tax environment and conducting all your business there if you think this is 'unfair'. The concept of fair is alien with civilisation and taxation; society/economy/governments services are all intrinsically linked.
  - coldtea 8y ago
    Actually the concept of fair is entirely inherent in civilization. Nature doesn't care for "fair". It's precisely within a civilization that you can deem a taxation scheme as fair or not.
cft 8y ago
A popular sentiment was "no taxation without representation". Why not implement "no representation without taxation"? If you don't pay income tax, you don't get to vote that calendar year.
- kalenx 8y ago
  Maybe because it would be the opposite of all democratic principles we cherish and stand for?
- drharby 8y ago
  Because tethering economic activity to citizenry participation goes against the fundamentals of the us constitution, for one
- coldtea 8y ago
  Because for rich people its trivial to pay income tax (and equally trivial to hire top accountants and lawyers to pay as little as possible, perhaps even less than an average middle class citizen). In any case, a rich person can pay $100K tax and still have tons to spare. A poor person might not even afford to pay $1K.
  - deleted 8y ago
    [deleted]
- yardie 8y ago
  Why stop there. If you don't pay taxes you aren't entered into the draft system. And finally, only the taxed public will be entered into the state and national reserve.
- asdfasgasdgasdg 8y ago
  Because we rich folks don't want to have the extremely exciting and terminal experience of being guillotined? Also, wow why are we responding to this thoughtless comment, but you realize that income taxes aren't the only types of federal taxes, right?
- cycrutchfield 8y ago
nickik 8y ago
This is the problem with much of this inequality talk. If you actually ask people what they believe to be true, the usually way overestimate how rich the 1% are, and they WAY underestimate how much taxes the 1% pay (or whatever 'richer' group you want pick). If you ask them about what the 1% SHOULD pay they often pick numbers that are actually below what they actually DO pay. The problem as in many spaces in politics is that the waste majority of people have no clue about the facts that they are voting on. And they have no intensive to actually learn the facts because their individual vote essentially doesn't matter. This is called rational ignorance, its simply not worth informing yourself about what is voted on. Voting is way more about proclaiming alliance to some sort of party or set of ideologies.
- afterburner 8y ago
  > If you ask them about what the 1% SHOULD pay they often pick numbers that are actually below what they actually DO pay. Not if you ask about the percentage of their income and wealth generated yearly that they should pay. Typically someone will say the mega-rich should pay at least the same percentage as them, per individual. And typically the mega-rich do not in fact pay that same percentage or more. Thanks to capital gains and hiding wealth overseas and in corporations, the mega-rich pay way less as a percentage than the middle or lower class do.
heydenberk 8y ago
Wealthier people also receive much greater benefits from the government. The court system makes complex contracts possible in a way that really only benefits holders of capital. Infrastructure for transportation and information technology benefits everyone, but especially people who own companies that ship goods and deliver services over the internet. Government contracts benefit people who have a stake in the companies that service those contracts. The police tend to provide better protection to wealthier people in wealthier communities, who have more to lose from property crimes in any case. In case you're not persuaded that people who can afford to pay more taxes should pay a greater share, all of these things are valid reasons for the wealthy to kick in a lot more of their wealth, in relative and absolute terms, than other people.
- closeparen 8y ago
  User fees are a much more accurate way to charge heavy infrastructure users their fair share. The better police, schools, etc. in wealthy communities are funded by the higher property taxes there.
  - dorchadas 8y ago
    Except then you often hurt those who can least afford it, those who have to live further away from their jobs due to costs and thus use infrastructure more to make it to work.
- throwaway2048 8y ago
  It can be considered in terms that wealth would be effectively entirely without meaning (whoever was stronger than you could just club you over the head and steal it) without strong organized governments.
- prostoalex 8y ago
  At policy level, is this the most robust tax system you want to build heading into the future? What happens when one of those people/families decides to shift their residence? It happened to NJ a while back https://www.nytimes.com/2016/05/01/business/one-top-taxpayer-moved-and-new-jersey-shuddered.html https://www.nytimes.com/2016/05/01/business/one-top-taxpayer...
ausjke 8y ago
That makes me recall that "47% paid no income tax". If we all go to socialism directly, we will be all equally poor. If we stay with capitalism, a gap between rich and poor is part of the deal. Tax rate is one of the key method to stabilize the society, as the poor is the majority(the 80%, or the 99%) and if they struggle for too long a revolution is for sure to happen. capitalism + welfare to the disabled(only the disabled please) + tax seems like the best solution still.
- matt4077 8y ago
  These labels are getting tiresome. There is not a single socialist state on earth today. It's completely out of the question that the US would ever become such a thing. The often-cited examples of Scandinavia are capitalistic through and through: It's private enterprises deciding prices, creating products, and generally competing. That they levy rather high taxes and use them to soften some of the edges of that system's outcomes does in almost no way affect the dynamics within the system. If you're a baker, and your bread isn't good, you still fail and society will be spared suffering your products. You just don't starve.
petermcneeley 8y ago
This is highschool math. Lets say you someone earning 70k and someone else 30k. Even with a flat tax rate of 10% the 70k earner pays 70% of the tax.
- djrogers 8y ago
  Your numbers are overly simplistic and do not reflect reality even closely - we don’t have a flat tax, and the article clearly shows that the top 3% earn about 25% of the income and pay about half of the income tax. Throwing out completely made up figures when the correct ones are available doesn’t help much.
  - anonymous5133 8y ago
    Pretty sure his example was just to illustrate his point. He even points out "even if" to show that it is an example and not the current tax system.
matt4077 8y ago
