The Most Important Things You Need to Know About Taxes in America

The word "tax" was mentioned 109 times during last week's presidential debate. For comparison, the first presidential debate of 2004 only saw six mentions of the word "tax." In the 2000 debate, "tax" was only mentioned 26 times. Taxes are a huge issue right now. Everyone cares. Everyone has an opinion.

Here are 10 of what I think are the most important points to keep in mind about taxes in America.

Fool contributor Morgan Housel has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On October 24, 2012, at 5:58 PM, thedoge wrote:

    Thanks for the data. It's interesting how out of synch with reality many Americans' perception of their tax situation is.

  • Report this Comment On October 24, 2012, at 6:07 PM, eldetorre wrote:

    I don't think we'd mind our taxes so much if government were leaner and more efficient.

  • Report this Comment On October 24, 2012, at 6:26 PM, miles60 wrote:

    More excise taxes!

  • Report this Comment On October 24, 2012, at 6:30 PM, mountain8 wrote:

    Fair share is so hard to define. It does seem the major share of taxes has shifted away from the corporate world into the personal world. Is that a correct assumption by me?

  • Report this Comment On October 24, 2012, at 6:38 PM, Cedarjones wrote:

    Thanks for the charts! Two ideas: (1) Politicians should automatically pay the highest tax rates. (2) Tax rates have very little to do with total tax revenue to the government. Politicians should stop focusing upon rates and start worrying about what produces the most revenue.

  • Report this Comment On October 24, 2012, at 6:51 PM, stlmikey wrote:

    The payroll tax issue is a hard one since in most cases we are "buying" something - most notably future Social Security benefits. Because of the weighting in the SS formula, the lower paid are able to buy more benefits per dollar spent than higher income individuals (approximately double the value).

    It would be difficult but probably not impossible to reflect this in the charts

  • Report this Comment On October 24, 2012, at 7:17 PM, Bulldozer56 wrote:

    I'm not in the corporate world but I believe business should not pay income taxes, only the employees 7 shareholders

  • Report this Comment On October 24, 2012, at 7:27 PM, snapperreef wrote:

    Why do some Americans persist in the self immolation regarding taxes. Look at our life style and compare it with the high tax countries.

    We would never have the riches we have at all income levels if we did not feel we could experience the rewards of our work.

    Forget the equal outcomes stuff if you want a vibrant and productive society.

    Cedarjones' points are good ones.

  • Report this Comment On October 24, 2012, at 7:46 PM, manleymike wrote:

    Does anyone truly feel the higher income individuals receive less benefits than lower income individuals in this society?

    In regards to corporate taxes versus personal income taxes, certainly the former should go down only if the latter goes up significantly at the upper brackets. It makes good economic sense as well as being the right thing to do.

  • Report this Comment On October 24, 2012, at 7:59 PM, jomueller1 wrote:

    Coming from another country I have a critical view of the tax system in the USofA.

    Firstly, I believe a lean government is good - to a point. But as a good friend of mine (US citizen) told me: Americans love it complicated. That costs dearly.

    Secondly, the inconsistency is mind boggling. Some items/services add sales tax, others don't. If I buy an item and the company installs it, there is no sales tax because the item is considered part of a non-taxable service. Weird.

    The concept of inter-state trade is ridiculous. Is it one country or not? I need a permit to ship a deceased to another state but I can buy without paying sales tax.

    Governments have hidden taxes. In my town I need a permit to have a new kitchen installed. The city charges 7% on the total value. I consider that a special tax.

    South Florida has three counties with about 30 cities. Many services are overly expensive. I know a town with 6000 inhabitants. They have a police force of 6 officers plus a chief. This multiplication of services is an enormous waste. One police force per state would be much more economical.

    What is also difficult to assess is the existence of home owner associations. They do many things that in other countries would be covered by cities or counties and be paid for with taxes.

    Again, Americans love it complicated. And don't get me started on health care!

  • Report this Comment On October 24, 2012, at 8:06 PM, akaluna wrote:

    Pretty obvious who to vote for. One candidate understands this and one has no clue.

