Myth #1 Rich people don’t pay taxes
Often I’ve heard someone ignorant say “rich people don’t pay taxes.” I guess the question is what defines “rich” and what taxes are you talking about? If you’re talking about adgusted gross income and federal income taxes, then it shows how ignorant that statement really is.
The top 50% earns $29,019(avg) and pays 96.54% of the Income Tax total
The top 25% earns $57,343(avg) and pays 83.88% of the Income Tax total
The top 10% earns $94,891(avg) and pays 65.84% of the Income Tax total
The top 5% earns $130,080(avg) and pays 54.36% of the Income Tax total
The top 1% earns $295,495(avg) and pays 34.27% of the Income Tax total
The Bottom 40% of American earnings $36,300 typically paid no income tax and received money back from the Government. Compare that with the top 50% of Americans who pay 96.54% of all Income Tax.
Myth #2 The Mega Rich pay less taxes
Now let’s look at the mega rich… Do they pay their fair share? Warren Buffet for example, is taxed at a lower rate than most people. Most of Buffett’s income is derived from dividends and capital gains, which are taxed at only a 15% Federal rate, as opposed to a Federal rate more than twice that for ordinary income, bonuses, etc. What did he pay in taxes? In 2003 his company Berkshire Hathaway paid $3.3 billion in tax or about 2.5% of all the taxes paid by all U.S. corporations in 2003. What about personally? In 2006 he paid 17.7 percent of 46 million dollars or about $8,142,000. Now before, we say, that’s not fair. He paid so little percentage wise, only 17.7%. His secretary paid 32% of her money in tax. We’ll I paid 30% as well, and it was still more than $8.1 million less than Mr. Buffet. Why is this important? Does Warren Buffet benefit more for the taxes he pays to Medicare/Medicaid, Social Security, Welfare, etc. than the average person? I can bet that the 40% of the of the population that pay no taxes benefit more for the taxes Mr. Buffet paid.
Myth #3 The Military is bankrupting the country
Let’s look at a breakdown of how the Federal government spends our tax dollars.
Even though these are 2008 numbers, they might not actually reflect the real cost of defense, i.e. some of these costs may be hidden. But still, even going as high as anti-war liberal estimates of 36%, the “socialist” spending is out of control. Medicare, Medicaid, Social security account for 53% of the tax budget, and this is rising due to the aging population and immigration.
Total Government spending, Federal, State and Local:
Here’s another view, considering all levels of government, federal, state, and local spent $4.1 trillion in 2007.
About 66% went to the federal government, and the remaining third going to state/local.
The largest chuck of tax dollars, 22% goes toward income security such as Social Security, welfare, disability payments, and unemployment insurance.
The next 20% goes for health care including Medicare and Medicaid.
That’s right 42% is entitlement programs. So the bottom 50% pay little or no taxes, but 42% of the actual tax payer’s money goes to entitlement programs that don’t really benefit the 50% on top.
Public safety, which includes the Military and Police, Fire Fighters, Prisons, and the court system make up 20%.
Education including primary, secondary, colleges, libraries account for 16%.
The cost of managing all levels of government takes up another 14 % of tax dollars, with the largest portion (63 percent) being the interest paid on borrowing. Other government costs include salaries, expenses, and the cost of actually collecting taxes. Can you say government / bureaucratic waste?
That leaves just 8% of taxes that goes to pay for roads, agriculture, airports, air and water quality, the space program, and recreation.
