So, it's a fact that the Top 1% paid 38% of federal income taxes. No one can argue that. But what should be discussed is the question as to whether this is a beneficial argument to the side that think the rich pay too much in tax or the side that say the rich are getting richer and the poor are getting poorer and everyone needs to pay their "fair share".
Let's look at the facts. 53% of people pay income tax, 47% don't. With the whole "occupy wallstreet" hoopla, there is now a group of people calling themselves the "53 percenters" (ridiculing the "we are the 99%" mantra of the occupy movement). Their point is that they are paying taxes, not complaining, and their taxes are going to, among other things, the "entitlement" programs for the poor.
The fact that the rich pay 38% of income tax, in my opinion, is a by-product of the fact that they earn an excess of money, and the 47% not paying taxes earn very little money by comparison. Some more facts: the per capita income (ie average or mean) in the US is approximatly 47K. However, the MEDIAN HOUSEHOLD income is just about $50K. So with a little knowledge in statistics, one can deduct that income is not normally distributed, and is thus skewed. (I can go into more detail if anyone likes)
Top 1% tax bracket for 2011 are people that earn over $379,151. However, a family in the top 99.9% percentile makes $2,075,574. 43.6 million people lived in poverty in 2009. Poverty level is $22,350 for a family of four.
Let's do a little math exercise. There's a group of 100 people. 99 of them earn $50,000 per year, 1 earns $3,000,000. To make things simple, let's assume there is a 20% flat income tax with no deductions (a dream for Republicans, and along the lines of what Rick Perry is proposing). Each of the people making 50K would pay $10,000 in taxes. The person making 3 million, would pay $600,000 in taxes. The total revenue generated from the 99 would be $990,000. As a percentage, the 1 person making 3 million would be paying 38% of the taxes. Or in other words, 1% of this population would be paying 38% of the total taxes ($600,000/$1,590,000).
In my opinion, it's a no-brainer to return the tax rates for the rich to what they used to be (I guess this depends on who you define as rich, which is a whole different story. But let's for kicks, say anyone earning over 1 million dollars) and to leave the tax rates the same for others. I don't think the 47% not paying taxes should start paying taxes. Why should a person who makes $9000 a year pay more taxes that what they are currently paying, while someone making 9 million gets a tax cut? Makes no sense. Some people think the 47% are doing something illegal to not pay taxes, but that's not the case. The reason they aren't paying taxes is that either they aren't flat-out earning enough money, or when you factor in deductions (mortgage, married, children, charitable donations) it leaves them not paying any taxes. This is the same exact way that the rich's accountants figure out how they can pay LESS taxes. They maximize their deductions by making a ton of charitable contributions, among other things. (There's also capital gains taxes which I will talk about another time)
All that being said, I do think major overhauls to the "entitlement" programs need to be made, they are a complete failure as they are functioning today. People should not be milking the system (ie people that have the ability to work, should work!!) I am all for illegal drug testing of those people on welfare. If you are spending my tax dollars on illegal drugs, then you shouldn't be receiving my $. There are plenty of hard-working people who could genuinely use our tax dollars to pay for baby formula, food, clothes, and heating to keep their houses warm.
So much to talk about, this discussion WILL be continued.
Please comment - would love to hear some feedback and ideas. Always open for good, clean, healthy discussion!
What a weekend - hope you all in the northeast got your power back and are staying warm! Time for some Sunday night football!
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