In the age of President Donald Trump, you don’t hear as many politicians, activists, and media outlets decrying “the top 1%” as often. Perhaps this piece of news will fly under the radar.
According to the Internal Revenue Service (IRS), the top one percent of United States taxpayers (1.4 million) paid as much in federal income taxes as the bottom 95 percent (134 million) in 2015.
The IRS reported that the top one percent earned about one-fifth of total income, while the bottom 95 percent earned nearly two-thirds of total income.
Mark Perry of the American Enterprise Institute (AEI) has one word for the top one percent: thanks!
Here is what he tweeted:
JUST OUT FROM IRS: The Top 1% of Taxpayers (N = 1.4M in 2015) Paid Almost As Much in Federal Income Taxes in 2015 as the Entire Bottom 95% (N = 134M).
As a Member of the Bottom 95%, THANK YOU Top 1% for Shouldering Such a Disproportionate Share of Our Tax Burden. pic.twitter.com/whfuAX219Q
— Mark J. Perry (@Mark_J_Perry) January 20, 2018
The next time the left shrieks about the rich paying their fair share, just make the point that they already do…and then some!
Prior to enactment of the bill, the top 1% paid about 39% of Federal taxes. If a tax bill that provided that 39% of the benefits went to the top 1% was enacted, there would have been very little impact on the degree of inequality. However, the actual tax bill provides that 83% of the benefits will go to the top 1%. While only 17% will go to the rest of the 99%.
The political debate may now shift from how many middle-class taxpayers actually will pay more or less under the Republican tax bill to the undeniable fact that there will be a massive shift in the tax burden from the rich and onto the middle class. The majority of middle-class taxpayers will see some benefit from the tax bill. However, even they might ponder the question of how much more they would have gotten from a tax bill that provided that 39% of the benefits went to the top 1%, and thus 61% of the benefits went to the other 99% as opposed to the 83% going to the top 1%, rather than the 83% – 17% split favoring the top 1% in the bill.
The fact that the non-rich could have had greater tax cuts, if the rich had not gotten so much, is not the only political problem for the Republicans. The tax portion of the Obama stimulus program lowered taxes on everyone who paid social security taxes and gave some extra payments to those on social security and unemployment compensation. However, most people falsely believed their taxes had been increased. With the new tax bill, there will be many middle class losers, which was not the case in earlier tax cuts.
In every single state, a couple who had previously filed with itemized deductions in the $18,000-29,000 range will definitely pay higher taxes in 2018 and beyond on the same income as they had in 2017. This is because the loss of their personal exemptions far outweighs the reduction in rates in every bracket. The same is true for any single filer with itemized deductions in the $10,000-$22,000 range. That is in addition to the many filers in high tax states who will pay higher federal taxes because of the limitation on state and local deductions to only $10,000.
An old adage is that a family should buy the absolutely most house they can. Prior to 2007, buying more house than they could comfortably afford was a generally winning strategy as home prices usually rose. Even today there are many middle-class households following the “absolutely most house they can” strategy, or for other reasons, that are just barely able to afford their homes. A family in the New York City suburbs with an income of $150,000 may be just able to pay their bills only because they can deduct the $10,000 they pay in state and local income tax and the $40,000 they pay in real estate taxes from their federal income tax bill. Limiting the state and local deduction to $10,000 will mean that many in those circumstances will lose their homes or at least suffer a drastic reduction in after-tax income. In those suburbs it is not uncommon for a house in a nice middle-class area to cost $900,000 and pay $40,000 in real estate taxes. The Sunday January 14, 2018, New York Times in the “On the Market” section shows a home for sale in Briarcliff Manor in the NYC suburbs listed for sale at $949,222 with real estate taxes per year of $43,956
Concern over rising Federal deficits could pose a risk to the fixed-income markets. In the coming months, the Office of Management and Budget and the Congressional Budget Office should be releasing their long-term budget projections. However, the Federal government shutdown, underway as I write, or a subsequent shutdown might interfere with the release of those budget projections. The financial markets could assume the worst in the absence of those figures. Additionally, there is a risk that deficits will be increased as a result of a new infrastructure spending bill. To the extent that markets perceive that deficit projections are either growing too fast and/or are based on unrealistic assumptions, that could also put pressure on the bond markets. Other possible aspects of the Federal government shutdown could be a reduction in outlays and even an elimination of the need to raise the debt ceiling. Trump’s reaction to the Russian expulsion of 755 American diplomats last summer was focused on how much money the American government was going to save from the elimination of those positions. Democrats possibly should have kept that in mind. While many Republicans might not have echoed those sentiments, there is an asymmetric aspect to the Federal government shutdown in that Republicans are likely to be less concerned with the cessation of many government functions. This would be especially the case if the criteria as to what is and what is not an essential service or employee, is whatever the Trump Administration says to be the case. The assumption that the furloughs of Federal government employees are paid vacations, may not even hold this time, as Trump might balk at paying for work not done. In any case a prolonged shutdown could reduce economic activity, which could be good for the fixed-income markets.
Even if the long-term budget projections are released, they might contain unrealistic assumptions regarding economic growth in the government’s long-term budget projections. With the enactment of the new tax law, there could also be unrealistic or at least inaccurate assumptions regarding the extent that firms and individuals will restructure themselves to reduce taxes. Already, we hear about entities now organized as partnerships of LLCs considering switching to being C corporations. Something that was not considered, when the possible impact of the tax legislation was being debated. That is in addition to the switching to LLCs that is widely expected to occur, as salaried individuals become pass-through entities to reduce taxes. As was seen in Kansas, where the income tax paid by pass-through entities was eliminated, so that it was advantageous for those collecting salaries to reorganize themselves into pass-through entities, many highly paid individuals did so. Bill Self, the state’s highest paid employee, does not pay state income tax on $2.7 million he earns as the University’s men’s basketball coach since he uses a Limited Liability Corporation to be compensated for his services rather than a salary…”
https://seekingalpha.com/article/4139026
It is morally wrong to even ask how much someone earns much less take what they earn based on how much they make. Our nation was not founded on covetous, envy, extortion and outright theft of private property. The basic premise to the entire argument is two fold. 1. It is governments money and they allow you to keep some and you should be glad they let you have what they do. 2. If you are deemed to have too much, produce more than what the government sees as enough you are to be punished so that those who do not produce can be rewarded. People gain wealth by providing goods and services people willingly and freely want more than the money they have in their pockets. Governments gained wealth by force by people with guns if you don’t “willingly” comply. The problem isn’t that the government isn’t taking enough, the problem is the government is doing WAY more than it is legally, financially and is physically capable of. The problem isn’t that we have too much liberty, the problem is we don’t have enough! It’s time we see who the REAL cause of the income gap is and why DC is the wealthiest city in the nation. You can’t be against big business and be for big government as that is hypocrisy at best.
This article is so wrong. It’s supporting the same 1% who have bought the goverment politicians and used them to destroy our economy(trillions in debt),countless unjust wars, and other corrupt practices. The same 1% which has destroyed the middle class but offshoring jobs. A lot of this same 1% have done some very corrupt things to get there money especially the war contractors,corporations and banks. The 1% should pay more since they can easily afford it and still live luxuries. They also don’t even pay 39% since they find ways to hide there actual income. Some of them don’t pay taxes at all.
The liberals are the richest people in our nation they own Wall Street. Yet some everyday average republicans actually support helping the rich who are liberals. It’s really sad.