"The report said the United States has the most progressive tax burden of
any industrialized nation."That may well be true, but the U.S.
also has, by far, the most unequal distribution of wealth of any industrialized
nation. You also leave out the fact that since 1983, working Americans have been
paying significantly higher payroll tax rates, and that the government has been
borrowing these excess payroll taxes to pay for functions that would normally
have been covered by income taxes. Also, the percentage of Americans paying no
income tax is quite close to what it was back in the 1940's. There are many ways to frame an argument. To get a true picture you need to
include all of the details.
The Tax Foundation is funded by big oil and the Koch Brothers. As a seasoned
tax prfessional, I do not trust anythig they write. It figures that the DN would
feature their "report" ( which is really a series of charts) rather than
reports by Tax Analysts and others.
"Of interest as well today should be a report from the Tax Foundation,
released late last week. It provides a detailed breakdown of federal income
taxes in terms of who pays and what, if any, inequalities exist. The results may
surprise many Americans." Where did they get their data? Did the IRS
provide data dumps on all filers, or did the IRS sample filings for the Tax
Foundation, or did the Tax Foundation perform their own sample survey. Before
you parrot this stuff you should do a little checking.
Many corporate leaders have noted that other OECD countries have lowered their
corporate tax rates in recent years, but fail to mention that these countries
have also closed corporate tax loopholes while the U.S. has expanded them. As a
result, the U.S. collects less corporate taxes as a share of GDP than all but
one ofthe 26 OECD countries for which data are available. In
1965, U.S. corporate income taxes were 4.0 percent of our GDP, compared to 2.3
percent of GDP in other OECD countries. But by 2009, U.S.
corporate taxes had fallen to only 1.3 percent of our GDP, while corporate
income taxes of the other OECD nations collectively stood at 2.4 percent. Many countries experienced unusually low corporate tax receipts in
the last couple years due to the recession. But even when U.S. corporate taxes
recently peaked in 2007 at 3.2 percent of GDP, the average for the other OECD
nations was well ahead, at 3.8 percent of GDP. In 2009, only
Iceland had lower corporate taxes as a share of GDP than the U.S.-Citizins for
Most of Utahans are disconnected from funding the government. Large families
many deductions. It is the Utah culture. Utah is ranked in the top 5 of states
with the fewest federal income tax payers.Editorial board "pot
meet keetle" start stating that Utahans and Mormons need to stop bashing
taxes and start paying so they fund their large families which are a drain on
our education systems and health care.
@ Mark. Comparing taxes to GNP is meaningless. Who cares what taxes compared to
the GNP might be? We still have the highest corporate taxes in the world and the
GNP doesn't reduce or change these taxes on penny. They still must be paid
and because they are the highest in the world, corporations and jobs leave and
go overseas where they can survive regardless of any country's GNP. Its all
about competition in the world market place and high taxes makes it impossible
to compete with countries that have lower taxes even if that country has a lower
GNP. Taxes are still taxes and the GNP affects them not a bit!
The simple fact is that high tax rates reduce business expansion and reduced
business expansion reduces revenues to the government. High tax rates create a
revenue death spiral. More businesses export jobs to offshore companies.
Exported jobs mean fewer Americana are working. Fewer workers mean less payroll
taxes are paid to the treasury. High tax rates mean more welfare checks are
paid from the treasury.The greatest disservice the government can do
is to take money from the public that is needed by the public to create tax
paying jobs.Yes, the wealthy should pay taxes, but they should pay
the same RATE as the poor. Government services, at least those authorized by
the Constitution, benefit all Americans equally. All Americans should at least
pay the same rate. Paying the same rate still shifts the burden
disproportionately onto the wealthy.
People need to understand the difference between tax rates and EFFECTIVE tax
rates.I am all for closing ALL Corporate loopholes and lowering tax
rates.When you compare the actual tax rates that corporations pay to
what they pay in other countries, you get a much truer picture.Remember all the carping about GE paying ZERO corporate taxes?Additionally, many people like to only tell part of the story. Many countries
that have a lower corporate tax rate than ours, have a significantly higher
personal income tax rate.
