What is your source for that? $60,000 per year might be in the top 5% of wage earners, but most highly compensated people aren't paid wages, they are paid salaries. The top 15% of households have income more than $100k per year.

Grim

 

Its called consumption tax! Tax based upon what you buy. Why the hell does someone who buys a $14K saturn pay the same tax % that Shaq pays for $350K farrari. You get to keep your whole pay check which would mean you would have more to spend and you tax rate would depend on you income level. Best way by far!!!

 

Source: The Bureau of Labor & Statistics... The top percentage of wage earners is based upon "Wage earners". People that really work (punch a clock) for a living. It doesn't include entreprenuers or salaried (non hourly) executives, like the execs who make $1.00 a year in salary, but brings home $**,***,***.00 in bonuses every year. That's why one must be careful when arguing statistics...

If you're saying the top 5% of wage earners supports whatever percentage you said of the tax base, then that top 5% represents any individual earning (on a job) more than $60,000.00/year. Now, if you had said the wealthiest 5% of Americans pay 80% of the taxes in the US, then- that would exclude all the regular Joes & Janes, and would be talking about the Ross Perot's, the Mark Cuban's, The Oprah Winfrey's, and Bill Gate's of the country. (those guys find more loopholes in taxes than you or I will ever get. Did you hear about Manhattan (NY) millionaires, getting $1.5M farm subsidiaries from the US government, not to plant certain crops this year? These guys buy land, and call it a farm as a tax write off, and still get kick backs from the government.

A good friend of mine works for the USDA, and he said they pay some farmers hundreds of thousand NOT to plant a certain crop that year. They'll get the money from Uncle Sam, then plant a crop anyway. So, they have to go out, and check these guys, then fine them for double dipping. Yep, even people with money will try to get more money, and will abuse what's put before them.

Back on task though, the wage earner statistic you mentioned is not based upon median household incomes, but individual, not entreprenuial wage earners. That's a different set of criteria.

 

What I think is happening here is that there is confusion about the use of the term "wage earners."

Here's some simple data that will hopefully clear up some confusion:

http://www.taxfoundation.org/news/show/22652.html

In 2005, the AGI (adjusted gross income) of the top 25% was $62,068. The top 25% earned 68% of income but paid 86% of the income taxes. (0.79:1)

The top 10% AGI was $103,912. The top 10% earned 46% of income but paid 70% of all income taxes. (0.66:1)

The top 5% AGI was $145,283. The top 5% earned 36% of the income but paid 60% of all income taxes. (0.60:1)

The top 1% AGI was $364,657. The top 1% earned 21% of the income but paid 39% of all income taxes. (0.54:1)

In contrast, the bottom 50% made less than $30,881. The earned 13% of the income and paid 3% of all income taxes. (4.3:1)

Grim

 

Thanks for understanding how a wellfare system works.
It's all about the information.

 

I've seen on this thread several times that corporations don't pay taxes. Would you like to explain that one to me? I sign tax returns yearly for my business that is incorporated. Maybe the auditing firm I use should be monitoring this website.

 

From a certain point of view, corporations are vehicles for the collection of taxation from the shareholders of the company. They pay taxes, but in reality, they are paying the taxes on behalf of the shareholders.

Grim

 

I am a 50% owner and officer of a small company with 30 employees. Let me assure you, the company (corporation) pays income taxes and I pay personal income taxes as well.

 

Plus we pay matching funds for our employees FICA

 

ok lets rephrase it so everybody understands it

big corporations GE Ford GM proctor and gamble etc etc roll any taxes they may have to pay into the cost of there products ergo tax hike on business worse on the consumer

 

Exactly... how is this hard to understand? It makes perfect sense to me... and I am no brainiac. The corporations pay taxes on paper. The cost is put to the consumer of there product. DUH!

 

As the 50% owner, you're getting taxed twice on the same income. Our corporate income tax makes no sense.

Grim

 

This information is more about Tax cuts, but still relavent.

TAX CUTS EXPLAINED
Because it's the election season, let's put tax cuts in terms everyone can understand.
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that's what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement until one day the owner threw them a curved ball (or is that a curved beer!). "Because you are all such good customers," he said, "I'm going to reduce the cost of your daily beer by $20. "Drinks for the ten now cost just $80.

The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men - the paying customers? How could they divide the $20 windfall so that everyone would get his 'fair share?'

They realized that $20 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now paid $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).

Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant the men began to compare their savings."I only got a dollar out of the $20," declared the sixth man. He pointed to the tenth man, "but he got $10!"

"Yeah, that's right, "exclaimed the fifth man." I only saved a dollar too. It's unfair that he got ten times more than I!"

"That's true!!" shouted the seventh man "Why should he get $10 back when I got only two? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor!"

The nine men surrounded the tenth man and beat him up. The next night the tenth man didn't show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and college professors, is how our Tax System works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

David R Kamerschen, Ph.D.
Professor of Economics
University of Georgia
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.

 

Thank you... I was looking for that one and couldn't find it.

 

That was a great explanation