  • Report this Comment On October 24, 2012, at 9:13 PM, rationalroy wrote:

    We are in deep trouble because of the Bush taxcuts,

    the wars in Iraq and Afghanistan plus the current

    economy and unemployment. Each needs further

    attention. If a citizen has millions/billions of $, why do they pay only 15% on Cap gains and dividend?

    Why to we reward businesses that shio jobs to

    other nations? Why to we spend billions on

    defense weapons that are obsolete? Why do we allow our officials to receive monetary gifts from

    folks who then control them and their actions?

    I don't know why we allow these things? Do you?

  • Report this Comment On October 24, 2012, at 9:28 PM, charliez08 wrote:

    What is the advantage of corporate income taxes? Corporations include all taxes they pay in the price of the product just as they do all other cost of operations. Corporate income tax is just a way for the government to tax us without us blaming the government for the tax. It's hidden in the price.

  • Report this Comment On October 24, 2012, at 9:47 PM, runner49 wrote:

    "The payroll tax issue is a hard one since in most cases we are "buying" something - most notably future Social Security benefits. Because of the weighting in the SS formula, the lower paid are able to buy more benefits per dollar spent than higher income individuals (approximately double the value)."

    True perhaps, but the higher paid generally live longer and therefore collect longer. They are also be more likely to have a spouse that paid in little or nothing to the system who collects survivor's benefits that more than make up the difference.

    There are too many variables to accurately determine who benefits more, but considering all the other advantages of the higher paid, I can live with this one.

  • Report this Comment On October 24, 2012, at 9:52 PM, NoOracleHere wrote:

    It's been a political debate from the beginning. Almost by definition that means divorced from reality. The critical thing is not so much taxes, but leadership. Can the leaders of the next 4 years bring Americans together to tackle a common problem? Too many people today think the Gov't is somebody else - the enemy. But in a democracy, that isn't right. If we believe in this democracy thing, that government is "we the people", then it's about time "we the people" decide once and for all what we're going to do to balance our budget.

  • Report this Comment On October 24, 2012, at 9:54 PM, NoOracleHere wrote:

    One more thing - Thank you Morgan for bringing the data!!!

  • Report this Comment On October 24, 2012, at 11:13 PM, mvp1 wrote:

    Did you all know that Americans living and working abroad have to file US Income Tax?

  • Report this Comment On October 25, 2012, at 12:52 AM, dgmennie wrote:

    Both the Democrats and Republicans say they will not raise federal taxes on the middle class -- or anyone earning less than $250,000/year, or $150,000/year -- or whatever. This simply cannot be the case since most all the easily-taxable wealth in the US is that which presently flows to what is left of the middle class. While the rich already pay considerable tax dollars annually, the fraction of their income/wealth this represents is often modest. And legal loopholes remain available so they can dodge any truly onerous new obligations. The poor simply don't have significant taxable income or assets to begin with. Also, the middle class pays the brunt of property taxes, sales taxes, licensing fees, and other charges mostly levied by state and local governments. Lowering the federal tax rate on income while getting rid of certain "tax deductions" sounds workable, except that the deductions likely to be lost (for mortgage interest, state/local taxes, child care, and medical expenses) will be gone forever while the federal government's future appetite for tax money knows no bounds. Any implemented "lower federal tax rate" will be history before you can say "gotcha!"

  • Report this Comment On October 25, 2012, at 1:33 AM, bobs111 wrote:

    I have a 30" monitor and I couldn't read half of the graphs. I know from my presonal taxes that I pay 49% of my income into the gov tax system. I didn't seem to show up on any graph.

    P.S. I could read the percentages.

  • Report this Comment On October 25, 2012, at 2:52 AM, Fleet731 wrote:

    Slide #10 pretty much sums it up by looking at total taxes combined - federal, state, local, property, & sales taxes by income group:

    If you are in the bottom 60%, your percentage of total tax paid is less than the percentage of total income earned (as a group).

    If you are in the top 40%, your percentage of total tax paid is higher than the percentage of total income earned (as a group).

    The numbers don't display a tax disparity that some politicians seem to stress about. Even with sales taxes considered, higher incomes pay a higher percentage of the taxes collected.

