Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016
bloombergquint.com
bloombergquint.com
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-sourc...
[2] "Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016"
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.
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.
There's a reason places with little to no taxation are flush with funds.
Your anecdote is one data point, nowhere near enough to draw conclusions about the entire state.
Places with little to no taxation are not flush with funds. https://www.taxpolicycenter.org/statistics/state-and-local-t... The generally red, generally low tax southeast and southwest states have about half the revenue per capita of the generally blue, generally high tax states in the northeast and far west. Where did you get this funny idea that collecting few taxes leads to collecting lots of taxes?
Investment is accelerating in low and no-tax countries or regions while it is waning in high-tax locations. There is a growing realization that silicon valley is not all it's cracked up to be.
Simple incentive structures explain a great deal of capital movement.
There is still plenty of activity in CA & NY on a sheer volume basis but the barriers are high, the types of businesses are shifting[1] in a detrimental manner and the overall trend is declining.
Don't get stuck in a purely domestic perspective. Absentee ownership is rising in many major cities due to international capital seeking safe havens for preservation of wealth - empty dwellings purchased at high rates results in elevated prices for working individuals, ensnaring them in a life-long debt cycle. If CA & NY continue resorting to taxation as the primary method for increasing revenue, they will end up like Detroit.
Rome's final collapse occurred over the span of approximately a decade and offers a glimpse at what is likely to occur: taxes became oppressive and property owners simply walked away because it no longer made financial sense - the benefits are outweighed by the costs.
How much more revenue loss can be endured by property owners in NYC before capitulation? They can hold out for a while and everything will appear to be doing alright, then the stampede begins and collapse takes place so fast you'll wonder what happened.
[1] https://www.citylab.com/life/2018/10/how-manhattan-became-ri...
Taxes across the board became oppressive in Rome - it was corruption that funneled funds to those who benefited. Not all wealthy are the same in their quest for control and power, or lack thereof.
Coinage records show a rapid collapse in the economy after a long period of gradual decay[1].
There is nothing new under the sun.
[1] https://www.armstrongeconomics.com/uncategorized/west-is-imp...
Now what could happen is one of two things. Either the benefits get cut to match the tax revenue at that time (estimates I've seen is that SS can drop to about 70% of what it is now), or that payroll taxes will increase, and the cap raised or eliminated.
E.g., "The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent)."
Ok, except this ignores the amount _earned_ by the top 1% (avg $678,359) vs. the bottom 90% (avg $35,083). [1]
And of course, higher wage earners are also likely to have disproportionately more wealth, as it's a lot easier to save, invest and otherwise maximize growth and minimize tax exposure when you have more cash available.
[1] https://www.epi.org/blog/wages-rose-for-the-bottom-90-percen...
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.
The better police, schools, etc. in wealthy communities are funded by the higher property taxes there.
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...
But in terms of value? Almost by definition, the rich are benefiting from the status quo more than the poor and it seems to be a strange feat of logic to argue that they are getting the raw end of the deal.
It's not like the wealthy ever go "those people on benefits have it easy. Hell. I'm going to join them".
I've seen this said a few times before - I'm kind of confused on what this means? I'm technically in the top few percent (idk exactly where) and I receive less from government than I did when I was an undergraduate in college. I'm from a poorer family, so the government was straight up paying my family in the past.
I don't think this is remotely true, and if you're arguing that it's protection or something, I'm also calling B.S.. for my taxes I can easily hire a full time body guard, buy a few machine guns and make my house and car a fortress, and after some napkin math, I could still probably pay 10% taxes to keep the roads up (as opposed to the graduated 45% I pay).
The vast majority of taxes go to medicare, Medicaid, social security, and payments to foreign countries. I honestly do not see any benefit to me from any of the above. And the people who benefit from the prior mentioned, are also zero threat to me (retired, sick, etc.).
Not saying we should get rid of it, but it's definitely not benifiting me.
Edit: just for reference, I refused any government grants for school and took up a job to start paying for my own food / clothing when my parents started getting welfare. I didn't want to be a hypocrite at then (at 13), so I can say stuff like this now.
That gets us into the realm of political philosophy. What is the purpose of government? Achieving stability at the lowest cost? My view is that, once you yoke people under the boot of the State, you're morally obligated to give them Democracy. And in a Democracy, people will tend to vote for policies that maximize the benefit to the middle 50% or so, which is going to lead to a larger government than the minimum necessary to ensure stability. (In my view, thus, an anarchist libertarian society is not possible, while a statist libertarian society is fundamentally immoral.)
However, I do think that a combination of democracy and a founding system, constitution or whatever can be better.
Switzerland is a example of a country that is very democratic but its more libertarian in many ways then most other democracies. That has probably to do with the way the system is set up outside of the pure democracy idea.
Not sure why you claim anarchist libertarian society is not possible, seems that has little to do with your post.
Switzerland government spending as a % of GDP: 34%
https://data.oecd.org/gga/general-government-spending.htm
Strip out the military (where the US spends quite a bit maintaining global hegemony), and the Swiss have a bigger government than the US.
My point was not that Switzerland is a libertarian paradise but rather that it is not true that more democracy makes the government larger.
Anarchist libertarianism solves the moral quandry of statist libertarianism, which is imposing a state on people but restricting the ability of people to use their vote to create a big government. I just don’t think it’s possible and would inevitably degenerate into feudalism. Central to anarchist libertarianism is the idea that coercion through violence is wrongful. True or not, violence is one of the most basic interactions that exists between oeganisms. You can’t wish it away, just control it by e.g. consolidating it into a State that has greater power to exercise violence than any group of individuals.
