OT- Beer and Taxes

[bigphesta]

It's Friday night, you and the gang (your five closest friends) are all heading out to the local pub for a few beers after a hard week of work. Of course, it's your local hangout, so the pretty girl behind the bar has no problem with letting you run up a tab. Closing time hits, everyone is feeling good, and the lovely bartender brings back the bill. Seems the six of you managed to drink up 100 beers. At $1 per beer, that's a bill of $100.

Now, you could split the bill down the middle, each of you paying $16.66, but, as one friend quickly points out, not everyone drank the same amount. Why should someone who had just 10 beers pay as much as the person who had 20? That seems reasonable so everyone starts to count the beers they drank. Seems simple. You get a certain % of the pie, you owe certain % of the cost.

You drank 13
Ozzie drank 21
Phreddie drank 14
Tom drank 11
Willy drank 21
Mike drank 20

Logic would dictate that if you drank 13 beers, you'd owe $13. Given that, do you think that you're going to be allowed to leave the bar throwing down $4 while Ozzie has to throw down $37 bucks when he had 21 beers? Would that be fair? I mean, sure, he drank a bit more than you, but why does each of his "dollar" beers cost him $1.85 when you're trying to weasel your way into paying 40 cents for each of yours? Let's say the tables were turned, and YOU were being told you had to pay $1.85 per beer while Ozzie only had to pay 40 cents per beer. Would you see this as fair?

Well, our government does. Today's April 15th, Tax Day, and our government thinks that "Ozzie" - representing the top 1% of wage earners in the United States - has to pay 37% of the total US Federal Income Tax burden, despite the fact that the top 1% only accounts for 21% of the total taxable income in the US.

Frank - representing the top 5% of earners (not including those in the top 1%) - earns 14% of the total income in the United States, yet is responsible for 19% of the total tax burden.

Tom - representing the top 10% of earners (not including those in the top 5%) - earns 11% of the total income in the United States, and incredibly responsible for 11% of the total tax burden.

Willy - representing the top 25% of earners (not including those in the top 10%) - earns 21% of the total income in the United States, yet is responsible for 17% of the total tax burden.

Mike - representing the top 50% of earners (not including those in the top 25%)- earns 20% of the total income in the United States, yet is responsible for 12% of the total tax burden.

And of course, "you" - who represents of the bottom 50% of tax payers (and this is in no means intended to estimate your income, simply used 'you' as an example) - earns 13% of the total income in the United States, yet is responsible for 4% of the total tax burden.

In a land where "All Men are Created Equal", does it make sense to you that someone can earn 13% of the pie and only be responsible for 4% of the cost, while someone else, working just as hard, can earn 21% of the pie, yet pays 37% of the burden? Is that "equal'? The top 10% of earners in the US pay 67.3% of the taxes, yet only earn only 46% of all wages. I mean, sure, 46% of the pie locked in the hands of 10% of the people is a sizeable chunk, but does that mean that they need to be punished? And 67.3% of the tax burden on the same 10% of the population is a much bigger chunk, and is definitely not equal, that's exploitation.

Forcing 10% of the population to cover over 67% of the expenses when they're only responsible for 46% of the taxable income, yet trying to prevent any sort of tax break because it's a "tax break for the rich" should be a crime. Simple math tells you if you're paying 67% of the bill, and bill is reduced by 10%, the total whole dollar amount of your savings will be more than the rest of the populations (90%) who's paying a laughable 33% of the bill. And a 10% tax cut for anyone is a 10% tax cut, and is only for the 'rich' when they're paying such a disproportioned amount to start with that any cut can't help but be substantial.

And the amount that the bottom 50%, even the bottom 75% (those making less than $55,000 per year) of wage earners is dwarfed in comparison to what those in the top 25% make, so by definition, you can't give them much of a tax cut. Yet these are the people to whom the liberal elite claim to want to give tax cuts. Remember this the next time you hear the "tax cuts for the rich" mentioned as a reason to NOT give all Americans a tax cut. Understand that the so-called rich are about the only ones paying taxes anymore and any tax cut will seem to favor the rich if you're only looking at dollar amounts and this is simply an excuse by Democrats in Washington to keep you scared, angry at the 'rich,' and allowing them to keep their hands in your pocket book. All fairness issues aside, ALL tax cuts are good for ALL people. Period.

Well, Happy Tax Day. Maybe you should just try and find someone to go out drinking with and forget this whole message...

[Havok]

i read something simalr to this on another website. Different story... same point.

Thats why it makes me laugh when people scream!!!"BUSH"S TAX BREAK ONLY EFFECTS THE RICH!!! THE TAX BREAK SHOULD GO TO THE POOR!!"

But the funny thing is... the poor dont pay hardly any taxes.

Unfortunetly most people are not educated enough on how taxes really work. Theres are great pie chart at the very bottom of this site.

http://www.rushlimbaugh.com

and just because its rushy's website doesnt make it any less true. so i dont wanna here... look at the source!!! blah blah

he backs it up with facts.

[Fritz]

Woohooo I am in the upper half of the class!

