Paying Their Fair Share - The Myth

[Gravitymaster 0]

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The Millionaires Who Pay the Highest Tax Rate
Published: Friday, 23 Nov 2012 | 11:05 AM ET Text Size
By: Robert Frank
CNBC Reporter & Editor


Warren Buffett and Mitt Romney have managed to create one of the enduring myths of our tax debate: that the rich pay a lower rate than the rest of America.

This may be individually true. Buffett pays a lower rate than his secretary and Romney pays a lower rate than most of us who make our living from salaries.

But nationally, the tax code is still broadly progressive. The more your make, the more taxes you pay as a percentage of your income.


According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010. Tax filers who earned $30,000 to $50,000 paid an average rate of 4.8 percent, while those who made between $50,000 and $100,000 paid 7.7 percent. Those making under $30,000 had a negative effective rate, meaning they paid no federal income taxes after deductions and credits.

Put another way, millionaires pay a rate that’s more than four times that of the middle class.

One caveat: Rates go up as income goes up — but only to a point. Once you hit a certain magic number among super-high earners, your tax rates start to fall slightly.

According to the IRS, average tax rates increase as income increases — until you get to around $1.5 million in annual income. Once you make $2 million, average tax rates start to decrease. The average tax rate peaks at 25.1 percent for those making between $1.5 million and $2 million.

After that it starts to go down, and falls to 20.7 percent for those making $10 million or more.

So the millionaires who pay the highest average tax rates in America are those who make between $1.5 million and $2 million. That $2 million could be called the “Top Turning Point” on the income ladder, where rates reverse. (Related: Where the 1 Percent Live)

The reasons for this aren’t complicated. Once you get above $2 million, your share of income from investments increases. Investments are generally taxed at the 15 percent capital-gains rate, compared with the top ordinary-income rate of 35 percent.

Those making $10 million or more earned nearly half of their income from capital gains and dividends.

Rates don’t fall all that much once you get above $10 million. Even among the top 400 earners in America, whose average income is more than $200 million, the average rate is 18 percent — still more than three times the rate paid by the middle class.

Both sides of the current political debate on taxes will no doubt see these data differently. The right will say that the rich already pay more than their fair share, while the left will point to the low rates paid by the wealthy relative to the official tax rates.

But the figures show that the more you make, the more you pay — up to the Top Turning Point.

-By CNBC's Robert Frank

Exposing another campaign lie designed to stimulate DRD4.

[CarpeDiem3 0]

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Exposing another campaign lie designed to stimulate DRD4.

What's DRD4?

[Gravitymaster 0]

A genetic defect.

[kallend 1,683]

"According to the IRS, average tax rates increase as income increases — until you get to around $1.5 million in annual income. Once you make $2 million, average tax rates start to decrease. The average tax rate peaks at 25.1 percent for those making between $1.5 million and $2 million. "

So the super rich, like Buffett and Romney, really aren't paying their share.

Thanks for the confirmation.

"According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010"

So I am paying at the same overall rate as someone making 10x what I make.

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The only sure way to survive a canopy collision is not to have one.

[GQ_jumper 4]

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"According to the IRS, average tax rates increase as income increases — until you get to around $1.5 million in annual income. Once you make $2 million, average tax rates start to decrease. The average tax rate peaks at 25.1 percent for those making between $1.5 million and $2 million. "

So the super rich, like Buffett and Romney, really aren't paying their share.

Thanks for the confirmation.

"According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010"

So I am paying at the same overall rate as someone making 10x what I make.

Most people read the article prior to commenting......

Did you completely ignore why it is that those multi-millionaires have tax rates that begin to lower?

If you hike the tax rates for investments you are going to make those of us at the bottom of the bracket suffer in order to force more money from the wealthy.

Someone paying 20% that is making 20 million is paying their share IMO. Or is millions of dollars in tax revenue per individual not enough, should we bleed them dry to punish them for their success? Because encouraging people to find even more tax loopholes and shelters overseas by trying to wring them out for cash is always a sound plan right?

Close the deductions, but leave the tax rates the same, or even lower them slightly if it still increases the revenue after taking away the deductions. And don't touch the capitol gains and dividend tax rates or you are going to hurt the working-class more than the super rich and force people to avoid investing their money for retirement.

History does not long entrust the care of freedom to the weak or the timid.
--Dwight D. Eisenhower

[RonD1120 58]

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"According to the IRS, average tax rates increase as income increases — until you get to around $1.5 million in annual income. Once you make $2 million, average tax rates start to decrease. The average tax rate peaks at 25.1 percent for those making between $1.5 million and $2 million. "

So the super rich, like Buffett and Romney, really aren't paying their share.

Thanks for the confirmation.

