unfortunates....constant poor decision making or bad luck?

[telewinz]

Uh, my facts cover a 10 year period not a SINGLE year.  Lets compare apples to apples.

In the year 2000  at the height of the last economic boom and before the
most recent round of tax cuts were enacted  IRS data shows that the richest
400 taxpayers paid 27% of their income in federal, state, and local taxes. On
average, these 400 taxpayers each had taxable income of $151 million. All
other taxpayers had average taxable income of only $34,600, and yet their tax
burden was 40%.2

American Wealth is More Concentrated Than Ever Before
Prosperity that was supposed to trickle down has instead flowed straight
uphill. Between 1990 and 2, the average CEOs pay increased by 571%
and corporate profits grew by 93%, while workers pay barely stayed ahead of
inflation.

[Brad Johnson]

*sigh*

Had you taken time to look at the page, you would have seen that the second table was a compilation of all tax years from 1980 to present. That means this data covers double the time that your "data" does. How do you like them "apples" (you wanted to compare, so let's compare). The overall data for the last 23 years of returns is roughly similar to the single year data.

By the way, your "concentrated wealth theory" is about a century out of date. Study a more updated, dynamic economic model and get back to us when reality sets in.

And where does this dumbass 40% crap come from? "IRS data shows that.." What IRS data? You haven't provided any. The only way you can come up with a 40% effective tax rate for the income bracket given is to include local and state taxes in the mix - tax data which the IRS would have had no part in providing (as in zip, zilch, zero, nada). In other words, IRS could NOT have shown it. Try again. And find some interpretations that can't be picked apart with information any grade schooler should know.

The link I provided showed the data from ACTUAL PAID TAXES compiled in both single-year and multi-year formats. The data was acquired directly from the IRS after all returns were finalized. It's hard numbers applied in a simple format. Sorry you are unable to interpret such singularly direct information.

Brad

[Firethorn]

I'll chime in on this.

Studies have shown that the extremely wealthy have always paid about the same percentage of their income in taxes.  Even when the marginal tax rate was greater than 90%, the richest people found ways around it.

How do they do this?  Well, as marginal tax rates rise, the Gates, Buffets, and Waltons of america stop focusing on creating* wealth and start focusing on sheltering it.  Result?  Rather than getting 25% of 10 million, the government gets 25% of 8 million, because rather than concentrating on earning that extra 2 mil, the rich guy concentrated on hiding and sheltering half of his money from taxes.  Result:  Legions of Lawyers and accountants employed to shelter the income, and fewer factory workers are hired.  Less economic activity going on, the factory delays upgrades, and the economy as a whole is better than 2 million poorer.

Meanwhile in today's society, while the "Rich" are getting wealthy faster than the poor, the "poor"'s TV's are still getting bigger, their computers faster, and their stereos louder on average.

*By investing their money as wisely as possible, more economic activity takes place more efficiently, generating the best returns for them, but also helping worthy, competitive businesses the money needed to expand and prosper, making more money, employing more people, making more goods, etc.

Oh, and the proper marxist quote is: "From each according to his ability, to each according to his need".

"To each according to his ability" would be proper capitalistic views.

[...has left the building.]

To save Telewinz the effort...

Here, a direct link to the Tax Foundation's analysis of the last full tax return year (2003).

http://www.taxfoundation.org/taxdata/show/250.html

According to the breakdown:

Top 1% of wage earners (those with incomes of $295,495 or higher) fund 24.31% of the total taxes paid. Adjusted for average income, the effective rate for this group of taxpayers is 34.27%.

Top 25% of wage earners (those with incomes of $57,343 or higher) fund 83.88% of the total taxes paid. Adjusted for average income, the effective rate for this group of taxpayers is 15.38%

Bottom 50% of wage earners (those with incomes lower than $29,019) fund a mere 3.46% of the total taxes paid. Adjusted for average income, the effective rate for this group of taxpayers is 2.95%

Now what was that about the 'poor' getting the shaft and the 'rich' not paying their fair share?

Brad

Now that is one interesting post! I'm amazed at how low the AGIs are. $57,343 is a very modest AGI considering this group bears over 80% of America's tax burden... Crazy!

[Brad Johnson]

Yep. It's also interesting to note that, from a political standpoint, it's these top 25% of wage earners that are considered "the rich", not the mega-wealthy as most people suppose.

Brad

[telewinz]

My data is based on all taxes...local, state AND Federal

[...has left the building.]

Yep. It's also interesting to note that, from a political standpoint, it's these top 25% of wage earners that are considered "the rich", not the mega-wealthy as most people suppose.

Brad

Good point.

[Brad Johnson]

My data is based on all taxes...local, state AND Federal

Then your information is still incorrect and/or misleading. The tax rate varies by state. The combined local and state tax burden averages vary from around 6.4% (Alaska) to 13.0% (Maine). Even presuming the highest FEDERAL tax bracket this means that the net tax rate varies from 36% to 42%. I can see where the information you found got it's numbers. The AVERAGE state/local tax burden is 10.1% (est. 2005). Add that to the highest federal tax to come up with the 40%. It's a great tool for those trying to foster the artificial class warefare mindset, but in the end it's just a bunch of numbers.