[QuikSand]

Kirby Puckett

[Craptacular]

I think we can at least all agree that tax forms suck royal ass.

[JPhillips]

But remember when you add all of the other taxes Americans pay, fica, fees, state taxes, locality taxes, property taxes ect. the tax burden is pretty evenly spread out. I don't know if I can find it again, but I saw a chart created for a study by tobacco and alcohol companies(hardly the far left) that showed that Americans basically pay the same percaentage of their income in taxes regardless of income.

This story also leaves out al of the Byzantine complexities of the tax code that overwhelmingly favor the wealthy and powerful. The tax code is a maze of confusion because it benefits those with money.

The story makes a good political point, but it sure doesn't reflect the reality of taxes in America.

[Butter]

Does anyone really feel like starting an argument on something as boring as taxes?

I sure don't. Even though it would be pretty easy to shoot holes in the entirety of the first post. I'll let someone else with more energy do it.

[Aylmar]

Originally posted by JPhillips
But remember when you add all of the other taxes Americans pay, fica, fees, state taxes, locality taxes, property taxes ect. the tax burden is pretty evenly spread out. I don't know if I can find it again, but I saw a chart created for a study by tobacco and alcohol companies(hardly the far left) that showed that Americans basically pay the same percaentage of their income in taxes regardless of income.

I'd love to see that study, if you can find it. I'm interested in how someone who pays 28% for federal income tax as opposed to 11% pays the same percentage after all state, local, and other taxes are calculated. It would be interesting to see where the gap is closed.

[Fritz]

Originally posted by JPhillips
But remember when you add all of the other taxes Americans pay, fica, fees, state taxes, locality taxes, property taxes ect. the tax burden is pretty evenly spread out. I don't know if I can find it again, but I saw a chart created for a study by tobacco and alcohol companies(hardly the far left) that showed that Americans basically pay the same percaentage of their income in taxes regardless of income.

You have to wonder if the tobacco and alcohol companies have an agenda. Something like keeping the flow of smokes and booze to our lowest incomes flowing. In some small way this seems to suggest that tobacco and alcohol use help level the playing field.

[JPhillips]

Aylmar: I have been digging, and I can't find the graph I saw earlier. Not suprising, it was at least two months ago when I saw it. However, its not hard to see how the gap is closed. FICA taxes only apply to the first 86,000 you make. Therefore, if I make 86,000 I pay the same FICA as ARod, but a much higher percentage. Also flat fees like hunting licenses, ect. naturally take a higher percentage of income from those that make less money. State and locality taxes also tend to be less progressive than the federal income tax. Finally, the most regressive taxes of all gasoline, cigarettes and alcohol all take a far greater percentage from the lower incomes.

[albionmoonlight]

The tax code is long novel length.

The regulations under the tax code are several long novels in length.

The guidance published by the IRS concerning the tax code is too big to be published.

Third party services that assist practitioners in navigating the tax code take up entire bookshelves.

People with post graduate degrees in tax law who have been practicing for their entire lives in the area still do not understand it all.

In part because the constitution limits the power of the federal government to act otherwise, the tax code represents 50+ years of ambitious social engineering as much as it does fiscal policy.

Havok was right when he said, "Unfortunetly most people are not educated enough on how taxes really work." I would add that that "most people" includes your humble narrator and 99%+ of the American public.

To assume that a bar graph or quick analogy can "explain" the way taxes "really work" is, for lack of a less euphemistic term, silly.

Or as QS put it--Kirby Puckett

[JPhillips]

dola

Fritz: I think the study was designed to show that raising tobacco and alcohol taxes to balance state budgets will hurt the poor and not the wealthy. As states are desperately trying to balance budgets, everyone has a reason why they shouldn't be hit.

[KWhit]

Originally posted by JPhillips
dola

Fritz: I think the study was designed to show that raising tobacco and alcohol taxes to balance state budgets will hurt the poor and not the wealthy.

True, because the poor and lower-middle class spend a much higher % of their income on booze and cigs.

[Fritz]

Originally posted by JPhillips
Fritz: I think the study was designed to show that raising tobacco and alcohol taxes to balance state budgets will hurt the poor and not the wealthy. As states are desperately trying to balance budgets, everyone has a reason why they shouldn't be hit.

I am sure. As is the case with most complex things, what is included in a study and why are almost as important as the study itself. In any case they can be more interesting. For instance, should end user consumer tobacco and alcohol taxes and fees be included in a "total tax figure?" That is a topic that could generate some very interesting discussion.

FWIW, I found your post about the study much more interesting than the initial post.

[Anrhydeddu]

...and lottery tickets, which is the gap that JPhillips is refering to.

[Fritz]

mmmmm gap

[Easy Mac]

mmmmmmm Fritz's gap

[Aylmar]

Originally posted by JPhillips
Also flat fees like hunting licenses, ect. naturally take a higher percentage of income from those that make less money. State and locality taxes also tend to be less progressive than the federal income tax. Finally, the most regressive taxes of all gasoline, cigarettes and alcohol all take a far greater percentage from the lower incomes.

