If we want shared sacrifice, maybe we should ask people at the bottom to share as well. Anecdotes of Warren Buffet's office aside, in general the richest people pay the largest proportion of taxes.
We already lean quite heavily on the top 1% - the top 1% actually pays more in taxes than the bottom 90%.
This year the first $9,350 of income is exempt from taxes for singles and $18,700 for married couples, just slightly more than in 2008. That means millions of the poor do not make enough to owe income taxes.
But they still pay plenty of other taxes, including federal payroll taxes. Between gas taxes, sales taxes, utility taxes and other taxes, no one lives tax-free in America.
When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.
and
It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.
Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.
Don't let some fool you into believing that the poor don't pay their share of taxes. They do.
Warren Buffet is specifically talking about federal income taxes, not payroll taxes such as Social Security and Medicare, which can be considered benefits because people contributing will get a return when they retire (it's actually a progressive system, in which the poor get more than what they contribute).
The link that he gave already adjusts the numbers for payroll taxes (but it's obvious from looking at how the tax is collected that it's regressive -- i.e., flat rate up to $106k and then no tax on wages above that).
The link he gives does not provide % of tax burden / % of income earned, nor do I see any way to figure that out from the data given.
I agree that payroll taxes are regressive past $106k, but it's hardly clear that this changes the picture significantly. I.e., the 12.4% a poor person pays in payroll taxes need not outweigh the 0% they pay in income taxes.
Second, the use of the federal itemized deduction offset is very misleading, given that the deduction's purpose is to avoid double taxation in the first place, and that the money states get from the federal government comes almost exclusively from progressive sources.
Third, the intersection of the previous two. Most of the difference between brackets regardless of states is accounted for by the wealthy paying very little sales tax. They pay very little sales tax because they consume very little of their income. What they don't consume ends up being taxed in the estate tax mentioned earlier or given to charity neither of which are included in this report but both of which pay for similar things to state taxes (helping the poor, schools, libraries, parks, etc)
Ask yourself how much you need to make in order to live comfortably, and feel "rich enough". Maybe $100,000/year would do it in most parts of the country? And probably a lot less.
Now suppose you had a million dollars (and just a million, ignoring these billionaires for the moment). That mean you could risk, without really blinking an eye, $900,000 on any investment; even if you lost every penny, you'd still be left with enough to live "well" and feel pretty "rich". At no point would you fear missing your next meal or losing the roof over your head, and you probably wouldn't care if you had a job. Of course, the odds of losing all $900,000 are slim; you'd probably see some payoff, and never really approach that unfortunate low.
Rich people will always have opportunities to make money that the poor will never have. Even if you tax a millionaire or billionaire at a very high rate, they'll have enough money left over to take many risks and very likely end up richer anyway. At the very least, they won't miss the money that went to taxes.
Now suppose you only make $15,000/year. Not only would it take years to reach the above "rich" $100,000 level, but you'd be insane to risk much of that low income on any investment: failure means you come out with zero and miss your next meal and lose your house. If they're lucky, these people may have a handful of investment opportunities and ways to become richer; if they screw up, most of those opportunities go away forever. Taxes at the bottom won't fix anything at all.
What I have always wondered: there has got to be a certain amount of money that by all normal standards HAS to be enough for a human being. If you are so rich, you can only have so many houses and cars and all sorts of other toys that you don't even need half of... then you want to leave something for your kids and their kids and generations to come, your relatives and family but still, that is considerably little. A few million go a LOOONG way.
So, after all the toys, investments and securing your offsprings, you are still left with a HUGE amount of money and assets which you will likely never make any use of anyway.
I know this goes against our ideals and system of capitalism but: if such a limit exists why not cut billionaires off above it and give the exceeding money directly to the government or charity?
You are trying to tell me that someone like Warren Buffet with a net worth of $50 billion can really actually make good use of all that money? I know, "there can never be enough" out of principle. But really, with 50bn I imagine you could not (sanely) possibly spend it fast enough in a way where you get something out of it or in return; it would grow back faster in interest than you can dish it out.
