Coincidence? I Think Not!

[PapaG]

http://www.powerlineblog.com/archives/2011/04/028845.php

Two of today's headlines seem as though they may be linked:

45 Percent of Americans Don't Owe 2010 Federal Income Taxes.

43 Percent of Americans Say They Are Paying About the Right Amount of Federal Income Taxes.

If I weren't paying any income taxes, I might be happy with the status quo, too.

--------------------------------------------------------------------------------

 

[BLAZER PROPHET]

Things just seem so totally screwed up these days.

 

[jlprk]

I agree. The richest 45% really should have to pay something--anything.

 

[RR7]

Things just seem so totally screwed up these days.

How is it screwed up? It's not that they didn't pay throughout the year, it's that they paid the right amount, or in some cases, too much, and do not owe MORE at the end of the year.

 

[BrianFromWA]

I don't think that's right. I think the following line:

With breaks like the Earned Income Tax Credit (EITC) and the First-Time Homebuyer Credit to take advantage of, many taxpayers discovered that Federal income taxes owed were not only offset, but refunded.

But this doesn’t mean those individuals had no tax liability last year. According to the center, in addition to state and local taxes, many owed payroll taxes, which support Medicare and Social Security.

means that the didn't owe the government anything for federal taxes, so that whatever they paid was refunded. If they "paid the right amount", they would still have had federal tax liability for the year...they just paid over the course rather than all at once.

The article makes it seem like 69M people did not have to pay a dime in federal taxes, and whatever they paid was returned to them, though they paid payroll and state taxes.

 

[bluefrog]

If I weren't paying any income taxes, I might be happy with the status quo, too.

That is not true. As Brian pointed out most people paid federal income tax throughout the year. You should fact check your links in the future.

 

[EL PRESIDENTE]

http://online.wsj.com/article/SB100...6267113524583554.html?mod=WSJ_Opinion_LEADTop

A dominant theme of President Obama's budget speech last Wednesday was that our fiscal problems would vanish if only the wealthiest Americans were asked "to pay a little more." Since he's asking, imagine that instead of proposing to raise the top income tax rate well north of 40%, the President decided to go all the way to 100%.

Let's stipulate that this is a thought experiment, because Democrats don't need any more ideas. But it's still a useful experiment because it exposes the fiscal futility of raising rates on the top 2%, or even the top 5% or 10%, of taxpayers to close the deficit. The mathematical reality is that in the absence of entitlement reform on the Paul Ryan model, Washington will need to soak the middle class—because that's where the big money is.

 

[bluefrog]

This chart is terrible.

So the bulk of taxable income is in the 50K -500K tax brackets? To end our deficit problems we just need to soak the middle class?

 

[Denny Crane]

This chart is terrible.

So the bulk of taxable income is in the 50K -500K tax brackets? To end our deficit problems we just need to soak the middle class?

That's where the money is.

 

[PapaG]

That is not true. As Brian pointed out most people paid federal income tax throughout the year. You should fact check your links in the future.

They paid no federal income tax. Whether that was because of breaks, or otherwise, that is a fact. Do you care to dispute it with something substantive? The links stand.

 

[bluefrog]

They paid no federal income tax. Whether that was because of breaks, or otherwise, that is a fact. Do you care to dispute it with something substantive? The links stand.

Yep I dispute it. The douchebag you linked insinuated that 45% of people don't pay "any income taxes". Which is not true. From your link:

Of the number of people who don’t pay income taxes, 49 million pay payroll taxes. And of those pay payroll taxes, 34 million pay more than they get back on their Federal returns.

You see, payroll taxes are withheld from employee pay for federal income taxes(FIT) owed by the employees. The amount of FIT is determined by information employees provide on Form W-4 at hire. So it's accurate to say closer to 25% don't pay "any income taxes".

 

[MARIS61]

The outline of that graph resembles someone giving the finger.

Coincidence? I Think Not!

 

[jlprk]

Other stats have shown that the top 2% of Americans own 80% of everything. This new graph is about income, not assets, and only the small part of rich people's income taxed under the tax laws, since most escapes. So all it shows is that the wrong people are having to cover the tax load. The top 2% are getting away with paying way too little tax. Obama just wants a tiny increase, back to the days of Clinton and Eisenhower.

 

[PapaG]

You see, payroll taxes are withheld from employee pay for federal income taxes(FIT) owed by the employees. The amount of FIT is determined by information employees provide on Form W-4 at hire. So it's accurate to say closer to 25% don't pay "any income taxes".

With the credits, 45% ended up as a net zero, though. Semantics, but clearly it hurt your feelings.

