Posted on 05/31/2003 9:54:04 AM PDT by Isara
Politics: The president had hardly put down his pen after signing the tax cut Wednesday when class warfare broke out again. As usual, the demagoguery doesn't comport with reality.
According to the Center on Budget and Policy Priorities, a hard-left Washington think tank, many families whose yearly incomes are between $10,500 and $26,625 — a number that's nearly 12 million — won't be getting the additional $400 per-child tax credit that was part of the tax cut.
While we're not challenging the findings, we object to the misleading nature of the argument. A significant fact is being left out.
The Tax Foundation tells us that many within the income bracket picked out by the Center on Budget and Policy Priorities have no tax liability; the child tax credit simply is of no use to them because they have no tax bill that can be credited.
Consider, for a moment, a family with two children making $26,625 a year, an income at the top end of the Center on Budget and Policy Priorities' bracket.
After taking the standard deduction ($9,000), the family's taxable income is $17,625, which translates into a tax bill of $1,943.75. But that's before the earned-income credit for families of four making less than $34,178 and the current child tax credit of $600 per kid.
Once those are figured, there is no tax liability. It is wiped out. That additional $400 at issue would have changed nothing — unless the Center on Budget and Policy Priorities wants it treated as the earned-income tax credit, the difference of which is mailed to filers if it exceeds their tax liability.
And, of course, that is exactly what we suspect.
Though the earned-income tax credit is a program with its own problems — and an editorial for another time — we don't mind if the Americans on the lower end of the income scale don't pay federal income taxes. We'd rather the tax burden be light on us all.
But the legislation signed Wednesday by President Bush was a tax-cut bill, not a welfare bill. And it's clearly a tax bill for everyone, not just the wealthy. The Tax Foundation believes it will add another 4 million Americans to the 35.7 million tax filers, which represent the 69.6 million of the roughly 285 million Americans who already have zero tax liability.
That's a detail that tax cut opponents seem determined to ignore.
I hope President Bush has in his mind to revamp the tax system in his second term.
This is a misleading statement. Perhaps the author didn't realize it, or perhaps it is meant to sound like the hypothetical family is actually paying no taxes at all, but the only liability that equals zero here is the income tax part. There are other tax liabilities (both overt and covert) that make their liability about $3,000.00 to the Feds and other liabilities to the states. That is not the implied zero taxes the author intimates the family is paying.
And your point would be....????
Overt and covert????
Do you mean Social Security and Medicare taxes, State sales taxes etc. and if so do you mean to illustrate how many taxes we are all paying, or is your concern that somehow this "non income taxpayer with an income" has somehow been cheated??
The earned income tax credit is income redistribution, do you feel it's not enough?
There are other tax liabilities (both overt and covert) that make their liability about $3,000.00 to the Feds and other liabilities to the states.
Yep corporate income taxes & half of FICA and other payroll taxes, misc excises, tariffs, cost of tax compliance, cost of regulation and monetary inflation, all embedded in product prices to consumers, and all mandated by government actions.
Every time Washington collects a dollar in tax revenues, taxpayers shell out that dollar plus another 65 cents. Why is that? It's not that the IRS is inefficient.
That agency's expenses eat up less than a penny of each dollar it raises. The 65 cents is what it costs taxpayers -- businesses and individuals -- to pony up each dollar. Compliance costs, which come to 24 cents, include the expense of keeping records, staying current with the tax code, and filling out the forms. Enforcement costs, close to 2 cents, include tax-???payers' expense for audits and litigation. We spend 3 cents on tax evasion and avoidance. However, the biggest expense item, at 33 cents, is economic disincentive. "By taking away the fruits of labor and capital," says political economist James L. Payne in his book Costly Returns, "the tax system works to discourage working and investing." So the next time Washington announces a, say, $10-billion program, remember that the real cost is that plus 65 cents per dollar -- or $6.5 billion more.