Well, assumed you were talking about sums < $1B. I can think of useful (starting businesses, research/engineering projects) things to do with up to $1B or so.
Now, suppose we wanted to cap individuals at say $2B. How would this actually work? That's not cash that's lying around. Almost all of Buffett's wealth is in equity of Berkshire Hathaway. He can't sell that without also losing ownership of BRK. Is BRK worth as much without Buffett and/or the people he's explicitly groomed?
Billionaires are billionaires not because of their income, but because of the assets that they control.
I'm not asking for his generalizations; I'm asking if he personally knows actual poor people in the US. E.g., a single mom, an elderly widow, a recovering alcoholic, a laborer whose back is shot.
Also, I utterly refuse to accept third-world conditions as a baseline for "poor enough". You might as well use the 15th century for all the relevance it has.
This is getting absurd. Poor people in America aren't as poor as you think. I absolutely hate it when people like you generalize how poor people live. Reading a blog post does not make you an expert on the poor or the bottom 1%. Try living it, like my family has. None of us are starving (a lot of us are fat in fact), and we all have smart phones and game consoles.
I have just come back from a trip to Vietnam in which I visited homes in the Mekong delta. We're talking about a place where half the homes are made of palm, there's no running water at all, and the people are dirt poor. I've seen some of these palm shacks with large-screen TVs - older CRT types, admittedly, but it drove home the point that "big screen TV" is no longer a sign of opulence.
Similarly, the people aren't starving, but that doesn't not mean that they aren't poor - if "electronic gadgets and absence of famine" is all you need to define as "not poor", I disagree with you.
Suggesting the bottom 1% has game consoles and smartphones is a) ridiculously wrong, and b) irrelevant.
Regarding wrong, The bottom 0.2% don't even have housing, which is going to make a game console hard to use. The I was talking just this morning with somebody doing financial literacy programs, and they decided against doing a web or smartphone tool because most of the people they are trying to reach don't have regular web access. And that's in the San Francisco Bay area, where tech adoption is very high.
It's irrelevant because having a few hundred dollars worth of consumer electronics says nothing about whether they have important basics like physical safety, a sound education, decent medical care, regular dental care, reliable transportation, clean water, and healthy food. All of which are necessary for people to reach their full economic potential. That shit costs a lot more than a game console.
This is getting absurd. What I find a ridiculously disgusting is your pretentiousness is assuming how poor Americans live. You're justifying your argument based on a shoddy and superficial experience with poor people?
My family immigrated from a third world country and the adult members earn ~$20K salaries. The children have a free and subsidized $10K+ education, is safe (yes, the ghetto isn't on high alert for drive by shootings 24/7), have access to clean water (yes, we use the same water that you use), healthy food which can be purchased at Walmart for a price much less than prices you can pay for food at a fast food restaurant. (Yes, we all don't eat at fast foods).
We also have access to the free emergency room when needed, and dental services for my family goes for about $35 per visit (it's subsidized in a lot of cases actually). The poor in America do not live like the poor in third world countries. Quit insinuating that and stop assuming how poor Americans in 2011 live. We're not as poor as you make us out to be.
As I explained elsewhere in the thread, adult members (plural) earning ~$20k means (depending on number of children) you probably aren't poor, or at least not very poor. 12.9% of households earn under $15k, 24.7% earn under $25k, and 35.6% earn under $35k:
The use of subsidized education and dental services helps to prove my point, which is that the poor in America don't have much to give up, and need the assistance (government and otherwise) that they're getting.
Also, emergency room access does not equal medical care. It does mean emergency care, but it does not mean preventative or chronic care. For example, it means you won't have a doctor helping you avoid diabetes and you won't get your diabetes treated. However, they will amputate your gangrenous toes once the disease develops that far.
I'm really glad that your family has done well. Every family should do at least that well. Many don't.
It's cheaper to buy off the Dollar menu than to buy out-of-season, expensive fresh produce (like raspberries, red peppers, etc.)