  • Report this Comment On October 25, 2012, at 6:44 AM, TMFMorgan wrote:

    <<I have a 30" monitor and I couldn't read half of the graphs.>>

    You can make the slideshow full screen by hitting the button with 4 arrows on the far right.

    -Morgan

  • Report this Comment On October 25, 2012, at 7:53 AM, sevenheart wrote:

    In the interest of full disclosure, who are you voting for as President Morgan?

  • Report this Comment On October 25, 2012, at 8:44 AM, MrsCathyGF wrote:

    Morgan, You offer clarity in place of all that confusing media noise. The next time, please be sure the slides, or however it is presented, is readable. The slides showing income comparisons were most useful, but could not read it.

  • Report this Comment On October 25, 2012, at 8:51 AM, agsimon wrote:

    In response to Billdozer1956: I would pose that corporations should pay the SAME taxes as employees and shareholders, as the SCOTUS has determined that corporations are "individuals."

  • Report this Comment On October 25, 2012, at 8:55 AM, MrsCathyGF wrote:

    Ok, all is good. Button is on right, ha. Hubbie was not here to read the instructions, ha.

  • Report this Comment On October 25, 2012, at 10:44 AM, Thror wrote:

    So pass some tax reforms. Both Bush (in 2005) and Obama (in 2010) had special boards commissioned to look for ways to reform the tax code. Despite the effort, neither set of recommendations got any traction or support. Too many interests, most likely. It would never pass intact.

    I've read them both, and the 2005 plan is a complete, progressive overhaul. The 2010 plan is a set of options, which would improvement things piecemeal. They both address simplification and corporate taxes. The 2005 plan eliminates loopholes and deductions, while lowering rates. (So this is what you're going to pay, and there's no way to weasel out of it.)

    I couldn't care less what other countries do. Many have chosen to have governments provide more services than we have. And many have proven to be incompetent at fiscal management. The jury is still out on us.

  • Report this Comment On October 25, 2012, at 1:35 PM, Spw225 wrote:

    Anyone who wants more taxes is a fool. Such charts are never accurate and we can never analyze their data. Here's the charts, trust me, no thanks. They appear to have an agenda, of making us believe we don't pay enough taxes. Such charts never show the spending or lack of balanced budgets. or that only 53% pays fed taxes. It's more important to stop and control government spending. For example, the charts don't reflect rising interest payments owed by the government, currently 240 billion for the Feds. If interest rates ever hit historical averages, that will grow to over 600 billion a year. The charts don't show unfunded entitlement and pension liabilities created by government. They don't reflect the cost of regulation, the hidden taxes. over 11,000 pages of new fed regulations in the last 4 years, not including state and local regs. Which are extremely costly in Ca. The charts don't reflect the waste or mismanagement in govt of our tax dollars. 95 billion in medicare fraud, per GAO report, ca's bullet train to nowhere, an expected 200 billion cost. The charts don't show the double and multiple layers of taxation we pay. If one invests their take home pay from their labors, that investment is taxed again as corp tax, then again as dividend tax. If I cash out my investment and buy a car, I pay sales tax, DMV tax on the same money I earned from my labor. The charts don't reflect the government policy of 2% erosion of the dollars purchasing power or goverment regulations increasing in gasoline costs. Taxes we pay represent money from our labors, our efforts, what we make or do with our hands and minds. Imagine your family and your desire to support them. Now, Imagine working in a mine for 40 hours a week, and for 15 of those hours, you work to pay the government. Its really worst than that because of government debt. For the average person paying income taxes. You pay 11.5 % SSA tax, on 80k of earnings, soon to be 13.5%, 15% fed tax rate. 7% state tax in ca. Plus Property tax, sales tax, gas tax and the cost of regulation, (health care costs are up by $2500) and the costs of government mismanagement, you're really probably working 20 + hours a week in the mine for the government. Only 20 hours of your labor is for your family. The more they tax and regulate, the more we become minions to unaccountable government. And the less we have to support our families. Not that I feel strongly about this.

