I feel left out

[xoxoxoBruce]

Originally Posted by Rock Steady

... The CBO study, due to be released today, found that the wealthiest 20 percent, whose incomes averaged $182,700 in 2001, saw their share of federal taxes drop from 64.4 percent of total tax payments in 2001 to 63.5 percent this year. ...

This is seriously unconvincing. I know a lot of people making a lot less than they did in 2001.

I can't believe that 20% of Americans make more than $180K a year. That's just ridiculous.

And I know a lot of people making more than in 2001, what does that prove?

It doesn't say 20% make more than $180k, it says 180K is the average for the top 20 %. That can be a very few making much more and a whole lot making less. It would be clearer as a mean or percentile, but it's not.

[xoxoxoBruce]

Originally Posted by Spexxvet

...

In regards to the taxation issue. I can't find the resultant tax rate or tax dollars paid by these groups of folks. If your income is, say, $1 million, how much tax do you really pay? What percentage of their income does that represent? How much for the $51K to $75K range? What is their disposable income? I've searched for this info, but I can't seem to find what I'm looking for.

Here's the tax rate but what you pay is entirely up to you. How good you and your accountant are at playing the deduction game.

[xoxoxoBruce]

Originally Posted by Undertoad

The US is best off when there is mobility: opportunity for the poor to become rich, no matter what the definition of those two things is.

One of the biggest factors creating a rich/poor "gap" is the Social Security system. SS is a regressive system that takes from the poor and gives to the rich.

How is it taking from the poor and giving to the rich?

[Rock Steady]

Originally Posted by xoxoxoBruce

... It doesn't say 20% make more than $180k, it says 180K is the average for the top 20 %. That can be a very few making much more and a whole lot making less. It would be clearer as a mean or percentile, but it's not.

Thanks, I misread it.

Originally Posted by xoxoxoBruce

Here's the tax rate but what you pay is entirely up to you. How good you and your accountant are at playing the deduction game.

It's not entirely up to you. If one make's a big stock option gain, one gets taxed hard no matter what, short term, alt min. Then, after paying dues to join the club, one can set up all kinds of tax shelters.

But, looking at any single year for a taxpayer can be deceptive. Part of what I did resulted in overpaying Alt Min. A couple of years later, we had big medical deductions that took our taxable income to zero. Normally that would initate Alt Min, but we had credit towards that. So, we paid no federal taxes that year.

But this was from real losses, real past taxes paid, and real medical expenses. It wasn't exactly the "money growing on trees" scenario of popular myth.

Originally Posted by Undertoad

The US is best off when there is mobility: opportunity for the poor to become rich, no matter what the definition of those two things is.

One of the biggest factors creating a rich/poor "gap" is the Social Security system. SS is a regressive system that takes from the poor and gives to the rich.

I agree that a chance for mobility is a good thing. Education is a key factor in that, and the truth remains that schools in the ghetto versus schools in wealthy suburbs give a very different quality of education.

I'm not quite sure of what you mean about the Social Security system either. Everyone pays into it, and at age 65 or if you become disabled, everyone draws from it, even those with private retirement/disability plans that give them a pretty good income. For example, I know of a disabled vet who gets almost $3,000/month from the VA and, in addition, draws an SSDI check for $730.00/month.

I think SS needs to be treated more like a sort of catastrophe insurance. If you have over a certain amount of income from other sources, you shouldn't be able to draw SS. I know most folks probably will disagree with me on this, but it would have the effect of making a big dent in the SS "crisis," as well as allow SS payments for those who truly need it to be raised to a more livable amount. Right now, a disabled person on SSI gets something like $570.00/month. Pretty pathetic. SSDI is somewhat better, I think people can get as much as $1200/month from that, but you have to luck out and meet the complex formula SSDI uses to figure your benefits.

[Undertoad]

Why SS is regressive.

One, your income under SS is only taxed to a certain point, about $90,000, and then it stops. You are not taxed above that point. Everyone under that exemption point is paying full percentage. Everyone who makes more than that is paying a lower percentage. People who make a ton more than that, pay a ton less.

Two, rich people live longer than poor people. A person who pays into the system their entire life, and then dies at age 65, is effectively hosed. Poor people are more likely to do that.

Three, rich people are more likely to be contractors and/or schedule C S-corporation or use other such practices to avoid paying the employer portion of the tax.

Four, rich people are more likely to put in close to the max their entire life which means they will take out close to the max during their entire senior years.

[xoxoxoBruce]

Originally Posted by Undertoad

Why SS is regressive.

One, your income under SS is only taxed to a certain point, about $90,000, and then it stops. You are not taxed above that point. Everyone under that exemption point is paying full percentage. Everyone who makes more than that is paying a lower percentage. People who make a ton more than that, pay a ton less.

OK, if you make more than 90k you pay a smaller percentage but not less money. Likely more money than most.

Two, rich people live longer than poor people. A person who pays into the system their entire life, and then dies at age 65, is effectively hosed. Poor people are more likely to do that.

True

Three, rich people are more likely to be contractors and/or schedule C S-corporation or use other such practices to avoid paying the employer portion of the tax.

Ah, self employed, a unique problem most of us never face.

Four, rich people are more likely to put in close to the max their entire life which means they will take out close to the max during their entire senior years.

So you think they will collect more than they contributed therefore grab some of the money the poor people contributed before they died. Got it, thanks.

[xoxoxoBruce]

Originally Posted by Rock Steady

It's not entirely up to you. If one make's a big stock option gain, one gets taxed hard no matter what, short term, alt min. Then, after paying dues to join the club, one can set up all kinds of tax shelters.

But, looking at any single year for a taxpayer can be deceptive. Part of what I did resulted in overpaying Alt Min. A couple of years later, we had big medical deductions that took our taxable income to zero. Normally that would initate Alt Min, but we had credit towards that. So, we paid no federal taxes that year.

But this was from real losses, real past taxes paid, and real medical expenses. It wasn't exactly the "money growing on trees" scenario of popular myth.

Your right of course, especially when it comes to unearned income or anything other than a straight wage.
I didn't mean to imply you could duck all taxes if you made big money. Just that those who do, will vary greatly in what they actually pay depending on the things I mentioned. It's hard to give 100k to a charity when you only make 20.