But your argument, inherent bias toward centralisation is the old and traditional argument that statist libertarian also use. Nozick is most well known for that argument.
I don't want to really argue for it to much, just want to make clear that, its not about 'wishing' anything away. Violence is reduced if some level of balance of power exists and conflict resumption is available and the believe is that this could exist without government.
As this is Hacker News its not the place for this argument, I would just recommend 'Anarchy and the Law: The Political Economy of Choice' as a great book on this. It includes chapters by different people arguing the two positions, and some other nice content about the subject.
Just because the checks aren't going straight into your bank account doesn't mean you don't benefit from these things.
Think for an instances, where their hospital bills would go?
More than that, there’s the loss value due to the overhead of redistribution. Imo again if we are just looking at my salary, I’d be better off without the payroll taxes from both angles.
And you’re also not looking beyond first order beneficiaries. The factory worker also benefits from the court system that allows for complex contracts as it allows his employer to operate and him to have a job.
1. Forced Arbitration clauses in an employment contract.
2. Successful reduction of workplace safety laws.
3. Easy relocation of factories and capital to low-wage locations.
4. Poor environmental protections
5. the elimination of defined benefit pension programs
6. CEO income being 400-1000x greater than average worker at same firm.
Oh, I see you are talking about factory workers in South-East Asia.
Or that taxation should be made pro rata of the utility someone derives from something which is an odd idea.
Once you give up that calculus you will be hard-pressed to defend these levels of taxation without consciously conceding that this is in fact organized racket. You can dress it with a skirt and call it necessary, moral, or utilitarian, it's still the same beast underneath.
> The court system makes complex contracts possible in a way that really only benefits holders of capital.
The court system is not all that expensive to run. Furthermore, just enforcing arbitrary contract would also allow most of these contracts.
> Infrastructure for transportation and information technology benefits everyone, but especially people who own companies that ship goods and deliver services over the internet.
Again, infrastructure is not the major cost of the government. Secondly, many people who make their living form simple stuff like pluming NEED the roads to make money also.
I think its hard to argue that OVERALL, richer people profit more from infrastructure then poorer.
> The police tend to provide better protection to wealthier people in wealthier communities, who have more to lose from property crimes in any case.
Again, the police is actually not a major cost of the government.
Furthermore, property protection is a pretty small part of police work and there a LARGER force of private security already operating to do that.
> Government contracts benefit people who have a stake in the companies that service those contracts.
That point I actually agree with.
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.
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.
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.
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.
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.
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.
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.
Specifically top 1% average rate is 27% while top 0.001 - 24%.
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.
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.
https://en.wikipedia.org/wiki/Wealth_inequality_in_the_Unite...
> According to US economist Joseph Stiglitz the richest 1% of Americans gained 93% of the additional income created in 2010.[44][45] A study by Emmanuel Saez and Piketty showed that the top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago.[46] People in the top one percent were three times more likely to work more than 50 hours a week, were more likely to be self-employed, and earned a fifth of their income as capital income.[47] The top one percent was composed of many professions and had an annual turnover rate of more than 25%.[48] The five most common professions were managers, physicians, administrators, lawyers, and teachers.[47]
Did you read what I linked or just read the title? There's literally an entire section on the topic of income inequality, but nobody took even the time to read the subsection headers let alone the actual section?
They also paid 40% of all income taxes.
If you read the article, you'll find a graph which shows the fractions of income: 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.
In either case, this is irrelevant to the fact that getcrunk made a false claim.
So, when it comes to the 1% it can be hard to measure who's actually in it.
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).
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.
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.
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.
https://www.businessinsider.com/top-one-percent-every-us-sta...
It's really hard for a reduction in taxes to benefit the poor because they pay so little in the first place.
$1 is a very different amount depending on your income.
$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?
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.
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.
C’mon, you know this isn’t accurate at all, “a lot” is just an over the top false statement.
Infrastructure isn't a one time cost.
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)
Throwing out completely made up figures when the correct ones are available doesn’t help much.
Yes, the top incomes earners might pay 60% of income, but they still pay 50% of all taxes.
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.
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...
That the top 0.0001% pay a smaller tax rate than the top 1% needs to be fixed though.
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.
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.
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.
3% of us are floating 50% of the population. How much more "fair" can we get?
The concept of fair is alien with civilisation and taxation; society/economy/governments services are all intrinsically linked.
Nature doesn't care for "fair".
It's precisely within a civilization that you can deem a taxation scheme as fair or not.
If rich people want to actually leave then that's fully their right to so, but mysteriously that doesn't happen very much...
A poor person might not even afford to pay $1K.
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?
Income tax is immoral for it penalizes lower wage earners proportionally far greater than those generating higher amounts. For an individual spending 70% on living costs and 15% in direct income tax (not counting sales tax, telecommunications fees, etc) there is 15% left over out of $50,000 per year - $7,500 free. For someone in the top tax bracket of perhaps, those numbers may be 25% living costs and 40% taxes; out of $450,000 that leaves $157,500 free - far greater flexibility.
Again, income taxes harm lower income levels far more than higher. You can raise tax rates but then the higher earners simply leave due to their greater flexibility - yet again leaving lower income earners worse off.
It also funds destructive policies that effectively cannot be shut down without reporting to extreme measures. Government never scales back willingly.
Seek the truth of how reality works by observing rather than trying to force it to fit a perspective; you'll find things are very different than you expected.
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.
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.