Nice infoporn  via Mint, showing the breakdown by income level. To put this into context, as of 2007, the median annual household income rose 1.3% to $50,233.00 according to the Census Bureau.

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click for larger graphic
MINT-TAXES-R2

Category: Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

69 Responses to “Who Pays the Taxes in the USA ?”

  1. Pete from CA says:

    This was enlightening. I always thought the half that are not paying any taxes are below the median income. How is it possible that 2% of the people with $200K+ incomes don’t pay any federal taxes? Seems like a huge loophole to me…

  2. Rikky says:

    so the top 1% are paying over 40% of income taxes? maybe the soak the rich crowd will shut the hell up now.

  3. willid3 says:

    maybe. but since they make more than 60% of total income doubtful

  4. bsneath says:

    I’m with willid3 on this one.

    Who is going to buy into the 1%/40% argument when they are out of a job, accepting food stamps, just lost their home to the bank, had their 401K trashed, etc. etc.. They are more inclined to believe that the top 1% came by their incomes through less than honorable means and will be more than happy to soak them.

  5. Big Picture Reader says:

    Before we plot the next round of class warfare against the poor, this is a chart of federal INCOME taxes. If we include payroll taxes and a handful of other regressive taxes, the burden shifts downward considerably.

  6. vincehart says:

    The title of the post should be “Who Pays the Federal Income Taxes in the USA?” The middle class and the poor pay a much higher percentage of their income in state and local taxes than the rich do. The overall burden as a share of income or wealth is much less disproportionate.

  7. S Brennan says:

    “so the top 1% are paying over 40% of income taxes? maybe the soak the rich crowd will shut the hell up now.” – Rikky

    Rikky,

    As tiresome as it is to keep having to point out reality …taxes paid…and income taxes are not related in any meaningful way.

    Real estate, sales, payroll…et al are not covered by these pin-up girls…and let’s remember, the US Government floats on SSI payroll taxes which run EACH EMPLOYEE 13% of his paycheck and helps cover the cost of borrowing huge deficits.

    Then there is the other point, if you make half the income of the nation, and you should AT LEAST HALF of the taxes and probably more because you are a lucky stiff, a lotto winner as it were.

    Oh…and one more for good measure on who pays the bills, when I was in US Army basic training only about 5% of the troops parents made median income at the time, with not a single troop parents in the top two quintiles. That’s a about 120 men for a sample…and in case you can’t clue in, fighting, getting wounded and possibly dying is a pretty stiff bill. A bill, that as a meaningful percentage, the upper two quintile skip out on year after year.

    Now, maybe people who are lucky stiffs “will shut the hell up now.”

  8. Pool Shark says:

    A perfect explanation in pictures as to why the USA is ultimately doomed.

    Those with no skin in the game will always vote themselves more government largess at the expense of the “rich.”

    “Rich,” meaning of course, anyone making $1.00 more than themselves.

  9. Aeolus says:

    I prefer analyses that show the total tax burden, including all state and local taxes, and all federal taxes, and not just the FIT.

    On the other hand, while I believe in progressive taxation, I never quite understood why everyone didn’t pay at least some share of the tax burden starting with dollar one.

  10. Thor says:

    We live in a country where close to 40% of the population now makes less than 30K a year – and people are worried botching about the uber wealthy paying more in taxes? Please. And enough of this “people will just opt out”. Where exactly are the uber wealthy going to go? Japan? Europe? Canada? Let me guess, they’ll all go to China.

    No wonder we’re screwed.

  11. Transor Z says:

    @S Brennan: Nicely put.

    To add:

    1) Households are the important unit, not individuals, when it comes to tax policy analysis.

    2) Median household income is no longer enough to achieve “middle-class” standard of living in the US.

  12. steve14 says:

    >but since they make more than 60% of total income doubtful

    No, the top 1% make 17% of the total income. And your made-up number was obviously false because income taxes are progressive. http://en.wikipedia.org/wiki/Income_inequality_in_the_United_States

    Just because you want to be outraged doesn’t mean it’s OK to make stuff up.