Short memory Mike,Can you imagine when you were picking and choosing
which bills you would pay, if you lost all of your 9 deductions and had to pay
10-20 % of your income to state and federal taxes?Would you have
@ Joe Blow. You are right that GE pays no corporate taxes, but they sure donated
handsomely to Obama's two elections! They get huge tax breaks because
supposedly, GE is doing research on green energy and receive generous tax breaks
provided by the Obama administration. Indecently, GE has produced nothing in the
green energy arena but they have moved thousands of jobs to China. If we close
that "corporate loop hole" what would Obama do? Corporate loop holes are
not created equally!
I am amazed the Editorial Board elects to write an article about the
exploitation of the wealthy. In the United States we have 35% of world's
billionaires, 30% of the world's millionaires with less than 5% of the
world's population. If that isn't enough Warren Buffet has even
recently asserted with all his tax breaks and loopholes he believe his secretary
still pays a higher tax rate. by the way the Tax Foundation, a pro business
funded organization. is hardly objective in these matters.
I do agree that the rich should pay as much as the poor and middle class.I am clearly middle class yet I pay 19% in taxes. Now a rich person
will pay less than 10% in taxes.Since I pay a larger percentage of
my wages in taxes than the rich, their taxes need to be increased. Warren
Buffet has been saying the same thing. Why are people against the rich paying
the same rate as the middle class?Putting them at the same rate will
increase tax revenues by $150 Billion a year or $1.5 Trillion in 10 years. I
say raise their rate to the same as the middle class and apply it straight to
debt and deficit reduction.The same tax rate needs to be applied to
those with large families. No more child tax credits. Leave the EIC in place
to help those that are well below the poverty line (Max of 2,000 per year
received in EIC).This will help to cut the debt, reduce the trade
deficit and encourage further savings as people will be forced to live within
their means and not on government handouts.
@ Joe Blow,I was self-employed (and I still am self-employed) when
my children were at home. There is no deduction on Schedule C for the number of
children. There is no deduction on Schedule C for anything related to family or
charity. Believe me when I tell you that I paid my share of taxes, including
the 100% "donation" to Social Security. Believe me when I tell you that
I am still paying off loans that I had to take out more than a decade ago to pay
the taxes that government demanded. Believe me when I tell you that paying off
that loan has kept me from hiring people to help in my business.Believe me now when I tell you that those children all pay taxes now.Believe me now when I tell you that one of my sons is writing out a check
TODAY to the government to cover the difference between what was withheld and
what he owes - a check that is greater than my total income for 2012. Looking short sightedly at deductions gives false impressions. Children grow
up and become tax-paying citizens.
"As the Reuters news agency put it, this was 'a sign that tax hikes
early this year stole momentum from the economy.'""The
much-publicized bottom 99 percent of taxpayers now pays on average less than 10
percent in income taxes, which is the lowest level since before the 1986 Tax
Reform Act was passed. The report raises questions about the wisdom of so many
Americans being disconnected from the primary means of funding
government."So which way is the DN arguing? Are tax hikes
impeding economic momentum, or are the bottom 99% not being taxed enough?
Sounds like you're trying to have it both ways.A Citizens for
Tax Reform report states that taking all income, payroll, and other taxes (sales
tax, gas, alcohol, etc) together, the bottom 20% of taxpayers pay 17.4% of their
income in total taxes, and the top 20% pays 30% of their income in total taxes.
Personally, I don't find that a progressive enough system.
@Mike RichardsSchedule C flows into a the regular Form1040 where
exemptions for children and deductions for charitable contributions offset the
business income from Schedule C. To imply that you were not receiving credit
for your children or charitable deductions against your business income is
ignorant or dishonest.
