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Why is the U.S. tax system so unfair to wealthy Americans ?


rash mulligan

Well-known member
Joined
Nov 24, 2010
Messages
3,149
I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Okay, Folks, Let's Put Aside Politics And Talk About Taxes... [CHARTS] - Business Insider

The top 5% pay @36% of all tax while the bottom 50% pay 3% of all tax collected at an average rate of 2.98%.




National Taxpayers Union - Who Pays Income Taxes?


Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
 


b.a. baracus

Well-known member
Joined
Feb 3, 2009
Messages
2,230
Not much different from Ireland, particularly within the PAYE system.

It is those outside the PAYE system we need to be keeping a closer eye on.
 

Richard Roma

Active member
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Feb 20, 2009
Messages
156
It might be less surprising for you if you compared those figures to the % of national income that these people earn.
 

momentimori

Well-known member
Joined
Jan 29, 2011
Messages
614
I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
Considering how much their income has grown relative to everyone else's in society is it any wonder they pay a higher proportion of the income tax bill?

In other words it is a sign of the large income and growing inequality in America.
 

feedmelies

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Joined
Jul 9, 2011
Messages
2,464
While the US tax system is extremely progressive, it would be better to look at tax rate paid. Your statistics do not take into account income difference. If, for example, 1% of the population earned 100% of the income (obviously unrealistic - i'm just using this example to prove a point) then they would also pay 100% of the income tax. This however would not a sign of an overly progressive tax system.

Didn't know you were a communist. Aren't Labour a bit too moderate than? That is a phrase that could be interpreted in many ways. "For each according to his ability" could signify a proportional tax, i.e everybody pays the same. If we take "Ability to pay" as meaning roughly "income", then indeed this statement would suggest a proportional tax rate - not a progressive one. Are you for that?

In addition, using an idiomatic phrase is not a substitute for actually arguing in favour of your point. Especially when the phrase in question was coined by someone so extreme politically.
 

SilverSpurs

Well-known member
Joined
Nov 27, 2009
Messages
5,550
I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Okay, Folks, Let's Put Aside Politics And Talk About Taxes... [CHARTS] - Business Insider

The top 5% pay @36% of all tax while the bottom 50% pay 3% of all tax collected at an average rate of 2.98%.




National Taxpayers Union - Who Pays Income Taxes?


Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
Which reinforces the view that if america is to fix it's budget and public debt it is going to have raise taxes on everyone including "the poor" and "the low paid" and "those who can't afford..." and "those who can't take any more pain". This is why the Democrats don't live in the real world. Having said that Republican ideas of cutting tax are also bonkers.
 

momentimori

Well-known member
Joined
Jan 29, 2011
Messages
614
Time for the State to steal more from its citizens?
Taxes aren't theft. They're the price of club membership of the nation.
 
R

Ramps

I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Okay, Folks, Let's Put Aside Politics And Talk About Taxes... [CHARTS] - Business Insider

The top 5% pay @36% of all tax while the bottom 50% pay 3% of all tax collected at an average rate of 2.98%.




National Taxpayers Union - Who Pays Income Taxes?


Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
Milton Friedman explained all this a long time ago.

The group at the bottom, owing to the lack of skills and resources of the its members, is unable to exert itself politically.

The top group, although comprising the wealthiest and most influential people, is smallest.

The group in the middle is the largest, and its members have resources and skills; therefore, it is the strongest group in the political system, by far. It looks below for enrichment; but while it can dominate the poorest group politically, it can get very little in terms of money. So it looks above, and sees a very attractive pot of money it can raid; it uses its political superiority to ensure that the burden of tax is loaded on to the top group.

It's why very few voters oppose a wealth tax...provided that the threshold is just above the amount they earn!!
 

Clanrickard

Well-known member
Joined
Apr 25, 2008
Messages
32,951
I think it's time to look for alternative economic systems or controls to ensure a better distribution of wealth.
I think it is time for everyone to get back to having everyone have the same chance to get wealthy not for the successful and entrepreneurial to be penalised.
 
B

Boggle

I think it is time for everyone to get back to having everyone have the same chance to get wealthy not for the successful and entrepreneurial to be penalised.
We need to spread the money around better. However thats achieved, I don't care.
 

