Published on Friday, April 16, 2004 by CommonDreams.org
Who Really Pays Taxes in America?
by Cheryl Woodard

Recent news articles about skyrocketing tax fraud and corporate tax dodging have prompted a high level of public concern about the overall fairness and effectiveness of our current tax system. AskQuestions.org an online news site that addresses issues raised by public demand released a report today on Who Really Pays Taxes in America?

Drawn primarily from government statistics, the report describes not only how the tax burden has shifted from corporations to private citizens over the past 20 years, but also a disturbing new twist: the richest American households pay about 30 percent less tax which includes federal, state, and local taxes combined -- than middle-income households pay. And the public apparently understands whats going on: an AP poll released Tuesday reports that 49 percent of Americans believe their taxes have gone up, not down, as a result of the Bush tax cuts, consider all the new local and state taxes imposed in response to withering Federal grants to the states. And new CNN/Money Magazine poll reports that, "60% of Americans said the Bush tax cut did not personally help them."

In his proposed budget for 2005, President Bush cuts another $6 billion in federal aide to states, even though 30 states already face shortfalls totaling about $40 billion next year and more cutbacks in state spending are inevitable, as well as more increases in local taxes. While there are no national statistics that add up the costs, anecdotal evidence is clear. One California couple received a $100 tax refund from President Bush for 2003, but paid $515 in new local taxes. A self-employed man living in Nassau County, NY got a $300 tax rebate last year, but his property taxes went up $2,250.

While honest taxpayers deal with their growing burden, the independent IRS Oversight Board reported that tax fraud is $311 billion dollars per year more than federal spending on Medicare in 2003 and greater than the gross revenues of either Walmart or General Electric. The Board continually requests funding to strengthen resources for IRS enforcement, but because some of the biggest campaign contributors may be the countrys worst tax cheaters, the incentives for auditing tax cheats is nil. As a result, audits are focused on those at the bottom of the income scale.

Yesterday, David Cay Johnston reported in The New York Times that corporate audit rates have dropped by half in recent years, and noted that in 2003 the IRS conducted face-to-face audits with only seven out of 1000 corporations (compared to 29 per thousand in 1992).

If we simply collected the taxes cheaters are withholding from the system, we would have enough money to pay the college fees of every student in America, or to provide health insurance for small business employees, says the AskQuestions.org report.

AskQuestions.org practices bottom-up journalism by inviting the public to submit questions. The most popular questions are handed over to professional researchers and reporters. Answering Who Really Pays Taxes? required the AskQuestions.org team to assemble a dozen practical suggestions from a range of experts about increasing the fairness of the tax code while also making it more effective at stimulating sustained economic growth.

Neither Presidential candidate is likely to talk about fraud and favoritism during the election campaign, but voters apparently want answers on these very issues. And the AskQuestions report frames the debate from a voters perspective, so that people will be armed with the information they need in order to raise their concerns with the candidates.

Authored by the Executive Director of AskQuestions.org, Cheryl Woodard, the full report is available online, along with the public questions and comments that prompted the article at http://www.askquestions.org/details.php?id=39

Woodard is a co-founder of several computer magazines, including PC Magazine and Macworld. A full-time business consultant to magazine publishers, Woodard sits on the board of directors at the Independent Press Association. The AskQuestions.org project is a collaboration between Woodard and journalist Mark Dowie, Berkeley city councilmember Linda Maio, and writer/publisher Ted Nace. Woodard's email is cheryl@askquestions.org.

I read an article saying that buy 2025 America would start to break up. I mean the states will no longer be able to stay states because the people would revolt because of taxs. They said when people pay in taxs 50% of there income to taxs it will start to happen.

And yet, we pay lower taxes than many other countries. Maybe if they were called user fees instead of taxes?

We actually pay more than 50% in taxes now most people just don't realize it. The next time you go to the gas station look for the stcker that shows how much of that is taxes. Look at your receipts for the year and see how much you pay in local taxes. Add additional money for tires, batteries, cigarettes, booze, property taxes, car taxes, etc. Then add state taxes and federal taxes.

