debate over the tax of wealth

"I would like to see facts on that. To my knowledge some rich pay 60 to 70% of their income where the middle class and poor pay 10% to 20%."

Payroll taxes include social security and medicare dollars (most of which won't be seen again by the people now paying them). Those account for ~7%. Usually there are state and local taxes (or sales taxes) which account for another 7-10%. Add in that poor people are more likely to consume tobacco or alcohol products (which have government surcharges) and the natural embedded taxes passed from by corporate and business taxes, or direct taxes and tariffs on things like food/sugar/gasoline and virtually everyone in the lower class pays over 50%. The rich and wealthy can use assets (like capital gains and real estate) to shelter the growth of their money. The poor/middle class generally use 401k or pension monies which are taxable at normal, if not "higher" rates (because they're not provided good information for alternatives).

If some rich are paying 60-70% of their income, they need to fire their accountant. The federal marginal tax rate is "only" 35% on only the money over a certain amount of taxable income and there are plenty of ways to get deductions in that 35% range to knock down the taxable amount further.

I am in agreement that the tax rate needs restructuring and balance, but not with a flat income tax. (sales tax, maybe).

"Well that's if you are counting sales taxes and what not but I am just looking at what you give to the government during tax season. Also saying most poor people smoke and drink and the rich do not is kind of a unfair statement. Also if they choose to do that those kind of figures should be set aside completely. That is a choice that they have made the government does not "force" them into buying those products.

I just don't understand your logic. . . the rich do use all of these things you speak of as well??"


No I'm saying that the poor engage in more activities that are essentially taxes. For example: they buy more lottery tickets. They buy more cigarrettes, they drink more. Etc. Since this also constitutes a larger cross-section of the population (the bottom 50%), that's a big chunk of people more likely to do things that inadvertantly increase the amounts of money they pay in taxes every year. To be fair, those taxes are basically subsidizing the increases in medical care costs or sustaining inferior school districts. Those figures should not be 'set aside', because they are a part of someone's overall tax bill (just as sales taxes or embedded corporate taxes are). Some of these taxes cannot be avoided even by choice, legally speaking.

If you wish only to discuss payroll and income taxes, the total percentages are still roughly higher for someone who is poorer in income. The federal marginal income rate is 35% on taxable income over 350k. This is only on taxable income, and only on the money OVER 350k. It's not on the money below it. There the rate is 33%, and so on down the line until someone who has only made around 9k of income when they finally pay no taxes at all (on income). What happens with a decent accountant is that 1) someone making a larger income learns to put money aside where it will grow at lower taxed rates (like capital gains for stocks/real estate) or no tax (life insurance/municipal bonds), generating a much lower relative tax burden and 2) the available income to tax is then attacked with itemized deductions, which come off the top not the bottom of the income bracket. If one is running a business say, it is fairly easy to come up with deductions (this before one calculates in the HMI deduction, which is often substantial), which again lowers the relative tax burden. Since someone of higher income is more apt to have access to these deductions by virtue of being more likely to run a business or own a home/property, they can get out (legally) of much of the additional tax burden we impose (and I don't begrudge them for doing so). It is essentially voluntarily stupid to pay any amount exceeding 25-30% of one's total income in federal income tax unless one is exceedingly wealthy, like 9-10 figures of income. Even then the amount will be roughly 35%. By contrast, the poor do not generally have additional income to contribute to tax-free savings, do not have available deductions (tax credits are a different story) and then to boot get screwed by putting money away in taxable savings (401k) if they can, and usually do their taxes at some place with a sign for instant tax refund credits (@ 2000% interest). I suspect most of those problems would be alleviated with a decent personal finance course, but that's another matter entirely.

As far as payroll taxes, these only apply on the first 97000 of income. Therefore, if someone makes more than that, they aren't taxed at the same rate as someone making less, like say the 9000 a year person. To be fair, this wasn't originally a tax, but we screwed that up decades ago, so it's NOW a tax. It is intended that these dollars are essentially banked away for use by that individual, but most economists seem to understand that Social Security is doomed without some revisions (at some point). Which means if that money may not be coming back it is an additional tax which disproportionally targets the poor or middle class. (now I'd argue we could just get rid of these taxes or make them privatized instead, but that's not very popular either).