5 tax fallacies invented by the 1%

[xchrom]

http://www.nationofchange.org/five-tax-fallacies-invented-1-1335792996


We hear these claims often, even though they're entirely false. An analysis of the facts should make that clear.

(1) The Rich Pay Almost All the Taxes

That's simply not true. The percentage of total taxes paid by the very rich (the top 1%) is approximately the same as the percentage paid by middle class Americans (the 4th quintile, average income $68,700). Here are the details:

Internal Revenue Service figures show that the very rich paid 23% of their incomes in federal income taxes in 2006. The middle class paid about 8% of their incomes in federal income taxes. Based on U.S. Congressional Budget Office figures, the very rich pay just under 2% of their incomes toward social security, while the middle class pays just under 10%. According to a study by The Institute on Taxation and Economic Policy, the very rich pay about 7% of their incomes in state and sales and property and excise taxes, while the middle class pays approximately 10%. Another year of Bush tax cuts will reduce the taxes of the very rich by at least 3% more than the middle class.

So total taxes for the very rich are 29% of their incomes (23% + 2% + 7% - 3%). Total taxes for the middle class are 28% of their incomes (8% + 10% + 10%). These figures agree with CTJ's 2011 estimate of total taxes paid.

[unblock]

1. what a sloppy article! i agree with the thrust but the details are painful.

(1) is "the rich pay almost all the taxes" -- i.e., the GOVERNMENT'S income comes almost entirely from the rich -- but then the body of that portion explains how the rich pay the same percentage of THEIR income as the lower middle class -- which is a very different question.

(3) is "tax cuts boost the economy" -- but then the body of that portion explains how tax cuts don't boost government revenue -- again a related but rather different question. there's plenty of room for tax cuts to stimulate the economy, but not enough to raise government revenue.

(5) merits of the financial transaction tax aside (it's probably a good idea and relatively harmless to financial markets), this section implies that this tax would have prevented the economic collapse, which it almost certainly would not have done. mostly, the ftt would put a damper on high-frequency trading, but that's about it. it wouldn't have done anything for simple excessive leverage, for instance, which had a LOT more to do with the collapse.

[chaska]

2. Another myth: US has high corporate taxes.

I checked this out once, a couple years ago, and found only a few godforsaken places like Estonia had LOWER corporate taxes.

[sabbat hunter]

3. the nominal rates and the rates actually paid

is where the differences are at.

If you look at our 'official' corporate tax rate it is fairly high among industrialized companies. However, with all the deductions, etc. the real rate is far far lower.

[oilpro2]

4. Recc'ed and bookmarked.

Good resource for those who believe the Reich Winger bullshit.