Personally I think there should be a flat tax with no way to get around it just like local sales tax. If everyone had to pay a flat 10% then you wouldn't spend all that time doing tax returns. It would be collected when you got paid like it is now except for those who are self employed.

Also keep in mind that as far as corp. go what ever they pay in taxes they raise the cost of the product to you in order to make up the difference because they still want a 30% return on their investment.

Until the public who owns and invests in these corporations, by buying stock, tells the businesses that they are happy with 8% corporations will continue to conduct business as usual.

Americans also feel they have to live better than everyone else. They buy a $700,000 house when a $100,000 house will do the same thing. They buy a $150,000 car when a $20,000 will do the same thing. When are we going to learn?

I tell my children this: If you're not part of the solution then you're part of the problem. We need to look at the problem and ask what can we do to make a difference. Who's up to running for office?

I believe there are enough people who want to see change but no one is jumping out there to try to make it happen. We all have to ban together to make the largest statement in history next to the Revolution. Did you know that the signers of the Declaration of Independence gave their lives and some the lives of their entire families? This is the price they paid for what they gave us today and the current government is trying to take that from us as well.

The biggest farce in my mind is the fact that we pay so much in taxes, but see fewer and fewer services. It is an abhorrent mess that the US cannot provide it's citizens with proper health care. It is becoming a survival of the fittest situation, if you have the money to pay for health care, you are able to have access to it. The Canadians think we are nuts (and so do I).

A friend of mine was in Costa Rica and met some people from Canada. They were all talking about plans to start families, and how they would work in their maternity leave, etc. The woman from Canada was saying things like, "Well, I just don't know at what point in my career I want to take one year (PAID!!) maternity leave". Good god!! My friend explained to her that in her new job in the US that she only would get 6 to 8 weeks off without pay and that only guarantees she will have her job back. Crazy.

Don't even get me started about education...

Thanks for posting this, David. Very important information--especially about how the tax burden is shifting. There was someone on these forums a while back who said something about how corporations should have the right to vote, which I completely disagree with. People can vote, not corporations. They already control so much of what passes for legislation with their lobbying dollars.

Also, I heard a report the other day about how people in Indiana are having to take out loans or sell their property because property taxes increased as much as 10 times IN ONE YEAR! Don't get me started. Corps. need to pay their fair share!

Thanks much for posting this article.
Peace,
Phoebe bird

Much has been said here. I could run off with my mouth and really get upset. I will say this. Fee are replacing taxes hands over fist for some folks. A good example is that as of last month the average working family here now has to pay a fee to park their boat trailer. Wonderful.

Depending upon who you listen to, for every living person in this country we each now owe $26,000.00 to $28,000.00 for our nation debt.

Thank you very much Mr. Bush.

BTW I'm Republican and a business owner. Not sure who I'm not to vote for yet....however I know who I'm not going to vote for~~!

Hi Phoebe!
Congratulations on your step up to the landowning class! There is nothing quite so comforting as closing the door behind me after an exhausting day at work and realizing that I have the right to tell the world to "stay out!" Except for our Gov, of course. They can kick the door down any time they feel like it. But one shouldn't dwell on such things. That's the road to paranoia. Don't think such stuff Phoebe! Just enjoy your new home and the pleasure it brings you!!
David

Now Pineapple Raye, I don't want to irritate you furthur but a few days ago I just came across the interesting fact that the Iraq debacle has cost each of us about $3400.00 to date! And to think of how long I agonized over spending just $2500.00 for a welder that I had wanted for the last twenty years! I wish George had listened to me before he went and sent all our boys and all them bombs to Iraq.
David

I have mixed emotions about Iraq. You see in my lifetime I've have had family that once lived behind the iron curtain. Freedom for them is still a new joy.

On the other hand I've lived my whole life believing in the American way. The we were the defenders of the weak, helpers of the needy, friends to all who smiled are way. I'm proud to \be an American. I really don't mind paying taxes to help those who really needed. I'm against paying taxes so someone can sit home on their shorts and watch T.V..

Today, I still have a hard time with the fact that we attacked another country. And to boot we did so with such an air about ourselves. While I'm still proud to be an American, I cannot help but see that our once shining shield is somewhat gray now.

I'm not impressed with who is running this next election. Like I said I know who I'm not going to vote for, the question who can I vote for.

