9 Things The Rich Don't Want You To Know

[Venonat]

The link will provide the entire details for these facts as I only pasted the most important info.

9 Things The Rich Don't Want You To Know About Taxes

For three decades we have conducted a massive economic experiment, testing a theory known as supply-side economics. The theory goes like this: Lower tax rates will encourage more investment, which in turn will mean more jobs and greater prosperity—so much so that tax revenues will go up, despite lower rates. The late Milton Friedman, the libertarian economist who wanted to shut down public parks because he considered them socialism, promoted this strategy. Ronald Reagan embraced Friedman’s ideas and made them into policy when he was elected president in 1980.

For the past decade, we have doubled down on this theory of supply-side economics with the tax cuts sponsored by President George W. Bush in 2001 and 2003, which President Obama has agreed to continue for two years.

You would think that whether this grand experiment worked would be settled after three decades. You would think the practitioners of the dismal science of economics would look at their demand curves and the data on incomes and taxes and pronounce a verdict, the way Galileo and Copernicus did when they showed that geocentrism was a fantasy because Earth revolves around the sun (known as heliocentrism). But economics is not like that. It is not like physics with its laws and arithmetic with its absolute values.

1. Poor Americans do pay taxes.

Gretchen Carlson, the Fox News host, said last year “47 percent of Americans don’t pay any taxes.” John McCain and Sarah Palin both said similar things during the 2008 campaign about the bottom half of Americans.

Ari Fleischer, the former Bush White House spokesman, once said “50 percent of the country gets benefits without paying for them.”

Actually, they pay lots of taxes—just not lots of federal income taxes.

Data from the Tax Foundation show that in 2008, the average income for the bottom half of taxpayers was $15,300.

This year the first $9,350 of income is exempt from taxes for singles and $18,700 for married couples, just slightly more than in 2008. That means millions of the poor do not make enough to owe income taxes.

But they still pay plenty of other taxes, including federal payroll taxes. Between gas taxes, sales taxes, utility taxes and other taxes, no one lives tax-free in America.

When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.

2. The wealthiest Americans don’t carry the burden.

This is one of those oft-used canards. Sen. Rand Paul, the tea party favorite from Kentucky, told David Letterman recently that “the wealthy do pay most of the taxes in this country.”

The Internet is awash with statements that the top 1 percent pays, depending on the year, 38 percent or more than 40 percent of taxes.

It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.

Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.

3. In fact, the wealthy are paying less taxes.

The Internal Revenue Service issues an annual report on the 400 highest income-tax payers. In 1961, there were 398 taxpayers who made $1 million or more, so I compared their income tax burdens from that year to 2007.

Despite skyrocketing incomes, the federal tax burden on the richest 400 has been slashed, thanks to a variety of loopholes, allowable deductions and other tools. The actual share of their income paid in taxes, according to the IRS, is 16.6 percent. Adding payroll taxes barely nudges that number.

Compare that to the vast majority of Americans, whose share of their income going to federal taxes increased from 13.1 percent in 1961 to 22.5 percent in 2007.

4. Many of the very richest pay no current income taxes at all.

John Paulson, the most successful hedge-fund manager of all, bet against the mortgage market one year and then bet with Glenn Beck in the gold market the next. Paulson made himself $9 billion in fees in just two years. His current tax bill on that $9 billion? Zero.

Congress lets hedge-fund managers earn all they can now and pay their taxes years from now.

5. Since Reagan, only the wealthy have gained significant income.

The Heritage Foundation, the Cato Institute and similar conservative marketing organizations tell us relentlessly that lower tax rates will make us all better off.

“When tax rates are reduced, the economy’s growth rate improves and living standards increase,” according to Daniel J. Mitchell, an economist at Heritage until he joined Cato. He says that supply-side economics is “the simple notion that lower tax rates will boost work, saving, investment and entrepreneurship.”

When Reagan was elected president, the top marginal tax rate (the tax rate paid on the last dollar of income earned) was 70 percent. He cut it to 50 percent and then 28 percent starting in 1987. It was raised by George H.W. Bush and Clinton, and then cut by George W. Bush. The top rate is now 35 percent.

Since 1980, when Reagan won the presidency promising prosperity through tax cuts, the average income of the vast majority—the bottom 90 percent of Americans—has increased a meager $303, or 1 percent. Put another way, for each dollar people in the vast majority made in 1980, in 2008 their income was up to $1.01.