  13. Pool Shark says:

    S Brennan:

    Did you consider that for anyone making less than about $50k, Social Security is a winning proposition (i.e., they will recieve back more in benefits than they will ever pay in).

    Of course, anyone making more than about $65k is screwed:

    http://upload.wikimedia.org/wikipedia/commons/5/59/Fig._168_-_Single_men_with_different_wages_and_retirement_dates.JPG

  14. franklin411 says:

    Everyone pays taxes in America. Even the people who make <$10k pay sales taxes, state income taxes, property taxes, municipal taxes, telephone taxes, utility taxes, gross receipts taxes (IE, the state taxes the retailer, and then the retailer passes the tax on to the consumer, but it's not a sales tax per se), gasoline taxes, excise taxes on tires, cigarette taxes…

  15. ashpelham2 says:

    Too much to even comment on here. This is a topic that can get very broad and far-reaching very quickly. Best to keep it to who pays the most income taxes as a percentage of their income.

    It has always been the upper 10% that paid the most as a percentage in our tax system. Sadly, to overcome the deficits we have now, everyone will have to pay more in the future.

    Or we could just legalize marijuana (roll his eyes).

  16. S Brennan says:

    “anyone making more than about $65k is screwed:” – Pool Shark,

    Did you consider that for anyone making less than about $50k, early death is a far more likely outcome than for those living above median. Thus they collect 0% dollars if they have no spouse or children?

    So when you say “anyone making more than about $65k is screwed:” you’re effectively saying you’d rather be dead than pay tax…wow…is that a statement for the age I live in.

    “Best to keep it to who pays the most income taxes as a percentage of their income.” – ashpelham2

    Yes, when you find an unrepresentative, but flattering metric, by all means stick with it. However, please be aware, it’s called propaganda in much of the world.

  17. hue says:

    soon, more and more people will become John Galt of income taxes.

    the wittle class: the former middle middle caught between the lifestyles of the rich and the struggle to exist.
    (madeup the name, lifted the def from the fabulous Mr. Todd Harrison.)

    Silly Money, (this is posted by Barry before) the 30 seconds at the end in b&w is worth thinking about http://bit.ly/RtNZX

  18. VennData says:

    Two-Thirds of Tax Units Pay More Payroll Tax Than Income Tax

    http://www.urban.org/publications/1001065.html

  19. tagyoureit says:

    Ida know Tran-Z, median income is enough for at least ‘lower-middle’ class in most areas of the county and ‘upper-middle’ in some other areas. Obviously, you can’t touch middle class in the forclosure states with median income. Unless of course we let the markets run wild!

  20. Paul Jones says:

    This chart only shows one federal tax; if sales taxes, user fees etc. were included it would show a different story.

    If only those taxes were shown it might start a revolution.

  21. par1 says:

    What’s also not reflected is the extent to which government policies have actively assisted some sectors while keeping wages down in others. As we’ve learned to our cost, there’s nothing “market” about what many have been making at the taxpayers’ teat. So percentages of “income” are inherently skewed – what we need are real subsidy-adjusted income and tax data.

  22. TDL says:

    As already mentioned, this chart shows only part of the picture. I think a more complete picture (fees, other non-income taxes, etc.) would show the simple fact, government at levels in this country is costing too much and returning too little.

    Also, I don’t think the “lucky stiff” or the “working stiff” should shut up. The nature of taxation is that someone else has a right to your property; this is the fundamental problem with taxation (and taxation in the form of fees, fines, & regulations), anyone who has a problem with it (rich or poor) should continually point out the immorality of it.

    Regards,
    TDL

  23. Gatsby says:

    This is a great chart but it only really paint a fraction of the picture. For starters is would be nice to blow up the $500K+ section who covers 40% of the tax bill to see how they break down.

    There seems to be a lot of knee-jerk reaction to this info-graphic suggesting that the bottom percentile are not carrying thier weight, but this is a straw-man argument and fails to take into consideration what percentage of INCOME (as a few previous psters have noted) that top few percent are taking in.

    If for example the top 1% are taking in 85% of the income earned but are only covering 40% of the tax bill it would be the poor who are being screwed.

