99 Percenters, Meet the 53 Percenters

[Bill Mattocks]

http://www.slate.com/articles/busin...ive_campaign_against_americans_who_don_t.html

In response to Occupy Wall Street, some conservatives are blasting the 47 percent of Americans who don’t pay federal taxes. Do they have a point?

By Annie Lowrey|Posted Tuesday, Oct. 11, 2011, at 6:45 PM ET

The 53 percent say everyone should stop moaning, quit pointing fingers at Wall Street, and pay their damn taxes. (The name refers to the fact that only 53 percent of households pay federal income tax these days.) The brainchild of Erick Erickson of RedState.org, the 53 Tumblr features comments like: “I don’t blame Wall Street. Suck it up you whiners. I am the 53 percent subsidizing you so you can hang out on Wall Street and complain.” (That’s from Erickson’s inaugural post, by the way.)

Exactly. I'd like to know. I am not talking about the obfuscation that's been going on recently (Hey, I make minimum wage, and I pay taxes!). No, you don't; not federal income taxes, which is what we're talking about here. You pay FICA, which is Social Security. Everybody pays that. You may have income tax withheld from your paycheck, but when you file your return, you get it all back; in fact, you may get back MORE in your federal tax return than you paid in. You may pay state or city income taxes depending on where you live; take it up with your state if you do and don't like it.

I *do* pay federal income tax, a lot of it. My withholding rate is high. I am required to fill out the long form, if you know what I mean. I have to take the standard deduction every year, since my itemized deductions are never more than that, so I get a refund, but hardly anywhere near what I put in.

But nearly half the country pays NOTHING in federal income taxes. Upper class, lower class, middle class. Yeah, it's like that.

http://taxvox.taxpolicycenter.org/2011/07/27/why-do-people-pay-no-federal-income-tax-2/

Why Do People Pay No Federal Income Tax?
Roberton Williams | Posted on July 27, 2011, 12:00 pm

Much has been made of TPC’s estimate that fully 46 percent of Americans will pay no federal individual income tax this year. Commentators have often misinterpreted that percentage as indicating that nearly half of Americans pay no taxes. In fact, however, many of those who don’t pay income tax do pay other taxes—federal payroll and excise taxes as well as state and local income, sales, and property taxes.

...

Higher-income households pay no tax because of other provisions. Itemized deductions and credits for children and education are a bigger factor for households with income between $50,000 and $100,000. The relatively few nontaxable households with income over $100,000 benefit most from above-the-line and itemized deductions and reduced tax rates on capital gains and dividends.

Policymakers can argue about whether specific tax expenditures serve their intended purposes, whether restructuring them might improve them, and even whether we should have them at all. But they cannot argue that pruning them back or eliminating them all would result in every American paying income tax.

I summary; taxing the crap out of the rich won't fix anything; not while the majority of those not paying federal income tax are middle income or poor. You can't give free services to everyone; someone has to pay for it all. And the rich, even if ALL their money was confiscated, don't have enough to do that. So how does this work, exactly? The 53% of us who DO pay taxes get to pay even more? So the 47% can continue to live on our dime? Nice.

 

[Steve]

I think we should open it up so that everyone pays an equal percentage. But you realize that the reason a true, flat tax will never pass is because it would really only benefit the middle class. And nobody really gives a damn about us.

There are millionaires who pay zero income tax. Let's rail against them, as well. Instead of picking only on the guys who live hand to mouth, let's include the OTHER people who pay no taxes. I've posted the information before from IRS.gov, but still we have middle to lower-middle income people who have been led to believe that the richest among us are poor, helpless victims.

 

[Bill Mattocks]

I think we should open it up so that everyone pays an equal percentage. But you realize that the reason a true, flat tax will never pass is because it would really only benefit the middle class. And nobody really gives a damn about us.

I'm even open to a non-regressive tax, so that people pay not a flat percentage, but a 'fair' percentage (long description of progressive versus regressive taxes omitted). Our current system of tax brackets is designed to work exactly that way; but with all the deductions and loopholes put there at every income level, it's just Swiss cheese at this point.

There are millionaires who pay zero income tax. Let's rail against them, as well.

Yes, there are. I'm not going to rail against them unless they're breaking the law. I will rail against the tax system that lets them pay zero taxes legally; in that I agree with you. However, as noted, all their money put together would not fund the federal government for more than 90 days. So what then?

Instead of picking only on the guys who live hand to mouth, let's include the OTHER people who pay no taxes.

