Posted on 04/09/2002 6:44:09 AM PDT by IM4TRUTH
WASHINGTON - Another way the rich are different: They pay the lion's share of the nation's income tax bill. The wealthiest 5 percent pay more than half the taxes, while people in the bottom half pay just 4 percent.
The annual federal tax deadline for most of America is next Monday.
Two-income households are increasing, putting more families in the top slice of taxpayers. Millions of small businesses and partnerships are up there, too, paying personal instead of corporate income taxes. Many other people were boosted by the 1990s stock market boom.
President Bush (news - web sites)'s big tax cut will prevent the wealthy from paying an even greater share in coming years. But key provisions, such as the gradual doubling of the child tax credit, will reduce or eliminate income taxes for many middle-income people while the rich won't qualify.
"This trend is not going to reverse," said Scott Hodge, executive director of the Tax Foundation, a nonpartisan tax education and research group. "This will be the demographic for the 21st century taxpayer."
For 1999, the most recent year for which complete Internal Revenue Service (news - web sites) statistics are available, 6.3 million taxpayers whose incomes were in the top 5 percent paid more than 55 percent of all income taxes. They had incomes above $120,846 a year — meaning two spouses could each earn a bit over $60,000 and be considered among the nation's richest.
"It's very easy to move into the top echelon of taxpayers," Hodge said.
The wealthiest 1 percent — those earning $293,415 and up — paid over a third of the taxes, while their share of the nation's taxable income was 19 percent. They pay income taxes at the top rate, now 38.6 percent, compared with a maximum rate of 15 percent for the majority of lower-earning taxpayers.
Taxpayers in the bottom half paid only 4 percent of the income taxes in 1999, according to the IRS. These 63 million taxpayers earned, on average, less than $26,415 a year.
Going back to 1989, the top 5 percent income group paid about 44 percent of income taxes, the bottom almost 6 percent. At that time, the top tax rate paid by high earners was 31 percent.
Looking ahead, the 10-year, $1.35 trillion tax cut enacted last year reduces income taxes in three steps, with the final step coming in 2006. In that year, according to the congressional Joint Committee on Taxation, taxpayers earning over $100,000 a year will pay almost 59 percent of all income taxes.
Those with annual incomes of less than $30,000 a year will pay about 4.4 percent in 2006, roughly the same as they do today.
In Congress, this disparity in the tax burden causes perennial political trouble for Republican tax-cutters because any across-the-board reduction meets with Democratic criticism that it would mainly benefit the wealthy while siphoning away money for government programs.
For that reason, many tax breaks contain income cutoff points that leave out the top income earners.
A prime example is the child tax credit, which is $600 for the tax returns due April 15 and will gradually rise to $1,000. This year, that credit begins to phase out for married couples filing jointly who earn more than $110,000 a year.
The IRS says the rising child credit, which is $100 higher than last year, is a major factor in the 12 percent increase in average tax refunds this year. Many lower-earning taxpayers who claim the credit get a refund even if it effectively eliminates their entire tax liability.
Another program for lower-income Americans is the earned income tax credit, which is intended to offset the burden of Social Security (news - web sites) payroll taxes. In 1999, about 13 million taxpayers claimed about $21 billion in credits, which also can trigger a refund even for those with no tax liability.
At the higher end of the income spectrum, the IRS now receives more than 24 million individual income tax returns from certain kinds of corporations and partnerships that don't pay corporate income taxes. Those are frequently paying at the highest tax rate.
Perhaps the biggest reason the rich are paying a higher share is that they continue to get richer, said Joel Slemrod, economics professor at the University of Michigan. Between 1980 and 1999, the share of total taxable U.S. income earned by the top 5 percent rose from 21 percent to 34 percent.
;) ttt
The Constitution sets election day, but it doesn't set tax day. Given this, let's move tax day to October 31st.
Unfortunately, given the way the taxing system is set up, most ignorant people believe that they "get paid" on tax day, and they are at least half of the voting population.
The most effective thing to do would be to eliminate withholding, and make everyone write a monthly check.
The next thing would be to make sure that EVERYONE that earns any income must pay some income taxes, even 1%, to make sure that they have a stake in the tax system.
Anyway, the article's basic premise is sound. This writer is being polite by not drawing the obvious conclusion: the net tax consumers outnumber, and therefore outvote, the net tax payors.
We're doomed.
When will they start giving a tax credit for guns? You "only" have to give us their serial numbers to take the credit. Or even tax credits for caches? Just state the latitude and longitude of your weapons/food/gold cache to the nearest 1/100 of a second, and you can claim the credit. Don't worry, the only purpose for these credits would be to try to make amends to much maligned gun owners and/or survivalists.
Yes, that does seem to ignore all other taxes. In fact, I bet these numbers are based on what they should pay, not what they actually do pay. Filing taxes makes it abundantly clear that all the exemptions are for the rich or poor. The reality is that the middle class shoulders almost the entire tax burdon for the simple reason that they are the most numerous, and the middle class will always be redefined in order to make that so. Personally, I am sick of being the financial conduit between the ivory-tower-well-wishing rich and the increasingly belligerent poor.
Well said!
This or a similar number gets repeated so often it's tiresome. If it is true, then this is a minority issue, that is, it only affects 5% of the population so why does anyone take it as a life and death matter? And if you want to start talking about fair be careful what you pray for.
What I have never found is a figure that compares how much of the wealth those 5% own. If it turns out that the 5% own more than half the wealth then all is right on earth and in Heaven with the proper tax ratio in place.
If you make a combined family income of $100,000 in DC, San Fran, New York City, etc., are you middle class? What if you make that in southwestern rural Virginia, or Iowa?
The numbers, as always, are manipulated and used by people who either don't discuss all the factors because they don't know them, or they choose to ignore them. Thus, the NY Times would like people to beleive that anyone in the top 5% is "rich".
Here's a news flash, if you live in Northern Virginia, and your family has a $120,000 per-year income, you better settle for renting, because you can't even buy in most communities with that income, unless you have lots of cash!!!
These same so-called rich lose their childrens' 500 per-child tax credit, interest deduction on student loans, and any meaningful deduction for childcare. (as 5k is the limit, and that won't get you 5 months in the big cities, let alone a year.)
True. I can't tell you the number of people I know who claim they don't pay taxes because they get a refund check. It's hard to get them to understand that the refund check means they have paid too much in taxes.
NEWS FLASH sun raises in the east!
First tues in Nov. and April 15 6months apart...coincidence? I don't think so.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.