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No, they do not pay less! The top 1% has an average effective tax rate of 32% -- much higher than yours! This includes capital gains taxes! It's whatever amount

by webXL 16y ago

No, they do not pay less! The top 1% has an average effective tax rate of 32% -- much higher than yours! This includes capital gains taxes! It's whatever amount they send to the IRS divided by the amount they receive as income (including proceeds from stock transactions). Methodolgy CBO's analysis of effective tax rates assumes that households bear the burden of the taxes that they pay directly, such as individual income taxes (including taxes on interest, dividends and capital gains) and employees' share of payroll taxes. The analysis assumes--as do most economists--that employers' share of payroll taxes is passed on to employees in the form of lower wages than would otherwise be paid. Therefore, the amount of those taxes is included in employees' income, and the taxes are counted as part of employees' tax burden. CBO estimates payroll taxes and individual income taxes, including refundable tax credits, with a tax "calculator" that applies the tax law for the relevant year to the tax return data from the SOI. Excise taxes are assumed to fall on households according to their consumption of taxed goods (such as tobacco and alcohol). Excise taxes that affect intermediate goods, which are paid by businesses, are attributed to households in proportion to their overall consumption. CBO assumes that each household spends the same on taxed goods as similar household with comparable income in the Consumer Expenditure Survey. Far less consensus exists about how to attribute corporate income taxes (and taxes on capital income generally). In this analysis, CBO assumes that corporate income taxes are borne by owners of capital in proportion to their income from interest, dividends, capital gains, and rents. Over the long term, however, some models suggest that at least part of the burden falls on labor income. http://www.cbo.gov/publications/collections/tax/2009/methodology.pdf http://www.cbo.gov/publications/collections/tax/2009/methodo... "taxes that they pay directly, such as individual income taxes (including taxes on interest, dividends and capital gains)"

jshen 16y ago
The CBO includes corporate taxes as a tax on shareholders income. The shareholders don't actually pay this themselves and one can make a strong case that the cost of those taxes aren't entirely borne by shareholders. Warren Buffet's tax rate is lower than his secretary's, and no one in the forbes 400 took him up on his challenge to show him that it's any different for them.
- webXL 16y ago
  You said "they make a lot of their money as capital gains which are taxed at a rate" and I said their effective tax rate of 32%, which is higher than yours, includes capital gains taxes. You can make a strong case that corporate taxes are a tax on consumers, but those are only 1/6 of individual taxes, and even if all of it was passed on to consumers in the form of higher prices, you're spreading it out over the entire economy. I highly doubt it pushes your effective federal rate above 32%! The argument that corporate taxes aren't paid by shareholders is not a justification to raise rates on the super rich, it's a justification to make sure all that tax revenue comes from shareholders. You could lower the corporate rate and increase capital gains, I suppose, but there's no excuse that much of the world has lower corporate tax rates, because it's an inefficient tax - a tax that the poor are partially paying!
  - jshen 16y ago
    I think you misunderstood me. When the CBO says their (the top 1%) effective tax rate is 32% they are including the corporate tax in that 32% for people that earn money on capital gains. That seems odd to me since those people didn't actually pay the corporate tax. The corporation did! If you take it out, you get something like the 17% that Buffet pays, which is the true value of the taxes he had to pay. HN isn't meant for this kind of back and forth so i've started a post on my site if you want to continue over there. http://yakkstr.com/posts/2749-How-much-do-the-rich-pay-in-taxes http://yakkstr.com/posts/2749-How-much-do-the-rich-pay-in-ta...

by webXL 16y ago

jshen 16y ago

The CBO includes corporate taxes as a tax on shareholders income. The shareholders don't actually pay this themselves and one can make a strong case that the cost of those taxes aren't entirely borne by shareholders. Warren Buffet's tax rate is lower than his secretary's, and no one in the forbes 400 took him up on his challenge to show him that it's any different for them.

webXL 16y ago
You said "they make a lot of their money as capital gains which are taxed at a rate" and I said their effective tax rate of 32%, which is higher than yours, includes capital gains taxes. You can make a strong case that corporate taxes are a tax on consumers, but those are only 1/6 of individual taxes, and even if all of it was passed on to consumers in the form of higher prices, you're spreading it out over the entire economy. I highly doubt it pushes your effective federal rate above 32%! The argument that corporate taxes aren't paid by shareholders is not a justification to raise rates on the super rich, it's a justification to make sure all that tax revenue comes from shareholders. You could lower the corporate rate and increase capital gains, I suppose, but there's no excuse that much of the world has lower corporate tax rates, because it's an inefficient tax - a tax that the poor are partially paying!
- jshen 16y ago
  I think you misunderstood me. When the CBO says their (the top 1%) effective tax rate is 32% they are including the corporate tax in that 32% for people that earn money on capital gains. That seems odd to me since those people didn't actually pay the corporate tax. The corporation did! If you take it out, you get something like the 17% that Buffet pays, which is the true value of the taxes he had to pay. HN isn't meant for this kind of back and forth so i've started a post on my site if you want to continue over there. http://yakkstr.com/posts/2749-How-much-do-the-rich-pay-in-taxes http://yakkstr.com/posts/2749-How-much-do-the-rich-pay-in-ta...