It's much, much cheaper to buy rice, beans, corn, potatoes, and pasta and supplement with cheap proteins (eggs, chicken) and cheap fresh fruits and veggies (melons, bananas, apples, cabbage, carrots; see the list starting on page 34 of http://www.ers.usda.gov/Publications/EIB71/EIB71.pdf ) Page 36 of the same report shows how an adult on a 2000 calorie diet can meet their recommended fruit and veggie intake for about $2 per day, with a pretty good variety (including some expensive options like strawberries.) This is more or less how I eat, and I'm just above the poverty line.
I notice you've dodged my question three times in a row.
I don't agree or disagree with your statistics. They're irrelevant, because Scalzi is describing things he has seen, and that match things I have seen. In the lives of actual poor people. In the US.
I ignored the question because the answer is irrelevant. One can gain knowledge about the world via statistics, not merely personal acquaintance, and statistics also tend to be more useful.
However, to answer your question, yes. I know poor people. I've lived most of my adult life in poor neighborhoods. My experiences tend to agree with what the official statistics say - most poor people eat enough or perhaps too much (virtually none are underfed), don't work much and do not live in overcrowded homes.
These are the specific points on which I disagreed with Scalzi. I cited statistics which back up my position.
You are also dodging a question, so I'll ask it again: which set of statistics do you disagree with? The BLS, the Census or the USDA?
Are you serious? You're dismissing statistics because you believe your anecdotal evidence holds more weight? You're now an expert on poor people because of the things you have "seen" and someone else has "seen"?
Please quit it with the BS. You're not poor. You're not around poor people. Stop describing how poor people live.
I am dismissing his statistics because they do not have bearing on the question that we were discussing, which is whether or not Scalzi was describing poverty in the US. Scalzi is definitely an expert on what he has seen. I'm an expert on what I have seen. As are the hundreds of other contributors to that discussion.
I am definitely not poor now. But we were poor when I was a kid, and only made it through via the help of family and government programs. I am still in regular contact with people who are not as lucky as I was. So enough with your baseless assertions, ok?
My family is actually at the bottom 1%. We can afford a solid standard of living at $15K-$20K salaries because of corporate behemoths like Walmart, which I assume you despise, feed, clothe, and entertain our family at $15 per day.
The poverty line for one person is $10.9k. For a family of four, $22.4k. That covers circa 15% of the population. For comparison, the median income is $44k, so if you're making $30-40k per year (assuming two salaries) then that's not far from the average American household.
It's interesting that all of these links talk about federal income taxes, but you talk about them as if they're talking about all taxes that people pay. Once you take into account payroll, sales, and sundry other taxes that people pay (many of which are pretty regressive), the system becomes much less progressive (it's still slightly progressive as a whole, but much less so than conservatives like to cast it).
This is one reason why Buffett suggests that we keep the 2% deduction in the payroll tax that President Obama proposed (and Congress passed) last year.
The richest pay the largest proportion of taxes because they earn so much. In the article, 400 hundred people make $90 billion, and it takes 3 million people working at $30,000 a year to collectively earn as much.
A family of 4 starts paying tax at around $27,000. They're already paying 6.2% in Social Security and 1.45% in Medicare. (This is also matched by the employer.) That's $2,066.
I want to know how many dollars they should pay in taxes. So, we've said social security and medicare is $2,066. How much should a family of 4 making $27,000 be taxed?
Stop spreading lies - it's incomplete data! Do you work at FOX News or something?
It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008. But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.
Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.
We already lean quite heavily on the top 1% - the top 1% actually pays more in taxes than the bottom 90%.
http://www.taxfoundation.org/news/show/22652.html
A graph of the data in that article:
http://i.imgur.com/wa8uu.png
In terms of taxation of the top 10%, the US is the most progressive country in the OECD.
http://www.taxfoundation.org/blog/show/27134.html
Maybe the tax code needs tweaking at the level of the top 400, but it's very progressive up to the level of the top 1%.