    Also a hot tip to S Brennan for a few very good points

  24. PseudoNoise says:

    “and let’s remember, the US Government floats on SSI payroll taxes which run EACH EMPLOYEE 13% of his paycheck and helps cover the cost of borrowing huge deficits.”

    Maybe true for the bottom 97% or so of folks, but we 3%-ers stopped paying the “poor tax” once we hit $107k gross this year.

    For the rest of you jokers who think there’s something wrong with distributing tax burden this way, what would it look like under a flat tax? Hint — the bottom 50% of wage earners would be paying substantially less than 50% of the taxes.

  25. Pat Shuff says:

    franklin411 Says:

    Everyone pays taxes in America. Even the people who make <$10k pay sales taxes, state income taxes, property taxes, municipal taxes, telephone taxes, utility taxes, gross receipts taxes (IE, the state taxes the retailer, and then the retailer passes the tax on to the consumer, but it's not a sales tax per se), gasoline taxes, excise taxes on tires, cigarette taxes…

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
    Bingo, blackout. Don't tax me, thee but the man behind the tree. Where taxes are levied and costs imposed
    are different places than where collected. Expensive refinery retrofitting to satisfy strengthened air quality standards result in the wheels spinning or numbers flashing faster at the pump as the recouped costs pass through the pricing chain to the ultimate consumer. At the end of the day when the tills are emptied and receipts tallied Walmart pays its taxes with the currency exchanged for goods at the checkout, all costs included because if they don't then how is Walmart paying them.

    It is very expensive being poor in America as contrasted with, say Mexico, not that Mexico has anything to commend it, for the reasons it isn't as expensive being poor there. All these niceties cost money. Taxes and costs are embedded in basic needs and the most modest of casual goods. Despite endless sales and marketing to the contrary
    it will all be paid in a distributed way, from each according to means, spending more means paying more. Given the impressive additional debt burdens imposed, it may or may not get more expensive being poor if instead there are just more poor to compensate for, interest and principal, all the poorer.

  26. trotsky says:

    OK, just to fill out the information, according to the Tax Foundation’s data — link here: http://www.taxfoundation.org/taxdata/show/23408.html — in 1987 the top 1 percent paid just 24% of the taxes, while in ’07 it was north of 40%. Because the Bushes and Clinton were soaking the rich? No, because the same cohort’s share of total AGI has risen from 12.3% (in ’87) to 21.2% (in ’07).

    The top 1% used to make a bit less than the bottom 50%. It was closing in on double in ’07.

    Poor dears. It’s terrible how cruel America has been to its business class.

  27. steve14 says:

    > If for example the top 1% are taking in 85% of the income earned but are only covering 40%
    > of the tax bill it would be the poor who are being screwed.

    The top 1% receive 17% of the income and pay 40% of the federal income taxes.

    This is mitigated somewhat by social security and sales taxes which are more regressive but the numbers still show the top earners paying a large majority of total taxes.

  28. Eric Davis says:

    Most people would be happy to make enough to pay more taxes.

    Those who benefit the most, much is expected.

    Also remember the cost of insurance is 12-16K per family, So when family income is lower middle class. they Gross 15-20K, and are the working poor.

  29. S Brennan says:

    The 400 highest-earning in the U.S. reported federal income tax bite of 17%

    “The 400 highest-earning in theU.S. reported $105 billion in total adjusted gross income in 2006, but they paid just $18 billion in tax, new Internal Revenue Service figures show. That works out to an average federal income tax bite of 17%–the lowest rate paid by the richest 400 during the 15-year period covered by the IRS statistics. The average federal tax bite on the top 400 was 30% in 1995 and 23% in 2002.”

    http://www.forbes.com/2009/01/29/irs-high-income-personal-finance-taxes_0129_wealthy_americans.html

  30. steve14 says:

    > Two-Thirds of Tax Units Pay More Payroll Tax Than Income Tax

    This is obviously true for the bottom 10% or so who pay no income tax, but since payroll tax is 15.3 percent, you can also rewrite that headline as:

    “Two-Thirds of Tax Units Pay Less than 15.3% Income Tax”

    Which further supports the fact that the top third and higher percentiles pay the large majority of taxes.