Remember that national income taxes are but a fraction of total government revenue. It does not include, among other things, consumption taxes (like VAT) which disproportionally affect lower-income people. Nor does it include social security, which has a similar bend.
curtis 8y ago
One thing that is important to understand is that the income tax only makes up about 50% of federal revenue. The next major source of revenue? Payroll tax. Income tax is a progressive tax. Payroll tax is definitely not progressive. According to this source [1] in Fiscal Year 2016 income tax made 47.3% of federal revenue and payroll tax accounted for 34.1%. I don't know what the exact numbers are if you take both taxes into account, but I do know that the headline [2] is at best grossly misleading because so many people are going to forget about payroll taxes. [1] https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government https://www.taxpolicycenter.org/briefing-book/what-are-sourc... [2] "Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016"
- rayiner 8y ago
  It's not "grossly misleading." Payroll taxes are a form of forced saving--in theory, you get that money back when you draw from Social Security/Medicare when you retire. (In reality, most people will get out more than they put in.) In that way, they're qualitatively different than the income tax. Looking at tax rates in isolation is pretty academic in any event. The real question, I think, is: what are our competitors (France, Germany, the U.K., etc.) doing? Those countries tend to lean even more heavily on regressive taxes like mandatory insurance and retirement contributions, VAT, etc.
  - trobertson 8y ago
    > (In reality, most people will get out more than they put in.) Up until it runs out, at which point nobody gets anything. And for whichever generation gets shafted (guess), they will be looking at a big negative when they see they get nothing for all the taxes they put in.
    - asdfasgasdgasdg 8y ago
      In all likelihood, that generation will simply raise taxes to the point where they can pay for the benefits. The odds that old people are going to be like, "Welp, I guess we have to just die now," are basically zero. They, whoever they are, will simply vote for whichever party promises most sincerely to fix the situation by taxing everyone else to pay.
d--b 8y ago
These statistics are meant to be polarizing... income taxation may need fine tuning here and there, but seems to be generally fine. That the top 0.0001% pay a smaller tax rate than the top 1% needs to be fixed though.
- anonymous5133 8y ago
  How are the top .0001% paying a smaller tax rate? If you are talking about the capital gains rates then there is definitely a huge reason that rate shouldn't be the same as income tax rates for obvious reasons.
  - zimablue 8y ago
    So obvious they don't need stating or defending, huh
  - d--b 8y ago
    it's written in the article.
ars 8y ago
So next time you hear about a tax plan that "benefits the rich", this is why. It's really hard for a reduction in taxes to benefit the poor because they pay so little in the first place.
- andybak 8y ago
  It sure doesn't feel that way to some. $1 is a very different amount depending on your income.
  - anonymous5133 8y ago
    The "feeling of a $1" is more of an opinion type statement whereas the other comparisons are more fact based.
    - andybak 8y ago
      Let me put it another way. $1 feels like the difference between eating and not eating to some people whereas other people wouldn't stoop to pick a dollar up from the sidewalk if they dropped it. How "fact-based" do you need this to be?
      - ars 8y ago
        But the question at hand is not income, it's tax reduction. When you get comparisons in the news about this tax plan or the other, they don't adjust the numbers based on how "$1 feels". They just use a percent of income - but since low income people pay so little tax in the first place, even a percent reduction looks meager.
- sintaxi 8y ago
  Bingo. This is what annoys me about mainstream pundits always parroting the claim that "those tax cuts were only for the rich".
- pm24601 8y ago
  Earned Income Tax Credit. ( https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit https://www.irs.gov/credits-deductions/individuals/earned-in... )
DannyBee 8y ago
The trick isn't getting them to pay the majority of income tax, the trick nobody has succeeded at (but desperately want to) is to get them not to want a proportionally larger say in the government for that money. IE people want rich folks to simultaneously pay most of the money the government is getting from income taxes but also 1. Not get a larger say automatically 2. Not spend a lot of money on politics to try to get that larger say. Regardless of whether one thinks these are good goals, neither is really happening right now, nor has it ever really happened (at least in the US). (and the position that you just have to take away enough of their money through taxes that they can't afford to do that is clearly silly in a variety of ways. About the only thing it shows is that you can't scale your government effectively)
iaw 8y ago
It feels a little misleading to not emphasize that this is reported income. On paper the top 0.1% appears to pay more than their fair share (2x proportional vs. their median counterparts paying closer to parity). But as recent articles about Donald Trump and Jared Kushner have highlighted they have both engaged in schemes (legal or not) to reduce the amount of income they have to report to the government. What would be interesting here is determining the proportion of individuals/households using expensive tax advantaging techniques by each quantile and then try to make some estimate of the actual income for each group is...
dkural 8y ago
Indeed, and how much of the income did they make? Keep in mind when a company "succeeds", they're succeeding on top of trillions of dollars of infrastructure - human capital (enabled by education! try hiring the same talent in an underdeveloped country), the transportation, subsidized energy production & grid, and municipal infrastructure underpinning movement of physical goods & digital goods; and finally the public order that assures safety of people, and the enforceability of contracts.
- bluedevil2k 8y ago
  This is the Elizabeth Warren argument. It fails to point out that those trillions of dollars of infrastructure was paid for already with taxes (which the top 10% mostly account for). So when she spouts the “they’re only successful because of the roads, the schools, blah blah” you can rephrase that as “they’re only successful because of the taxes they’ve already paid into the system”.
  - anonymous5133 8y ago
    good point, never thought of it that way
  - dkural 8y ago