The real issue lies in understanding the huge gap between the "nominal
rate" (the list price) and the "real rate" (the tax rate that most
companies actually pay.) These two rates diverge widely. The nominal federal tax
rate on the largest corporations is now 35 percent. State taxes, on average,
bump this to 39.2 percent. This nominal rate ranks as the highest among
developed countries.However, no major company really pays the
nominal rate. . . Big companies enjoy a huge buffet of credits, shelters,
deductions, and other preferences that reduce their rate to an average of 13
percent. Many profitable companies pay no federal income tax at all. Regardless
of our nominal rate, OUR REAL CORPORATE TAX RATE IS AMONG THE LOWEST. Further
cuts cannot stimulate growth. -The Truth About Corporate Tax Rates, By David
Brodwin | April 4, 2012, US News and World ReportYou guys do
understand the difference between nominal tax rates and effective tax rates
Every year the IRS releases tax data on the 400 wealthiest households. These 400
households have an average annual income of 300 million dollars, and a pay an
average tax rate of 16.6%. That's not overtaxed. Also, Seven of these
households were among Romney's 47% who paid zero income taxes.
By showing about 1/3 of the tax picture, this very poorly constructed DN
editorial is both inaccurate and misleading. Yes, if you look at the aggregate,
the wealthy in America may pay a larger percentage of income taxes than the
wealthy in other countries. But in spite of this, somehow the wealthy keep
accumulating a larger piece of a pretty slowly growing pie. Even Republicans
don't dispute all the studies showing that inequality in America is growing
rapidly. The reason the wealthy pay the lion's share of the income taxes is
because they earn a massive and growing chunk of the income and their portion of
overall wealth is expanding exponentially. Our problem is not a progressive tax
code. Our problem is the initial distribution of wealth. The bulk goes to the
top few. The rest are getting less each year.But if you want to talk
about progressive tax codes, Germany's is far more progressive, especially
if you count several taxes they pay that we don't. Their wealthy probably
pay a lower percentage of the whole because they earn a lower percentage of the
income. Silly, biased editorial.
@TaxMan,You've really shown your ignorance of tax laws.
Schedule C shows the profit/loss of a business. Schedule C requires that you
pay self-employment tax on the profits earned from that business. Because you
pay Social Security taxes on the profits of a business BEFORE deducting
exemptions and donations, you pay the FULL 15% required for Social Security
BEFORE deducting exemptions for children and BEFORE deducting donations to
charity.That 15% is on top of the income taxes owed. That 15% is on top of property taxes owed.That 15% is on top of
any other taxes owed.If you owned a business, you would know that
having Uncle Sam as a silent partner keeps you from hiring real people who would
produce goods and services; people who would pay taxes instead of receiving
welfare from Uncle Sam.If you owned a business you would know how
insidious high tax rates are and how crippling it is to have Uncle Sam as a
silent partner in every business; a partner who drains off the profits that
could generate more revenue to the government if left to the owner to use to
build his business.
@Mountanman"You are right that GE pays no corporate taxes, but
they sure donated handsomely to Obama's two elections!"No
argument there. I am for getting ALL corporate and union money out of the
elections as I believe that they corrupt the system and sway legislation. And
get rid of all lobbying also.Are you for that? I see George Soros
and the Koch brothers as being the same, just on different sides of the
political fence. Their money corrupts equally.Do you think that
Republicans are immune to being bought by corporations?
@J Thompson/Mike RichardsWe are not talking about self-employment
tax, we are talking about income taxes. Non-self-employed people cannot offset
their FICA and Medicare taxes with personal exemptions and charitable
deductions, and neither can self-employed people. Implying that because you
can't deduct personal exemptions and for self-employment tax purposes, you
don't get to deduct them against your income tax is wrong. They are two
different and distinct taxes. You are either extremely confused, or are trying
to confuse the issue and pretend you know what you're talking about.I've worked in large corporations, I've worked in public
accounting, and I've run my own business, so I know what I'm talking
about here.And regarding Mike Richard's earlier comment about
everyone paying taxes at the same rate, this will not bring enough revenue and
is unworkable. Tax commentators stopped talking about it long ago, even the
most conservative ones. It is not a serious idea, and people who continually
raise it are wasting our time.