Go to this web-site.
This is what we need!

www.fairtaxvolunteer.org/news/index.html.
But actually, 20% of the tax payers, pay 80% of the taxes.

As far as corporations paying taxes. Who eventually pays those taxes?
Why the consumer of products from the corporation, right?
Com'on now, follow this logically folk's.
What ever $$$$ are taken out of the economy, hurt it.
Fact!
Under Presidents; Kennedy, Reagan, and Bush, tax cuts were made.
Fact!
Revenues went UP!
However, congress who control the purse strings, went on a spending spree, under Reagan.
Who was then blamed for the deficit.
Bush [ 1 ] was dissed for raising taxes, after saying; 'read my lips, no new taxes'.
Well interesting isn't it?
Legislation that he wanted with a line item that hid a new tax.
Was that a setup?



It's not just the President, but YOUR congress person.

After reading the arguments on both sides in these forums,I have come to the conclusion that the best solution is don't re-elect anyone, especially a senator or representative. It is hard to believe sometimes that this country was founded on a tax revolt. Love, Jackie

Ok, so now don't shut this out just because it's the the Rush Limbaugh web-site. It comes right from the IRS.



here is new data for 2001. The share of total income taxes paid by the top 1% fell to 33.89% from 37.42% in 2000. This is mainly because their income share (not just wages) fell from 20.81% to 17.53%. However, their average tax rate actually rose slightly from 27.45% to 27.50%.



*Data covers calendar year 2001, not fiscal year 2001 - and includes all income, not just wages, excluding Social Security



This proves that it was not the tax cut that caused revenues from the rich to fall, but the recession and the stock market crash. In other words, you live by the sword, you die by the sword. If you are going to benefit from the rich paying more taxes, due to progressivity, on the upside, you are going to lose more revenue from these people on the downside. This is a good argument for reducing progressivity.

Think of it this way: less than four dollars out of every $100 paid in income taxes in the United States is paid by someone in the bottom 50% of wage earners. Are the top half millionaires? Noooo, more like "thousandaires." The top 50% were those individuals or couples filing jointly who earned $26,000 and up in 1999. (The top 1% earned $293,000-plus.) Americans who want to are continuing to improve their lives - and those who don't want to, aren't. Here are the wage earners in each category and the percentages they pay:

Top 5% pay 53.25% of all income taxes (Down from 2000 figure: 56.47%). The top 10% pay 64.89% (Down from 2000 figure: 67.33%). The top 25% pay 82.9% (Down from 2000 figure: 84.01%). The top 50% pay 96.03% (Down from 2000 figure: 96.09%). The bottom 50%? They pay a paltry 3.97% of all income taxes. The top 1% is paying more than ten times the federal income taxes than the bottom 50%! And who earns what? The top 1% earns 17.53 (2000: 20.81%) of all income. The top 5% earns 31.99 (2000: 35.30%). The top 10% earns 43.11% (2000: 46.01%); the top 25% earns 65.23% (2000: 67.15%), and the top 50% earns 86.19% (2000: 87.01%) of all the income.



The Rich Earned Their Dough, They Didn't Inherit It (Except Ted Kennedy)



The bottom 50% is paying a tiny bit of the taxes, so you can't give them much of a tax cut by definition. Yet these are the people to whom the Democrats claim to want to give tax cuts. Remember this the next time you hear the "tax cuts for the rich" business. Understand that the so-called rich are about the only ones paying taxes anymore.

I had a conversation with a woman who identified herself as Misty on Wednesday. She claimed to be an accountant, yet she seemed unaware of the Alternative Minimum Tax, which now ensures that everyone pays some taxes. AP reports that the AMT, "designed in 1969 to ensure 155 wealthy people paid some tax," will hit "about 2.6 million of us this year and 36 million by 2010." That's because the tax isn't indexed for inflation! If your salary today would've made you mega-rich in '69, that's how you're taxed.