But as the study I linked to points out, it's NOT just the people living hand-to-mouth who are paying no federal income taxes, nor is it the very rich. It's 47% of the blessed population.

I've posted the information before from IRS.gov, but still we have middle to lower-middle income people who have been led to believe that the richest among us are poor, helpless victims.

I don't know where that comes into it. I certainly don't believe that the very rich are poor or helpless or victims. I do believe that even if we confiscated all their wealth, the problem would not be fixed; not even close.

Nor am I suggesting taxing the very poor. From the study, it appears that a very large chunk of the middle class pays no federal income tax, either.

If we need to use the term 'fair', I think it needs to be applied across the board. Sure, fix the codes so the rich pay as much or more than the rest of us (certainly not less that the rest of us). But don't ignore where the biggest hump in that bubble is; the middle and lower (but above the poverty line) economic classes.

 

[Steve]

Wait. Bill, the lower income people who don't pay income tax aren't breaking the law either. I don't begrudge the wealthy from taking advantage of every deduction and credit they can. I would advocate for changing the laws, but I don't blame them for using existing laws to their advantage.

In the same way, we shouldn't (imo) come down on the lower income brackets who pay little to no income tax. If anything, they have no influence over legislation and are only operating within the law.

For what it's worth, I'm with you 100% on a reasonable, progressive tax scale that makes sense as long as it taxes all income.

 

[Tez3]

What are your taxes used to pay for? Here it's easier to argue that everyone including the rich should pay taxes because they receive the same service everyone else does such as policing, medical care ( they can chose private but if they were in an accident it would be the NHS ambulance and medics who treat them first) roads, fire service, schools, sewage etc etc.

 

[Steve]

What are your taxes used to pay for? Here it's easier to argue that everyone including the rich should pay taxes because they receive the same service everyone else does such as policing, medical care ( they can chose private but if they were in an accident it would be the NHS ambulance and medics who treat them first) roads, fire service, schools, sewage etc etc.

Pretty much all of that. Medical gets a little more convoluted, but Federal tax dollars pay for all of those things, either directly or indirectly. The Federal Government pays directly to fund agencies such as FEMA, Dept. of Education, Homeland Security/FBI/CIA etc, Social Security, IRS and the VA along with others. So, anything these agencies do is a product of direct government funding. The one notable exception is the US Postal Service which actually generates revenue.

In addition, the Federal Government makes funds available to the States, with strings attached. Medicaid, Food Stamps, Temporary Assistance to Needy Families (TANF) and other similar programs are funded largely by the Fed, but are managed by the States. The amount of money the State gets is a function of need, population and compliance with Federal guidelines.

Then there are grant programs, where States can qualify for Federal money if they participate in certain programs.

Anyway, long and short of it is that the Federal Government pretty much pays for those same things. Rich people don't get rich alone. They benefit from the infrastructure that we all pay for.

 

[Bill Mattocks]

What are your taxes used to pay for? Here it's easier to argue that everyone including the rich should pay taxes because they receive the same service everyone else does such as policing, medical care ( they can chose private but if they were in an accident it would be the NHS ambulance and medics who treat them first) roads, fire service, schools, sewage etc etc.

Well, it's fascinating all the things our federal taxes are use to pay for. I doubt I could corral that information in a month of Sundays!

Put simply, though, federal income taxes pay for the expenditures of the federal government. Military defense spending, social services, government functions, and so on. Currently we spend more than we take in every year, hence we run a deficit - the same as if you consistently wrote checks for more money than you made every month and the amount you owed kept getting bigger and bigger. We also spend a lot of the money we take in for federal taxes to 'service the debt', which means to pay interest on the accumulated deficit, which is the overall national debt. Obviously, this is not infinite; eventually there comes a day of reckoning. Either the bill is paid, or the creditors get stiffed.

So the issue, broken down to simple terms, is how to 'balance the budget' so that we don't end up going bang financially. Just like any household that spends more than it takes in, right?

One way is to spend less. But reducing federal spending means cutting social services, cutting federal employees, ending military involvements and cutting military members from the rolls; all of which may be good or bad depending on where you end up on the political spectrum. All of them will also have an impact on the fragile economy, which brings another argument against cutting spending when so many depend on social services and when cutting employees would raise unemployment numbers.

Another way is to take in more revenue. Raising taxes and creating new fees are the traditional means. Of course, raising taxes for many who are just scraping by now also endangers the fragile economy. It means they can afford less for themselves, and of course their reduced purchasing also puts the retailers and others in a bind. When people stop eating out at restaurants, for example, the restaurant loses money and lays off employees, who then have to seek another job or social services, putting even MORE strain on the economy. And so on.

