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The truth about the rich and loop holes

September 27, 2011 By justinhart Leave a Comment

President Obama made another assertion the other day about the rich getting to write off a bunch of money through loopholes and hiring lawyers.  Last week we examined how the rich do indeed pay their own fair share.

Let’s examine this closer:

Below is the breakdown of incomes (according to IRS 2009 data) and various percentages which I’ll explain in a moment:

% Taxable income % took deductions % total deductions
$1 under $5,000 1.56% 4.20% 29.47%
$5,000 under $10,000 4.25% 5.15% 10.75%
$10,000 under $15,000 13.21% 7.42% 9.51%
$15,000 under $20,000 23.76% 10.25% 9.07%
$20,000 under $25,000 32.13% 13.15% 9.46%
$25,000 under $30,000 40.72% 17.70% 10.17%
$30,000 under $40,000 49.88% 25.19% 11.42%
$40,000 under $50,000 56.98% 37.00% 14.14%
$50,000 under $75,000 62.74% 49.60% 15.40%
$75,000 under $100,000 67.61% 66.15% 16.98%
$100,000 under $200,000 72.52% 84.71% 18.44%
$200,000 under $250,000 77.07% 94.44% 18.03%
$250,000 under $500,000 80.60% 96.38% 16.81%
$500,000 under $1,000,000 84.49% 96.61% 14.55%
$1,000,000 under $1,500,000 85.79% 96.73% 13.91%
$1,500,000 under $2,000,000 86.34% 97.16% 13.43%
$2,000,000 under $5,000,000 86.73% 97.75% 13.28%
$5,000,000 under $10,000,000 86.99% 98.30% 13.13%
$10,000,000 or more 85.60% 98.48% 14.63%

The first column shows the % of gross income which was taxable for each income bracket.  Notice that the rich don’t get away with much here.  They have little wiggle room to shovel money into some evil shelter to keep it from being taxed.

Next column shows the % of returns which declared deductions.  Again, when the deductions you have can pay for themselves you take them…

The last column shows the % of the total amount of deductions compared to gross income.  Again, even after all the deductions, the rich end up with net income comparable to even low and middle class families.

Bottom line: the rich pay their fair share and over 80% of their gross income is taxable in the end.

Filed Under: Taxes Tagged With: ,
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Tax Rates, Revenue and the Flat Tax

September 21, 2011 By justinhart Leave a Comment

With all this delightful class warfare underfoot I thought I’d take a gander at the average tax rate which Americans of all incomes pay.  (These numbers are from 2009 IRS records):

Income bracket Taxable income Ave. Tax Rate Taxes Paid % of taxpayers % of taxes paid
$1 under $5,000 $424,220 9.49% $40,278 7.57% 0.00%
$5,000 under $10,000 $3,927,228 9.67% $379,851 8.86% 0.04%
$10,000 under $15,000 $20,542,044 4.13% $848,075 9.02% 0.10%
$15,000 under $20,000 $47,287,524 5.32% $2,516,274 8.26% 0.29%
$20,000 under $25,000 $72,338,786 6.45% $4,669,410 7.27% 0.54%
$25,000 under $30,000 $96,902,697 7.05% $6,827,564 6.28% 0.79%
$30,000 under $40,000 $249,325,250 8.08% $20,151,883 10.42% 2.33%
$40,000 under $50,000 $275,259,782 9.23% $25,404,304 7.82% 2.93%
$50,000 under $75,000 $720,889,762 10.81% $77,962,073 13.55% 9.00%
$75,000 under $100,000 $669,533,805 12.02% $80,492,622 8.31% 9.30%
$100,000 under $200,000 $1,306,333,237 16.25% $212,290,589 9.80% 24.52%
$200,000 under $500,000 $718,621,108 24.54% $176,322,148 2.32% 20.36%
$500,000 under $1,000,000 $280,537,996 28.68% $80,458,185 0.36% 9.29%
$1,000,000 under $1,500,000 $111,652,589 29.34% $32,755,871 0.08% 3.78%
$1,500,000 under $2,000,000 $65,749,557 29.50% $19,393,235 0.03% 2.24%
$2,000,000 under $5,000,000 $158,702,289 29.58% $46,943,630 0.04% 5.42%
$5,000,000 under $10,000,000 $84,805,917 29.03% $24,617,005 0.01% 2.84%
$10,000,000 or more $205,554,127 26.17% $53,790,324 0.01% 6.21%

As we noted previously the rich pay a good portion of all taxes.  Note that the top .01% of taxpayers (those making $10,000,000 or more) pay more than 6% of the total taxes.

Notice also how high the top effectual tax rates are…  As I noted yesterday, even in a perfect world… this discrepancy of income would exist.