Misty tried the old line that all wealth is inherited. Not true. John Weicher, as a senior fellow at the Hudson Institute and a visiting scholar at the Federal Reserve Bank, wrote in his February 13, 1997 Washington Post Op-Ed, "Most of the rich have earned their wealth... Looking at the Fortune 400, quite a few even of the very richest people came from a standing start, while others inherited a small business and turned it into a giant corporation." What's happening here is not that "the rich are getting richer and the poor are getting poorer." The numbers prove it.

I have made an executive decision as the owner and ultimate editor of this website that this table and these numbers stay on this website forever - or until next year's numbers come out. In order to get these facts, you have to see them each and every day. This story, along with a link to the IRS chart, will stay somewhere on the RushLimbaugh.com homepage so everyone can see and find these numbers at any time. It's crucial that people get this, so please, share it with a friend now!

Uuhh, sorry to be so 'radical'

Just would be nice to hear the truth once in a while.

There are some huge problems here.

First, what is a "tax?" That isn't defined. Second, are we talking rates or amounts, and THEN compared to what? Gross income? Net income? Net worth? Are they talking ALL taxes, are they including 'fees,' etc.

I suggest that all 'statistics' are pretty much true that are listed here, but those that present them like to mislead....and sometimes outright lie.

How about SS (or self employment) tax? Since that 'tax' is 'returned' to the payer, is that really a tax? Anymore than 'contributions' to a 401(k) account, deductions for insurance, union dues? The SS tax is one of the huge wild-cards here in determining who pays 'tax,' and it is 'conveniently' brushed over....ie: not mentioned.

FACT: SS tax hits earners making less than 90,000 equally (in rate), and hits all those making over 90,000 equally (in amount). The 'benefit' is also capped....high earners will only benefit a 'capped' amount later in life IN ADDITION, high wage earners will pay a DOUBLE TAX on their SS benefits!! (ie: they pay income tax when it goes in, they again pay income tax on that amount when it comes out)

Capital gains tax: Hits the wealthy extremely unfair. How? by allowing a $3,000 deduction for capital loss that benefits "average" investors, but is practically useless for the 'wealthy' investor.

"Flat Taxes" such as gasoline tax, sales tax, etc. This is a consumption tax, and those that consume pay a flat rate.....some argue this is the fairest tax method, but yet generally hits the 'poor' much harder when compared to net income as a rate of tax per net income dollar.

Income Tax...... ironically, this is what most people think of, yet those misleaders like to throw in some or all of the other taxes, then make us think they mean Income Tax. The simple fact is that the wealthy pay far, far more income tax than the middle class. The poor generally pay absolutely no Income Tax. This is fact. If you don't think so, put your money where your mouth is and become extremely wealthy yourself by showing the wealthy how to significantly reduce this tax and retain their wealth.

In one of my jobs, I worked as an internal accountant/CFO
for several weathy families that owned (together) several businesses'. They paid huge, obscene amounts of Income Tax...... They only paid slightly more tax for their food than the poor did (if they ate more expensive food), but at the same rate....they paid far more property tax (had more property), but at the same rate as other property owners, and one year they lost huge amounts on money that they couldn't write-off due to the capital gains loss limitation (if an 'average' person had lost that percentage of his net worth, he could have written it off over just a couple of years, these people will never, ever 'write-off' that loss)......and so forth and so on.

So....what is a tax? Most people simply don't understand what they read.

Whether or not corporations should pay tax and at what rate is subject for discussion. Ultimately, corporations pass their wealth on to individuals, and it will be taxed....whether or not it should be taxed during business use (income tax) is a matter of discussion......but ultimately it will be taxed. C corporations DO pay income taxes! Then they pay out dividends and it is taxed (income) again without being a business expense!! S corporations income is passed through to the individuals (corp doesn't pay tax), but it is taxed at the individual rate.

So....when you see an article about who does and doesn't pay tax.....rest assured that the writer very well could be trying to confuse the reader while trying to express their political point of view, using accurate facts to back up their argument.....and also hiding facts they don't want the reader to see.

Plain and simple....if you think the 'rich' don't pay their 'fair share' of income taxes, then show me how they don't.....and I'll pay literally tens (if not hundreds) of thousands of dollars for this unique insight you have to offer. When it comes to income taxes, the 'few rich' far and away carry the largest load in this country....calculating in both methods of measurement; their rates are higher, as are their amounts.