Monday, April 11, 2016

Do Rich People Pay Taxes? Part 1

You hear it all the time; on the radio, television, your friends, coworkers, and even your barber state it as fact. "THE RICH NEED TO PAY MORE TAXES." It's a campaign slogan thrown around so much I wonder why no one bothers to point out real issues such as:

  • Why Congressman and their staff are exempt from insider trading and the ACA. 
  • Why Congressman can be elected for multiple terms. Some with careers over 40 years.
  • Why we let the same Congressman appoint their friends as chair of the Federal Reserve, Treasury, and ratify Supreme Court Justices whom make decisions that have far more influence on our daily lives
  • Why we have infrastructure challenges so large it's resulted in whole cities being flooded(New Orleans), and bridges collapsing(I-35W)

That's just a few of the issues going on. I could list tons more but I won't.

So the rich need to pay more taxes is absolute BS, and I'll show you why. It's all just a scam to get you distracted because 99% of people have no clue what it's like to be, and they never will be rich. I personally don't know what it's like either but I'm hoping one day I will!

Yet that slogan is repeated so many times everyone thinks it's true. Which is of course the whole point of repeating it so people think it's true.  We can attribute this mis-information to the normally rich politicians, and the media which goes a long with the whole brainwashing. 

Consider this chart from that clearly illustrates the top 1% of earners in our country paid 38% of all income tax in 2012. It's been reported that the number in 2015 is up to 45%. of all income taxes paid. That's quite a large portion considering the number of people in the top 1% is around 3 million people.

Let's see what the total amount of income tax collected was in 2012 to see the amounts each income group paid.  In 2012 total tax receipts were $2.45 trillion.   Now here is a chart to detail each income group

2012 Income Tax Collections$2,450,000,000,000
Income GroupTax Paid %Amt Taxes Paid
Top 1%38.10%$933,450,000,000
5% to 1%20.90%$512,050,000,000
10% to 5%11.20%$274,400,000,000
25% to 10%16.30%$399,350,000,000
50% to 25%10.80%$264,600,000,000
Bottom 50%2.80%$68,600,000,000
Subtotal By Income Group$2,452,450,000,000
2012 Income Tax Collections$2,450,000,000,000
Calc Rounding Errors$2,450,000,000

That would imply the top 1% paid over $933 billion in tax. If we include the top 5% the total reaches a staggering $1.44 trillion for exactly 59% of the total income tax burden.  I sure hope these people don't move out of the country while renouncing citizenship because where else is all that tax money going to come from!

The only group that strikes me as odd from the above chart is the 25%-10% group. This is likely a lot of dual income households where each spouse makes $55k-$100k/yr. That income range is typically associated with educated middle class households, but when combined create an "affluent household"  That could land them in the 28% tax bracket, in reach of additional income taxes, and have phaseouts for deductions. That could partially explain why that group pays more on a percentage basis than the 10%-5% group. Probably a good area for further research.

As we now see rich people actually pay a "insert favorite expletive-LOAD" of taxes every year. Why? Because it's inevitable. Death and taxes they say are the only guarantees in life.

We'll explore this subject in more detail in an upcoming post.

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