"According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010"

So I am paying at the same overall rate as someone making 10x what I make.

Most people read the article prior to commenting......

Did you completely ignore why it is that those multi-millionaires have tax rates that begin to lower?

If you hike the tax rates for investments you are going to make those of us at the bottom of the bracket suffer in order to force more money from the wealthy.

Someone paying 20% that is making 20 million is paying their share IMO. Or is millions of dollars in tax revenue per individual not enough, should we bleed them dry to punish them for their success? Because encouraging people to find even more tax loopholes and shelters overseas by trying to wring them out for cash is always a sound plan right?

Close the deductions, but leave the tax rates the same, or even lower them slightly if it still increases the revenue after taking away the deductions. And don't touch the capitol gains and dividend tax rates or you are going to hurt the working-class more than the super rich and force people to avoid investing their money for retirement.

You and Gravitymaster are stating principles far to complicated for the perfesser. He thinks only in a straight line from preconceived notion to forgone conclusion, IMO.

Of course, I am guilty as well, except that I think conceptually not linear, IMO.

Look for the shiny things of God revealed by the Holy Spirit. They only last for an instant but it is a Holy Instant. Let your soul absorb them.

[catfishhunter 1]

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"According to the IRS, average tax rates increase as income increases — until you get to around $1.5 million in annual income. Once you make $2 million, average tax rates start to decrease. The average tax rate peaks at 25.1 percent for those making between $1.5 million and $2 million. "

So the super rich, like Buffett and Romney, really aren't paying their share.

Thanks for the confirmation.

"According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010"

So I am paying at the same overall rate as someone making 10x what I make.

And your point is? Just because someone makes more they should pay more? How about you pay the total sum they are paying then you will be paying YOUR SHARE...This whole fari share thing is bull shit. If it is a fair share thing then lets add up what it cost our goverment to run then divide that equally between everyone then it would be fair share...Either that are go to a flat sales tax and get rid of federal income tax all together..

MAKE EVERY DAY COUNT
Life is Short and we never know how long we are going to have. We must live life to the fullest EVERY DAY. Everything we do should have a greater purpose.

[kallend 1,683]

Clearly the concept of progressive, or even flat, tax rates is lost on some people.

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The only sure way to survive a canopy collision is not to have one.

[catfishhunter 1]

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Clearly the concept of progressive, or even flat, tax rates is lost on some people.

No the concept isn't lost on me, but we are talking fair share. So tell me Kallend just what is my fair share? What is your fair share? How do you come up with what is fair?

Lets break it down real simple for you. Lets take a pie. Lets put you me and billy boy at the table. We need to divide the pie up into fair share portions. Well I'm bigger the both of you so my fair share should be 75% Now Billy is younger then you and just had a kid and your old and going to die soon so you really don't need any pie so lets give the rest to billy...Sounds fair to me using your logic...Pretty ridicules don't ya think....

MAKE EVERY DAY COUNT
Life is Short and we never know how long we are going to have. We must live life to the fullest EVERY DAY. Everything we do should have a greater purpose.

[Andy9o8 0]

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Clearly the concept of progressive, or even flat, tax rates is lost on some people.

No the concept isn't lost on me, but we are talking fair share. So tell me Kallend just what is my fair share? What is your fair share? How do you come up with what is fair?

Lets break it down real simple for you. Lets take a pie. Lets put you me and billy boy at the table. We need to divide the pie up into fair share portions. Well I'm bigger the both of you so my fair share should be 75% Now Billy is younger then you and just had a kid and your old and going to die soon so you really don't need any pie so lets give the rest to billy...Sounds fair to me using your logic...Pretty ridicules don't ya think....

Flat tax does not promote the real-world fairness equivalence-of-burden; only a graduated tax rate does. That's why it's existed for decades, even when the GOP has had the majority in Congress.

This is the third thread in as many weeks that I've had to explain this. It's amazing how many non-wealthy conservatives fail to get it, and actually - eagerly - advocate their own butt-fucking.*

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4405259#4405259

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4400009#4400009

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=3481855#3481855







* Not that there's anything wrong with that.

[wolfriverjoe 1,371]

I'd like to see how the 30-50 group pays an average of 4.8%. I'm in there and I pay a hell of a lot more than that.

"There are NO situations which do not call for a French Maid outfit." Lucky McSwervy

"~ya don't GET old by being weak & stupid!" - Airtwardo

[normiss 644]

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So I am paying at the same overall rate as someone making 10x what I make.

OMG - THE EXACT SAME RATE?????

Sounds perfectly fair to me.

[Gravitymaster 0]

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Clearly the concept of progressive, or even flat, tax rates is lost on some people.

It isn't the concept that is difficult. Its accepting the unfairness that is lost on some.