That is the PUBLISHED tax rate. I deal with reality, as in actual taxes paid. From that you can determine the EFFECTIVE tax rate. The information used by the Tax Foundation is from finalized returns reflecting the real paid taxes for a given tax year. From that the actual effective tax rates and percentage burdens are calculated. And when talking about actual taxes paid, the top 50% of wage earners pay almost all of 'em.

The pols and hysterical PACs would have you believe that minimum wage Americans are suffering the burden of all the taxes. Bullshit. Reality is that anyone earning less than the $29,019 cutoff for the bottom 50% of wagearners has a full THIRD of their income exempted from taxation. And that's just to start. Add in any other deductions or exemptions and this category of wage earner gets a break on their taxes unlike any other class in society. Have a kid, get an exemption. Make a mortgage payment, get an exemption. Buy some school supplies, get an exemption. Someone with a little ingenuity and common sense can, quite literally, get out of paying ALL their taxes until they start earning well into the 25-30k range (I am specifically excluding SoSo Security since there's virtually no way to get around paying it).

Another thing...

Yes, the high-income earners may have lots of tax shelters. But do you think that money gets shoveled into a hole somewhere, never to see the light of day again? Jeez... Dynamic economics is not hard. Really.

Brad

[Ben]

average taxable income of only $34,600, and yet their tax burden was 40%.2

I recommend they get a new accountant.

Yep. It's also interesting to note that, from a political standpoint, it's these top 25% of wage earners that are considered "the rich", not the mega-wealthy as most people suppose.

Indeed. Here in CA, it's almost comical that a large portion of the voters behind realigning our "progressive" tax structure to further "stick it to those lousy rich people" are in fact unknowingly included in the "lousy rich people group".

[Firethorn]

The pols and hysterical PACs would have you believe that minimum wage Americans are suffering the burden of all the taxes. Bullshit. Reality is that anyone earning less than the $29,019 cutoff for the bottom 50% of wagearners has a full THIRD of their income exempted from taxation. And that's just to start. Add in any other deductions or exemptions and this category of wage earner gets a break on their taxes unlike any other class in society. Have a kid, get an exemption. Make a mortgage payment, get an exemption. Buy some school supplies, get an exemption. Someone with a little ingenuity and common sense can, quite literally, get out of paying ALL their taxes until they start earning well into the 25-30k range (I am specifically excluding SoSo Security since there's virtually no way to get around paying it).

I made, according to my employer, around $20,000 last year.  My federal tax liability was around $1000.  Call it 5%.  6% for Social 'Security', 1.5% for medicare.  1% for state income tax($238, ND).  7% sales tax for the local area.  I won't include taxes for phones and such.

13.5% Paid for Income.  If I spent every cent on sales taxable items, it'd be 20.5%.  I do save money, and my rent and food are tax free, so it'd be closer to 17%.

I know I'm not even close to the cutoff, but in many ways I'm worse off than my income would suggest because I can't deduct mortgage or health care or kids, etc.  All I get is the standard deduction and 1 exemption.

[Brad Johnson]

5% income tax. I wish I had it so good.

If you make 20k or less AND have a mortgage AND have kids AND have child health care expenses, a good MSA and some prudent financial maneuvering by a competent tax accountant could probably take your fed tax liability to near zero.

Brad

[Art Eatman]

The standard deduction is now high enough that you have to have a sizable amount of interest and medical expenses to come near equalling it.  Itemization helps those in the early years of a high-dollar mortgage, but it isn't a teaspoon of warm spit for somebody with a mostly-paid-for world.

But I jus' luv Skejul See.  IRS done gimme a license to steal!

Art

[Brad Johnson]

That's what the MSA is for. Most MSA deductions are pre-tax and are not tied to your standard deductions. If you know you are going to have children's medical expenses throughout the year, divert the money into the MSA pre-tax. In some rare circumstances, you can roll unused MSA funds over into an IRA.

I like sched C, too. Unfortunately, they still come 'a knockin' for the self-employment tax no matter how bad my sched C looks. Bleccch!

Brad

[Art Eatman]

Brad, the nice thing about working backhoe and dumbtruck (not mis-spelled) is that all manner of early depreciation and extra expense stuff gets put into "deductibles" from time to time, courtesy of the Congress.  That's why folks buy new ones--although my own backhoe is a 1978 model and it's still going strong.  "Developer" covers a multitude of sins.

, Art

[Brad Johnson]

Backhoe and dumbtruck, eh? And you live in the middle of nowhere. I can think of a multitude of things that might be useful for...

Brad

[Firethorn]

5% income tax. I wish I had it so good.

If you make 20k or less AND have a mortgage AND have kids AND have child health care expenses, a good MSA and some prudent financial maneuvering by a competent tax accountant could probably take your fed tax liability to near zero.