 

[jlprk]

No, he's saying

"45 Percent of Americans Don't Owe 2010 Federal Income Taxes"

on April 15 because they had had too much deducted from their paychecks. So they DID pay taxes, but on April 15 they didn't owe.

Then you tried to make it personal with the "hurt your feelings" BS.

 

[Denny Crane]

Yep I dispute it. The douchebag you linked insinuated that 45% of people don't pay "any income taxes". Which is not true. From your link:



You see, payroll taxes are withheld from employee pay for federal income taxes(FIT) owed by the employees. The amount of FIT is determined by information employees provide on Form W-4 at hire. So it's accurate to say closer to 25% don't pay "any income taxes".

You're confusing payroll taxes with income taxes. Everyone who works pays payroll taxes. The number who pay $0 in income tax is near 50%, which is fine by me.

 

[Ed O]

No, he's saying

"45 Percent of Americans Don't Owe 2010 Federal Income Taxes"

on April 15 because they had had too much deducted from their paychecks. So they DID pay taxes, but on April 15 they didn't owe.

Then you tried to make it personal with the "hurt your feelings" BS.

Well, if he's saying that he's wrong, because it's not what is being reported. If they paid federal income taxes over the year and owed no federal income taxes, then they'd get all that they paid back as a return.

It's not that they didn't owe any ADDITIONAL federal income tax at the end of the year. It's that they didn't owe any at all.

Ed O.

 

[bluefrog]

Well, if he's saying that he's wrong, because it's not what is being reported. If they paid federal income taxes over the year and owed no federal income taxes, then they'd get all that they paid back as a return.

It's not that they didn't owe any ADDITIONAL federal income tax at the end of the year. It's that they didn't owe any at all.

Ed O.

More than two-thirds -- or 49 million of the 69 million households -- pay payroll tax. Of those, 34 million end up paying more in payroll taxes than they get back on their federal return. The other 15 million pay payroll tax but they get enough refundable credits to offset what they paid.

Only 15 million got all that they paid back as a return. I know the federal tax is under the name of "payroll tax" but that includes FIT as well as Social Security and Medicare according to everything I've read

 

[BrianFromWA]

So to put numbers to this, this is how I see the breakdown. Let's say my notional paycheck is $1000.

B/c I put, say, 2 exemptions, let's make it a nice round 10% tax bracket that's taken out each paycheck for "Federal Income Tax". That's $100.
Let's say I live in WA, so my state income tax = 0.
My FICA (since I make less that 106k /yr) is 7.65%, or $76.50.

So my net pay is $824.50, and I paid $76.50 for Social Security/Medicare/Medicaid and $100 in federal income tax (to pay for things like DoD, SS/M/M overruns, interest on the debt, etc). What the article was saying (and I think Denny and PapaG as well) is that 45% of people got that $100 per paycheck back. They had no Federal Income liability. You're correct that they still had to pay that $76.50, b/c that goes to SS/M/M (and they MAY have received a refund big enough to cover that, but I don't think that was the point of the article).

I think that the premise of the OP was that 45% of people are ending up paying $0 per year toward Federal Income Tax (to pay for DoD, SS/M/M overruns, debt interest, etc) and then a bunch of them saying "I'm satisfied with that!". Not "I paid $100 per paycheck, and on April 15 didn't have to pay a dime extra, and I'm satisfied with that!"

Someone pipe up if I'm way off here.

 

[bluefrog]

I think that the premise of the OP was that 45% of people are ending up paying $0 per year toward Federal Income Tax (to pay for DoD, SS/M/M overruns, debt interest, etc) and then a bunch of them saying "I'm satisfied with that!". Not "I paid $100 per paycheck, and on April 15 didn't have to pay a dime extra, and I'm satisfied with that!"

If that's the case, why does the article specify that some people paid more in payroll than they received in tax returns?

Of the number of people who don’t pay income taxes, 49 million pay payroll taxes. And of those pay payroll taxes, 34 million pay more than they get back on their Federal returns.

 

[Denny Crane]

If that's the case, why does the article specify that some people paid more in payroll than they received in tax returns?

Because payroll taxes are a flat ~15% of your wages (up to ~$106K). And it's BEFORE deductions.

It's not supposed to be a tax, per se, but it acts like a really regressive one.

 

[bluefrog]

Because payroll taxes are a flat ~15% of your wages (up to ~$106K). And it's BEFORE deductions.

It's not supposed to be a tax, per se, but it acts like a really regressive one.

OK, I get it now. That point wasn't clear at all in the article.

How can you not consider that a tax?

 

[Denny Crane]

OK, I get it now. That point wasn't clear at all in the article.

How can you not consider that a tax?