The current OWS movement seems to be somewhat focused on anger at the people on Wall Street who gambled on housing prices going up forever, gave loans to people who could not afford to pay them back, and generally helped put us into the recession we are currently experiencing, as well as anger at those who are currently making millions or billions of dollars and still managing to (legally or otherwise) shield their assets from taxes. (I have been pointing out that although I agree that the rich should indeed pay their fair share, even if we could wave a magic wand and take all their money away today, it would not actually fix the problem we have.)

So, simply put, we're in a real mess. We either raise more money (taxes and fees), cut spending (social services, wars, government employment of all kinds), a combination of both, or we do nothing. Even if we choose to do nothing, we still have made a choice. If we do nothing, the question is only how long can we avoid default on our financial obligations? If we do something, will it be enough, or is it already too late? And of course, we all disagree on what it is that we should do.

 

[Tez3]

Cheers for the info, I think even the rich cannot live apart from the rest of us however much they may wish to! Sorry another question or two lol, do you have tax on tobacco and alcohol? do you have the equivilant of our VAT on goods and services? http://www.hmrc.gov.uk/vat/start/introduction.htm. All these are revenue rasiers for governments.

 

[Bill Mattocks]

Cheers for the info, I think even the rich cannot live apart from the rest of us however much they may wish to! Sorry another question or two lol, do you have tax on tobacco and alcohol? do you have the equivilant of our VAT on goods and services? http://www.hmrc.gov.uk/vat/start/introduction.htm. All these are revenue rasiers for governments.

I don't think we have anything quite analogous to VAT. We do have local, state, and federal taxes on tobacco and alcohol.

 

[Big Don]

The one notable exception is the US Postal Service which actually generates revenue.

Not so much...
The program is a big money loser for the Postal Service. It costs more than $100 million annually to operate, while only generating $30 million in revenue, according to Postal Service officials.

http://www.adn.com/2011/10/12/2116613/alaska-goes-postal-over-calif.html#ixzz1abvTO0C9
Which, is a pittance compared to the FIVE BILLION DOLLARS lost by the USPS...
​

 

[Empty Hands]

Not so much...
The program is a big money loser for the Postal Service. It costs more than $100 million annually to operate, while only generating $30 million in revenue, according to Postal Service officials.

http://www.adn.com/2011/10/12/2116613/alaska-goes-postal-over-calif.html#ixzz1abvTO0C9
Which, is a pittance compared to the FIVE BILLION DOLLARS lost by the USPS...
​

Only because unlike any other private or government run business or program, they have been required to pre-pay their pension obligations for the next ten years. Now. I don't think any company could remain profitable under that constraint.

 

[Steve]

Only because unlike any other private or government run business or program, they have been required to pre-pay their pension obligations for the next ten years. Now. I don't think any company could remain profitable under that constraint.

Exactly! The legislation governing the USPS is a giant shell game, but the USPS actually makes money most years.

 

[David43515]

In the end it doesn`t really matter who is paying for what. The fact remains that individually and as a government we`re spending much much more than we`re generating in revenue. There comes a time when you have to say "No, it`s a great idea but it`s just not in the budget."

We`re like a fat kid munching twinkies who complains about getting fatter even though we`re exercising regularly. If the number of calories being burned is less than the number being eaten you`re gonna gain weight no matter how many hours you put in on the treadmill.Eventually we`re going to have to cut down on the eating if we want to see results.

 

[shinbushi]

I got one better, I just went to a Lloyd Irving business seminar where the goal is to be a 3%er. Which I would rather be than a 53% Which I already am. Actually looking at Income charts I am a 15.93%er.

 

[Steve]

In the end it doesn`t really matter who is paying for what. The fact remains that individually and as a government we`re spending much much more than we`re generating in revenue. There comes a time when you have to say "No, it`s a great idea but it`s just not in the budget."

We`re like a fat kid munching twinkies who complains about getting fatter even though we`re exercising regularly. If the number of calories being burned is less than the number being eaten you`re gonna gain weight no matter how many hours you put in on the treadmill.Eventually we`re going to have to cut down on the eating if we want to see results.

It doesn't matter if what we're talking in very general terms about trimming the fat and getting the budget under control. It matters very much if misinformation and factual errors are being used to support a specific political agenda.

Or as Ross Perot is famous for saying, "The devil is in the details."

For what it's worth, I agree. We need to cut fatboy off from the dessert counter.