    A lot of it is property taxes, payroll taxes, local taxes etc. and in any event, paid by a different generation. If we're willing to go further back, let's also not forget that a lot of this was achieved by slave labor & after emancipation, an entire people denied basic civil rights. In any event, it was not as if Bill Gates paid for the Hoover Dam. Keep in mind some of the tools for creating capital and income was not available to large swathes of society - like access to subsidized higher education, homesteads / farmsteads, and mortgages. These are federal means to build capital which sets the stage for earning higher incomes.
    - bluedevil2k 8y ago
      >> let's also not forget that a lot of this was achieved by slave labor C’mon, you know this isn’t accurate at all, “a lot” is just an over the top false statement.
wonderwonder 8y ago
The top 1% paid about 37% of income taxes. They also own over 38% of the wealth and 'took home 85% of income growth between 2009 and 2013. In 15 states, the top 1% captured all income growth during the same four-year period'. Based on this I would argue that they are in no way being taken advantage of and that income disparity is a very real problem that is only getting worse. This also does not include payroll taxes which are almost always paid by the middle and lower class while only sometimes by the wealthy as they are able to leverage their wealth to generate income. https://www.businessinsider.com/top-one-percent-every-us-state-2016-11#-2 https://www.businessinsider.com/top-one-percent-every-us-sta...
cameldrv 8y ago
Is the point of the article to demonstrate that the tax system is unfair to the rich? If that's the point to be made, they're only looking at the most progressive part of the tax system. Add in payroll, property, state income, unemployment, and sales taxes, and the picture looks quite different.
- refurb 8y ago
  Actually it doesn’t look that different. Yes, the top incomes earners might pay 60% of income, but they still pay 50% of all taxes.
djrogers 8y ago
There’s a lot of talk about wether this is ‘fair’ or not - let’s set that aside and ask if it’s good policy to have so much of the country’s revenue depend on the income of so few people. Does this make the government more or less beholden to the rich? Does this put the government more or less at risk of exposure to financial events that only impact the wealthy? And does this incent the government to enact policies that increase the wealth of the top 3% over the bottom 30%? Those are the questions we should be focusing on - not what’s ‘fair’. Life isn’t fair - if it were the wealth of the top 3% would be determined by how hard they work and how much good their work does to society. That’s not how we live, so let’s get back to crafting our society based on what’s good for it as a whole instead of how we feel about how much tax someone else pays.
- JamesBarney 8y ago
  How would shifting the tax burden more onto the poor reduce the influence of the rich on the government? It seems like the wealthy's influence on politics is two fold. Indirect, people who get elected to Congress have wealthy friends, and interact more with wealthy people. I.e. they have way more friends that are doctors than burger flippers. Direct, wealthy people and directly contributing larges amounts of money to access politicians. It seems like the first would be unaffected, and the second would mbe made worse because the poor would have less, and the rich more disposable income to use to donate to and influence politics more.
- simonh 8y ago
  Well said. The way I see it, we are all very closely tied together economically at all income levels. The top few percent don’t carry their wealth off into space, they spend it in shops and restaurants, they invest it in businesses even if indurectly through pension plans and funds. They employ basically everyone else one way or another. On the other hand, they benefit from living in a stable society, with fair and equitable laws and a skilled healthy work force. We all do, but it has to be paid for somehow. Here in the UK we faced this issue the hard way in World War 1. Many young men called to service were malnourished, sickly and unfit for duty. It became clear that a national effort to educate, economically support and maintain the health of the general population was a matter of national security. The consensus around the national health service may have been catalysed by socialists, I’ll give them that, but it gained cross party support because it’s just good governance. Society doesn’t need to be a brutal zero sum game of haves versus have not’s. I’m a true believer in capitalism. It’s raised billions of people out of poverty. It’s based on basic principles of individual freedom and responsibility and it works. But it also works best I think when woven into a durable, fair and equitable social fabric. Capitalism needs an educated work force that is healthy and well nourished. To the extent that free markets can provide those things fine, but where they fail to do so ideology should not prevent necessary intervention in the national interest and that needs to be funded somehow.
pm24601 8y ago
This is so much BS. Wealthy people slide their income into whole owned businesses. Those businesses use deductions to reduce their income in ways that you or I can't. Simple example, to avoid paying income tax on $40,000 1. Create a business. 2. That business buys a car. 3. That business then leases the car to the business's owner 4. The owner as an independent contractor to the business deducts the 'cost' of leasing the car. 5. The business depreciates the car net the lease 'income'. Result: The cost of the new car is a tax deduction for the business. The business owner never has to take the $40,000 to go out and buy the car themselves. How about that fancy mansion? Also simple! 1. Have a separate LLC buy the house. 2. Host company events at the mansion. 3. The company pays a high fee for the privilege of hosting the CEO's Christmas party at the CEO's house. 4. All the CEO has to do is make sure to invite enough customers' CEOs to the event and it becomes an IRS approved business function.
zimablue 8y ago
The thing is, if you own all the wealth, you pay yourself "income" effectively through the rent you're taking off the rest of society. The slaveholders I'm sure paid more taxes than the slaves. There are layers of indirection => you're rich so you can afford/get your way into an expensive university, you're placed in a position through nepotism, you "rise" to a senior directory of a company, you make X million but all you've really done is take your oligarchy shares. If slaveholding is too extreme consider land-owning, the owner pays more tax than the rentiers, but he has income he's done nothing to achieve. Rentier capitalism is just this with more steps. I'm sitting in an elite company, of the ten people (I'm not one) making serious money, 5/10 are nepotism hires and the others are socially elite who went to (and paid for) top universities.