Paddyc

Well-known member
Joined
Jan 30, 2009
Messages
9,302
Looking at Federal Income Tax in isolation and ignoring all the other taxes paid by individuals distorts the figures hugely.

it ignores earnings on capital for example. Warren Buffett famously showed that his secretary paid more in tax per capita than he did.

Unfair on the wealthy, I don't think so!

Compare current federal income tax rates to those applying in the 1950's under Eisenhower.
 

Troy_337

Well-known member
Joined
Oct 17, 2012
Messages
614
I think it is time for everyone to get back to having everyone have the same chance to get wealthy not for the successful and entrepreneurial to be penalised.
[video=youtube;tanJYrIh7VU]http://www.youtube.com/watch?v=tanJYrIh7VU[/video]
 

Troy_337

Well-known member
Joined
Oct 17, 2012
Messages
614
I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Okay, Folks, Let's Put Aside Politics And Talk About Taxes... [CHARTS] - Business Insider

The top 5% pay @36% of all tax while the bottom 50% pay 3% of all tax collected at an average rate of 2.98%.




National Taxpayers Union - Who Pays Income Taxes?


Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
[video=youtube;qXBswFfh6AY]http://www.youtube.com/watch?v=qXBswFfh6AY[/video]
 

compliant

Member
Joined
Jan 9, 2011
Messages
96
I am very surprised by this.

I would normally see the U.S. as a place where wealth is admired and appreciated but based on the facts

Okay, Folks, Let's Put Aside Politics And Talk About Taxes... [CHARTS] - Business Insider

The top 5% pay @36% of all tax while the bottom 50% pay 3% of all tax collected at an average rate of 2.98%.




National Taxpayers Union - Who Pays Income Taxes?


Top 1% pay 36.73% of federal income taxes collected.

Top 5% pay 58.66% of federal income taxes collected.

Top 10% pay 70.47% of federal income taxes collected.

Top 25% pay 87.30% of federal income taxes collected.

Top 50% pay 97.75% of federal income taxes collected.

Bottom 50% pay 2.25% of federal income taxes collected.

A bit unfair one should think.
What a load of one sided rubbish. To look at these statistics, you would think there is some sort of persecution of the top 50% earners in the United States, that the 1% are getting saddled with the burden of the lower 99%. If you are in any doubt of how biased this is towards the more well to do members of the United States, all you need to do is to look at the "Business Insider" logo slapped on it.

When you are talking about taxation, you need to remember that the first item is that it needs to be equitable. Not equitable in the sense that everyone pays the exact same amount, but that everyone needs to pay according to their ability to pay. So that doesn't mean that everyone just pays the same amount (a fixed amount) or a fixed rate (percentage point) but that people pay based on how much they have. If you have more, you have to pay more. This is referred to as progressive taxation.

As I said already, the above figures would lead you to suggest that they are paying some unfair amount of tax, and that the bottom 50% are paying nothing or next to nothing. That is not the case. In reality, everyone pays a percentage of their income (perhaps as some societies have decided that the bottom rung of society should be exempt) The below graph shows what the effective tax rate were for the USA in 2011.



As you can, the graph starts off low and rises, until you get to the top 1% where it drops. Which means they pay less as a percentage of their income than the previous 3 income brackets. This also shows that they only 11.6% more as a percentage of their income than the lowest income group.

All that the OP's graph shows is the huge income inequality in the United States at the moment.

As to why the United States is so unfair to the wealthy? I actually thought this was a joke when I saw it. The United States has been and is getting better for the wealthy Americans for several decades now. Take a look at this


Since the end of World War 2, there has been a huge decrease in the percentage of tax paid by wealthy Americans, while at the same time, income inequality has risen massively


(Apologies on the different date range than the above graph, couldn't find one from 1945 period)

The result is the large transfer of wealth from the rest of American society to the upper income groups. Taxes should be designed to prevent this kind of transfer of wealth to an elite few who can then use their power and influence over the rest of society. As we have seen the USA, the wealthy then control the mechanisms of communication, law, politics and governance because they can effectively buy out said institutions. In many ways, taxation is a patch to try and fix the flaws in capitalism by preventing the build up of wealth within an ever smaller percentage of the population.
 

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