Those at the top did better. The top 1 percent’s average income more than doubled to $1.1 million, according to an analysis of tax data by economists Thomas Piketty and Emmanuel Saez. The really rich, the top one-tenth of 1 percent, each enjoyed almost $4 in 2008 for each dollar in 1980.

6. When it comes to corporations, the story is much the same—less taxes.

Corporate profits in 2008, the latest year for which data are available, were $1,830 billion, up almost 12 percent from $1,638.7 billion in 2000. Yet, even though corporate tax rates have not been cut, corporate income-tax revenues fell to $230 billion from $249 billion—an 8 percent decline, thanks to a number of loopholes. The official 2010 profit numbers are not added up and released by the government, but the amount paid in corporate taxes is: In 2010 they fell further, to $191 billion—a decline of more than 23 percent compared with 2000.

7. Some corporate tax breaks destroy jobs.

Despite all the noise that America has the world’s second-highest corporate tax rate, the actual taxes paid by corporations are falling because of the growing number of loopholes and companies shifting profits to tax havens like the Cayman Islands.

And right now America’s corporations are sitting on close to $2 trillion in cash that is not being used to build factories, create jobs or anything else, but acts as an insurance policy for managers unwilling to take the risk of actually building the businesses they are paid so well to run. That cash hoard, by the way, works out to nearly $13,000 per taxpaying household.

8. Republicans like taxes too.

President Reagan signed into law 11 tax increases, targeted at people down the income ladder. His administration and the Washington press corps called the increases “revenue enhancers.” Reagan raised Social Security taxes so high that by the end of 2008, the government had collected more than $2 trillion in surplus tax.

George W. Bush signed a tax increase, too, in 2006, despite his written ironclad pledge never to raise taxes on anyone. It raised taxes on teenagers by requiring kids up to age 17, who earned money, to pay taxes at their parents’ tax rate, which would almost always be higher than the rate they would otherwise pay. It was a story that ran buried inside The New York Times one Sunday, but nowhere else.

In fact, thanks to Republicans, one in three Americans will pay higher taxes this year than they did last year.

9. Other countries do it better.

We measure our economic progress, and our elected leaders debate tax policy, in terms of a crude measure known as gross domestic product. The way the official statistics are put together, each dollar spent buying solar energy equipment counts the same as each dollar spent investigating murders.

We do not give any measure of value to time spent rearing children or growing our own vegetables or to time off for leisure and community service.

And we do not measure the economic damage done by shocks, such as losing a job, which means not only loss of income and depletion of savings, but loss of health insurance, which a Harvard Medical School study found results in 45,000 unnecessary deaths each year.

Source

[Guest]

The link will provide the entire details for these facts as I only pasted the most important info.

Thanks - this needs to be repeated until people finally give up on Friedmans La La land Utopianism.

One of the most dangerous men of the last century. The mess we are in is largely due to his ideas.

Br Cornelius

Edited April 14, 2011 by Guest

[theGhost_and_theDarkness]

That was a really good read.

Seems like a lot of it should be common sense, but I guess not. Hopefully more people will get on here and read it.

[Esoteric Toad]

In fact, thanks to Republicans, one in three Americans will pay higher taxes this year than they did last year - This is because the tax cuts expire this year, something that does not need to happen but they will not be extended again.

There are no easy answers and both sides have merits and some pretty extreme utopian ideas. That is the problem here in the US, no moderation. We swing from one extreme to the next. Every election comes down to one thing, how much money do the people have in their 'wallets' when voting time comes around.

Without being psychic or a holder of any sort of political degree I can assure you, like it or not, right or wrong, if things do not improve vastly in the next 16-17 months virtually everyone elected from 2008 on will be out the door.

I know this, I am not wealthy (my household income barely puts us above what is required to cash in on entitlements), I do not see wealth as evil. This class warefare that has been created since before 2008 is rediculous. I would rather live in a counrty where anyone can become hugely wealthy than one where politicians create divides by pitting 'the poor' versus 'the rich folks'. If someone is not paying their taxes, punish them. If they are following the tax code and NOT paying taxes then they are doing nothing wrong (the tax code encourages this).

Huge corporations are another issue altogether IMO. I cannot see a way we can force companies to build factories here and produce goods since in theory their motivation for moving overseas was to compete with countries that have cheap labor. Raising tariffs to offset things would just create trade wars and in the end it would be the poor that would be hurt the most.

We need cheap fuel, a strong dollar to help things for 'the poor'. Instead neither is happening (I know my grocery expense keep going up and I am getting less and less). Keep in mind, I am this close ->.<- to being considered 'the poor'. Less federal government across the board would help me the most.