74 points by spking 8y ago

getcrunk 8y ago

In other news, top 3% of us taxpayers earned the majority of income in 2016

refurb 8y ago
So you’re willing to concede that the rich pay their fair share?
- greesil 8y ago
  Please define fair, and rich.
- nevir 8y ago
  Isn't the other half of the statistic something like "the top 0.1% of U.S. taxpayers earned majority of income"?
- coldtea 8y ago
  How did you come up with that? The article just says that top 3% of US taxpayers pay the majority of income taxes. If they pay 60% of all income tax paid, but have e.g. 80% of income, they're still paying "the majority of income taxes", but not a fair share of them.
  - harryh 8y ago
    Your hypothetical is not the case (as you can see in one of the graphs in the article). I don't know what "fair share" means exactly, but the 3% in question make far less a % of national income than they pay in income taxes.
    - coldtea 8y ago
      My hypothetical was an extreme example to show how this can be still fair. Besides this extreme example, you can get the 3% much lower in their share of income and still be justified for the taxes they pay. Say, a person makes 1M year and a 999999 people make 10K per year. The first person earns just 0,01% of the total income combined, but he might be the only one paying taxes if the others are below the taxable income level. So, he might pay e.g. 20% of 1M (and 100% of taxes), while he only makes 0.01% of the income -- and that could still be fair. Now add many dirt poor, many middle class, and a 3% of upper middle class, millionaires, billionaires and so on.
  - sintaxi 8y ago
    As someone else has pointed out the top 3% have about 30% of the income while paying 60% of the tax. https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ahY/v1/760x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ah... edit: downvoted for providing facts. I take it we have marxists here.
    - coldtea 8y ago
      >downvoted for providing facts. I take it we have marxists here. Well, speaking of facts, "I take it we have marxists here" shows a bias, and it's not exactly a fact in itself. Under a progressive taxation scheme, it can be perfectly normal to make "30% of the income while paying 60% of the tax". (In fact, more normal than being 3% of the population but making 30% of the income). And for many progressively harsher taxation is fairer -- for one because 20% for someone who makes $20K can leave them with difficulty even paying for rent, while even 50% for someone earning $1M will leave them with a very comfortable amount to have all kinds of luxuries. Below a point of poverty, even 10% or 5% is cruel. Whether 60% share of taxes is fair it depends. Perhaps they should pay even more than 60% of the tax.
      - sintaxi 8y ago
        My comment corrected the assertion that the top 3% take home 80% of the income - and was written without bias (the marxist comment was added after the downvotes).
- tankerdude 8y ago
  No chance. There are lies and there are statistics. It misses the point about local taxes and fees. If you flip it around, and ask, how much of your total income is used to pay taxes and fees for federal, state, and local taxes, the ones at the lower end will be paying a much higher percentage of their income. There is only so much you actually have to pay for when you become rich where the folks on the lower end must pay for certain things that take a larger part of their income. No chance it is “fair” and we know who is writing the tax laws.
  - harryh 8y ago
    If you flip it around, and ask, how much of your total income is used to pay taxes and fees for federal, state, and local taxes, the ones at the lower end will be paying a much higher percentage of their income. This is simply false. One can certainly argue that our tax code should be more progressive than it is, but denying that it is progressive at all is contradicted by the facts.
    - tankerdude 8y ago