Because you're buying insurance (workers' compensation) and an annuity (social security) with the money withheld...

It's the New Deal. It was a very different time then, when nobody wanted to take unemployment benefits or anything else considered charity. So they made it a rule that everyone pays in and everyone collects.

 

[Minstrel]

Because you're buying insurance (workers' compensation) and an annuity (social security) with the money withheld...

It's the New Deal. It was a very different time then, when nobody wanted to take unemployment benefits or anything else considered charity. So they made it a rule that everyone pays in and everyone collects.

Which is what a tax is. A requirement that the society pays in as a whole to provide benefits to the society as a whole. It seems extremely arbitrary to single this out as "payment for a service." When you pay taxes that go to support roads or schools, it's the same concept. You may or may not believe it's a service you should be paying for, but that doesn't change the concept behind it.

 

[Denny Crane]

Which is what a tax is. A requirement that the society pays in as a whole to provide benefits to the society as a whole. It seems extremely arbitrary to single this out as "payment for a service." When you pay taxes that go to support roads or schools, it's the same concept. You may or may not believe it's a service you should be paying for, but that doesn't change the concept behind it.

Taxes go into the general fund. These withholdings go into trust funds. The withholdings are not on your net income, after deductions, they're on your gross earnings.

 

[Minstrel]

Taxes go into the general fund. These withholdings go into trust funds. The withholdings are not on your net income, after deductions, they're on your gross earnings.

Not all taxes are processed the same, but they are still conceptually the same. All you're really saying is that these taxes are earmarked and can't be used for other things. I don't see any useful reason to not classify them as taxes. You're generally willing to play fast and loose with what is taxation...for example, you termed the health insurance mandate a tax. Which I agree with, but it's technically not a tax. If that is a tax (and it is, once you get down to brass tax, err, tacks), so is this. It's paid by society for society.

 

[MARIS61]

To make a long story short, rich Americans individually pay a smaller percentage of their income in taxes than ever before.

 

[Spud147]

Because you're buying insurance (workers' compensation) and an annuity (social security) with the money withheld...

It's the New Deal. It was a very different time then, when nobody wanted to take unemployment benefits or anything else considered charity. So they made it a rule that everyone pays in and everyone collects.

Workers compensation insurance is not funded by payroll tax (or any other tax) and employees never pay a dime for it. It's just like any other insurance and is funded by insurance premium paid by business owners (at least it's that way in Oregon, not sure about other states).

 

[Denny Crane]

Not all taxes are processed the same, but they are still conceptually the same. All you're really saying is that these taxes are earmarked and can't be used for other things. I don't see any useful reason to not classify them as taxes. You're generally willing to play fast and loose with what is taxation...for example, you termed the health insurance mandate a tax. Which I agree with, but it's technically not a tax. If that is a tax (and it is, once you get down to brass tax, err, tacks), so is this. It's paid by society for society.

Charitable contributions are paid by society for society. They're not taxes either. Are union dues taxes? How about the money contributed to a pension plan?

As for ObamaCare and taxes, the administration continues to argue in court that the mandate is a tax. Though they lied us into war by claiming all along it wasn't.


http://www.forbes.com/2010/07/26/he...a-opinions-contributors-merrill-matthews.html

The Biggest Tax Increase In U.S. History?

The Obama administration just flip-flopped on a long-standing Barack Obama promise. What's new about that, you ask? In this case it amounts to what's likely the largest tax increase in U.S. history.

President Obama has repeatedly asserted that the new health care law's individual mandate requiring everyone to have qualified health insurance coverage or pay a penalty is not a tax. In a testy exchange with ABC's George Stephanopoulos--who, ironically, also pushed for sweeping health care reform legislation when he worked for then-President Bill Clinton--Stephanopoulos pointed out that ObamaCare critics call the mandate a tax. Obama rejected the claim and noted that his critics call everything a tax: "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase."

And yet the Justice Department now claims the mandate is a tax, but not because the legislation refers to the mandate as a tax--it doesn't. Rather, the lawyers at Justice want the Supreme Court to confer its blessings on ObamaCare when the issue comes before the Court, and the lawyers are increasingly concerned that the 20-plus state challenge claiming the mandate is unconstitutional may hold up.

So the Democratic defense has morphed from the "Of course we have the constitutional power to impose an individual mandate" defense to "The Commerce Clause gives us the power to mandate coverage" defense and now to their "It's a tax" defense. The Constitution clearly gives Congress the power to levy taxes.

 

[Minstrel]

Charitable contributions are paid by society for society. They're not taxes either. Are union dues taxes? How about the money contributed to a pension plan?

Those that are mandated by the government are.