[catfishhunter 1]

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Clearly the concept of progressive, or even flat, tax rates is lost on some people.

No the concept isn't lost on me, but we are talking fair share. So tell me Kallend just what is my fair share? What is your fair share? How do you come up with what is fair?

Lets break it down real simple for you. Lets take a pie. Lets put you me and billy boy at the table. We need to divide the pie up into fair share portions. Well I'm bigger the both of you so my fair share should be 75% Now Billy is younger then you and just had a kid and your old and going to die soon so you really don't need any pie so lets give the rest to billy...Sounds fair to me using your logic...Pretty ridicules don't ya think....

Flat tax does not promote the real-world fairness equivalence-of-burden; only a graduated tax rate does. That's why it's existed for decades, even when the GOP has had the majority in Congress.

This is the third thread in as many weeks that I've had to explain this. It's amazing how many non-wealthy conservatives fail to get it, and actually - eagerly - advocate their own butt-fucking.*

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4405259#4405259

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4400009#4400009

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=3481855#3481855







* Not that there's anything wrong with that.

Geeze you too? Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

MAKE EVERY DAY COUNT
Life is Short and we never know how long we are going to have. We must live life to the fullest EVERY DAY. Everything we do should have a greater purpose.

[billvon 2,476]

>Just because someone makes more they should pay more?

Yes. Having everyone pay the same amount doesn't work.

>If it is a fair share thing then lets add up what it cost our goverment to run then
>divide that equally between everyone then it would be fair share...

Then you'd have to put half the country in jail for nonpayment of taxes. Being imprisoned because you don't make enough money doesn't sound very fair.

[davjohns 1]

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Clearly the concept of progressive, or even flat, tax rates is lost on some people.

No the concept isn't lost on me, but we are talking fair share. So tell me Kallend just what is my fair share? What is your fair share? How do you come up with what is fair?

Lets break it down real simple for you. Lets take a pie. Lets put you me and billy boy at the table. We need to divide the pie up into fair share portions. Well I'm bigger the both of you so my fair share should be 75% Now Billy is younger then you and just had a kid and your old and going to die soon so you really don't need any pie so lets give the rest to billy...Sounds fair to me using your logic...Pretty ridicules don't ya think....

Flat tax does not promote the real-world fairness equivalence-of-burden; only a graduated tax rate does. That's why it's existed for decades, even when the GOP has had the majority in Congress.

This is the third thread in as many weeks that I've had to explain this. It's amazing how many non-wealthy conservatives fail to get it, and actually - eagerly - advocate their own butt-fucking.*

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4405259#4405259

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=4400009#4400009

http://www.dropzone.com/cgi-bin/forum/gforum.cgi?post=3481855#3481855







* Not that there's anything wrong with that.

Andy: I asked for you to clear this up in a prior thread, but I think you stopped participating. How do you define 'equivalent burder' in a rational way? It's an emotional argument. It's how the tax 'feels'. Is that how we now define 'fair'? Does it have to 'feel' right to...whom?

I know it just wouldnt be right to kill all the stupid people that we meet..

But do you think it would be appropriate to just remove all of the warning labels and let nature take its course.

[champu 1]

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Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

Actually Kallend said, "So the super rich, like Buffett and Romney, really aren't paying their share." which is a nonsensical statement that is, by definition, incorrect. They are literally paying their share. The fact that they pay it is what makes it their share.

[headoverheels 292]

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So I am paying at the same overall rate as someone making 10x what I make.

OMG - THE EXACT SAME RATE?????

Sounds perfectly fair to me.

Well, they are paying quite a bit lower rate than I do. Even more so, if you include FICA.

[ryoder 1,412]

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Well, they are paying quite a bit lower rate than I do. Even more so, if you include FICA.

And I still can't comprehend why the hell income > $110k is exempt from it!

"There are only three things of value: younger women, faster airplanes, and bigger crocodiles" - Arthur Jones.

[champu 1]

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Well, they are paying quite a bit lower rate than I do. Even more so, if you include FICA.

And I still can't comprehend why the hell income > $110k is exempt from it!

I think when talking about oasdi, it either needs to be kept separate, kept a "mandatory" expenditure, and the rules about paying in and paying out can be discussed as a discrete thing OR all the revenue and spending gets dumped into the general fund and we drop the charade that it is something special, or something we shouldn't quit like a bad habit if payments are unaffordable.

The reason you don't pay oasdi on income over $110K is because the program has caps on the maximum benefits you can receive. Under the "it's a special retirement program" doctrine this makes sense. It also makes sense to not pay oasdi on investment income because that doesn't correspond to a job you retire from, and investment income doesn't earn you any credits in the program to become eligable to receive benefits. And finally, if it makes anyone feel any better, the program is actually quite progressive when you consider the return people get out of it, and not just look at it as a tax.

