How can that be? We’re paying 35%?
THAT my friend is one of the problems with the tax code. All us little folks are being taxed at a higer rate because we get paid on income; the rich make their money from dividends and capital gains, so they pay a lower rate. This is why people like Buffett says he pays less taxes than his secretary. Stricly speaking, it’s not true, but he’s taxed at a lower rate than she is because of the way she receives her income.
“How can that be? We’re paying 35%?”
Wage income, like from doing work, is taxed at around 35%, depending on where you are in the tax tables.
Interest income or capital gains from stocks is taxed at 15%.
More than half of Congress and the president and VP are millionaires, and they write the tax laws.
This is one of the major complaints of OWS and was the basis for Warren Buffet’s rant some months ago.
If you work, save, and invest, the fruits of that investment is taxed less. It’s a great incentive to invest your dough so other people can work with it (grow the economy). As Eisenhower found out, raising that rate makes people hide their stash so nobody gets the benefit. Kennedy drastically cut taxes on “the rich” and increased Federal revenue significantly, as well as investment and growth in general as “the rich” could now make a buck by spreading their wealth around in the form of investment via stocks and bonds.
You can see the result in Buffet’s letter, when he complains about how much people make and how much they are taxed, do the math and you’ll see that Buffet proves the point that lower taxes on The Wealthy results in higher federal revenue (to pay for federal stuff).
35% is for people making $379k and up....taxable income.
Keeping Romney’s name out of this argument, I refuse to fall for this class baiting.
I’m in the 25% bracket, if you look at my raw income...but I don’t pay 25%. Last year, I paid 6.6% - a very common outcome after standard deductions, etc lower the taxable income.
This whole class baiting argument pits the stated and collected cap gain rate (15%) against the stated (but certainly not collected) income tax rates. Its not a valid comparison.
And why are we comparing income tax to gains tax anyway? Presumably, somebody somewhere earned money as income, in the first place, before investing it and realizing gains.
I know spicing up the argument with Romney’s name clouds the issue...but this ‘argument’ is at the heart of the OWS crowd. The sheeple really believe they pay more in taxes than the ultra wealthy...and it really is just not true.
If everyone who told me that I need to pay more in taxes, paid taxes at the same rate I’m paying, there would be no need to tell me that I need to pay more in taxes.
They didn’t ask him how much he paid his tax attorneys.
There are many reasons the two can be very different, you may have tons of kids, or an unusually large mortgage or other unusual itemized deductions. You may derive most of your income from investments which are taxed differently than earned income or maybe you earn far more than the point at which you stop having deductions for social security and medicare.
Any of these or many other things can lower your effective tax rate. In Romney's case, he is probably getting most of his income from investments, and probably also has a large percentage of his money kept in off shore investments and banks to avoid US taxes.
Impossible that you pay a full 35% on your income via federal income taxes (ie not payroll taxes). 35% may be your top marginal but all your income is not subject to the top marginal rate. The margins start at 10%.
It just means that taxes for everyone else is too high.
Newt better be careful with this one. Let others criticize Romney’s returns.
Interesting that the fact that the Heinz-Kerry tax return showed millions of dollars of income taxed at 0% (municipal bonds) garnered hardly a peep from the media...
They’re not income taxes. They’re capital gains taxes, or other taxes on investments. Romney apparently doesn’t earn wages in the traditional sense. That’s the same reason Warren Buffet claims that he pays less in taxes, as a percentage, than his secretary, but it’s apples-to-oranges. If we want to encourage investment, we tax it at a lower rate.