“What Do You MEAN, ‘I Don’t Pay Taxes?!'” February 6, 2004January 21, 2017 Dan Schaeffer: ‘Tom says ‘your median American $38,000 wage earner does not pay ANY federal income tax.’ That doesn’t sound right to me, but you didn’t call him on it, so maybe you can explain?’ ☞ My explanation is that Tom was wrong. It was my oversight not to point that out. David Bruce: ‘Little people do pay taxes. I made $28,334 in 2002. I paid $2,051 in federal income tax, $515 in state income tax, and $494 in local income tax.’ Tax-Paying David: ‘I just filed my income tax with a total income of $42,000. Even with itemized deductions of $12,000 (mortgage interest, property tax, charity, and unreimbursed work expenses), I owed $3,645 in tax.’ Disgusted David (who is being sarcastic): ‘Just because there are some people who are willing to get up early in the morning, work hard, and sell their hard-earned, marketable job skills in the marketplace in return for a decent income, doesn’t entitle them to walk away with such a large share of the pie. And just because those with initiative and drive and ambition pay 80% of all taxes, doesn’t mean we shouldn’t keep the pressure on to tax them even more. Let’s tax the rich, keep the class warfare going strong, and pretty soon, America’s industrious will be wiped from the face of the earth.’ ☞ What a wonderfully Republican attitude. (Not that all Republicans feel this way; but a lot do.) Does David think that the woman who gets up at 6, gets the kids off to school, walks to the bus stop, waits for the bus in the cold, takes the bus for an hour, gets on her knees to scrub bathroom floors and polish the silver, makes her $65, walks back to the bus stop, waits for the bus, takes another hour to get home and make dinner for the kids . . . is lazy? Unenterprising>? Subhuman? Under-taxed? Coddled by the long-suffering, over-taxed rich? Does David realize that he has totally distorted the discussion? No one was talking about raising taxes on the rich beyond the good balance we had with Clinton/Gore. The question Democrats pose is: should we really be borrowing hundreds of billions of dollars to drastically cut taxes on the rich? Does David think Warren Buffett fails to understand the merits or workings of capitalism when he rails against abolishing the estate tax? Or when he wonders why his secretary is in a higher tax bracket than he is? Does David think the American economy was unsuccessful from 1945 to 1961, when the top federal income tax bracket was (an admittedly wrong-headed) 90%? Or that entrepreneurs didn’t bother to get out of bed 1962 to 1982, when the top bracket was (a nearly as wrong-headed) 70%? Does he think the economy performed better under Reagan/Bush than it did under Clinton/Gore (who raised the top bracket from 31% back up to 39.6%)? Listen to yourself, David! Are you one of those compassionate conservatives who think Scrooge was exploited by Bob Cratchett? Pulitzer-prize-winning author David Cay Johnston’s compelling new bestseller, Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich – and Cheat Everybody Else, notes that ‘Those in the top 1 percent saw their [after-tax] average income, adjusted for inflation to 1999 dollars, more than double from $234,700 in 1977 to $515,600 in 1999. Meanwhile, the 55 million Americans in the poorest fifth of the population lived in households whose average income fell from $10,000 in 1977 to $8,800 in 1999.’ And all this before President Bush rode to the rescue with breathtaking tax cuts for the top 1%, and cuts to social programs for those less fortunate. (For a partial list of upcoming program cuts, see yesterday.) Jeff Martin: ‘To branch off from the discussion of personal income taxes: according to an article by Bob Herbert yesterday, Halliburton paid $15 million in IRS taxes for 2002 by utilizing off-shore “subsidiaries” in tax-havens such as Vanuatu and Tobago.’ ☞ Maybe Vanuatu is the site of the Vice President’s ‘undisclosed location.’ Jacob Roberts: ‘It is useful to look at the CBO’s assessment of the total effective tax rate (taking into account income, excise, and payroll taxes while reducing the taxes paid by benefits received). Here is the most recent data I could find after a quick search. This is pre-Bush tax cuts.’ Bob Daniels: ‘Apropos your 1/29/04 column and John Brownie’s point that the 1% highest incomes pay 34% of the income tax: here are a few more statistics mined from the latest IRS data release. In 2001, one taxpayer in 700 — 195,000 out of 130 million — reported income over $1 million. These folks received almost 10% of all the income in the US that year, and they paid almost 20% of the total income tax ($174 billion out of $887 billion.)’ [By definition, that’s what makes our “progressive income tax” progressive. If those who earned 10% of the income paid 10% of the tax, it would be proportional, not progressive. But the thinking is that the family living on $26,000 has little left over for taxes, whereas the same family earning $1 million or $2 million has more room to maneuver. – A.T.] ‘The higher the income, the more it reflects the return to capital, not labor. Over half of all capital gains reported in the US in year 2001 were on the tax returns of income millionaires. For the 6,836 folks at the pinnacle with incomes over $10,000,000, only one-quarter represents salary, while over half was in the form of lightly-taxed long-term capital gains. The super-rich don’t miss a trick, either. P. 30 of the IRS report shows that 12 taxpayers with incomes over $10,000,000 collected an average of $4,250 each in unemployment compensation. I wonder – how do they spell chutzpah?’ ☞ Have a great weekend. I hope, for your sake, you are one of the overtaxed, whining, long-suffering Republican rich and not one of those getting a cushy free ride working as, say, a lazy hotel maid or the unenterprising guy who picked my strawberries.