Even with all the corruption, cheating, scamming, bribing, and outright
stealing, the money we pay for the privilege of being an American is the best
deal that people have in this commercially driven world. The pure
fact is that when money is spent improperly by our government, it is the result
of business scams proposed by businessmen. Money spent for the welfare of
people by their government can never be classified as improper spending. If we could restrict the improper spending of our tax money that goes
for the benefit of business and demand a better ratio of benefit for the people,
and we could reduce the spending of government. Most every action
made by our government contains a profitable part some businessmen and a part
beneficial to people. The split determines whether we call it pork or
entitlement. Conservative groups would like to move the split
toward the business end and do away with as much of the entitlements as
possible. Their goal seems to be to get as much of the governments money as
possible while decreasing their share of the government cost. Government enforces the law, and the law makes us free.
@TaxMan,It's good to see that you have the solution for the
problem, i.e., tax someone else at the highest rate possible so that you
don't have to pay the real cost of government.You separate
Social Security taxes from income tax. You deny that it is a tax. Just because
you minimize its effect on my business does not mean that it is not Uncle
Sam's hand in my pocket. He takes what he wants and leaves too little for
me to hire employees. He mixes that Social Security tax with the general fund
and spends it on pork-barrel projects and then threatens to lower the promised
payments because those of us who have paid and paid and paid are suddenly a
burden on society.When it comes time to pay me and the others who
have paid and paid and paid, he calls us a blight on society and a drain on the
revenues of the United States. He FORCED us to pay. We had no choice.SS is a tax. It is an onerous tax, no matter what you think.
To make taxes “fair”, you should tax according the to benefit
received, but since that is not possible, the next best “fair” way
to assess benefit is by income received. If we tax income at a
single flat rate, every ones share is simple and straight forward and a host of
irrelevant expenses can be eliminated. Tax all income from every
source without deductions and without exemptions. Require every
financial institution, business, or group, operating in America, or selling to
people in America, to withhold the flat rate tax on every outgoing payment from
that entity. This is based on the notion that all business payments are income
to someone. That someone could be an American living in America or a human
being living any where in the world. If their income is derived from America it
is subject to the cost of the American government. By taxing the
income at its source there would be no need for individual tax returns or
concerns. There would not be any opportunity to cheat or have special
Ultimately this is an issue of economic inequality, and problems with unequal
opportunity, and how we address them.Technology is becoming an
extraordinarily powerful catalyst for creating even greater economic inequality,
even in the Scandanavian countries, who emphasize equality of opportunity to the
point where Finland has eliminated educational tiering altogether.Apple, Google, Yahoo and Amazon together employ 200,000 workers, which is the
amount of jobs we need to create monthly to keep up with population growth.
Those four companies account for over $900 Billion in market value. Most of the jobs our economy *is* creating today aren't in the same
league as the jobs where technology is creating tremendous value.I
don't know if tax policy is the best way to address unequal opportunities
or push to reduce economic inequality, but whatever mechanisms are considered,
they will unquestionably have a much, much steeper hill to climb, just because
of how technology is much more sharply slanting the economic playing field, an
effect that will accelerate in the next 10 years.Pretty sobering, I
@ Mike RichardsLet me deal with your erroneous statements
separately:"It's good to see that you have the solution for
the problem, i.e., tax someone else at the highest rate possible so that you
don't have to pay the real cost of government."False. I
did not say that. I pay a lot of tax at higher rates than most people, so to
say that I want to to tax someone else so I don't have to pay for
government is absurd."You separate Social Security taxes from
income tax. You deny that it is a tax."False. I called it a
tax; you are putting words in my mouth. It is hard to have an honest, respectful
exchange on these boards if when we can't twist and distort the facts
sufficiently, we try to twist and distort each others' statements. The
income tax and the self-employment tax are distinct taxes. You can deduct
charitable contributions and exemptions against Sch C income for income tax
purposes. You can claim that you've been talking about the SE tax and not
the income tax all along, but that claim is not believable.
