for all the people who want to tax the rich more

[.::UNKNOWN::.]

'm going to use the example of a condominium here. In virtually every condominium you will find a condo fee. Everybody pays a share of the operating expenses of the condominium. How, though, do you figure out what the assessments will be if different people have different sized condos? Obviously the people in the larger condos should pay a higher fee than those in the smaller ones, right? That would be fair .. right? But how do you figure out who pays what? Well here's an idea? You add up the total square footage of the entire condominium. Just for the sake of argument, let's say that the total square footage is 300,000 square feet and the annual budget for operating the condo is $1,600,000. If you own a 2,300 square foot condo you own a total of 0.76% of the total square footage. This means that you should be responsible for 0.76% of the annual general operating expenses. That would bring your annual assessment to $12,160, or just over $1000 a month. If you own the 9,000 square foot condo you have about 3% of the total square footage, and your assessment is going to be about $4,000 a month.

Now does anyone want to argue that this would not be a fair way to assess the costs of operating the condo? There's your "fair share" in action.

Now .. since we're talking income taxes here (not wealth taxes -- income taxes) it would stand to reason that you would be paying your "fair share" of income taxes is you were paying in proportion to your share of the total income, just as our condo owners pay in proportion to their share of the square footage.

So ... let's look at the statistics and see where we stand. These figures come from the U.S. Treasury Department. Argue with them if you will .. but they are official government statistics. The Treasury Department refers to these numbers as "Projected Share of Individual Income Taxes and Income in 2005."

The bottom 50% of income earners in this country earn about 13.9% of all income. That would be the equivalent of owning 13.9% of the square footage in the condo. So ... to be fair, they should pay 13.9% of the total income taxes collected by the government, right? Well, the fact is they pay only 3.6% of the income taxes. Could it then be argued that the people in the bottom 50% of income earners aren't paying their fair share?

I don't want to drag this out with a full page of statistics from the Treasury Department .. so let's move on to the top 5% of income earners. The top 5% of income earners in the U.S. earn 31% of all income. So .. their "fair share" would be 31% of all income taxes, right? Well .. the fact is the top 5% of all income earners are paying 54.1% of all income taxes. Now that's a bit more than their "fair share" isn't it?

One last group: The evil, hated, derided "richest one percent." Yes .. here we are looking at the real high achievers . The top 1% of income earners in the U.S. in 2005 earned 16.5% of all income. You might be interested in knowing that this share is actually down from previous years. At any rate --- since the highest 1% of income earners are earning 16.5% of all income, they should be paying 16.5% of all income taxes, right? By now you must know what's coming. The fact is the top 1% of income earners, while earning 16.5% of the total income, are paying 33.7% of all income taxes. They're paying income taxes in an amount double their proportion of the income ... and Nancy Pelosi and her Democrat fellow travelers will tell you that they aren't paying their "fair share." alright discuss

[SouthSide Tay]

Hmm... this is very interesting yet i dont care becuase i refuse to pay anymore in taxes unless i am getting more *cough*free health care*cough* hell anything for that matter

[TIGERJC]

Now to the thread starter, what income bracket are you in? I haven't heard any complaining coming from the top 5% income earners about taxes. Warren Buffett recently said that his secretary pays a greater percentage in taxes than he does.

[tony]

A capitalistic society cannot be summarized in a condominium, sorry nice try. Firefighters, Police Officers, Teachers contribute more than just monetary value to our economy and are arguably grossly underpaid and those are just examples off of the top of my head.

In this society you will always have those who have, and those who don't. Not everyone aspires to become a multi millionaire but still contribute just as much if not more than those who are. Don't like it, start lobbying for the fair tax.

[ksniperfox]

id like to suggest a short book by neal boortz: 'the terrible truth about liberals'
a good read. fa sho.

[.::UNKNOWN::.]

i am in the lower income bracket making about 28000 a yr

[.::UNKNOWN::.]

