Question of the Day
Does anybody else see the irony of a Tea Party member complaining when someone takes advantage of available tax credits & deductions to the tune of a zero tax liability (or if they don’t make enough income to pay taxes), aka “47% of people pay no taxes?”
Taxed Enough Already, isn’t that what it stands for?
47% of people pay no income tax. People who make this argument generally tend to leave this out. Those people still pay a lot in payroll tax and state taxes. In fact, most of that 47% pay more than the 53% as far as the percentage of their income goes (since payroll tax ends at the first $106,000 it is incredibly regressive as far as percentage of income goes). Also, for non-Delaware states, those 47% still pay sales tax, which is another regressive tax, since those who make less tend to spend a larger percentage of their income, since they don’t make enough money to heavily save or invest.
JimD wrote:
Oops, sorry, wrong answer. We 53% still pay the Social Security and Medicare taxes, along with income taxes, which means that we are paying a higher percentage of our income in direct federal taxes. And even when you get above the $106,800 threshold — and remember, that’s per individual, not per income tax filing, which can include married couples — the marginal rate for federal income taxes is higher than the current 4.2% employee’s portion of Social Security taxes.
Again, incorrect. If they are spending it on investments, even just savings, the return on investment — assuming that there is any — is taxed at a higher rate than the sales tax in any state in the union, regardless of whether the return is in the form of dividends, capital gains or ordinary interest income.
Dana is right. The incomes of the 47% need to be increased until they fall into a taxable bracket.
Yup, Puck, that’s exactly right. Of course, their incomes can’t be increased until they produce enough to start earning those higher incomes.
“Of course, their incomes can’t be increased until they produce enough to start earning those higher incomes.”
And the way for them to produce is to raise investment taxes until the wealthy decide it is better to invest in (deductible) jobs and facilities than to pay the taxes.
While the analysis on how people pay taxes clarifies the inaccuracies of the right when it comes to who pays taxes, it does not address the Tea Party’s hypocracy about income taxes. Also to Delaware DEM we all pay sales tax in Delaware the Gross Receipts tax is a hidden sales tax, also a Pete Dupont creation.
“We 53% still pay the Social Security and Medicare taxes, along with income taxes, which means that we are paying a higher percentage of our income in direct federal taxes.”
That’s not what he said. He said that the 47% pay a higher percentage of their wages in SS/MC than those who earn more. That’s a simple matter of fact.
“If they are spending it on investments, even just savings, the return on investment — assuming that there is any — is taxed at a higher rate than the sales tax in any state in the union, regardless of whether the return is in the form of dividends, capital gains or ordinary interest income.”
True only as far as it goes. Investments, unlike sales taxes, can and often are chosen to evade tax liability.
The real mystery is why someone who earns $38,000 a year and pays minimal income taxes is supposed to have more in common with a millionaire than with someone who earns $30,000 and falls just under the no-income-tax threshold.
Just because you identify with the 1%, Dana, does not mean you are among them. The plantation system never lacked for house servants.
“Also to Delaware DEM we all pay sales tax in Delaware the Gross Receipts tax is a hidden sales tax”
Technically true. But consider the rates:
The rates are different for different categories of industries. Retail and restaurants is around .07%, while the 2% rate is for banks and insurance companies.
If GRT were a standard sales tax it would be less than 1%.
For those who like to say the GRT “strangles small business,” consider that the GRT exempts the first $80,000 per month – that’s $1 million per year – for most categories.
Dana,
The ultimate point is this: no one in America pays no taxes.
Also, to your point about the income for investments being taxed, maybe you can explain why we tax income at a lower rate if you got it from investing rather than having a job. Why should you pay lower taxes on investments than I pay on my income from the job I work?
Jim: Actually, that’s something I disagree with: if we are going to tax income, all income should be taxed at the same rate. But the logic behind it was that taxing capital gains at a lower rate would encourage investment.
Dividends are another matter: they are taxed both at the corporate level — dividends paid are not a deductible business expense — and at the individual level, in that dividends received count as income.
Geezer wrote:
Sorry, but you didn’t read it right. Jim’s direct quote was:
No where did he limit his statement to “the 47% pay a higher percentage of their wages in SS/MC than those who earn more.”
Once you exceed the $106,800 Social Security maximum, you are into the top end of the 25% marginal bracket, and very close to the 28% bracket, depending upon the difference between your gross wages and taxable income; that’s much higher than the current 4.2%, or recent 6.2% Social Security tax rate.