@ Ultra Bob"By taxing the income at its source there would be no
need for individual tax returns or concerns. There would not be any opportunity
to cheat or have special treatment."There has been much analysis
and discussion in the tax press regarding your suggestion. I won't go into
detail, but your proposed system is much more complicated and difficult to
administer than you portray.For a simple example, let's say my
sole source of income is from a triplex that I rent to 3 poor families. How
does my income get "withheld at source" (without requiring tax filings)?
If the poor people are all supposed to withhold a portion of my rent and each
file statements with the government, (1) you have just created a lot of
recordkeeping and work (would they have to do this monthly each time they pay
rent?), and (2) you have not done anything to reduce cheating (because, for
example, I could lower their rent a little in exchange for them not
@ TaxMan,After reading and re-reading the posts, I don't see
how Mike Richards or I deserved your attacks. He stated that there were no
deductions allowed on Schedule C for dependants or for charity. That is
correct. He stated that he paid 100% of SS taxes on profits from his business.
That is correct. You claimed that he was dishonest because Schedule
C flows into form 1040. Let's look at your claim. Was he allowed to use
Schedule A to reduce his SS tax generated on Schedule C? Did he pay SS tax at a
lower rate because of form 1040 or Schedule A? How was he dishonest? He told
the absolute truth. If he made $100,000 profit on Schedule C and somehow had
$100,000 of deductions on other schedules he would still have had to pay SS
taxes on his profits at about 15%. You changed the subject to
include only income tax and then claimed that he and I twisted things.You also said that paying the same rate would not bring in enough revenue.
How many new jobs would be generated if everyone paid the same rate? Your
conclusion has no basis.
Mountanman and All,I used to work for GE decades ago when it was
newly under Jack Welch (Neutron Jack as he was then referred to). Even then GE
paid little or no taxes. It had nothing to do with presidential politics. It
had everything to do with how GE maximized its tax deductions.I
cannot say how GE Capital operates today. But back when it was GECC, it owned
huge amounts of real estate, planes, trains, generators, etc. These were then
leased back to the company that actually used them and GE took the depreciation.
They made sure that GE never paid much if anything in taxes.I can
only assume that GE has not changed a winning formula.
@mike Richards. Are you implying that you can not hire employees because your
taxes are too high? I never heard a real businessman state that they can not
hire employees because of high taxes. Employee wages are entirely deductible.
Close the corporate tax loopholes. The general tax rate of the nation can be a
little higher. We pay a lot more as a result of crumbling infrastructure
(roads, etc) and higher crime because of the instability as a result of over
zealous tax cutting than we do when our taxes are keeping things stable around
Okay J Thompson lets look at Richards claim, He was responding to
this post by Joe Blow, "Can you imagine when you were picking
and choosing which bills you would pay, if you lost all of your 9 deductions and
had to pay 10-20 % of your income to state and federal taxes?"Richards responded by saying this, "There is no deduction on
Schedule C for the number of children. There is no deduction on Schedule C for
anything related to family or charity. Believe me when I tell you that I paid my
share of taxes, including the 100% "donation" to Social
Security."He's trying to say that he doesn't get to
claim deductions for his children. He is also talking about all his taxes not
just SS taxes. Taxman called him out on it. It seems that by stating that
he doesn't get to declare deductions on schedule c he is misrepresenting
his actual deductions, as taxman pointed out. I know you guys love
to move the goalposts. But come on, it's in writing.