      Progressive for federal income taxes, yes. But overall progressive, the answer is simply no. Many places switched from part of income tax to fees. Skyrocketed increase for fees to national parks this past year. Went up 300% for a weekly pass. You apply that over and over again in many parts of your life, and it adds up. It just simply costs more of the percentage of your income to live and because of it, it takes a bigger chunk of your income and thus isn’t progressive. Lastly, Social Security is a kicker for the one thing that is flat out regressive. Capital gains pays zilch for it, and it stops at 127K or so of income. That tax is burdened by the middle class. That’s chump change for the wealthy, but anyone hit by it is burdened less and less the more money they make. And don’t tell me it’s a “fund”. That’s not how the GOP acts with it.
      - harryh 8y ago
        There are publicly available stats on this stuff. You can look them up on the IRS website. They disagree with your assertion.
- kylestlb 8y ago
  Do you think marginal utility factors into fairness?
- deleted 8y ago
  [deleted]
foota 8y ago
That doesn't actually follow, since average tax rates increase as you earn more.
- trhway 8y ago
  I dont think it's true. Remember Buffet saying that his tax is less than his secretary's? Specifically top 1% average rate is 27% while top 0.001 - 24%.
  - bluedevil2k 8y ago
    His effective tax percentage he meant. Since he has so many tax write-offs, capital gains distributions and carried interest, he was referring to the taxes he paid divided by the total money he earned. One can assume his secretary had only her income and the standard deduction.
  - MR4D 8y ago
    That’s mostly irrelevant. If you had a trillion dollars in muni bonds and no other income, your federal tax rate would be zero. (And that’s a constitutional thing, too). The other aspect is long term capital gains rate. Raising that has historically hurt capital formation, which, while it hurts those at the top, creates situations like the late 70’s for the rest of the population.
  - wdn 8y ago
    Buffett said that because he wants other to pay more tax. If he so wants to pay more tax as law requires it, then all he has to do is lobby Washington get rid of the “Dividend Received Deduction” or DRD, which he is the biggest beneficiary. DRD is when a company, in this case Bershire Hathaway, received a dividend payment from a company they owned, Bershire can exempt up to 80% of the dividend from the income tax. I love Buffett dearly and I think he is a great person. But when it come to tax, he is a hypocrite.
    - JamesBarney 8y ago
      The drd doesn't effect his personal tax rate, it only affects Berthshire Hatheways tax rate.
zxcvvcxz 8y ago
The top 1% earned 23% of all income. They also paid 40% of all income taxes.
cperciva 8y ago
Not true. If you read the article, you'll find a graph which shows the fractions of income: https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ahY/v1/760x-1.png https://assets.bwbx.io/images/users/iqjWHBFdfxIU/itOyNXaN9ah... The top 3% of US taxpayers had a combined ~28% of income. You have to go up to the top ~12% of US taxpayers to accumulate 50% of income.
- danvoell 8y ago
  What % of discretional income did the top 3% have?
  - cperciva 8y ago
    Not sure what you mean by "discretional". Disposable (after-tax) income? Or discretionary income (which depends on where you draw the line for a "basic standard of living)? In either case, this is irrelevant to the fact that getcrunk made a false claim.
- andrewvc 8y ago
  The NY times recently ran a story about Jared Kushner paying no, or almost no taxes after showing a loss by using some legal, but creative accounting around depreciation. I've heard the same thing about owners of sports teams. So, when it comes to the 1% it can be hard to measure who's actually in it.
  - refurb 8y ago
    There is a big difference between cherry picked examples and what happens on average. We’ve all heard of millionaires paying no taxes, yet the top 0.1% pay an effective rate of 36% on average (too lazy to look up source again).
  - djrogers 8y ago
    Asset depreciation is at best a temporary game - for example I racked up depreciation on a rental property, and during the years I did so, I paid less in taxes. When I sold the property I had to account for that depreciation and pay taxes on all of it.
branchless 8y ago
"earned" in a world of rentier activity. Some earn it, some appropriate it.