  • Report this Comment On October 25, 2012, at 2:50 PM, slickandjake wrote:

    There really are two issues that have developed from income taxes. First: what is the Federal Governments scope? In my opinion all of this bickering about income taxes goes away if the 16th Amendment is repealed and the scope of the Federal Government is reduced back to its Constitutional limits. I am not in favor of eliminating income taxes cold turkey. The Federal Government needs to balance the budget and pay off debt first and about 50% of Federal Government revenues are from income taxes. But the ultimate goal should be pursuing spending cuts to the point that income taxes can eventually be eliminated. By allowing the Government an open spigot of income the scope of the Government is constantly changing and likely ever increasing which will eventually lead to a totalitarian state.

    The second issue at hand with taxes is the "distribution of wealth" or "paying a fair share" of taxes. One particular party uses these interchangably but they really are two different things. Distribution is a statistical term. Therefore if you want a "distribution of wealth" then people should be paid using a bell curve. This is totally separate from taxes and therefore taxes should never be mentioned along with "distribution of wealth". So to me Corporate Governance and pay scales need to be addressed to satisfy a "distribution of wealth" and frankly I am in favor of some sort of pay scale bell curve for corporations. "Paying a fair share" of taxes is subjective. What I think is fair is different from Romney, which is different from Obama, which is different than the 300 million other Americans. If you look at the Constitution, however, I believe the problem we have here is the term "general welfare". This has been interpreted as the Government needs to take care of all people by developing programs to help those in need. This is really the purpose of charities and the Government should not be funding them. The intended definition of general welfare is that the Government taxes people in order to provide a service which all Americans can benefit from. This includes providing for a national defense, providing justice, regulating inter-State commerce, etc. It does not mean we take money from one group of people to give to another group of people. This is playing favoritism and leads to corruption and the eventual breakdown of Government.

    I wanted to make one more point. I saw someone's comment calling our Government a democracy. Our Government is not a democracy, it is a Republic. There are very important distinctions. I believe the biggest problem facing our nation is a lack of calibration of the peoples as to what our principles are and how that dictates the scope of our Government. The powers that be drive wedges between the peoples by debating issues but without common principles. Without a foundation of principles then issues are much more difficult or downright impossible to resolve.

  • Report this Comment On October 25, 2012, at 5:38 PM, WyattJunker wrote:

    The problem is that lower incomes aren't paying their fair share. Payroll taxes are self-feeding vehicles since those who pay in are doing it with the expectation of a later withdrawal date in the out years. IOW, they are self-serving. Income taxes are not like that. They go to all the other wasted money blown by the federal government.

    So, in the best interest of patriotism, as Joe Biden said, it is time for them to pay their fair share.

    The poor and middle class need to pay income taxes too, even if its a modest sum. They need to leave a little skin in the game that isn't in the form of only medicaid/medicare and social security alone.

  • Report this Comment On October 25, 2012, at 8:12 PM, mcisiebs wrote:

    Slides 3, 4. Of Course payroll taxes were up; the economy was great through 2008. Corp taxes really took a dive in 2008; about the same time the economy really took a dive.

  • Report this Comment On October 26, 2012, at 7:22 AM, busterjde wrote:

    Hey Morgan,

    Is capital gains included as part of your "income" in these graphs? If not, then it makes it look like the data is more equitable than it is. Especially when the top .1% generally take home 50% of the capital gains. http://www.forbes.com/sites/robertlenzner/2011/11/20/the-top...

    Don't you need to slice up the top income bracket to the top .1 and top .01% of families? That's where the majority of the disparity lies. Also, if you look at wealth instead of income, don't the graphs change a fair amount as well?

  • Report this Comment On October 26, 2012, at 12:49 PM, Anysimplefool wrote:

    You can lead a horse to the data, but you can't make it grasp the meaning. Nice try Morgan.

    Simple

  • Report this Comment On October 26, 2012, at 12:52 PM, sonofliberty wrote:

    Using GDP as a basis of comparison (denominator) is flawed, as it includes govt spending. All economic analysis using this convention is fataly flawed, IMO.

    GDP= C+I+G

    Use of GDP Makes govt spending look good, when it isn't

  • Report this Comment On October 26, 2012, at 5:12 PM, MCCrockett wrote:

    "Both the Democrats and Republicans say they will not raise federal taxes on the middle class" introduced gdbennie's comment. It raises an interesting question: "Who are the 'middle-class'?"