Hmm... this is very interesting yet i dont care becuase i refuse to pay anymore in taxes unless i am getting more *cough*free health care*cough* hell anything for that matter

you want socialized healthcare where do you think they are going to get that money for that huh? TAXES

[joecoolfreak]

i am in the lower income bracket making about 28000 a yr

I think you make an interesting point. The tax system isn't "fair". You aren't paying nearly enough in taxes. Even though you only make about 28k, you should be taxed at the over 40% tax rate as well for income tax purposes. This of course is just a federal level, so lets just assume that the state will take another 10% and just strip half of your paycheck every time to help make it more fair.

[Jkuao]

Where are these condos? A 2,300 sq ft condo is a monster already. Short of Sovereign, I don't see these sizes inside Atlanta anywhere.

The reason why this analogy doesn't work is b/c taxes are different from condo fees. There's qualifications for membership (you have to buy a unit to get services) which just doesn't exist. The big penthouses don't necessarily utilize resources that much more than the poor guy in the studio. In fact, they may have their own pool and facilities. To complete the analogy, you'd have to allow hobos to use the pool and parking spots even if they didn't pay. You'd also have half the building as rentals of people who live there but don't have a vested interest in the maintenance.

To understand the progressive tax brackets, you have to understand that money isn't a linear relationship. The 1st 10-15k a person makes goes straight to survival. Every additional dollar you earn is not worth the same as the last one. Taxing Buffett more would affect his lifestyle far less than pretty much anyone on the planet. He's worth 60 billion, short of taking all of it, few things would affect him. A guy making 100k doesn't spend the same percentage of his income on surviving as a guy making 20k. Since taxing people out of survival is step one to inciting a socialist uprising, the gov't doesn't tax the bottom quarter much even though they utilize a ton of resources (the "rich" have insurance and retirement plans).

The question is how big is this group of people that don't make enough to bother taxing. A full 42% of people over 25 make less than 25k/year. A lot of these people aren't single and have dependents leaving little money beyond subsistence so taxing them is pointless. Another 28% make between 25k and 50k. That's 60% of the population over 25 that's making under 50k. There's not a lot money to squeeze out of these people.

Now you have the remaining 40% of the population making 50k+ paying the majority of all taxes. There's still a huge range in how much these people pay b/c of their particular setup. A guy making 100k w/ 5 kids, a mortgage, and dependent wife will probably pay a lot less tax than a guy making 75k renting w/o any deductions.

If nothing else, it's people like me that get hammered worse. I don't make all that much but b/c it's straight income, I get taxed at income brackets w/o any dedcutions. That means between fed, state, and FICA, I'm paying nearly 25k. This is even though I'm putting lots in my 401k but I don't qualify for most deductions like student loan or traditional IRA. This leaves me around 60% of my income to actually spend. Short of having a mess of kids and buying a house, I can't lower my tax liability despite living like a college kid most of the time.

Then there's the big difference between types of income. The wealthy earn money in investments, dividends, and long term income. Buffett may have made like 20 million in salary(which would have been taxed near 50% for like 11 million net) but he probably gained 5-6 billion in interest, dividends, stock options, stock appreciation, and deferred compensation. On that several billion, he likely only got taxed 10-15% which is what he's talking about getting taxed less than his secretary.

Everyone complains about things not being fair. That's not the point of the tax system. If it were fair, everyone would only pay how much they use. Geezers on medicare would be taxed at 80%, single mothers on welfare would be taxed infinitely(no income but taking money = big debts). In the end, it's about bleeding just enough money from people those w/ enough that they don't revolt. Guys like Buffett and Gates aren't sitting on all their money in cash. Their bank accts probably only have 5-6 zeroes at any time and there are so few people like them, they make up a drop in the bucket even if we taxed their income at 85%. If you base the tax liability on how much money you made in the US, the super rich would pay even less since they can make money internationally.

[TIGERJC]

good post

[Alan®]

Then there's the big difference between types of income. The wealthy earn money in investments, dividends, and long term income. Buffett may have made like 20 million in salary(which would have been taxed near 50% for like 11 million net) but he probably gained 5-6 billion in interest, dividends, stock options, stock appreciation, and deferred compensation. On that several billion, he likely only got taxed 10-15% which is what he's talking about getting taxed less than his secretary.