zxcvvcxz 8y ago

"Pay their fair share" 3% of us are floating 50% of the population. How much more "fair" can we get?

chrisbennet 8y ago
”When a man tells you that he got rich through hard work, ask him: 'Whose?'” -Don Marquis
- refurb 8y ago
  “When a topic is complex, offering quotes adds little to the conversation” - Anonymous
  - jjaredsimpson 8y ago
    Sentences lose meaning over time?
    - neom 8y ago
      True, Don Marquis will lose meaning after reparations.
  - droopybuns 8y ago
    “Quotation is a serviceable substitute for wit” - Somerset Maugham
tomarr 8y ago
Nothing stopping you moving to a low tax environment and conducting all your business there if you think this is 'unfair'. The concept of fair is alien with civilisation and taxation; society/economy/governments services are all intrinsically linked.
- coldtea 8y ago
  Actually the concept of fair is entirely inherent in civilization. Nature doesn't care for "fair". It's precisely within a civilization that you can deem a taxation scheme as fair or not.

cft 8y ago

A popular sentiment was "no taxation without representation". Why not implement "no representation without taxation"? If you don't pay income tax, you don't get to vote that calendar year.

kalenx 8y ago
Maybe because it would be the opposite of all democratic principles we cherish and stand for?
drharby 8y ago
Because tethering economic activity to citizenry participation goes against the fundamentals of the us constitution, for one
coldtea 8y ago
Because for rich people its trivial to pay income tax (and equally trivial to hire top accountants and lawyers to pay as little as possible, perhaps even less than an average middle class citizen). In any case, a rich person can pay $100K tax and still have tons to spare. A poor person might not even afford to pay $1K.
- deleted 8y ago
  [deleted]
yardie 8y ago
Why stop there. If you don't pay taxes you aren't entered into the draft system. And finally, only the taxed public will be entered into the state and national reserve.
asdfasgasdgasdg 8y ago
Because we rich folks don't want to have the extremely exciting and terminal experience of being guillotined? Also, wow why are we responding to this thoughtless comment, but you realize that income taxes aren't the only types of federal taxes, right?
cycrutchfield 8y ago

nickik 8y ago

This is the problem with much of this inequality talk. If you actually ask people what they believe to be true, the usually way overestimate how rich the 1% are, and they WAY underestimate how much taxes the 1% pay (or whatever 'richer' group you want pick). If you ask them about what the 1% SHOULD pay they often pick numbers that are actually below what they actually DO pay. The problem as in many spaces in politics is that the waste majority of people have no clue about the facts that they are voting on. And they have no intensive to actually learn the facts because their individual vote essentially doesn't matter. This is called rational ignorance, its simply not worth informing yourself about what is voted on. Voting is way more about proclaiming alliance to some sort of party or set of ideologies.

afterburner 8y ago
> If you ask them about what the 1% SHOULD pay they often pick numbers that are actually below what they actually DO pay. Not if you ask about the percentage of their income and wealth generated yearly that they should pay. Typically someone will say the mega-rich should pay at least the same percentage as them, per individual. And typically the mega-rich do not in fact pay that same percentage or more. Thanks to capital gains and hiding wealth overseas and in corporations, the mega-rich pay way less as a percentage than the middle or lower class do.

heydenberk 8y ago

Wealthier people also receive much greater benefits from the government. The court system makes complex contracts possible in a way that really only benefits holders of capital. Infrastructure for transportation and information technology benefits everyone, but especially people who own companies that ship goods and deliver services over the internet. Government contracts benefit people who have a stake in the companies that service those contracts. The police tend to provide better protection to wealthier people in wealthier communities, who have more to lose from property crimes in any case. In case you're not persuaded that people who can afford to pay more taxes should pay a greater share, all of these things are valid reasons for the wealthy to kick in a lot more of their wealth, in relative and absolute terms, than other people.

closeparen 8y ago
User fees are a much more accurate way to charge heavy infrastructure users their fair share. The better police, schools, etc. in wealthy communities are funded by the higher property taxes there.
- dorchadas 8y ago
  Except then you often hurt those who can least afford it, those who have to live further away from their jobs due to costs and thus use infrastructure more to make it to work.
throwaway2048 8y ago
It can be considered in terms that wealth would be effectively entirely without meaning (whoever was stronger than you could just club you over the head and steal it) without strong organized governments.
prostoalex 8y ago
At policy level, is this the most robust tax system you want to build heading into the future? What happens when one of those people/families decides to shift their residence? It happened to NJ a while back https://www.nytimes.com/2016/05/01/business/one-top-taxpayer-moved-and-new-jersey-shuddered.html https://www.nytimes.com/2016/05/01/business/one-top-taxpayer...

ausjke 8y ago

That makes me recall that "47% paid no income tax". If we all go to socialism directly, we will be all equally poor. If we stay with capitalism, a gap between rich and poor is part of the deal. Tax rate is one of the key method to stabilize the society, as the poor is the majority(the 80%, or the 99%) and if they struggle for too long a revolution is for sure to happen. capitalism + welfare to the disabled(only the disabled please) + tax seems like the best solution still.

matt4077 8y ago
These labels are getting tiresome. There is not a single socialist state on earth today. It's completely out of the question that the US would ever become such a thing. The often-cited examples of Scandinavia are capitalistic through and through: It's private enterprises deciding prices, creating products, and generally competing. That they levy rather high taxes and use them to soften some of the edges of that system's outcomes does in almost no way affect the dynamics within the system. If you're a baker, and your bread isn't good, you still fail and society will be spared suffering your products. You just don't starve.

petermcneeley 8y ago

This is highschool math. Lets say you someone earning 70k and someone else 30k. Even with a flat tax rate of 10% the 70k earner pays 70% of the tax.

djrogers 8y ago
Your numbers are overly simplistic and do not reflect reality even closely - we don’t have a flat tax, and the article clearly shows that the top 3% earn about 25% of the income and pay about half of the income tax. Throwing out completely made up figures when the correct ones are available doesn’t help much.
- anonymous5133 8y ago
  Pretty sure his example was just to illustrate his point. He even points out "even if" to show that it is an example and not the current tax system.

matt4077 8y ago

Remember that national income taxes are but a fraction of total government revenue. It does not include, among other things, consumption taxes (like VAT) which disproportionally affect lower-income people. Nor does it include social security, which has a similar bend.