  31. MRegan says:

    Two brief notions*:

    1) Deficits suggest that collectively we pay too little in taxes**
    2) Why don’t the ‘high income earners’ complain (effectively) about the amount*** the Fed Gov spends on the military to prop up an imperial presence on the global stage [ever heard of bad ROI]*

    * I lied, sue me
    **Same issue
    ** Is that an extra 25k in the check to the IRS doesn’t reflect the true cost of the War Racket?

  32. mitchcalderwood says:

    Where’s the graph that shows the proportion of federal receipts paid by Corporations vs. Individuals ?

    Corporate Income Tax Receipts as a Percentage of Total Federal Receipts and
    GDP, by Decade Average Percentage of Corporate Taxes As:
    Share of Total Federal Receipts Share of GDP
    1950-59 27.5% 4.8%
    1960-69 21.3% 3.8%
    1970-79 15.0% 2.7%
    1980-89 9.3% 1.7%
    1990-99 10.5% 2.0%
    2000-09* 9.6% 1.7%

    from http://www.cbpp.org/files/10-16-03tax.pdf
    by Joel Friedman
    *Reflects OMB historical data through 2002, Treasury estimates
    of actual 2003, and CBO projections (August 2003) for the
    remaining years. The CBO projections assume that existing tax
    breaks will expire as scheduled and will not be extended.

  33. Rikky says:

    >>Most people would be happy to make enough to pay more taxes.

    so who’s stopping them? it’s not my fault they don’t and i shouldn’t have to subsidize that scenario.

    >>If for example the top 1% are taking in 85% of the income earned but are only covering 40% of the tax bill it would be the poor who are being screwed.

    safeguards are already in place such as progressive taxation. progressive taxation is a double taxation. the ‘rich’ already pay more tax due to more income + an additional percentage on top of it.

    >>So percentages of “income” are inherently skewed – what we need are real subsidy-adjusted income and tax data

    you are right but such an analysis would be difficult if not impossible to perform with any macro accuracy.

  34. bsneath says:

    What is certain is taxes are going to go up.

    The debate will likely be between 1) A Value Added Tax. This will be supported by the high income classes. and 2) Higher income taxes on those high income classes. This will be supported by nearly everyone else.

    Do the math and you will answer this riddle.

    Many “limousine liberals” might become advocates of smaller government once they realize they will be the ones footing the bill. Not a criticism, it is called human nature.

  35. Gavshire Hathaway says:

    Who cares? When the government can print money and hand it out like candy, determine winners and losers by monetary policy, and use inflation as a silent tax, analysis like this becomes irrelevant.

    Furthermore, drivel like this coming out as we CONTINUE to bail out banksters and their ilk suggests that we’ll actually be paying back some of these debts. Who gives a shit whether the top 1% pays all of the taxes, if the majority is going to fund deficits (which benefit the banksters), wars (which benefit the military industrial complex), and healthcare (which benefits insurance, pharma, etc.).

    If the government’s policy is to force it’s middle and lower classes into debt, outsource their jobs, etc, for the benefit of the elite, then certainly the elite should be expected to pony up. Perhaps the first step is to understand where our money is going and who benefits, before determining how to allocate payment?

  36. Transor Z says:

    Here’s what I have to use for my personal bankruptcy clients:
    http://www.justice.gov/ust/eo/bapcpa/meanstesting.htm

    A chart with median income for all 50 states, DC, and territories is here:
    http://www.justice.gov/ust/eo/bapcpa/20091101/bci_data/median_income_table.htm

    $99k (~$70k take-home) household income is not middle class for a family of four here in Massachusetts.

    Do the math if you don’t believe me. Make a realistic monthly household budget for a family of 4 on $5800 a month take-home in the Northeast and then make the case that that gets you to what we would reasonably consider middle-class standard of living. Not lower-middle class. White picket fence middle class.

  37. Ramstone says:

    >>>The debate will likely be between 1) A Value Added Tax. This will be supported by the high income classes. and 2) Higher income taxes on those high income classes. This will be supported by nearly everyone else.

    Don’t underestimate American stupidity.

  38. DL says:

    Higher marginal tax rates beget more tax loopholes and more tax avoidance.

