Monday, April 18, 2011

9 Things The Rich Don’t Want You To Know About Taxes

Today is tax day and most Americans would probably feel better about paying taxes if the system wasn’t rigged in favor of the rich. Here are 9 things the rich don’t want you to know about taxes. (Hint: They don’t pay their fair share.)

I saw this Associated Press article in the Enquirer today about how Taxes fell for the super-rich. Here’s an excerpt from it.

More than half of the nation's tax revenue came from the top 10 percent of earners in 2007. Still, the wealthy have access to much more lucrative breaks than people with lower incomes.

The vast majority of those who escape federal income taxes have low and medium incomes, and most of them pay other taxes, including Social Security and Medicare taxes, property taxes and retail sales taxes.

Over all it seems like a good article, but it made me think of this excerpt from Pulitzer Prize winning journalist David Cay Johnston’s article on the same subject.
The Internet is awash with statements that the top 1 percent pays, depending on the year, 38 percent or more than 40 percent of taxes.

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.

It should be noted that taxes like the pay roll tax and sales taxes are regressive and disproportionately affect the poor. Yet conservative think tanks try to shape arguments that make people think that everybody will benefit if we cut taxes on the super rich and corporations. This of course is a big fat lie as one can easily see if they look back at what has happened over the last 30 years since the Reagan and Bush tax cuts.

The reason we are seeing budget problems is not because of the social safety nets. According to a new report from the Organization for Economic Cooperation and Development the US is the 9th worst on social spending. The reason we have budget deficits is because the wealthy have successfully lobbied for loop holes and tax breaks for decades. And they have looted the public treasury.