4 ms·

Extending the 2017 tax policies, specifically continuing the capping of SALT deductions, leads to higher taxes for high income earners. That deduction was worth

• ceejayoz 1y ago
  > the top 1% still pay 40+% of federal taxes No. They pay 40% of Federal income tax, specifically. https://nymag.com/intelligencer/article/fact-check-richest-1-dont-pay-40-of-the-taxes.html https://nymag.com/intelligencer/article/fact-check-richest-1... > The bottom 50% pay no taxes Same mistake here. They pay plenty of payroll etc. tax.
  • loeg 1y ago
    The numbers from your link are: The top 1% pays 24% of Federal taxes, and the bottom 50% pays somewhere between 7% (bottom 40%) and 16% (bottom 60%).
    • dmoy 1y ago
      Yes, that sounds about correct. It's a lot more than "bottom 50% pay no tax". Also I'm unclear if that source includes only the "employee half" of the 15% FICA.
    • NuclearPM 1y ago
      That’s a crystal clear sign that the top 1% have way too much money.
      • estearum 1y ago
        Yeah this argument is so silly: "the top 1% pay 60% of income tax" oh okay, so as they get closer and closer to escape velocity from the rest of us, that number will climb to 1% paying 70%, then 80%, then 90%, so your argument to tax them gets weaker while the functional need to tax them gets stronger. Brilliant!
        • NuclearPM 1y ago
          Thank you for understanding what I was trying to say. :)
  • throwawaymaths 1y ago
    no, employees do not pay payroll tax, employers do.
    • Spivak 1y ago
      And stores pay sales tax. > By law, some payroll taxes are the responsibility of the employee and others fall on the employer, but almost all economists agree that the true economic incidence of a payroll tax is unaffected by this distinction, and falls largely or entirely on workers in the form of lower wages. Who is charged the tax and who pays it are different things.
      • gamblor956 1y ago
        In some states, the stores are the ones that owe the "sales" tax (which in these states are actually excise taxes that the business can pass through to the customer). The "tax" the customer pays in those states is the "pass thru" charge. To make things fun, Hawaii imposes the excise tax (on the business) recursively on any tax charges passed thru to the customer.
    • ceejayoz 1y ago
      I assure you we do. https://en.wikipedia.org/wiki/Federal_Insurance_Contributions_Act https://en.wikipedia.org/wiki/Federal_Insurance_Contribution... > The Federal Insurance Contributions Act (FICA /ˈfaɪkə/) is a United States federal payroll (or employment) tax payable by both employees and employers to fund Social Security and Medicare—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers. 7.65% of your check until you hit the cap. Employer pays a similar amount.
      • quickthrowman 1y ago
        Additionally, removing the cap on FICA contributions would likely push Social Security back into long-term solvency, but that would be far too much of a burden on the top 1% of wage earners so it’ll never happen.
• triceratops 1y ago
  > The bottom 50% pay no taxes and the top 1% still pay 40+% of federal taxes. This tells us nothing unless we know how their relative income shares. If the bottom 50% earns only 20% of all income (just an example) this is quite fair. If they earn 60%, it's unfair. The number of people who just trot out this statistic without context is quite tiresome. And of course everyone pays sales tax, property tax (even if they're a renter), payroll tax and so on.
  • gruez 1y ago
    See this chart: https://media4.manhattan-institute.org/wp-content/uploads/correcting-the-top10-tax-myths.pdf#page=4 https://media4.manhattan-institute.org/wp-content/uploads/co...
    • triceratops 1y ago
      That doesn't answer the question I posed. First off it conflates "high-earning" with "wealthy". Plenty of early career doctors are high earners but have a negative net worth. They pay more taxes than someone with millions in net worth but lower "income". Secondly, just because the median earner pays a 2% average income tax rate while the top 1% pays on average 21% doesn't tell us anything about its fairness. It ignores income share.
    • verteu 1y ago
      True, though it's irksome how the chart conflates "Rich" with "High taxable income." These are not the same, which is exactly the problem! eg: The #1 most wealthy American is Larry Ellison, whose net worth increased $89B today with zero tax implications.
      • twoodfin 1y ago
        Capital gains absolutely have tax implications. Just like my house rising $100K in (unrealized) value over a year.
        • cherrycherry98 1y ago
• loeg 1y ago
  > That deduction was worth $100K to a $1M/year income in a 10% State income tax state earner. What? Income deductions are only worth the marginal tax rate on that income -- ~40% on $100k of income deducted is worth ~$40k. (With the $10k SALT cap, he can still deduct $10k, worth about $4k.) The top bracket being reduced from 40% to 37%, and starting at a higher income threshold, likely saved the same high earner more than $36k.
  • happyopossum 1y ago
    You’re over mathing here - GP is simply saying that if someone lives in a 10% income tax state and makes 1m, they can deduct $100k from their income (presumably because it was never really theirs).
    • loeg 1y ago
      They specifically make the claim that the TCJA is a net negative for this hypothetical $1M earner in a 10% income tax state, and I don't think that's true.