    Be careful what you wish for.

  39. hue says:

    “so who’s stopping them? it’s not my fault they don’t and i shouldn’t have to subsidize that scenario.”

    lol, “You’ve heard of mental depression; this is a mental recession,” said Rikki (aka Phil Graham), noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”

    “We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline” despite a major export boom that is the primary reason that growth continues in the economy.

  40. DL says:

    If we do get a value-added tax, it won’t happen until after the 2012 election. And if Obama is still president at that point, he might decide to couple the value-added tax with a subsidy to people who make less than $50K.

  41. Transor Z says:

    Bear in mind that the average American family in the $60k to $100k income range has $107,000 in total debt.

    See: http://www.nytimes.com/interactive/2008/07/20/business/20debt-trap.html

  42. Casual Onlooker says:

    It would be nice to see a more holistic comparison. For example a side by side comparison of the chart verses the amount of true disposable income by income group. While it may be fashionable to see a lot of hand wringing about people that don’t pay FEDERAL income tax, as many people have stated, that is not the whole picture. There are a lot of other ways we are taxed, or have money work for or against us based on how much we have of it.

    A person on the lower end of the income scale is far more likely to be paying considerably more in credit costs than do the people on the higher end of the scale. It is more likely that people at the lower end of the scale will access credit to cover basic needs, and end up in a vicious cycle where even a greater percentage of their income will go to service that debt. At the higher end of the scale, people are likely to have investments and can allow their money to earn income for them. Just a few percentages of income lost for someone making under $30,000 can be devastating in regards to just making ends meet. The same percentage for someone making $200,000 doesn’t come close to having the same effect.

    A lot of the housing/credit crisis came about because of wilful targeting people who did not have the means to pay for what they were getting into. The money that was made throughout this period didn’t go back to improve the lot of people at the bottom end, rather it bubbled up to the people that knew how to make money work for them. The costs of the crisis also heavily hit the people at the bottom in REAL terms far more than people at the top.

    Personal federal income taxes are just a slice of the complicated financial picture, only a simplistic person would try to provide a simplistic answer to a simplistic graph.

  43. hue says:

    Transor, the average family is a tad less upside down like the federal gov’t.

    so you’re a bk attorney? that bill that the banking and credit card companies wrote in 2005 isn’t stopping bk filings? your business must be booming.

  44. hue says:

    the average family is a tad less upside down than the federal gov’t

  45. wmhalpin says:

    I agree with Casual Onlooker.

    It is not possible to make any statements about income taxes without knowing what the incomes are.

    Also, looking at income taxes only is very misleading since most people pay more in payroll taxes than income taxes.

    Also, as Warren Buffet has said many times, the biggest injustice in out tax system comes at the top. He says that he pays taxes at half the rate of his secretary.

    I am very surprised that Barry put such a misleading graph up.

  46. call me ahab says:

    DL says-

    “Higher marginal tax rates beget more tax loopholes and more tax avoidance. ”

    historically that is correct- when there were very high marginal tax rates people protected themselves by tax shelters allowed by the tax code-

    however- no-one said there had to be loop holes just because the marginal rates are higher- right?

  47. TDL says:

    wmhalpin,
    I wouldn’t quote Buffet when it comes to taxes & economics (also, it would help to know how much his secretary makes to test his claim.) Buffet has become nothing more than a rent seeker & despite his howling about the need for a higher estate taxes (as well as all taxes) he knows full well that right insurance coverage will cover the tax bill and the estate of the very wealthy & financial savvy will go unmolested. Although a successful tradesman, printer, tool & dye guy, etc. will be hurt by this.

    Regards,
    TDL

  48. TDL says:

    call me ahab,

    The reality is that there will be loopholes created though. The people writing the laws and the people voting on the laws will also be affected so they will seek to protect themselves. Also, the large donors & other constituents will lobby aggressively for loopholes.

    Regards,
    TDL

  49. Tom K says:

    Funny to read posts from those who suffer from acute envy and mis-information e.g.