Naturally. They're also completely optional....unlike my federal income tax return. Or wait...I did read this thing from a guy in Montana that says I don't have to pay taxes because Ohio wasn't legally a state until 1953...which meant Taft wasn't a natural-born citizen..so he couldn't be President..and couldn't legally introduce the 16th Amendment. Shit...I guess I'll pay anyway.

[KWhit]

Well... You don't have to have a job. Which means income tax IS optional.

[JPhillips]

Oh yeah, I forgot to mention sales taxes which also are regressive.

[KWhit]

Does anyone else find it funny that Bigphesta registered JUST so he could make this post? Talk about a guy with an agenda!

[JPhillips]

Here is the chart. The blog itself leans left, but the chart seems to speak for itself. I don't know if these numbers would change much if you used the same percentages used in the anecdote above.

(If this doesn't work I will link to the site)

[JPhillips]

dola

Damnit. Here is a link to the chart.

Tax Distribution

[ACStrider]

Wow, great idea JPhillips!

You're in favor of a universal flat tax. Cool, no more SS, FICA, utilitites, state or gasoline taxes. I'm all for it!

[bigphesta]

Originally posted by QuikSand
Kirby Puckett

other, explain

[JPhillips]

ACstrider: I actually favor the progressive income tax with few exemptions and deductions. I was only using that chart to point out that the argument that the rich are being unfairly overtaxed doesn't stand up when you include all of the tax burden.

[sabotai]

"he backs it up with facts."

When I first read this, I thought it said "he backs it up with fat."



And I know enough about taxes to know that the current systems sucks ass.

[Buzzbee]

Originally posted by JPhillips
ACstrider: I was only using that chart to point out that the argument that the rich are being unfairly overtaxed doesn't stand up when you include all of the tax burden.

That is absolutely, positively assinine. I can understand the spin you are trying to put on it, but it just doesn't hold water. If person A is taxed at 30% of their income and person B is taxed at 20% of their income, how is that fair? Seems to me that the person who is being charged 30% of their income is being unfairly overtaxed.

In regard to the taxes on gasoline, cigarettes, alcohol, etc. those are not related to income. Those are related to the price of a purchase. A person making a million dollars pays the same tax for a pack of cigarettes as a person making $10,000. Income has NO bearing. You are absolutely correct when you say that the person with lower income is paying a proportionately higher tax on these purchases when compared to income. BUT IT'S NOT A TAX ON INCOME!!! It is a tax on comsumption! They are paying exactly the SAME tax for the same purchase. Therefore, trying to lump taxes on consumption in with taxes on income is like lumping in apples with oranges.

So in a nutshell, it is my opinion that comparing the tax paid on a purchase to a persons income is totally irrelevant. Therefore, I don't dispute the validity of the percentages, but I do dispute their relevance when discussing whether or not the "rich" are unfairly overtaxed.

[Brillig]

Well I, for one, take issue with that graph purporting to show the overall tax burden.

In state and federal taxes alone, I paid 27%. 33% after FICA and Medicare. Assuming that I actually *spend* the money I make, sales tax will take it somewhere in the region of 36-37%. Wherever it is that people are paying 19%, I want to move there :P

[JPhillips]

Buzzbee: Well we have a disagreement that I doubt we can overcome. You want to limit the tax percentage discussion to income tax and I think we should include all forms of taxation. I don't see it as apples and oranges, I see it as the total tax burden.

In terms of the fairness of the progressive tax system, I don't see the issue. To me the people who make the most have the most to gain by a stable government and society. For the past 70 years our society has been remarkably stable and secure. We haven't suffered a major economic collapse since the Great Depression. I think our record of prosperity may have something to do with our fiscal policies.

I can go more into why I believe in the progressive tax structure, but I doubt it will bridge the gap between our beliefs.

Brillig: Can't speak for everyone, but I probably paid in the range of 20% last year. With my mortgage deduction and my wife's new business I had a lot of write offs. I can't verify the data of the chart, but being an average there will obviously be people higher and lower.

[Radii]

Some states don't have state income tax. That would certainly skew an individual's numbers. After the maximum 15% contribution into my 401K has been factored out, I paid almost exactly 25% of my income into state+federal+fica, etc.

I am hoping to buy a house in the next year or two because I am tired of throwing money away on rent.

[korme]

I paid freakin like 6 cents on tax for a mountain dew today, I was so pissed.

[Buzzbee]

Yes, JPhillips, we will probably have to agree to disagree. I can't see how "the people who make the most have the most to gain by a stable government." Seems like everyone would benefit the same. They should pay more since they have more to lose seems like a shallow argument.

Anyway, we'll call it a draw and move on.

So, how do you feel about abortion?? JUST KIDDING!!!

[Craptacular]

My wife and I paid almost exactly 25% of our gross wages in fed, state, FICA, and Medicare taxes. We're still renting, so we used the standard deductions.

[korme]

Originally posted by bigphesta
other, explain

BIGPHESTA!!!

Glad to see you made the trip over safely!

[korme]

Hahahah I didn't even realize the first huge post was by biggy P either.