Understanding Taxation
With any luck I'll have the time to write a long post on the subject. When it comes to running a civil society, much of it boils down to how we handle taxes. We'd all pretty much agree that some level of taxation is necessary...and we'd all agree that paying less is a good thing, and having government do less is a good thing.
I've been studying taxation and incomes. There are some pretty astonishing facts that you rapidly become aware of:
- three quarters of American families pay more in social security taxes than they do in income tax
- the total tax paid must be taken into account (income, medicaid/medicare, social security), and that's federal stuff
- inflation-adjusted income since 1970 has risen only 4% for the bottom 99%
- inflation-adjusted income since 1970 for the bottom 80% of earners has actually fallen slightly
- inflation-adjusted income since 1970 for the top 0.01% of earners has risen by over 400%
- tax burdens as a percentage of income are roughly equal, at all income levels; the rich do NOT pay more taxes as a percentage of income
- tax cuts for the rich are financed with social security revenues, which are exclusively collected from the poor and middle class
- repeals of inheritance tax were pitched as "save the farm"; there has not been one documented instance in the last 20 years of a farm being lost due to the inheritance tax.
- AMT is going to be a huge problem in a few years, because its formulas are not adjusted for inflation. AMT works by denying deductions; you cannot take a deduction for having a child, for example. The basic AMT deductions haven't increased; as such dramatically more people are subject to it. Bush could have used tax cuts to free middle class families from AMT, but he didn't...
Until you're in the top 1% of earners in the country, you haven't seen any real income increase in 1970 dollars.
How do the rising deficit, deficits as a percentage of GDP, and revenue projections all factor into this? Very badly, of course.
But not if you're at the very top...everything is fabulous. You've gotten the best tax legislation money can buy...
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Ross,
Ross,
Who are the top earners in the country today? That is, at what annual salary in 2003 dollars am I in the top 1% of earners?
The latest data I have is as
The latest data I have is as of 2000...to be in the top 1%, you need to be earning $277,983, in 2000 dollars. The average income of the top 1% was $723,581, in 2000 dollars. In 1972, to be in the top 1%, your income had to be $170,935, in 2000 dollars. The average income of the top 1% in 1972 was $286,225
, in 2000 dollars.
The _average_ income of ALL other people (the other 99%), in 2000, was $35,473, in 2000 dollars. In 1972, ALL others averaged $34,050, in 2000 dollars.
Source: [url=http://emlab.berkeley.edu/users/saez/w8467.pdf]http://emlab.berkeley.ed…]
Those are interesting numbers
Those are interesting numbers. If I read them right, it takes $277k to break into the top 1% of American earners. That can be an airline pilot married to a nurse, say, or a cop with overtime and a doctor. That is, people who have to show up for work and do something.
But $723k is the average... so alot of people are included in this 1% who are compensated all out of proportion to what their "worth", ie managing directors at Morgan Stanley, or AOLTimeWarner CEO types.
I think it would be very interesting to fracture that 1% into people who make a salary that they live on, and people who work for 2 years and would never need to again.
The link I supplied has a TON
The link I supplied has a TON of income breakdown information in it...it's really fascinating! In it, they actually do fracture that top 1% into several more groups -- they refer to them as "fractiles"...so there is more there if you want it.
The constant dollars income averages are the really astonishing thing. If you pull that top 1% out of the averaging, you find that everybody else is pretty must exactly where they were 30 years ago...that top bracket skews the average dramatically.