Now, let’s talk flat taxes.  If we took the existing taxable incomes and applied a flat of 11% to the brackets here are the taxes that come out:

$1 under $5,000 $424,220 $46,664
$5,000 under $10,000 $3,927,228 $431,995
$10,000 under $15,000 $20,542,044 $2,259,625
$15,000 under $20,000 $47,287,524 $5,201,628
$20,000 under $25,000 $72,338,786 $7,957,266
$25,000 under $30,000 $96,902,697 $10,659,297
$30,000 under $40,000 $249,325,250 $27,425,778
$40,000 under $50,000 $275,259,782 $30,278,576
$50,000 under $75,000 $720,889,762 $79,297,874
$75,000 under $100,000 $669,533,805 $73,648,719
$100,000 under $200,000 $1,306,333,237 $143,696,656
$200,000 under $500,000 $718,621,108 $79,048,322
$500,000 under $1,000,000 $280,537,996 $30,859,180
$1,000,000 under $1,500,000 $111,652,589 $12,281,785
$1,500,000 under $2,000,000 $65,749,557 $7,232,451
$2,000,000 under $5,000,000 $158,702,289 $17,457,252
$5,000,000 under $10,000,000 $84,805,917 $9,328,651
$10,000,000 or more $205,554,127 $22,610,954

When you add up the totals, taxes collected from individuals amounted to $866 billion dollars.  In this 11% flat tax model taxes would come in at $560 billion.

At this point liberals will weep and gnash their teeth for the flailing budget of the EPA to save the snail dart…

But wait!  There’s hope!  The income above is taxable income – that is – income after deductions.

If we took away those deductions and simply went off of what people made (and did away with the hundreds of thousands of hours wasted on tax preparation) behold:

Bracket Gross income Flat Taxes at 11%
$1 under $5,000 $27,218,608 $2,994,047
$5,000 under $10,000 $92,407,278 $10,164,801
$10,000 under $15,000 $155,465,805 $17,101,239
$15,000 under $20,000 $199,017,560 $21,891,932
$20,000 under $25,000 $225,167,737 $24,768,451
$25,000 under $30,000 $237,994,230 $26,179,365
$30,000 under $40,000 $499,879,773 $54,986,775
$40,000 under $50,000 $483,088,798 $53,139,768
$50,000 under $75,000 $1,149,068,817 $126,397,570
$75,000 under $100,000 $990,337,913 $108,937,170
$100,000 under $200,000 $1,801,446,897 $198,159,159
$200,000 under $500,000 $905,347,402 $99,588,214
$500,000 under $1,000,000 $332,037,478 $36,524,123
$1,000,000 under $1,500,000 $130,149,237 $14,316,416
$1,500,000 under $2,000,000 $76,148,200 $8,376,302
$2,000,000 under $5,000,000 $182,986,391 $20,128,503
$5,000,000 under $10,000,000 $97,493,167 $10,724,248
$10,000,000 or more $240,133,885 $26,414,727

If you add up the column on the right you get (drum roll please) $860 billion. Imagine the incredible boost to the economy if we were allowed to keep more of our money on all levels.

Obviously there are implications for those in the brackets who pay less than 11% now… but the harranging over class warfare would effectually be eliminated.

Filed Under: Exclusive Tagged With: , ,
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Do the rich pay their fair share?

September 19, 2011 By justinhart 5 Comments

As Obama ramps up to tax the rich we ask: what constitutes a fair tax for the richest among us?

From 2009 data taken directly from the IRS we get the following breakdown of high income taxpayers vs. the rest of us:

All Taxpayers Make over $1 Million Percent
No. returns 81,890,189 235,649 0.29%
Gross Income $6,777,684,912,000 $726,910,880,000 10.73%
Taxes paid $865,948,695,000 $177,700,565,000 20.52%

In other words. Taxpayers who make over $1 Million a year constitute just .29% (point 29 percent) of all tax returns, account for 10.73% of all taxable gross income and pay over 20% (twenty percent) of all taxes.

Think about it, a group that makes up 3 tenths of 1% of our population pays 20% of the US receipts.  Ummm… that’s seems fair to me.

Filed Under: Fiscal Crisis Tagged With: , , ,
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Does taxing the rich work? Nope. Here’s the proof.

September 19, 2011 By justinhart Leave a Comment

The Left loves to decry that that “the rich get richer and poor get poorer”.  Their solution is always to tax the rich. Does taxing the rich lead to better income distribution? No, in fact, quite the opposite.

Let’s put this to the test using the latest data from the Census Bureau just released to the public.

One set of data I’m particularly fond of are the aggregate income tables found here.

These data show the % of the income held by each quintile income bracket.  In other words, if you sliced up taxpaying American households into 5 parts – what is the percentage of the total aggregate wealth in each bracket?

Using out trusty Many Eyes tool provided free by IBM we can give you an interactive graph of the same.

Let’s look at the data from 1967 – 2010:

Notice that distribution of income for the wealthiest jumps remarkably in 1993 after Clinton enacted what became known (even in Democrat circles) as the “largest tax increase in history.” The top 5th income bracket (those making over $100K a year) saw a huge bump in their percent take of all the money. In fact, if you narrow it to the top 5% of earners (those making $180,000 a year) their percentage jumped 13%!

Zooming in you can see this in action. Click on the last item on the left “Lowest fifth”.

The lowest fifth income earners (those making under $20,000 a year) saw their percentage command on the economy drop.

Notice that Obama has presided over the largest percentage drop in aggregate income for the poor – since they began keeping records.

So, we know what will happen if we raise taxes again. Fewer receipts and poorer poor among us.

Filed Under: Fiscal Crisis Tagged With: , , , , ,
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