    “maybe. but since they make more than 60% of total income doubtful”

    The top 1% earned 23% of AGI, not 60%, but let’s not the facts get in the way of a good liberal argument:
    http://www.taxfoundation.org/research/show/250.html

    “Before we plot the next round of class warfare against the poor, this is a chart of federal INCOME taxes. If we include payroll taxes and a handful of other regressive taxes, the burden shifts downward considerably.”

    The “burden” shifts downward? The people receiving the benefits from those unfair payroll taxes are getting far more return than they ever paid into the system. Also, a huge number of those in the top income tiers are business owners, paying HALF of each employee’s contribution. Are you adding that into your fanciful calculation? I thought not.

    Most of the folks here wouldn’t be happy until Hugo or Fidel becomes POTUS.

  50. FSharp says:

    @Pool Shark Says:

    A perfect explanation in pictures as to why the USA is ultimately doomed.

    Those with no skin in the game will always vote themselves more government largess at the expense of the “rich.”

    “Rich,” meaning of course, anyone making $1.00 more than themselves.

    Pool Shark, I want to know where this government largess is. Where can I get me some?

    I’m in a marginal income bracket, and I can tell you there isn’t any. No health care, no food stamps, no welfare, no unemployment. My vote means piss-all because it doesn’t count. I get to vote for my choice of rich f**ker who can buy a campaign and donors. Some choice. Woohoo for democracy!!

    I’ll tell you who voted themselves all the largess – the ones who buy influence in Washington and the local statehouses. They get the tax breaks and a system designed to keep them fat and insulated from reality.

    Ya’ll keep thinking that the system is collapsing from us poor folks voting ourselves all that money. We know who sucks the corpse of America dry – and it ain’t us.

    As my pappy used to say, ain’t nothing more pitiful than a bunch of well-off folks whining about how hard they have it.

  51. Transor Z says:

    @hue:
    We aggressively built up our bk practice a couple of years ago. The timing was good, obviously, from a business standpoint, but some of the circumstances around personal bk filings are very, very sad.

    It’s part of why I get impatient with discussions like these that never get down to ground-level reality. I put out a similar challenge in another thread months ago. Nobody has the balls to base a comment on a sample REAL family budget in the income range that the vast majority of Americans live with and then try to make a concrete argument that that should enable them to enjoy a terrific level of comfort. Because it’s not true and everyone knows it. The middle class has been freaking destroyed over the last 30 years. It’s a joke.

  52. PseudoNoise says:

    Tom K is envious of the lucky duckies on the bottom rung. There’s a way to get in on all that gov’t largess — lemme send you my paypal account info so you can give me the difference and get in on all those tasty subsidies.

    This will be doubly appropriate for you because you think I pay too much in taxes — you’ll have done your part in bringing more social justice to the tax code.

  53. hue says:

    Transor, before now ( i believe and you may know this first hand) is that people filed bk because of illness or job loss. it’s not common for people to go out on a spending spree, then deliberately ruin their credit. i bet now, it’s mostly job loss or being upside down on their house.

    another way to look at the last 30 years is that the post war, greatest generation is the outlier. they came home to an economy where dad can go to work and mom stayed at home and raised the kids. that kind of thing never existed before, and since the 1970s, likely will never happen again. the history of world is almost always lords and serfs, and few instances of a thriving middle class. i believe capitalism is flawed, but still better than any other economic system, and doesn’t distribute wealth like we believe it does.

  54. hue says:

    “The top 1% earned 23% of AGI, not 60%”
    we’re still only talking about wage income here. the wealthy has investments, real estate and other passive income. so when we lament the income tax, we’re not talking about the true measure of taxes as a percentage of wealth.

    a business owner may pay half of its employee’s payroll taxes, but the owner can also pay him or herself $10,000 a year, and benefit from writing down expenses like cars, meals, travel etc. do business owners really believe they have it worse than their employees? if so, they would close the business and go to work for someone else and join the no paying income tax pool.

    if all else fails, just call people commies or socialists.

  55. hue says:

    that frigging spam filter, i’m going to have a duplicate post showing up, hope it makes sense both times. i thought i had forgotten to hit the submit button.