Cpafred.You seem to be confused about the separation of personal
income and business income. I did not make it clear that it is the business who
remits the income tax to the government based upon the outgoing payments of the
business. Workers, consumers, renters, and other non business people are not
involved in the withholding and remitting of the tax. That is the
responsibility of the businessman. As a landlord you are a businessman. If you receive the rent and hold it on the books of your business, you
would not remit any money to the government. If, however, you take money from
the business to pay yourself, or the furnace repair man, or any others providing
service to the business, you would pay an amount determined by the flat tax of
the amount you pay out, to the government. All this is based upon
the premise that business income is separate from personal income. I would not
tax the business, only the money that becomes person income. All outgoing
money from a business is personal income to someone.
@ Ultra BobPerhaps it is you who are confused about business income.
Under current tax rules a trade or business activity does not include a rental
activity or the rental of property that is incidental to an activity of holding
the property for investment (see IRS Pub 925). So unless you change the
definition of business income, you are wrong.If you do change the
definition of a business, you're saying that my 94 year-old step-father who
owns a couple of rental properties and gets paid rent with multiple personal
checks made out to him personally each month, has to withhold and remit on
himself 12 times a year (rather than file and pay once a year). This sounds
more cumbersome rather than less cumbersome.
@Mark,You missed the point entirely. Do you have a business? Do you
fill out Schedule C? Do you pay SS tax on all the profits from your business?
Do you deduct dependents on your Schedule C? Do you deduct charitable
deductions on your Schedule C? If you do, you've made a grave mistake.If you report all income, as you are required to do, all of your profits
will be taxed for SS, at least until you hit the SS ceiling - something that
I've never done.You claim that Mike Richards is talking about
all taxes. Where did you get that idea? He said that he paid his fair share of
taxes. SS tax is a tax. Property tax is a tax. Gasoline tax is a tax. Sales
tax is a tax. They all add up. Only income tax has a provision for deductions
because of number of dependents or contributions to charity. The other taxes are
mostly a flat tax where everyone pays the same rate. He called for
a flat income tax where everyone pays the same rate. Some say that a flat tax
won't work. Why not?
So to all those who say taxes should be higher, how much should the tax be? How
much would you want to pay on income over $25K? $50K? 100K? 200K? How much of one's hard earned money should a person be allowed to keep?
Should the wealthy just be slaves to pay for the government?
"So to all those who say taxes should be higher, how much should the tax
be?"Enough to cover what we spend (then a little to pay off the
debt we incurred)Once we balance taxes and spending, our politicians
will think much harder before getting us into a war or spending any money.Let me ask you. How much of todays spending do you want to pass on to
your kids?Cutting taxes is easy. It's that pesky spending that
The worst part of our present tax code is the improper definition of income and
business.The rules of the game of capitalistic business have changed
over the last 200 years mostly in favor of business. We need to bring the rules
up to date for everybody. Capital gains, long term investments, and even
inheritance are income.
My goodness, really, Thompson? "Do you have a business?"
Yes"Do you fill out Schedule C?" I have no idea. You would have
to ask my accountant. You're right, Richards isn't talking
about ALL taxes, but he also isn't talking about just SS security taxes. He
was implying that he doesn't get to deduct his children on his taxes. It
would seem, according to taxman, that he does. The schedule c has nothing to do
with it, the schedule c "flows" into the 1040 and that is where the
deductions for children is. So by Richards trying to claim that he doesn't
get to claim children, because he doesn't claim them on his schedule c,
would be misrepresentative, because he claims them elsewhere in the forms.
Mike Richards asks us to "believe him" several times in the middle of
yet another misleading diatribe. The answer is "no." In fact, no
businessman who blames higher taxes for fewer hires ever gives specifics.
Without proof - actual business names and financials - these are all anecdotal
fables to promote a false narrative. So "no." Non-credible sources merit
Why oh why do we let these guys go on about income tax rates and ignore Social
Security and Medicare taxes? If you take all taxes into account (state, local,
and federal), then we're all paying closer to the same.
17%-21%-25%-28%-30% Doesn't seem particularly inequitable to me.