wealthy tax rates income tax deductions

US rich see taxes drop dramatically yet …
progressive super rich households tax breaks

Taiwan passes another tax on super hot property

The super rich pay a lot less taxes than they did a couple of decades ago. What’s one country doing about it? We trim, blend, and append three 2011 articles from: (1) Christian Science Monitor, Apr 15, on rich taxpayers by M. Trumbull; (2) Associated Press, Apr 17, on super rich taxpayers by S. Ohlemacher; and (3) BBC, Apr 15, on Taiwan by C. Sui.

by Mark Trumbull, by Stephen Ohlemacher, by Cindy Sui

How much do wealthier Americans pay in taxes? According to the Tax Foundation, which supports low tax rates, the top 1% account for 20% of "adjusted gross income" (an Internal Revenue Service measure) and pay 38% of income taxes. That shows how the income tax itself is progressive (higher rates on the rich, lower on the poor).

The tax rate on top incomes is 35% but deductions and other factors lower the effective rate to 23% of income, the Tax Foundation reckons. The average tax rate for all taxpayers is 12% of adjusted income.

Look at the broad mix of US taxes, not just income taxes and estate tax which are progressive. Other taxes levied in the US are often regressive; federal gas taxes, payroll taxes, and state sales taxes offset the progressivity of the income tax.

To put it in numbers, the top 1% account for 20.3% of total personal income in the US and pay 21.5% of all federal and state taxes. The middle 20% of households earn 11.6% of US income and pay 10.3% of taxes. The lowest 20% account for 3.5% of income, and pay 2% of all taxes.

Lower-income groups pay a smaller -- but still significant -- share of their incomes in taxes. The lowest fifth of earners pay, on average, 16% of their income in taxes. At the higher end of the scale, the top fifth pay a bit more than 30% of their income in taxes, not much higher than the next fifth down.

To see the whole article, click here

The super rich pay a lot less taxes than they did a couple of decades ago, and nearly half of US households pay no income taxes at all.

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average effective income tax rate was 17%, down from 26% in 1992.

The top federal income tax rate is 35%, so how can the top pay about half that? Mainly, the top rate on capital gains is only 15%. Over the same period, the average federal income tax rate for all taxpayers declined to 9.3% from 9.9%.

More than half of the nation's tax revenue came from the top 10% of earners in 2007. More than 44% came from the top 5%. Still, the wealthy have access to much more lucrative tax breaks than people with lower incomes.

The nation's tax code offers breaks for having children, paying a mortgage, going to college, and even for paying other taxes. These credits, deductions, and exemptions, total $1.1 trillion, an average of about $8,000 per taxpayer, according to an analysis by the National Taxpayer Advocate, an independent watchdog within the IRS.

There are so many breaks that 45% of households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.

The figure has dropped slightly the past two years. It was 47% for 2009. The main difference for 2010 was the expiration of a tax break that exempted the first $2,400 of unemployment benefits from taxation.

A group of wealthy Americans, called United for a Fair Economy, seeks to raise taxes on rich people like themselves. One member received a little over $200,000; his federal income tax bill was a little more than $2,000 -- 1% of his income.

To see the whole article, click here

JJS: While trying to tax the rich makes emotional sense, consider this. If you don’t want the rich to have so much money, why do you give it to them in the first place? Then get so huffy that they have it, and demand some of it back later. Wouldn’t it make more sense -- logical sense -- to not give them the money initially?

How could you keep your spending from pooling up in just a few pockets? The main way is to remember that there is a commonwealth, and to share that. Sharing wealth that is common keeps it from collecting in a few pockets that are private.

How do you share what belongs to us all? You redirect our spending for nature. All the money we spend for the nature we use -- payments for land, resources, EM spectrum, ecosystem services -- is trillions each year. We could pay Land Dues into the public treasury and get “Rent” Dividends back. Everyone getting an equal share means nobody gets too much, more than a fair share.

Sound idealistic? In a mild form, it’s realistic in some place.

Taiwan has taken an unusual move to curb rampant property speculation and the worst wealth gap in a decade.

Property not lived in by the owner and sold within two years of purchase will be taxed 10-15%.

Luxury goods will also face a 10% tax, which could come into effect by June.

Surveys show most Taiwanese people favor the move. Property prices have sky-rocketed to a level that is unaffordable for average wage earners. The richest 20% of the population has an average household income that is six times higher than the poorest 20%.

Taiwan is one of the world's top luxury markets. Besides property, private jets, yachts, and luxury cars valued at more than $100,000 (£61,000) will face a 10% tax. Golf club membership, coral, leather, and fur coats worth more than $17,000 will also be taxed.

To see the whole article, click here

JJS: Would a luxury tax even be seen as necessary if the tax on locations and fees for privileges like banking, utility franchises, and corporate licenses were higher, up to their full market value? I bet getting such “rents” upstream would leave little gross income downstream for taxists to tax.


Editor Jeffery J. Smith runs the Forum on Geonomics.

Also see:

World's rich got richer, so how about a break?

Most Chinese kept from good wages & affordable homes

Wealth Gap Yawns and So Do Media

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