Sort of related but here is something I saw and could not believe - I was standing in line at a convienence store and the woman in front of me had a huge fountain soda. Lo and behold she paid for it with here WIC card (foodstamps). I was stunned. I am working and barely getting by and I am paying for that fountain drink. How can that be that OUR tax dollars (and I do pay taxes, never get all of my income tax back) be used for entitlements that allow someone free fountain drinks? Shouldn't it be for necessities?

[danielost]

gee i am one of the poorest people on here, and i knew number 1 and 2 and i have been saying as much on here. only to be called a none tax payer.

this may have been covered in the story, but in reality the wealthy dont pay taxes, they pass the tax down to the poor through prices on products.

which is why i have been saying we need a flat sales tax only in this country, dump all of the other taxes. if the rich increase the price of their products they too have to pay more in taxes.

Edited April 15, 2011 by danielost

[Venonat]

This is a repost but it ties in great with this thread:

Ten Worst Corporate Tax Avoiders

• 1) Exxon Mobil made $19 billion in profits in 2009. Exxon not only paid no federal income taxes, it actually received a $156 million rebate from the IRS, according to its SEC filings.
  
• 2) Bank of America received a $1.9 billion tax refund from the IRS last year, although it made $4.4 billion in profits and received a bailout from the Federal Reserve and the Treasury Department of nearly $1 trillion.
  
• 3) Over the past five years, while General Electric made $26 billion in profits in the United States, it received a $4.1 billion refund from the IRS.
  
• 4) Chevron received a $19 million refund from the IRS last year after it made $10 billion in profits in 2009.
  
• 5) Boeing, which received a $30 billion contract from the Pentagon to build 179 airborne tankers, got a $124 million refund from the IRS last year.
  
• 6) Valero Energy, the 25th largest company in America with $68 billion in sales last year received a $157 million tax refund check from the IRS and, over the past three years, it received a $134 million tax break from the oil and gas manufacturing tax deduction.
  
• 7) Goldman Sachs in 2008 only paid 1.1 percent of its income in taxes even though it earned a profit of $2.3 billion and received an almost $800 billion from the Federal Reserve and U.S. Treasury Department.
  
• 8) Citigroup last year made more than $4 billion in profits but paid no federal income taxes. It received a $2.5 trillion bailout from the Federal Reserve and U.S. Treasury.
  
• 9) ConocoPhillips, the fifth largest oil company in the United States, made $16 billion in profits from 2007 through 2009, but received $451 million in tax breaks through the oil and gas manufacturing deduction.
  
• 10) Over the past five years, Carnival Cruise Lines made more than $11 billion in profits, but its federal income tax rate during those years was just 1.1 percent.
  

Source

Edited April 15, 2011 by Venonat

[danielost]

This is a repost but it ties in great with this thread:

3000 loop holes is what the congress has given those corporations so they dont have to pay taxes. that is both sides of congress dems and reps.

[Venonat]

3000 loop holes is what the congress has given those corporations so they dont have to pay taxes. that is both sides of congress dems and reps.

Yupp, I agree.

[Venonat]

Rich pay a lot less in taxes than they did a couple decades ago:

MSNBC:Super-rich have seen their tax liability tumble

[danielost]

Rich pay a lot less in taxes than they did a couple decades ago:

MSNBC:Super-rich have seen their tax liability tumble

there is the case of the body builder who is able to write off his body oil because he needs it for the shows. but he isnt able to write of the food supplements.

http://www.bankrate.com/brm/itax/news/20020201a.asp

the link is two pages.

Edited April 18, 2011 by danielost

[UltraThunderMan]

So if we eliminate these tax loopholes for these corporations, how much would we stand to make?

[questionmark]

So if we eliminate these tax loopholes for these corporations, how much would we stand to make?

To start with, last year only 115 of the 500 listed in Standard & Poors paid any taxes at all. Funnily if we look at effective tax rates it depends on the sector, so we can see that electric companies have an effective rate of about 38% and Oil companies of 11.3%. The winner seem to be the (oh so poor) drug companies who pay effectively about 4% in taxes. Doing away with all those loopholes (that Congress will not) could increase the corporate tax revenue by 100%. That would be around $200 billion. That could pay for the Human Services Budget (the highest in the Federal Budget), the Veterans Affairs Budget (second highest) and the Education Budget (third highest budget).