Costs of the Federal Tax System to Taxpayers for Every Dollar of Revenues Collected
Compliance costs 24¢ Enforcement costs 2¢ Disincentive to production 33¢ Disincentive cost of tax uncertainty 2¢ Evasion and avoidance cost 3¢ Government cost 1¢ Total 65¢ Source: Costly Returns, by James L. Payne (ICS Press, San Francisco, 1993). n
For a typical U.S. family, the real cost of taxes and regulations is at least:
Federal taxes 22.4% of income
State & local taxes 11.8%
Compliance costs 22.2%
Regulatory costs 12.7%70.1% of your income is now consumed by government
Breakdown of 1998 federal tax payments alone as they impact gross family income:
http://www.cbpp.org/taxday98.htm
CBO Estimates of Effective Federal Tax Rates for 1998
Families Ranked by Income Quintile
Individual Income Tax
Social Insurance Taxes
Corporate Income Tax
Excise Tax
Total Federal Taxes
Lowest -6.9% 7.8% 0.5% 2.8% 4.2% Second 1.7% 9.9% 0.9% 1.6% 14.2% Third 6.3% 10.8% 1.4% 1.2% 19.7% Fourth 9.0% 11.3% 1.4% 1.0% 22.7% Highest 16.2% 8.0% 4.6% 0.5% 29.3% Top 10% 18.0% 6.7% 5.8% 0.4% 30.8% Top 5% 19.7% 5.3% 7.0% 0.3% 32.3% Top 1% 23.0% 3.0% 9.5% 0.2% 35.7% Average for all families 11.2% 9.3% 3.0% 0.9% 24.4% Source: Congressional Budget Office, May 15, 1997.
Notes: Pre-tax family income is the sum of wages, salaries, self-employment income, rents, taxable and non-taxable interest, dividends, realized capital gains, and all cash transfer payments. Income also includes the employer share of Social Security and federal unemployment insurance payroll taxes, and the corporate income tax. For purposes of ranking by adjusted family income (AFI), income for each family is divided by the poverty threshold for a family of that size. Quintiles contain equal numbers of people. Families with zero or negative income are excluded from the lowest income category but included in the total.
Individual income taxes are distributed directly to families paying those taxes. Payroll taxes are distributed to families paying those taxes directly or indirectly through their employers. Federal excise taxes are distributed to families according to their consumption of the taxed good or service. Corporate income taxes are distributed to families according to their share of capital income.
I thought I made that pretty clear. The so called "non income taxpayer with an income", indeed does have a tax liability and he is paying taxes on his income. The article seems to make it look like he has no tax liability and is paying no taxes.
Overt and covert????
The words are in the dictionary; Look 'em up.
The earned income tax credit is income redistribution, do you feel it's not enough?
"income redistribution" is a meaningless buzzword for the mindless. All income is redistributed income unles you happen to be in the personal business of mining gold out of the ground or something like that. Where do you think the money that pays your salary comes from? A good chunk of it, if not all of it, can be traced right back to someone elses taxes (or their 'tax credits'). Give it some thought.
This is an IDIOTIC statement.
I can see you're not too familiar with economic principles. LOL
So income is all someone elses tax contributions????
>"income redistribution" is a meaningless buzzword for the mindless
It's call socialism fool, you should have stayed in school.
Not at all. It means that money fairly earned by one citizen is taken by the government & given to another.
Not to be confused with the other items you mention above.
That's cool. But we are looking at different things I think, and it could be worthwhile to persue the surface disagreements. Better understanding is always worth a seeming disagreement. When I say income is partly or fully someones elses taxes, consider the number of Government employees, State , local and Federal, that are paid in someones taxes and end up spending that pay in a manner that becomes income for non government employees (it was still originally someones tax money). and the number of people employed at private industries that exist solely on government checks and those people who then make their living off of those employees. Many years ago I did some investigating and found that. at a minimum, 30% of all people in the United States were either directly or indirectly making their living from Federal spending. I don't have any current figures, but lately I've been hearing a number of different radio talk show guests stating the figure in now around 50%. That would mean that if the Gov just quit issuing checks, that half of the people in the country would no longer have any income. (I've got to do some investigating again sometime and get valid 2003 figures. Internet should make it easier this time)
Of course, the money's got to circulate somehow, but I think that the Federal, and most State, spending of the new economy should be replaced by the old style economy of private industry spending. The private use of money is based on making new and better things, the government use of money is based on controll of things already made.
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