  56. Transor Z says:

    @Hue:
    I think there is more to it than that. The rise of the mega-chains (Walmart, Home Depot) and death of mom & pop retailers has done a number on us culturally as well as economically. Look around. Even what appear to be family-owned funeral homes are actually local fronts for large corporations. Dreier did something similar in the legal business building a coast-to-coast empire before his arrest a few years back. As you say, it’s capitalism running its course: grow or die.

    It is generally agreed that the 2005 bankruptcy “reforms” were wildly pro-creditor and anti-consumer. But that’s just one example of the steady creep of the mega-wealthy. IMO these things are cyclical because people are stupid and don’t learn from history. There have been amazing advances in tech over the last few centuries but I’m not optimistic that the socioeconomic framework is in place to permit them to be incorporated to enhance well-being. The people at the top are above-average smart and share common economic interests but that’s not saying much. They’re as idiotic today as elites ever were and they’re driving the bus over the cliff.

    At the bottom of the cliff, the pissed-off and scared surviving passengers will kill the inept driver with machetes like they always do and then incompetently drive the bus around in circles for a while, screaming bloody people jumping out the windows, until a new driver emerges from the back of the bus and promises to get things back on the road to progress again. Then it all starts again.

  57. DL says:

    TDL @ 6:35

    “Loopholes [will be] created though. … the large donors & other constituents will lobby aggressively for loopholes”.

    Yes. And lobbyists who bring suitcases filled with cash can be particularly persuasive.

  58. hue says:

    transor, the walmart of america, yeah i’ve had that debate back in the 90s, with a friend in New York, who worked for Chase in interest rate derivatives.

    my argument that even though mom and pop stores sell their wares more expensively, walmart killing those businesses is worse than the low prices American consumers enjoy. it wasn’t readily apparent in the 90s when things were booming. now we all pay the price for our low prices. like you said, that superstore model is copied for almost every category, from drug stores to restaurants. when mom and pops close, what jobs do they get? they work for internet companies, then mortgage brokers? or worse at Walmart?

    dude, i think it’s bad, but machetes, haha, you need to take a break from those bk clients. that’s got to be depressing to deal with daily. even in the Depression, we weren’t going around with machetes.

    i’m going to be repetitive. i think the power laws distribution rules the world in wealth and everything, wealth and power is concentrated. there never was income, economic equality, and never will be. it’s the dream of equality that gives us hope.

    good thing we have bks now. in the past, they put you in debtor prisons, and your debt is never forgiven.
    do you know the story of James Wilson? http://bit.ly/25DVmz and of course, Thomas Jefferson was also bankrupt.

  59. Clem Stone says:

    I’d like to see lottery ticket and cigarette tax revenues broken down by income bracket.

    I heard someone somewhere refer to lottery tickets as a tax on stupid people. Maybe we could test that by breaking into IQ brackets too.

  60. stevenstevo says:

    Regarding the state/local taxes crap everyone keeps throwing out there, the poorest 20% of the population pay state and local taxes that comprise about 12% of their income, while the richest 1% pay an amount of about 7% of their total income, a difference obviously of about 5%. Wow, 5%. That just boggles the mind.

    From IRS data: http://www.taxfoundation.org/research/show/250.html

    “The top-earning 25 percent of taxpayers (AGI over $66,532) earned 68.7 percent of the nation’s income, but they paid more than four out of every five dollars collected by the federal income tax (86.6 percent).”

    Also, note that in 2007, the bottom 50% paid just federal taxes that comprised a mere 2.9% of total federal taxes paid that year. That is absolutely ridiculous.

    Basically the bottom 50% pay no taxes, while the top 25% cover pretty much everything.

  61. Transor Z says:

    As myself and a number of others here have tried to point out in recent months, the coming zombie scourge remains the biggest untold story of our times.

    http://www.nola.com/news/?/base/news-1/1239081731120020.xml&coll=1

  62. hue says:

    7% when you make $100K, is pocket change. 12% when you make $30K is a lot of dough

    if you worry so much about paying taxes, take a pay cut and join the bottom 50%. not paying taxes will be the least of your worries.