[UltraThunderMan]

To start with, last year only 115 of the 500 listed in Standard & Poors paid any taxes at all. Funnily if we look at effective tax rates it depends on the sector, so we can see that electric companies have an effective rate of about 38% and Oil companies of 11.3%. The winner seem to be the (oh so poor) drug companies who pay effectively about 4% in taxes. Doing away with all those loopholes (that Congress will not) could increase the corporate tax revenue by 100%. That would be around $200 billion. That could pay for the Human Services Budget (the highest in the Federal Budget), the Veterans Affairs Budget (second highest) and the Education Budget (third highest budget).

Well how does someone go about making them do it? Wouldn't they have to do it if enough people were alerted to the situation?

[rashore]

lol, I've been arguing about this point in another thread about taxing the rich more. I keep saying that we would probably make more money closing loopholes than generally raising a tax. Does not help much to raise a tax if it can just be dodged. I think tax spending loopholes need to be closed up too because it would probably help more than just making general tax cuts.

[questionmark]

Well how does someone go about making them do it? Wouldn't they have to do it if enough people were alerted to the situation?

Well, they are also alerted that water contamination depletes drinking water resources, do you see them doing anything meaningful to protect waters from corporations?

Edited May 4, 2011 by questionmark

[UltraThunderMan]

Well, they are also alerted that water contamination depletes drinking water resources, do you see them doing anything meaningful to protect waters from corporations?

So it can happen if the people will it to be so. Then everything is not lost yet.

[rashore]

Well how does someone go about making them do it? Wouldn't they have to do it if enough people were alerted to the situation?

Hmmm, just because a lot of people are alerted to a situation does not make them have to do it. We are all aware that there are tax loopholes, and that's not enough to make those loopholes go away. Same goes for poisoned water, but I'll stick to the tax stuff since that's what this thread is.

So they are aware, and we are aware. How we make them change the law requires work. Got to do the whole contact an official thing, sign petitions or start them if there isn't already one, read up on what is in upcoming votes, and turn out to vote on measures. And as much as we vote people into office, it is possible to petition them back out again too in a lot of instances. It's a PITA of a process, but it can be done.

There are TONS of petitions already started about all sorts of stuff, including calls to stop tax loopholes.

[Gothraidh]

The thing that sucks the worst is being lower middle class... No government aid to help you and you still have to pay your bills and taxes like regular middle class folks. When people who refuse to work get food stamps and exude the most insane spending habits with them all around you and you scrimp and save to obtain the necessities of life its very sickening.

[Omnaka]

In fact, thanks to Republicans, one in three Americans will pay higher taxes this year than they did last year - This is because the tax cuts expire this year, something that does not need to happen but they will not be extended again.

There are no easy answers and both sides have merits and some pretty extreme utopian ideas. That is the problem here in the US, no moderation. We swing from one extreme to the next. Every election comes down to one thing, how much money do the people have in their 'wallets' when voting time comes around.

Without being psychic or a holder of any sort of political degree I can assure you, like it or not, right or wrong, if things do not improve vastly in the next 16-17 months virtually everyone elected from 2008 on will be out the door.

I know this, I am not wealthy (my household income barely puts us above what is required to cash in on entitlements), I do not see wealth as evil. This class warefare that has been created since before 2008 is rediculous. I would rather live in a counrty where anyone can become hugely wealthy than one where politicians create divides by pitting 'the poor' versus 'the rich folks'. If someone is not paying their taxes, punish them. If they are following the tax code and NOT paying taxes then they are doing nothing wrong (the tax code encourages this).

Huge corporations are another issue altogether IMO. I cannot see a way we can force companies to build factories here and produce goods since in theory their motivation for moving overseas was to compete with countries that have cheap labor. Raising tariffs to offset things would just create trade wars and in the end it would be the poor that would be hurt the most.

We need cheap fuel, a strong dollar to help things for 'the poor'. Instead neither is happening (I know my grocery expense keep going up and I am getting less and less). Keep in mind, I am this close ->.<- to being considered 'the poor'. Less federal government across the board would help me the most.

Sort of related but here is something I saw and could not believe - I was standing in line at a convienence store and the woman in front of me had a huge fountain soda. Lo and behold she paid for it with here WIC card (foodstamps). I was stunned. I am working and barely getting by and I am paying for that fountain drink. How can that be that OUR tax dollars (and I do pay taxes, never get all of my income tax back) be used for entitlements that allow someone free fountain drinks? Shouldn't it be for necessities?

Thats noyhing, I saw a 20 something year old buy $50.00 worth of candy the other day on Oregon food stamps.

Love Omnaka

[Gothraidh]

That's exactly what I'm talking about... Buying $300.00 in Pepsi products...taking them down the street to a competing grocery store and selling them for a loss...to get cash.