    Too often we use "middle-class" where we should be using "middle-income". The "middle-class" is what William Thompson and Joseph Hickey described in their 2005 sociological study as the "upper middle-class" and corresponds to the "middle-class" in the UK.

    In terms of the slides presented in this article, the "middle-class" is the first 75% of the fifth quintile. As a percentage of income, we are paying more than our fair share of the taxes.

  • Report this Comment On October 26, 2012, at 5:32 PM, savant55 wrote:

    One thing omitted from these statistics is that millionaires, who make up a fraction of a percent of all taxpayers, pay more that 20% of the total federal income tax revenue, about $180 billion. It seems that more and more people want these folks to pay higher taxes and yet, they are the citizens who own small to large businesses and employ thousands. Making them pay more taxes could very easily force them to downsize their businesses and lay employees off. It would be much more effective if the government would downsize or at the very least, become accountable as to how our money is spent.

  • Report this Comment On October 26, 2012, at 6:54 PM, kxknight wrote:

    Reading through the comments it's interesting to see how most people find their way to using the information provided to support whatever their own opinion is. Honestly, I have no idea how to interpret this information, because it still doesn't seem like enough information.

  • Report this Comment On October 27, 2012, at 3:14 PM, ChrisBern wrote:

    Interesting charts but there's an important one missing: what would be the GDP next year if we increased taxes enough to balance the budget?

    Personally I don't really care whether taxes go up or not, but if they do go up, they'd better go up in conjunction with a sensible long-term plan e.g. Simpson-Bowles. If they go up and deficits remain astronomical and entitlements aren't made long-term viable, then what would be the point?

  • Report this Comment On October 27, 2012, at 11:56 PM, SkepikI wrote:

    I've never understood why anyone even the "poor" want others to pay more when a good chunk or maybe most of it gets poured down ratholes to no good use. I guess they just want to see those better off get taken down a peg... as my Kiwi friends would say "tall poppy syndrome" Personally, I think we should cut out the middleman and just nail the rats at the bottom of the holes, call it a day and let everyone have a holiday.

    To be more serious, the GDP vs Taxes has always left me a little cold. It admits that graft, corruption and fraud are embedded and just part of the cost of doing business. As long as its kept down to a dull roar (the proper percent of GDP) its ok that some 40% plus pay nothing and some (pick a number) 80 or 100 million out of 300 million are on some form of "assistance" (I use the term loosely) CRAP!!!! The reason this country exists and has thrived in the first place is that the (motley ha) crazy collection of revolutionaries, self sufficient rebels and inventive individualists would not let the paternalistic order of class suppress, oppress or coddle them. Maybe we need to resurrect and channel Patrick Henry?

    I for one will relax and not get worked up when Taxes as a percent of GDP get to hmmm say 1%

  • Report this Comment On October 28, 2012, at 11:29 AM, Harley117 wrote:

    Slide 10 shows the Obama lie when he says the wealthy don't pay their fair share. According to the CBO the top 20% of earners pay 94% of federal income tax which is up from 84% since 2001. Also after the Bush tax cuts we had the highest percent of tax revenue as a percent to GDP. The reason it is low now is because of the high unemployment rate.

  • Report this Comment On October 28, 2012, at 12:00 PM, comissar wrote:

    I disagree that money spent by the government shouldn't count in GDP. If the government buys a car, an airplane, or any other product, it's no different than if a company or an individual bought it. Raw materials were consumed, products were manufactured, people were employed. And a paycheck paid to a government worker has the same impact as a paycheck paid to a private sector worker - it's still spent in the free market, used to provide for families, purchase luxuries, pay for education, fund retirements, etc.

    But people get all hung up on "government waste". What about "private sector waste"? Have you ever read "Dilbert"? There is waste everywhere - personal, corporate, and government. Government waste seems special, because it's "our money". But so is money wasted at GM, Apple, or the corner store, because it causes products to be more expensive and/or profits to be lower and/or paychecks to be lower. In a broad economic context, there is no difference.