curtis 8y ago

One thing that is important to understand is that the income tax only makes up about 50% of federal revenue. The next major source of revenue? Payroll tax. Income tax is a progressive tax. Payroll tax is definitely not progressive. According to this source [1] in Fiscal Year 2016 income tax made 47.3% of federal revenue and payroll tax accounted for 34.1%. I don't know what the exact numbers are if you take both taxes into account, but I do know that the headline [2] is at best grossly misleading because so many people are going to forget about payroll taxes. [1] https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government https://www.taxpolicycenter.org/briefing-book/what-are-sourc... [2] "Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016"

rayiner 8y ago
It's not "grossly misleading." Payroll taxes are a form of forced saving--in theory, you get that money back when you draw from Social Security/Medicare when you retire. (In reality, most people will get out more than they put in.) In that way, they're qualitatively different than the income tax. Looking at tax rates in isolation is pretty academic in any event. The real question, I think, is: what are our competitors (France, Germany, the U.K., etc.) doing? Those countries tend to lean even more heavily on regressive taxes like mandatory insurance and retirement contributions, VAT, etc.
- trobertson 8y ago
  > (In reality, most people will get out more than they put in.) Up until it runs out, at which point nobody gets anything. And for whichever generation gets shafted (guess), they will be looking at a big negative when they see they get nothing for all the taxes they put in.
  - asdfasgasdgasdg 8y ago
    In all likelihood, that generation will simply raise taxes to the point where they can pay for the benefits. The odds that old people are going to be like, "Welp, I guess we have to just die now," are basically zero. They, whoever they are, will simply vote for whichever party promises most sincerely to fix the situation by taxing everyone else to pay.

d--b 8y ago

These statistics are meant to be polarizing... income taxation may need fine tuning here and there, but seems to be generally fine. That the top 0.0001% pay a smaller tax rate than the top 1% needs to be fixed though.

anonymous5133 8y ago
How are the top .0001% paying a smaller tax rate? If you are talking about the capital gains rates then there is definitely a huge reason that rate shouldn't be the same as income tax rates for obvious reasons.
- zimablue 8y ago
  So obvious they don't need stating or defending, huh
- d--b 8y ago
  it's written in the article.

ars 8y ago

So next time you hear about a tax plan that "benefits the rich", this is why. It's really hard for a reduction in taxes to benefit the poor because they pay so little in the first place.

andybak 8y ago
It sure doesn't feel that way to some. $1 is a very different amount depending on your income.
- anonymous5133 8y ago
  The "feeling of a $1" is more of an opinion type statement whereas the other comparisons are more fact based.
  - andybak 8y ago
    Let me put it another way. $1 feels like the difference between eating and not eating to some people whereas other people wouldn't stoop to pick a dollar up from the sidewalk if they dropped it. How "fact-based" do you need this to be?
    - ars 8y ago
      But the question at hand is not income, it's tax reduction. When you get comparisons in the news about this tax plan or the other, they don't adjust the numbers based on how "$1 feels". They just use a percent of income - but since low income people pay so little tax in the first place, even a percent reduction looks meager.
sintaxi 8y ago
Bingo. This is what annoys me about mainstream pundits always parroting the claim that "those tax cuts were only for the rich".
pm24601 8y ago
Earned Income Tax Credit. ( https://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit https://www.irs.gov/credits-deductions/individuals/earned-in... )

DannyBee 8y ago

The trick isn't getting them to pay the majority of income tax, the trick nobody has succeeded at (but desperately want to) is to get them not to want a proportionally larger say in the government for that money. IE people want rich folks to simultaneously pay most of the money the government is getting from income taxes but also 1. Not get a larger say automatically 2. Not spend a lot of money on politics to try to get that larger say. Regardless of whether one thinks these are good goals, neither is really happening right now, nor has it ever really happened (at least in the US). (and the position that you just have to take away enough of their money through taxes that they can't afford to do that is clearly silly in a variety of ways. About the only thing it shows is that you can't scale your government effectively)

iaw 8y ago

It feels a little misleading to not emphasize that this is reported income. On paper the top 0.1% appears to pay more than their fair share (2x proportional vs. their median counterparts paying closer to parity). But as recent articles about Donald Trump and Jared Kushner have highlighted they have both engaged in schemes (legal or not) to reduce the amount of income they have to report to the government. What would be interesting here is determining the proportion of individuals/households using expensive tax advantaging techniques by each quantile and then try to make some estimate of the actual income for each group is...

dkural 8y ago

Indeed, and how much of the income did they make? Keep in mind when a company "succeeds", they're succeeding on top of trillions of dollars of infrastructure - human capital (enabled by education! try hiring the same talent in an underdeveloped country), the transportation, subsidized energy production & grid, and municipal infrastructure underpinning movement of physical goods & digital goods; and finally the public order that assures safety of people, and the enforceability of contracts.

bluedevil2k 8y ago
This is the Elizabeth Warren argument. It fails to point out that those trillions of dollars of infrastructure was paid for already with taxes (which the top 10% mostly account for). So when she spouts the “they’re only successful because of the roads, the schools, blah blah” you can rephrase that as “they’re only successful because of the taxes they’ve already paid into the system”.
- anonymous5133 8y ago
  good point, never thought of it that way
- dkural 8y ago
  A lot of it is property taxes, payroll taxes, local taxes etc. and in any event, paid by a different generation. If we're willing to go further back, let's also not forget that a lot of this was achieved by slave labor & after emancipation, an entire people denied basic civil rights. In any event, it was not as if Bill Gates paid for the Hoover Dam. Keep in mind some of the tools for creating capital and income was not available to large swathes of society - like access to subsidized higher education, homesteads / farmsteads, and mortgages. These are federal means to build capital which sets the stage for earning higher incomes.
  - bluedevil2k 8y ago
    >> let's also not forget that a lot of this was achieved by slave labor C’mon, you know this isn’t accurate at all, “a lot” is just an over the top false statement.

