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/...
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/...
Mind you I'm not a 1%er. Not that that should have any bearing. But indie media have their dead horse they like to climb on and it wears thin.
lets call a spade a spade and treat tax like what it is, a protection racket. you are protecting yourself from two things: alien invaders and zombie hoards. health care, food, housing, and, entertainment keep the hoards from destroying your logistics infrastructures and disrupting transportation routes. it also keeps them just alive enough to keep buying what you are selling. defense, police forces, and tough crime laws reduce your risk of having your factories and warehouses bombed or burned to the ground. in short, you are paying for muscle and placation, keeping the peace. (edit: forgot, you are also paying for intellectual property protection, so your inventiveness cant be cloned or repackaged.)
why should the 'rich' pay the majority of the taxes? because it benefits them the most to have low crime healthy consumers. whose problem does it end up being if the 99% are unemployed, homeless, starving, diseased, and unable to consume. whose house slash bunker is going to get broken into, the person with nothing, or the person with years of survival stockpile? why should the 'rich' pay the majority of the taxes? because they are the ones with something to lose (a business, a family, a lifestyle), worth paying to protect.
all that said, im not defending the current tax code or federal government as an efficient or effective way to put that "protection/socialorder" tax to good use.
There's an entire cottage industry in places like Monaco, Panama or St Kitts & Nevis built on rejecting that thesis.
Additionally, is California with its high income tax rates significantly safer and healthier than states with no such tax, like Washington or Nevada?
Perhaps the idea that those that earn 28% of the income need to be taxed at 45% is an indictment on California's spending.
https://psmag.com/the-imf-confirms-that-trickle-down-economi... http://www.imf.org/external/pubs/cat/longres.aspx?sk=42986.0
Some are. Some aren't.
EDIT: The responses are all assuming the tax is regressive. Note the POVERTY_LEVEL constant in there. And the tax rate itself could be progressive. 0% under 20k (if that's the poverty level), 15% on the next 30k, 25% on the next 50k, etc.
The real problem is the positive feedback loop where money buys political influence, which then results in laws that favor the already-rich at the expense of everyone else. Taxing consumption won't fix that. Taxing political contributions might fix it, but you can't do that because political contributions (a.k.a. bribes) are now protected under the First Amendment thanks to Citizens United. High marginal income tax rates or a wealth tax (or reversing Citizens United) are the only ways to fix the problem AFAICT.
How come? There are entire categories of consumption that open up with significant wealth? Private aviation, yachts, fine arts are all categories with spending heavily concentrated up top - a poor person is unlikely to own a proportional 1/1000th share of a Gulfstream jet or a Picasso.
Also, most jets are not bought by filthy stinking rich people, they are bought by businesses, mainly airlines, which operate on pretty thin margins. If you raised taxes on jets significantly you would probably put a lot of them out of business. If you tried to raise taxes on jets that were disproportionately bought by filthy stinking rich people they'd just go out and buy different jets to avoid the taxes.
On the other hand, if you're poor then just the bare necessities of life will cost a significant fraction of your income.
The only equitable taxation scheme is a progressive income tax and/or a wealth tax.
See this 2009 IFS report for the nuance in the context of UK VAT - in particular figure 10.1 and 10.2 (http://www.ifs.org.uk/budgets/gb2009/09chap10.pdf).
Often VAT regimes will not tax certain basic good such as bread, eggs, or essential household products, but in the UK most goods including many that you may consider basic have 20% VAT.
Someone being taxed say 20% on their consumption when their typical yearly consumption is $1 million has a much smaller impact to their marginal welfare than someone with a typical expenditure of $10k taxed at 10-15%. If someone has an income and consumption of $10k, then you probably don't really want tax them much or anything at all (you probably want to give them money/job/training/something!).
Provided you offset the increased taxation by consumption with increased services and benefits to the poorest, then you can mitigate most of the worst regressive effects.
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.
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.
It bothers me a bit though. I'd actually rather earn less and things be more affordable. The homeless situation in the city I moved to is truly insane and unsustainable. Tech companies drive up prices. I have a friend who lives in a neighbourhood where all the homes were around $100k when she was a kid; and now the same homes can go anywhere from $500k to nearly a million!
You see some of the average working class taking those big payouts and moving further from the city (and potentially driving more; increasing the traffic problem).
I'd rather earn less, my housing be more affordable and things be more equal for everyone. Supply and demand for housing really drive these crazy swings in gentrification.
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.
In other words, the state, by upholding the rule of law (particularly property law), is providing the ultra wealthy with a service of far greater value than that which it provides those with lower wealth/income.
Those who are high income in California are generally not wealthy (as opposed to everyone's favorite high income poster boy - the NY hedge fund manager), but are subjects to windfall effect - a few years of work at below market wages in hopes for a giant payback (royalties in Hollywood, stock options of a successful tech startup in the Valley).
Fyi, those sentences in your reasoning are already handled by a hypothetical flat tax percentage. It's the percentage that handles your cases as you stated them. For example, if a flat 15% tax was applied for everyone, the billionaire earning $30 million pays $4500000 in taxes, while the Walmart earning $20k pays $3000.
Mathematically, 4500000 is greater than 3000. In that case, the billionaire has paid more taxes which satisfies your reasoning.
On the other hand, the previous posters were emphasizing "progressive" taxes. That means that the percentages themselves are increased as income increases. Your rationale isn't specific to that. Probably the most common math rationale for progressive taxation is the concept of marginal utility of money[1]. In other words, a billionaire's $1 million of money made between $29 million and $30 million is less significant to him and therefore, can be taxed at a more "progressive" tax rate of 40% instead of 15%. On the other hand, the Walmart employees $1000 from $3000 to $4000 pays for food and rent and is not discretionary play money.
In any case, what I said wouldn't be covered under a flat tax percentage unless that flat tax percentage were on wealth, not income. A person making approximately 20k or less currently pays no income tax, which makes sense, because there's virtually no way they can accumulate any wealth at that income. On the other hand, as you move up each income tier, the amount of wealth you can accumulate goes up progressively. So a progressive tax is a close enough approximation to a flat tax on wealth, which is what I'm arguing makes the most sense.
Or is it just a commodity that we all utilize and is payed for with a flat rate, regardless of the value/un-value is provides?
If you upped the tax to $10k, you'd still only be talking about $2tn, but you'd have huge swathes of the country forced into poverty as they'd be unable to pay it.
You'd need immense corporation taxes in order to make up the shortfall. Currently US business taxes make around 8% of the budget, compared to 36% for income tax. A flat dollar tax is nuts. The rich make their money from the labour of many, many people. They may only personally use the roads the same as others, but the thousands of their employees that need to drive to work need it a thousand times more. Without that, the rich would have no business. Ditto with healthcare. You need your workers healthy and they can't afford healthcare, you pay for it or you soon won't have many workers. $10k does not pay for much healthcare. Blindness to the social costs that are picked up by the government, does not mean that they don't exist.
The rich can pay a bit more and still be rich. They need to pay a bit more or they won't be rich for long, their workers and customers won't exist anymore.
"Gross income in United States tax law is receipts and gains from all sources" [0] This includes wages, interest, gains etc.
I'd like to see the same data with un-adjusted gross income.
Assuming you're not subject to the naive 'wealth is a pie' fallacy, why are you so bothered about inequality of wealth? As a non-rich person, I don't get it! Questions of power and influence on the folk who sit in government and have really massive sums at their disposal with little ultimate responsibility if they foul up - are much more pertinent but should and can be dealt with separately.