Here are some startling facts about the income tax system in America from the Wall Street Journal. How many Americans pay no income tax? A full 40% of taxpayers, or should we say non-payers, pay no income tax. Now, Senator Obama, AKA “He Who Shall Be Present, But Not Vote”, wants to take another 7 million taxpayers off the income-tax rolls. He is going to do this by eliminating taxes on Seniors earning $50,000 or less. However, he wants to raise the capital gains tax and dividend taxes. Retired seniors invest in dividend and capital gains producing vehicles as a means of income in their golden years. He wants to go to 20% to 25% on capital gains. If you are a senior living on investments that produce cap gains, you will lose 10% more of your income to the government under Senator Obama.
The collateral damage of this cap gains plan will be in the value of stocks. They will drop as the after tax yield takes 10% more of the gain. In this time of economic woes, this tax increase will cause measurable harm to the markets and the companies. Same goes for dividends. When the taxes on dividends increase, the resulting reduction of after-tax income will decrease the value of the stock yield and the companies that pay them. Mutual Funds and Investment Bankers will be forced to rebalance their portfolios as the yields decrease. Do we really want to add that shock to the already shaky economy?
Senator Obama also wants to give as much as $1,000 credit per family to help offset the payroll tax (social security tax). This credit would even be available to families that PAY NO TAX!!!! Can you say income redistribution welfare plan. Senator Obama believes this would take an addition 10 million families off the payroll with this credit.
From the WSJ article referenced below, “If you’re providing a tax cut, it’s unfair to say that people who are working deserve one and senior citizens don’t,” said Jason Furman, Obama’s top economic advisor. It does not matter if you are working or not. It matters if you have income. If you are providing a tax cut, it’s unfair to say that people who are paying taxes don’t deserve one and those that do not pay taxes do.
This sickening bit of information comes from the Tax Foundation:
During 2006, Tax Foundation economists estimate that roughly 43.4 million tax returns, representing 91 million individuals, will face a zero or negative tax liability. That’s out of a total of 136 million federal tax returns that will be filed. Adding to this figure the 15 million households and individuals who file no tax return at all, roughly 121 million Americans—or 41 percent of the U.S. population—will be completely outside the federal income tax system in 2006. This total includes those who pay no tax, and those who pay some tax upfront and are later refunded the full amount of the tax paid or more….. One-third of single filers pay nothing in federal income taxes, and almost two-thirds of those who file as head of household pay nothing…….. Married taxpayers pay roughly 75 percent of all federal income taxes, despite filing only 40 percent of returns.
The top five states that pay zero federal income tax as a percentage of returns are Mississippi, Louisiana, Arkansas, New Mexico, Alabama.
Look at the sharp increases in those going off the tax roll under President Bush. How dare you let the Democrats spew their class warfare sound bites condemning the President for giving tax cuts to his wealthy friends. Bill Clinton took about 3% off the the tax rolls. George W. Bush took about 7% off the tax rolls. George H. W. Bush (DAD) took as many off as Clinton did in only half the tenure as President. President Jimmy Carter, AKA the Worst President of All Eternity, actually added close to 6% back on the tax rolls. Those have to be the lower income taxpayers. That was his gift to the poorest Americans. That is why it is so amazing the Democrats keep getting away with the claim of being the working man’s party.

Source: Internal Revenue Service, Tax Foundation.
The Tax Foundation and Harris Interactive® joined forces to conduct a poll showing a majority of U.S. adults think the federal tax system is very complex and they pay too much. Interesting item - Only 1 in 10 believe they should pay higher taxes to eliminate this year’s federal budget deficit.
- 83% believe the current federal income tax is somewhat or very complex.
- 58% consider the federal income tax they pay as too high.
- 8% believe the federal tax system needs major changes or a complete overhaul.
Who thinks their tax bills are too high?
- 65% - Ages 45 to 54.
- 64% - Top income group of $75,000 and up.
- 61% - Married couples vs. single (48%).
- 56% - Those who itemize deductions.
The numbers from the IRS show some interesting trends. The bottom 50% ($30,121 and under) pay 2.97% of their AGI. Compare that to the tax of someone in the top 10%. If you make $99,112 or more, then you are paying around 6.25X the tax those under $30,000. That 19% of your money does not include payroll tax, Medicare, state income, self employment tax, local income, real estate, and personal property taxes. So a married couple with an AGI of $99,112 pays almost one 1 out of 5 dollars in federal tax alone. IRS Charts below.
Back to the Tax Foundation Survey now. They asked what is the maximum percentage of income that should go to all taxes - that is, all taxes, state, federal and local?
- The average response was 14.7%
- Women favor lower taxes than men.
- Lower income earners favor lower taxes than higher income earners.
There are many ways to look at the information. Another question from the survey showed those without high school educations believe the tax rate should be 11.9% while those with graduate degrees or higher felt that 21.5% was about right. Those numbers indicate the less educated either don’t realize how much it costs the various government entities to function or
maybe they have no idea how much the upper 50% of the incomes (over $99,112) pay in taxes. The Tax Foundation calculated the actual tax to be around 32% of your income. The Tax Foundation calculates the government spends just over $12,000 per person for government services.