  • Report this Comment On October 28, 2012, at 3:08 PM, testyg wrote:

    Again, I think the focus is wrong ; taxes are not in itself the right discussion but what is an effective government, which by the way spends our money because they don’t generate money. If the Congress and President had to receive SS at our rates, they would fix the problem. In reality, if I pay into something then I should get what I paid into not redistribute to someone else. Think about it; if you were to put money in the bank you would expect to get out what you put in, not more and not less; why is Social Security different? If you don’t pay in, you don’t get paid out, pretty simple.

    For the person who said they don’t understand Cap Gains/Div., this is simple; you already pay money on the money that generates this income so on the one hand folks look at this as double taxation. Buffet is not only dishonest but he is purposely misleading people who don’t understand when he says his secretary pays more than him. She will not even come close during a lifetime of her taxes vs. 1 yr. of his corporate tax or payroll tax.

    Folks who want to blame a prior administration do out of ignorance. This problem started with people who want to keep us enslaved to their concepts because they know we do not understand what our fore fathers set out for us nor that most folks care.

    "Slickandjake" makes a good point; what is gov’t supposed to do vs. what they are supposed to do? Telling me that I can’t drink 20 oz. of soda, eat fast food, smoke or exercise is none of their freaking business, nor is printing information and signs in more than one language. We might do a better job of questioning the real important issues rather repeating an asinine line about outdated military position. Speak from knowledge not idiocy!!

  • Report this Comment On October 29, 2012, at 10:17 AM, slickandjake wrote:

    Testyg, thanks for the plug! I agree that the Government should not mandate soda size, fast food, smoking, etc. I don't have a problem with the Government highlighting problems society may need to address, i.e. obesity and how drinking 48 oz. sodas doesn't help that issue, but it is up to individuals to make informed choices and change their lifestyles for themselves. If people changed their habits and switched from buying a 48 oz. soda to a 12 oz. soda the businesses would naturally get rid of the 48 oz. soda. The Government didn't need to mandate it but by just informing citizens it can effect change.

    Back on the subject, essentially our income tax rates are dictated by the Government's spending habits and debt tolerance. If it spends more it will either open the spigot of income taxes a little more or incur more debt. And both parties will spend more because both parties want to win votes by scratching people's backs. Heck the media already has people talking about income taxes as if they are necessary. Doesn't anyone question that anymore? Clinton is typically given credit for balancing the budget and he deserves a share of that credit. But people forget before this happened that in those mid-term elections there were a lot of freshman Congressmen, mostly Republicans, who worked with Clinton to balance the budget and then they did not re-run for office. A balanced budget needs both the executive and legislative branches in order to happen. Our problem is that Washington has become a career path. Too many people are career politicians. There should be no such thing because all that means is they are career frauds and corruptors. In today's world there is little chance a person with principles can survive in Washington for a career. Shame on us the people for continually voting for incumbents and career frauds and corruptors.

  • Report this Comment On October 30, 2012, at 7:49 PM, mikecart1 wrote:

    Good article!

  • Report this Comment On October 31, 2012, at 8:58 AM, QuarkHadron wrote:

    Showing just tax revenue comes no where near the whole picture. Need to show the interest on the Debt as a percentage of GDP as well.

    Government spending is rising each year. Tax revenue is dropping. The money to spend has to come from somewhere - can't pretend it doesn't matter just because it isn't coming from taxes.

    The delta comes from borrowing. And taxes have to pay the interest. So, the more interest that is being paid each year, the less tax revenue available for current spending, the more that must be borrowed, more interest, less for current spending, cycle, cycle, cycle - Broke!

    From the CBO 2012 Long Term Outlook: "Over the past few years, the federal government has been recording budget deficits that are the largest as a share of the economy since 1945. Consequently, the amount of federal debt held by the public has surged. By the end of this year, CBO projects that the federal debt will reach roughly 70 percent of gross domestic product (GDP), the highest percentage since shortly after World War II. "

    And remember, the interest on the debt that we are paying right now is at historically low interest rates. When inflation returns, that rate is going to keep rising. (And I don't want to even think about the affect of high inflation rates kicking in....)