Your missing one Large detail. I highly doubt he made billions considering there is this thing called capital gain tax.

[Alan®]

For those who understand this, no explanation is needed. For those who
do not understand, no explanation is possible.


Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for
all ten comes to $100. If they paid their bill the way we pay our taxes,
it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar
every day and seemed quite happy with the arrangement, until on e day,
the owner threw them a curve. 'Sinc e you are all such good customers, he
said, 'I'm going to reduce the cost of your daily beer by $20. Drinks
for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our
taxes so the first four men were unaffected. They would still drink for
free. But what about the other six men - the paying customers?How could
they divide the $20 windfall so that everyone would get his 'fair
share?' They realized that $20 divided by six is $3.33. But if they
subtracted that from everybody's share, then the fifth man and the sixth
man would each end up being paid to drink his beer. So, the bar owner
suggested that it would be fair to reduce each man's bill by roughly the
same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (3 3%savi ngs).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

'I only got a dollar out of the $20,'declared the sixth man.
He pointed to the tenth man,' but he got $10!'

'Yeah, that's right,' exclaimed the fifth man. 'I only saved a
dollar, too. It's unfair that he got ten times more than I!'

'That's true!!' shouted the seventh man. 'Why should he get
$10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't
get anything at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the
nine sat down and had beers without him. But when it came time to pay
the bill, they discovered something important. They didn't have enough
money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is
how our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat
friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

[tony]

In fact, they
might start drinking overseas where the atmosphere is somewhat
friendlier.

And where they tax you even more due to universal healthcare, oh the irony. Good numbers and nobody has stated the tax code is perfect.

[.::UNKNOWN::.]

And where they tax you even more due to universal healthcare, oh the irony. Good numbers and nobody has stated the tax code is perfect.

that is why i support the fair tax just because if you are rich, poor or somewhere inbetween you get taxed the same way..... i get irritated on this subject due to my father he makes 100K+ a yr working on a navel shipyard and navy retirement..... he probally brings home right at 80K then he still owes the government about 20K....

[Alan®]

And where they tax you even more due to universal healthcare, oh the irony. Good numbers and nobody has stated the tax code is perfect.

i didnt write it i just thought it was interesting

[JConner]

Now to the thread starter, what income bracket are you in? I haven't heard any complaining coming from the top 5% income earners about taxes. Warren Buffett recently said that his secretary pays a greater percentage in taxes than he does.

NO she pays a greater percentage of INCOME tax than he does. Buffett pays CAPITOL GAINS taxes that far excede her income taxes.

[JConner]

GREAT post 93lude!

[ISAtlanta300]

For those who understand this, no explanation is needed. For those who
do not understand, no explanation is possible.


Bar Stool Economics

Suppose that every day, ten men go out for beer and the bill for
all ten comes to $100. If they paid their bill the way we pay our taxes,
it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that's what they decided to do. The ten men drank in the bar
every day and seemed quite happy with the arrangement, until on e day,
the owner threw them a curve. 'Sinc e you are all such good customers, he
said, 'I'm going to reduce the cost of your daily beer by $20. Drinks
for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our
taxes so the first four men were unaffected. They would still drink for
free. But what about the other six men - the paying customers?How could
they divide the $20 windfall so that everyone would get his 'fair
share?' They realized that $20 divided by six is $3.33. But if they
subtracted that from everybody's share, then the fifth man and the sixth
man would each end up being paid to drink his beer. So, the bar owner
suggested that it would be fair to reduce each man's bill by roughly the
same amount, and he proceeded to work out the amounts each should pay.

And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (3 3%savi ngs).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four
continued to drink for free. But once outside the restaurant, the men
began to compare their savings.

'I only got a dollar out of the $20,'declared the sixth man.
He pointed to the tenth man,' but he got $10!'