Look at the chart below if you need evidence the Bush tax cuts were not just for the wealthy. They are clearly across the board cuts whereas the Clinton tax policy of the nineties increased taxes on every class. Sixty-one percent of those in the survey felt it was unfair for some individuals to pay no tax. In other words, everyone should pay something.
Chart Information from the IRS.
AVERAGE TAX RATE AS PERCENTAGE OF AGI PAID IN TAX.
|
Year
|
Total
|
Top 1%
|
Top 5%
|
Top 10%
|
Top 25%
|
Top 50%
|
Bottom 50%
|
| 1992 |
12.94%
|
25.05%
|
21.19%
|
19.13%
|
16.25%
|
14.44%
|
4.39%
|
| 1993 |
13.32%
|
28.01%
|
22.71%
|
20.20%
|
16.90%
|
14.90%
|
4.29%
|
| 1994 |
13.50%
|
28.23%
|
23.04%
|
20.48%
|
17.15%
|
15.11%
|
4.32%
|
| 1995 |
13.86%
|
28.73%
|
23.53%
|
20.97%
|
17.58%
|
15.47%
|
4.39%
|
| 1996 |
14.34%
|
28.87%
|
24.07%
|
21.55%
|
18.12%
|
15.96%
|
4.40%
|
| 1997 |
14.48%
|
27.64%
|
23.62%
|
21.36%
|
18.18%
|
16.09%
|
4.48%
|
| 1998 |
14.42%
|
27.12%
|
23.63%
|
21.42%
|
18.16%
|
16.00%
|
4.44%
|
| 1999 |
14.85%
|
27.53%
|
24.18%
|
21.98%
|
18.66%
|
16.43%
|
4.48%
|
| 2000 |
15.26%
|
27.45%
|
24.42%
|
22.34%
|
19.09%
|
16.86%
|
4.60%
|
| 2001 |
14.23%
|
27.50%
|
23.68%
|
21.41%
|
18.08%
|
15.85%
|
4.09%
|
| 2002 |
13.03%
|
27.25%
|
22.95%
|
20.51%
|
16.99%
|
14.66%
|
3.21%
|
| 2003 |
11.90%
|
24.31%
|
20.74%
|
18.49%
|
15.38%
|
13.35%
|
2.95%
|
| 2004 |
12.10%
|
23.49%
|
20.67%
|
18.60%
|
15.53%
|
13.51%
|
2.97%
|
DOLLAR CUT OFF OF MINIMUM AGI TO BE IN PERCENTILE
|
Year
|
Top 1%
|
Top 5%
|
Top 10%
|
Top 25%
|
Top 50%
|
|
1992
|
$181,904
|
$85,103
|
$64,457
|
$40,378
|
$20,803
|
|
1993
|
$185,715
|
$87,386
|
$66,077
|
$41,210
|
$21,179
|
|
1994
|
$195,726
|
$91,226
|
$68,753
|
$42,742
|
$21,802
|
|
1995
|
$209,406
|
$96,221
|
$72,094
|
$44,207
|
$22,344
|
|
1996
|
$227,546
|
$101,141
|
$74,986
|
$45,757
|
$23,174
|
|
1997
|
$250,736
|
$108,048
|
$79,212
|
$48,173
|
$24,393
|
|
1998
|
$269,496
|
$114,729
|
$83,220
|
$50,607
|
$25,491
|
|
1999
|
$293,415
|
$120,846
|
$87,682
|
$52,965
|
$26,415
|
|
2000
|
$313,469
|
$128,336
|
$92,144
|
$55,225
|
$27,682
|
|
2001
|
$292,913
|
$127,904
|
$92,754
|
$56,085
|
$28,528
|
|
2002
|
$285,424
|
$126,525
|
$92,663
|
$56,401
|
$28,654
|
|
2003
|
$295,495
|
$130,080
|
$94,891
|
$57,343
|
$29,019
|
|
2004
|
$328,049
|
$137,056
|
$99,112
|
$60,041
|
$30,122
|
What taxes were viewed as least fair to to taxpayers? Estate taxes, Federal gas taxes, Income taxes, and Payroll taxes. The number of people who favor estate tax repeal was 66 percent in 2007. Why have our politicians not yielded to the will of the people and repealed this tax?
If you are in the camp that believes the wealthy are not paying their fair share of income taxes, then I suggest you try this little experiment. Take out eight total strangers to dinner with you. When the bills comes, you and four of the others pay the bill leaving four people to pay nothing for their dinner. The four that got free meals come back and expect you to pay for them all the time. Finally, you say enough is enough, pay for your own meal. See what happens after that. You’ll hear that you owe it to them because you don’t deserve or work for the money you make. They’ll say you are evil because you won’t provide dinner for them. Then they will hand you their doctor bills and tell you to pay them. They tell you they are not going to work anymore, but did not save enough money so you must pay for their retirement too. Now you know how those making more than $50,000 per year feel every April 15th when the tax bill comes due.
Articles Referenced in this commentary:
Obama Courts Seniors With Tax Break
What Does America Think About Taxes? The 2007 Annual Survey of U.S. Attitudes on Taxes and Wealth by Andrew Chamberlain
Full Poll Results on Taxes
The Tax Foundation