  63. DiggidyDan says:

    @clem

    http://www.ritholtz.com/blog/2009/08/rally-time-items-to-watch/#comment-207591

    Somewhat tounge in cheek, but true. Dumb man’s tax or not, if I have a college degree with honors from a top 10 public university (helped along by this money) and still might not be able to find a job to cover my expenses, who is the “dumb” one. As somebody said above, the money comes and goes to the top regardless. Taxation is very much a moot arguement in our capitalistic fiat currency system. Bottom line, learn skills that are in demand, spend less than you can make, and prepare for the ups and downs of fortune.

  64. DeDude says:

    We have a society that is set up to allow the rich pigs to suck dry the poor saps. So you pay for what you get and you get what you pay for. The rick get a great opportunity and they should be asked to pay for that. The poor get sucked dry and who the heck would (or should) be paying for that?

  65. Boo-urns says:

    The title of this post is asinine and misleading.

    1) Due to the hijinks that the federal government has been playing for decades (Al Gore proposed to end this, and was pilloried by the kool kids krowd as advocating a “lockbox”), payroll taxes are funding a lot of our actual expenses. The entire Social Security “crisis” is because this imaginary pot of money that’s supposed to finance SS payments as Baby Boomers and Gen X retire doesn’t exist, instead replaced by a bunch of IOUs. As pointed out by many, payroll taxes are very regressive and constitute the bulk of taxes on income for most Americans.

    2) For the truly rich, they don’t make their money through income, but rather through capital gains. Hence Warren Buffett’s claim that he pays half what his secretary does.

    3) When you add in sales/consumption taxes and other types of fees/licenses/etc. that are either based on consumption or fixed fees, these add to the regressive nature of our tax system. Utility taxes or sales taxes or drivers license fees aren’t much for most of us, but for those who are making $75k a year, it makes up a much higher percentage of their income.

    The whole “let’s pretend that the tax system is unfairly progressive by focusing only on federal income tax instead of at the entire taxation scheme” was an oft-used tool of the VRWC in the 1990s, but I thought it had been killed by its own inherent stupidity and a slew of studies showing that the overall tax burden has become regressive in this country, as we’ve shifted away from relatively transparent income taxes to more opaque revenue generators like sales tax, use taxes, lotteries, etc. Apparently I was wrong.

  66. bottyguy says:

    I think that this graphic is really pretty crappy, and doesn’t provide a true picture.

    Problems I see:
    – The share of taxes paid categories in red do not match the income tax unit categories, so there is much less correspondence between the left chat and right, I assume that they just used the $ income estimate to place the % taxes divider but that doesn’t necessarily line up with the volumes on the right.

    - What do the Green volumes represent. I assume people, but maybe not.

    - Share of taxes vs. number of people is meaningless, since the top 1% make oddles more than the bottom 90%, this chart should show % of income taxed, and should include all taxes if possible, as well as return on capital (investment income) and return on labor (salary, etc.).

    - I really don’t understand the percentages on the left side, I’m assuming its an aggragate of population from the top down, but it’s unclear.

    I suspect that this chart was put together to make some point, but it is lost on me.

  67. As long as I have been alive — and that’s a lo-o-o-ong time — there have been arguments about tax fairness, which leads to two questions:

    1. Is tax fairness possible?

    2. Why does the federal government need our money?

    An answer to #1 is at http://rodgermitchell.com/FairTaxes.html

    The answer to #2 is: It doesn’t.

    Rodger Malcolm Mitchell

  68. kaleberg says:

    The chart seems to be mislabeled. Shouldn’t that be “Who Is Paying Federal Income Taxes?” It doesn’t seem to show all the low wage sorts paying FICA, Medicare and the like. It also leaves out people paying real estate taxes, sales taxes and excise taxes. This also ignores the very high implicit tax rate of raising one’s earnings in the $20 – $40K range where one is effectively taxed at a very high rate as one earns out of EITC, Section 8, child care subsidies, Medicaid and so on. When someone loses such benefits, the money goes back to the federal treasury just as surely as when one pays tax directly.

  69. [...] Barry Ritholtz, submits: “Nice infoporn  via Mint, showing the breakdown by income level. To put this into context, as of 2007, the median annual household income rose 1.3% to $50,233.00 according to the Census Bureau.” (Source: The Big Picture) [...]