'Yeah, that's right,' exclaimed the fifth man. 'I only saved a
dollar, too. It's unfair that he got ten times more than I!'

'That's true!!' shouted the seventh man. 'Why should he get
$10 back when I got only two? The wealthy get all the breaks!'

'Wait a minute,' yelled the first four men in unison. 'We didn't
get anything at all. The system exploits the poor!'

The nine men surrounded the tenth and beat him up.

The next night the tenth man didn't show up for drinks, so the
nine sat down and had beers without him. But when it came time to pay
the bill, they discovered something important. They didn't have enough
money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is
how our tax system works. The people who pay the highest taxes get the
most benefit from a tax reduction. Tax them too much, attack them for
being wealthy, and they just may not show up anymore. In fact, they
might start drinking overseas where the atmosphere is somewhat
friendlier.

David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

Another flawed post. It suggests they all drink the same amount, which may not be true. The rich guy may easily drink 10 beers, while the poor can only afford 2. But they all have to share the 100 bill??

In a perfect world, instead of dividing the bill, why not just charge you by how much you drink? Fair tax FTW !

[tony]

I always find it interesting when the working class defend the rich but you barely see the sentiment returned.

[MistaCee]

Agreed and you will never see the rich business people defending the poor either.

[Jkuao]

Your missing one Large detail. I highly doubt he made billions considering there is this thing called capital gain tax.

Long term capital gains tax. He didn't buy/sell all his shares of Berkshire this year meaning he was taxed 15% on his gains on anything he sold. He could have easily made hundreds of millions on just dividends. If he's given the options (ie he gets a share for $1 a share when the going rate is 127k/share, he still doesn't get taxed a dime until he sells the share. If he's well diversified (which I'm sure he is) he could hold a billion in muni bonds and pay nothing in tax on those interest payments.

[Jkuao]

If you're going to post this poor example at least strip off the fake signature line:
http://www.snopes.com/business/taxes/howtaxes.asp

For those who understand this, no explanation is needed. For those who
do not understand, no explanation is possible.


Bar Stool Economics
...
David R. Kamerschen, Ph.D.
Professor of Economics, University of Georgia

This oversimplification emphasizes only how much the rich pay vs, how much they make vs. how much they pay.

Nowhere in my post did I say that the rich should pay all taxes. I'm saying there's not a lot to tax the middle class for and how difficult is to change that b/c in the end the rich are the only ones w/ anything left to tax.

As for ISAtlanta300's tax people for how much they use, then we're in for one hell of a messy regressive tax base. Poor people use 100% of their income. Middle class people w/ credit beat that and use over 100% of their income. Only the rich spend less than they make, meaning the entire tax liability would fall on the middle/low income people. I would benefit hugely from a flat tax as a person who spends significantly less than my income. I'd probably cut my tax bill in half. That said, for this ad valorem tax to work w/o collapsing the govt it would have to be revenue neutral (someone else has to pay to make up what I save). This would be shifted to either someone who makes the same as me or less than me but has to spend significantly more (people w/ families and other liabilities). This would be more "fair" since someone who uses buys more gets taxed more but then a rich guy w/ 10mill in the bank acct but spending maybe 300k in a year would rack up the same tax bill as an upper middle class family. The rich guy could also now buy a 5 mill beach house in Cancun tax free and park his tax free yacht there as well. Middle class and poor can't exactly fly out of the country to buy all their stuff leaving them to support the entire tax base.

In the end, I don't see a "fair tax" happening. There are far too many accounting professionals who happen to love the byzantine tax code since it means guaranteed income and plenty of loopholes for those w/ the means to exploit it. The rich will continue to have their tax aversion tactics and if nothing else it will improve their ability to avoid taxes.

[stillaneon]

Hmm... this is very interesting yet i dont care becuase i refuse to pay anymore in taxes unless i am getting more *cough*free health care*cough* hell anything for that matter

Good don't. Then they will lock you up for Tax evasion. One less person making dumbass remarks.


I would push for the fair tax. It just makes sense. Pay Taxes on what you buy, not what you make....