Who Really Pays Taxes in America?

The entire taxation system for the US government SUCKS, and anyone who pretends otherwise is naive. The IRS needs to be permanently disbanded and the entire tax system rebuilt from scratch. To ensure the new system doesn''t suck as much, all people who have any involvement in writing or maintaining the current tax code should be deported and held incommunicado until the new code is finished. Execution would be a good fate, too.

I have a great idea: how about a flat tax? Haha... I can practically see everyone cringe in disgust. But hey, if Russia''s doing it, it''s gotta be a good idea, right?

Sounds like what their research found was that low income earners carry a disproportionate share of the tax burden. Everything that I''ve ever read on the subject suggested the exact opposite. The good thing about this kind of disagreement is that you can look at the figures and determine who''s right and who''s wrong... it''s a purely factual argument. Unfortunately, I don''t have the time to research the issue more.

The middle class account for the majority of the population, ergo they should shoulder the majority of the tax burden. Taxes go to pay for social service, such as road building, fire and police, etc. by shear virtue of being the largest group, they use those services the most.

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capn_midnight | Captain Midnight | deviantArt
ACM | SIGGRAPH | Generation5

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Original post by lunarss
The problem stems from the fact that, proportionately, the lower half of the imcome bracket is hurt more by taxes than the wealthy. Think about it this way. A wealthy guy makes $1,000,000 / yr and is taxed at 50%. He still has $500,000. That''s $41,000 / month in AGI. Say the average American family makes $50,000. I think the actual number is less than that, but if they pay 30% in tax, that leaves them with $35,000 / yr and $2900 / mo. In my opinion, that would be tough to live on for the average family with a mortgage, 2 kids, and at least 1 car.

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Depends on where you live, I guess. My family is bigger than that and has more than that to pay for, and we''re on a $50,000 a year budget, yet we''re living comfortably.

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"Yes, ''n'' how many ears must one man have
Before he can hear people cry?
Yes, ''n'' how many deaths will it take till he knows
That too many people have died?
The answer, my friend, is blowin'' in the wind,
The answer is blowin'' in the wind." -- Bob Dylan

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Original post by Mscgamer

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Original post by lunarss
The problem stems from the fact that, proportionately, the lower half of the imcome bracket is hurt more by taxes than the wealthy. Think about it this way. A wealthy guy makes $1,000,000 / yr and is taxed at 50%. He still has $500,000. That''s $41,000 / month in AGI. Say the average American family makes $50,000. I think the actual number is less than that, but if they pay 30% in tax, that leaves them with $35,000 / yr and $2900 / mo. In my opinion, that would be tough to live on for the average family with a mortgage, 2 kids, and at least 1 car.

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Depends on where you live, I guess. My family is bigger than that and has more than that to pay for, and we''re on a $50,000 a year budget, yet we''re living comfortably.

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"Yes, ''n'' how many ears must one man have
Before he can hear people cry?
Yes, ''n'' how many deaths will it take till he knows
That too many people have died?
The answer, my friend, is blowin'' in the wind,
The answer is blowin'' in the wind." -- Bob Dylan

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yes, it definitely depends on locality. San Francisco vs. Des Moines is like the Pauper vs. the Prince in terms of living conditions for the same amount of money, and I''m not exagerating.

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capn_midnight | Captain Midnight | deviantArt
ACM | SIGGRAPH | Generation5

Deleted my previous post. It was mostly irrelevant to the discussion.

I did mention the fact that most people are completely unaware of / unwilling to believe that there is a problem with the concentration of wealth. I agree with the article on the point that our tax system encourges the concentration of wealth, and I am willing to bet that taxes will remain the same as the middle class continues to shrink. The wealth divide in this country is absolutely staggering.

lunarss I think you should have stuck to your guns.

@sthomas
A flat tax will probably raise most people''s tax rate and the wealthy will probably work out new exemptions for themselves.

@captain_midnight
If that logic had been at work in the 1950''s and 1960''s there would hardly be any middle class in the USA. By extension, as this logic has been put into effect in the last 20 years, the middle class has been increasingly getting pinched.

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Original post by LessBread
@sthomas
A flat tax will probably raise most people''s tax rate and the wealthy will probably work out new exemptions for themselves.

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uh, what do you have to back that up? seems awfully close to a slippery slope argument to me.

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@captain_midnight
If that logic had been at work in the 1950''s and 1960''s there would hardly be any middle class in the USA. By extension, as this logic has been put into effect in the last 20 years, the middle class has been increasingly getting pinched.

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so what do you propose, penalize the rich for their prosperity and good fortune?