wonderwonder 8y ago

The top 1% paid about 37% of income taxes. They also own over 38% of the wealth and 'took home 85% of income growth between 2009 and 2013. In 15 states, the top 1% captured all income growth during the same four-year period'. Based on this I would argue that they are in no way being taken advantage of and that income disparity is a very real problem that is only getting worse. This also does not include payroll taxes which are almost always paid by the middle and lower class while only sometimes by the wealthy as they are able to leverage their wealth to generate income. https://www.businessinsider.com/top-one-percent-every-us-state-2016-11#-2 https://www.businessinsider.com/top-one-percent-every-us-sta...

cameldrv 8y ago

Is the point of the article to demonstrate that the tax system is unfair to the rich? If that's the point to be made, they're only looking at the most progressive part of the tax system. Add in payroll, property, state income, unemployment, and sales taxes, and the picture looks quite different.

refurb 8y ago
Actually it doesn’t look that different. Yes, the top incomes earners might pay 60% of income, but they still pay 50% of all taxes.

djrogers 8y ago

There’s a lot of talk about wether this is ‘fair’ or not - let’s set that aside and ask if it’s good policy to have so much of the country’s revenue depend on the income of so few people. Does this make the government more or less beholden to the rich? Does this put the government more or less at risk of exposure to financial events that only impact the wealthy? And does this incent the government to enact policies that increase the wealth of the top 3% over the bottom 30%? Those are the questions we should be focusing on - not what’s ‘fair’. Life isn’t fair - if it were the wealth of the top 3% would be determined by how hard they work and how much good their work does to society. That’s not how we live, so let’s get back to crafting our society based on what’s good for it as a whole instead of how we feel about how much tax someone else pays.

JamesBarney 8y ago
How would shifting the tax burden more onto the poor reduce the influence of the rich on the government? It seems like the wealthy's influence on politics is two fold. Indirect, people who get elected to Congress have wealthy friends, and interact more with wealthy people. I.e. they have way more friends that are doctors than burger flippers. Direct, wealthy people and directly contributing larges amounts of money to access politicians. It seems like the first would be unaffected, and the second would mbe made worse because the poor would have less, and the rich more disposable income to use to donate to and influence politics more.
simonh 8y ago
Well said. The way I see it, we are all very closely tied together economically at all income levels. The top few percent don’t carry their wealth off into space, they spend it in shops and restaurants, they invest it in businesses even if indurectly through pension plans and funds. They employ basically everyone else one way or another. On the other hand, they benefit from living in a stable society, with fair and equitable laws and a skilled healthy work force. We all do, but it has to be paid for somehow. Here in the UK we faced this issue the hard way in World War 1. Many young men called to service were malnourished, sickly and unfit for duty. It became clear that a national effort to educate, economically support and maintain the health of the general population was a matter of national security. The consensus around the national health service may have been catalysed by socialists, I’ll give them that, but it gained cross party support because it’s just good governance. Society doesn’t need to be a brutal zero sum game of haves versus have not’s. I’m a true believer in capitalism. It’s raised billions of people out of poverty. It’s based on basic principles of individual freedom and responsibility and it works. But it also works best I think when woven into a durable, fair and equitable social fabric. Capitalism needs an educated work force that is healthy and well nourished. To the extent that free markets can provide those things fine, but where they fail to do so ideology should not prevent necessary intervention in the national interest and that needs to be funded somehow.

pm24601 8y ago

This is so much BS. Wealthy people slide their income into whole owned businesses. Those businesses use deductions to reduce their income in ways that you or I can't. Simple example, to avoid paying income tax on $40,000 1. Create a business. 2. That business buys a car. 3. That business then leases the car to the business's owner 4. The owner as an independent contractor to the business deducts the 'cost' of leasing the car. 5. The business depreciates the car net the lease 'income'. Result: The cost of the new car is a tax deduction for the business. The business owner never has to take the $40,000 to go out and buy the car themselves. How about that fancy mansion? Also simple! 1. Have a separate LLC buy the house. 2. Host company events at the mansion. 3. The company pays a high fee for the privilege of hosting the CEO's Christmas party at the CEO's house. 4. All the CEO has to do is make sure to invite enough customers' CEOs to the event and it becomes an IRS approved business function.

zimablue 8y ago

The thing is, if you own all the wealth, you pay yourself "income" effectively through the rent you're taking off the rest of society. The slaveholders I'm sure paid more taxes than the slaves. There are layers of indirection => you're rich so you can afford/get your way into an expensive university, you're placed in a position through nepotism, you "rise" to a senior directory of a company, you make X million but all you've really done is take your oligarchy shares. If slaveholding is too extreme consider land-owning, the owner pays more tax than the rentiers, but he has income he's done nothing to achieve. Rentier capitalism is just this with more steps. I'm sitting in an elite company, of the ten people (I'm not one) making serious money, 5/10 are nepotism hires and the others are socially elite who went to (and paid for) top universities.