Horace Heffner wrote:
Apples to oranges! Those are marginal rates; Jed's quoting the total take. You're looking at the derivative, Jed's talking about the result once you integrate it.At 10:41 AM 4/14/5, Jed Rothwell wrote:
These percentages are much too high. I should not try to quote these things off the top of my head. Here are the corrected figures as reported in the New York Times a few years ago.
Income group, Average pretax income, Total government tax receipts, As a
percentage of income
Bottom 20%, $7,946, $1449, 18%
Second 20%, $20,319, $2847, 14%
Middle 20%, $35,536, $5,622, 16%
Fourth 20%, $56,891, $9,835, 17%
Top 20%, $116,666, $21,623, 19%
This looks utterly bogus! Possibly more oriented around witholding than actual tax maybe? It looks like no one bothered to even look at a form 1040.
Consider this year for example (other years similar, just slightly different numbers). A single person gets $7,950 in deductions right off, so would not pay any federal taxes at all on $7,946. If the percentage is based on taxable income and not adjusted gross income, then that percentage is highly misleading. For example the first line of numbers for this year should be: Bottom 20%, $7,946, $795, 5%, where the 5% is of actual income of $7,946 + $7,950 = $15,896.
After taking the deductions, the tax table this year applies the formula:
$0 - $7150, 10%
$7150 - $29,050, 15%
$29,050 - $70,350, 25%
$70,350 - $146750, 28%
And please note that Jed's income numbers stopped at $116,666. If you look at larger incomes, and ignore use of loopholes and fancy deductions (and the alternative minimum tax and yada yada yada), you'd presuamably see the percentage paid in rise toward the top marginal rate in the limit.
And Jed was also looking at the total tax take, which is, of course, impossible to precisely divide up among the various income levels, but which surely hits the lower levels harder than an extrapolation from Schedule X would suggest. SS tax is regressive and starts at the first $1 -- AFACR there is no zero-bracket amount for SS. Many state taxes do the same thing. And if the table _really_ represented "Total government tax receipts" then it must have included sales tax too and there is just no way that can be anything except a coarse approximation, but in any case sales tax also starts at the first $1.
Yeah, Congress refused to index it. Strange -- I'd've thought Bush's cronies would've wanted that done.etc.
HOWEVER, people making over $100,000 are increasingly getting it socked to them at a much higher rate in the form of an alternative minimum tax.
This also does not include the possibility of Earned Income Credit (EIC) for the low end wage earners.
There is no way to get to $1,449 taxes on $7,946 actual income. All the $1,449 would have to be state and local taxes and sales tax,
And social security, which is, what -- 7.5%? Don't forget that.
and that just can't be 18%, unless maybe all the money were spent on booze, cigarettes, and gasolene.
Postage, that's the ticket! It's 100% tax!
And there's that gas-hog tax on V-8 engines. (Or is there?)
How're guns and ammo taxed?
8^)
Regards,
Horace Heffner