However, if you want to remove the cap, call it a tax like any other, throw investment income into the fray, or means test it and tell people like myself to go pound sand when I retire then fine, but then treat it like any other receipt or expenditure and let it fend for itself in the budget and continuing resolutions every year.

[kallend 1,683]

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Geeze you too? Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

Kallend said NO SUCH THING. Try reading before hitting "post"

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The only sure way to survive a canopy collision is not to have one.

[kallend 1,683]

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Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

Actually Kallend said, "So the super rich, like Buffett and Romney, really aren't paying their share." which is a nonsensical statement that is, by definition, incorrect. They are literally paying their share. The fact that they pay it is what makes it their share.

Well, depends on whether you think treating income earned by running a hedge fund as "capital gain" represents a reasonable definition of a capital gain.

Just one example of how the super-rich have bought favorable tax treatment that isn't available to the middle class.

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The only sure way to survive a canopy collision is not to have one.

[champu 1]

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Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

Actually Kallend said, "So the super rich, like Buffett and Romney, really aren't paying their share." which is a nonsensical statement that is, by definition, incorrect. They are literally paying their share. The fact that they pay it is what makes it their share.

Well, depends on whether you think treating income earned by running a hedge fund as "capital gain" represents a reasonable definition of a capital gain.

Just one example of how the super-rich have bought favorable tax treatment that isn't available to the middle class.

As you may be aware I'm in agreement that calling what for all intents and purposes is a salary by the name "qualified dividend" or "capital gain" to enable a lower tax rate is something broken that needs fixing. Usually I bring it up when people propose screwing with the tax rate on investments because they're mad at "rich people" and they don't know why.

But, that doesn't change what I said about your statement. They may not be paying the share you think they should be paying, they might not being the share that is paid by Bizzaro-Buffet or Bizzaro-Romney in the alternate universe that people are free to refer to as "fairsboroughshire," but here they are literally paying their share.

If you meant "fair share" in your post, fine. If you meant "the share that I think would work best," fine. But then write that and lay off the posts like #21 in this thread.

[kallend 1,683]

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Kallend said FAIR SHARE...I want HIM to tell me what is my fair share what is his fair share and what are rich peoples fair share and what are the folks sucking off the government tit fair share.

If you want a FAIR SHARE then that means EVERYONE pays their fair share. Otherwise shut the fuck up about paying a "fair Share" because there is no way to actually do that

Actually Kallend said, "So the super rich, like Buffett and Romney, really aren't paying their share." which is a nonsensical statement that is, by definition, incorrect. They are literally paying their share. The fact that they pay it is what makes it their share.

Well, depends on whether you think treating income earned by running a hedge fund as "capital gain" represents a reasonable definition of a capital gain.

Just one example of how the super-rich have bought favorable tax treatment that isn't available to the middle class.

As you may be aware I'm in agreement that calling what for all intents and purposes is a salary by the name "qualified dividend" or "capital gain" to enable a lower tax rate is something broken that needs fixing. Usually I bring it up when people propose screwing with the tax rate on investments because they're mad at "rich people" and they don't know why.

But, that doesn't change what I said about your statement. They may not be paying the share you think they should be paying, they might not being the share that is paid by Bizzaro-Buffet or Bizzaro-Romney in the alternate universe that people are free to refer to as "fairsboroughshire," but here they are literally paying their share.

If you meant "fair share" in your post, fine. If you meant "the share that I think would work best," fine. But then write that and lay off the posts like #21 in this thread.

I avoid using the term "fair" in relation to taxes. It is meaningless.

However, those who have paid off the legislators to reduce their tax rate by redefining words in the language cannot by any means be considered to be paying their share of the cost of running the country. Income is income, it should all be taxed under the same rules regardless of where it comes from.

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The only sure way to survive a canopy collision is not to have one.

[kelpdiver 2]

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Warren Buffett and Mitt Romney have managed to create one of the enduring myths of our tax debate: that the rich pay a lower rate than the rest of America.
...
According to new data from the IRS, people who make $1 million or more had an average tax rate of 20.4 percent in 2010. Tax filers who earned $30,000 to $50,000 paid an average rate of 4.8 percent, while those who made between $50,000 and $100,000 paid 7.7 percent. Those making under $30,000 had a negative effective rate, meaning they paid no federal income taxes after deductions and credits.

sadly, this column starts with a lie when it redefined what Buffet said. You can't ignore the FICA taxes when it comes to comparing him and his secretary. She pays a higher rate because that 7.65% tax applies against her entire income. For Buffet it represents a rounding error.

I think it's fine to try to restrict the argument to income taxes, so long as that's clearly stated. But pretending that FICA doesn't exist doesn't serve the discussion well either.