Brad

near zero -> negative.   Ever hear of "Earned Income Credit"?  There are actually people to get a bigger refund than what they paid in for the year.

Crazy, huh?

[Art Eatman]

Gives a whole new meaning to "Shoot, shovel and shut up."  But with some 60,000 acres of unoccupied lands off to my northwest, "A coyote is a man's bestest friend."  And buzzards and ants...

Art

[The Rabbi]

Yep. It's also interesting to note that, from a political standpoint, it's these top 25% of wage earners that are considered "the rich", not the mega-wealthy as most people suppose.
Indeed. Here in CA, it's almost comical that a large portion of the voters behind realigning our "progressive" tax structure to further "stick it to those lousy rich people" are in fact unknowingly included in the "lousy rich people group".

We see this coming with the debate on the AMT (alternative minimum tax).  Originally enacted in the late 60s or something and targeted to some insanely small number of people (like less than 200--if that isnt a bill of attainder, I dont know what is) it now traps a very large number of middle class people.  So the biggest proponants of getting rif of it are actually Blue state Democrats, whose constituents are getting raped by it.  Bet they never thought they'd be wealthy.

[griz]

Thanks for looking it up Brad.  Unfortunately my fears were proved true and Telewinz disregarded the data. At least I learned that for computaional purposes, rich people don't pay state, local, or sales tax.

[Art Eatman]

Rabbi, wash your mouth out with lye soap, for talking about the AMT.  Thanks to "Mr. Republican", Bob Dole, that POS got foisted off on us around 1984-ish, mas o menos.  Hit me right smack in the billfold, and I had to rework my whole financial "empire".

Art

[Ben]

To resurrect the thread -- a perfect example of bad decision-making. The guy got rich and is now well on his way back to poor (and probably jail):

----------------
http://www.cnn.com/2006/LAW/01/25/survivor.taxes.ap/index.html

Original 'Survivor' guilty of tax dodge
Richard Hatch is taken from court in handcuffs

PROVIDENCE, Rhode Island (AP) -- Richard Hatch, who won $1 million in the first season of "Survivor," was found guilty Wednesday of failing to pay taxes on his winnings.

Hatch was handcuffed and taken into custody after U.S. District Judge Ernest Torres said he was a potential flight risk.

He also was convicted of evading taxes on $327,000 he earned as co-host of a Boston radio show and $28,000 in rent on property he owned. He was acquitted of seven bank, mail and wire fraud charges.

Hatch, 44, faces up to 13 years in prison and a fine of $600,000. Sentencing was scheduled for April 28.

Jurors deliberated for less than a day after more than a week of testimony.
Misspent funds

Besides the tax charges, prosecutors accused Hatch of using money donated to his charitable foundation, Horizon Bound, an outdoors program he planned to open for troubled youth. He allegedly spent the money on expenses including tips to a limousine driver, dry cleaning and tens of thousands of dollars on improvements to a house he owned.

Near the end of the trial, an explanation for Hatch's failure to pay taxes was raised by his lawyer -- but never mentioned in the jury's presence. Hatch's lawyer, Michael Minns, said Hatch caught fellow contestants cheating and struck a deal with the show's producers to pay his taxes if he won. (Full story)

But Hatch was never asked about the allegation when he testified. Instead, Minns told jurors that Hatch, who lives in Newport, was the "world's worst bookkeeper" and said his client never meant to do anything wrong.

Hatch testified that he thought producers were supposed to pay his "Survivor" taxes, and said the donations he took from his charity were far less than the money he had already poured into it.
Famous TV villain

More than five years after winning, Hatch remains reality TV's most famous villain, the man viewers loved to hate. He first captured their attention for shedding his clothes on "Survivor," prompting David Letterman to call him "the fat naked guy."

But he made the biggest impression -- and won the show -- by scheming his way to the top. He reveled as squabbles among his fellow contestants thinned their ranks, connived with teammates to stick together then pitted his allies against each other.

Early on, he used his success on the show to get more work, including a "Got Milk?" ad and an appearance on "Survivor All-Stars" -- where he was voted off by fellow contestants.

He also appeared on TV game shows, including "The Weakest Link." That appearance, made on behalf of Horizon Bound, netted a $10,000 donation to his charity camp -- money prosecutors said was among the funds misused.
Reality check

But Hatch's shrewdness did not serve him well in the legal world. A year ago, prosecutors offered him a deal: plead guilty to two counts of tax evasion and they would recommend less than the maximum 10-year sentence.

After initially agreeing, Hatch walked away, retaining Minns as his new lawyer and appearing on NBC's "Today" show to claim that CBS was supposed to pay the taxes.

Prosecutors responded with a grand jury, which indicted Hatch on 10 counts carrying a maximum of 73 years in prison and millions of dollars in fines.

During the trial, prosecutors called witnesses, including Mark Burnett, executive producer of "Survivor."

Burnett testified that Hatch's "Survivor" contract stated he would have to pay taxes on his prize. Minns never asked him about the cheating allegation, and Burnett and CBS declined to comment about it.