  • Report this Comment On October 31, 2012, at 9:09 AM, Usurped wrote:

    Not too sure I would assume that the POTUS's OMB. especially this Regime's OMB is beyond reproach.

  • Report this Comment On October 31, 2012, at 9:52 AM, DonkeyJunk wrote:

    "Slide 10 shows the Obama lie when he says the wealthy don't pay their fair share. According to the CBO the top 20% of earners pay 94% of federal income tax which is up from 84% since 2001."

    The flaw in this logic is to ignore the fact that the wealthy continue to get wealthier, while the incomes of the middle class and poor remain the same. The portion of the Total Income pie continues to get larger for the very wealthy. It only makes sense for the people with most of the wealth to pay most of the taxes. Lowering their taxes, which has happened several times in the past decade, has not proven to create jobs.

    Also, it only makes sense that their share of taxes goes up during a deep recession--I suspect the unemployment rate for the very wealthy is considerably lower than that of the middle and lower classes. You can't pay taxes if you don't have a job.

  • Report this Comment On November 01, 2012, at 10:53 AM, ClimbinFool wrote:

    Morgan,

    Interesting read. Quick question about #5. I noticed Greece is higher in the list than the U.S. I remember hearing much about tax avoidance in Greece being a significant contributor to its debt crisis, so is this data statutory or actual?

  • Report this Comment On November 01, 2012, at 10:56 AM, TMFMorgan wrote:

    Actual. Keep in mind the data is from 2009 (latest available). I'd assume Greece is lower today due to its ongoing depression.

  • Report this Comment On November 01, 2012, at 12:10 PM, wolfman225 wrote:

    I'd like to offer an anecdotal submission. It's not empirical data (it's only one source), but I still think it serves to illustrate the disconnect many have with the real burden of visible and hidden taxation on their lives.

    A "middle income" Maryland woman, after hearing Obama talk repeatedly about the need for people to "pay their fair share" decided to investigate, categorize, and calculate her and her husband's actual burden of taxation (including hidden taxes and fees on everyday expenses). The result: $26,106.93 so far this year.

    And counting. How much is YOUR fair share?

    http://www.theblaze.com/stories/maryland-woman-has-kept-trac...

    Hmmm. Couldn't insert the link. You will need to cut/paste to access the story. It's quite an eye-opener. Especially the section on her phone bill.

  • Report this Comment On November 01, 2012, at 12:11 PM, wolfman225 wrote:

    ^NM about the link not working. It seems to be working fine, now.

  • Report this Comment On November 01, 2012, at 12:33 PM, sklogw wrote:

    Altogether seems like a strong argument for raising taxes. Americans are under-taxed compared to peer countries, especially at the high end. If we want to live like a developed nation we should expect to pay for it. I call that "personal responsibility."

    Also quite clear that taxes have been higher in the past in the US and that hardly led to economic catastrophe.

    As for "fairness":

    Slide 9 and 10 really should include the absolute $ cutoffs on the x-axis. I don't know for individuals, but for households the 20th %tile is about $22,000 a year. The 40th %tile is somewhere near $35,000. Meanwhile the upper 1% is above $250,000.

    Taxing these groups at a similar rate (~20% v. ~30% seems not so different to me) is certainly a way to define "fair". So could a fixed flat tax (say, $50,000 a year) be construed as "fair".

    In my worldview, these both ignore the reality that a certain minimum income is helpful to survive-- the lower bound is fixed somewhere and the rest is luxury. I don't think I am the only person who feels this way-- "from each according to his or her means" used to be understood as a shared value, which was enforced by tax law. It's pretty clear this is no longer the case.

  • Report this Comment On November 05, 2012, at 9:38 PM, Havanero61 wrote:

    The corporate tax rate really reveals the great jobs that corporate lobbyists do for their clients.

  • Report this Comment On November 07, 2012, at 11:33 AM, 1pOwedyank wrote:

    You can make charts say anything you want, so lets deal with facts.

    1. Government has a spending problem.

    2. Government is growing.

    3. Ther is no such thing as free.

    4. Class warfare is great vote getter.

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