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capn_midnight | Captain Midnight | deviantArt
ACM | SIGGRAPH | Generation5

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so what do you propose, penalize the rich for their prosperity and good fortune?

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depending on what you call penalizing: yes.

This article, though certainly informative, seems rather leading. Frankly, I''m not sure whether or not to take it seriously on a lot of things because they "forget" to tell us certain things that I think would be important for a fair look at what''s really going on. Let me give a few examples.

First, tax fraud of $311 billion a year is a terrible thing. But, they fail to give statistics as to who exactly is doing what. Which taxpayers are doing this? Is a middle class family less likely to indulge in tax fraud than a rich family? Where do poor families fit in? The apparent intent is to make you believe that it''s the rich people doing it, but no facts are given to support that.

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In the year 2000, at the height of the last economic boom and before the most recent round of tax cuts were enacted, IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%.

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Okay, now this is a bit of number manipulation. If you look at the graphs, the social security tax is a big chunk''o''change for the "average" $34,600 a year household. For the "rich" people you can barely see the line. Now, the obvious reaction to that is "well, duh". Everyone puts about the same into social security and gets about the same when they start receiving benifits at retirement. That''s basically like complaining that when a rich person goes to McDonald''s they spend a fraction, percentage-wise, that a poor person pays for a happy meal, so rich people happy meals should cost $20 and poor people happy meals should cost $.02 to make it "fair"... despite the fact that you get the same little burger, fries, and drink. Basically, all they''ve pointed out is that the average rich person makes more money than the average poor person, which I think we''re all pretty much aware of. They don''t even bother noting the obvious other conclusion... that even though the percentages are different, the rich people would end up paying $40,770,000 in taxes and the poor people would end up paying $13,840, using the numbers and percentages given by the article.

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Investors pay lower income taxes than workers. Roughly 85% of stock market wealth is owned by 10% of American households and there is no logical reason why income from those investments (called “capital gains” by the tax code) should be taxed less than income from work. But the top tax rate on wages is 35% while the top tax rate on capital gains is only 15%. This rate structure gives the richest households enormous advantages without producing any obvious social benefit. If we reversed the favor – and let workers pay lower tax rates than investors – then working families might have greater opportunity to accumulate wealth.

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Now, what they haven''t bothered with here is saying what the AVERAGE tax rate is. Granted it''s in the 20% range, which is more than the 15%, but it''s nowhere near as bad as what they''re trying to portray. Furthermore, the money put into the stock market had to be earned initially, and it was taxed at that point. It''s a tax on a tax, just like the interest you pay taxes on when you have your money in the bank... you were taxed when you earned the money you needed to make the money, now that you''ve made money on the previously taxed money you earned, it''s going to be taxed again. There''s no logical reason not to? How about the fact that it was taxed in the first place? Or perhaps the fact that the government LIKES invested money and want to encourage people to do so, because it results in the economy humming away more happily? I suppose my biggest problem with this is the complete lack of equivalent complaint regarding people getting tax breaks on their mortgages. Apparently tax-loophole-type things are only bad if they''re good for the rich.

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In 2000, only 52,000 estates out of over 2 million deaths that year were large enough to pay estate taxes . Even though the heirs of rich families kept 75% to 80% of their family’s fortunes, the tax generated vast sums for the government. According to the analysts at United for a Fair Economy, “In 2000, the estate tax alone raised more than double the total amount of federal income taxes paid by the bottom half of American taxpayers.” And yet the tax is slated for extinction by President Bush.

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Let''s discuss how many of those 52,000 estates were actually estates from people that would be considered "rich" by the average Joe, and how many of those involved family farms that are only worth a lot because the land is worth something, as is the equipment. I have seen far too many family farms destroyed because, though the people involved were barely eking out a living, the farms were "valuable" in and of themselves. If you have nothing and you inherit farmland that you''re theoretically going to keep trying to feed your family with (usually that you''ve been farming for years already and supporting the relative you''ve inherited it from), how exactly are you going to get the money to pay off the inheritance tax? You barely have enough money to buy your kids shoes... if you sell the land then how are you going to feed them next year?

The problem is that inheritence tax law has not been intelligent enough in the past to differentiate between some trust fund baby, and a guy who is trying to scratch a living out of the dirt in Nebraska. I''d rather not have any inheritence tax if they can''t be smarter about it.

Social security: I agree. Social security money should be earmarked and invested in the safest propositions possible. It should NOT be available to other programs.

State taxes: They didn''t bother backing up the statement that "Many states have also cut taxes for their best-off residents." It doesn''t make a lot of sense to me either.

I guess I would say in general I agree that our tax program is screwed up. That''s a true statement. But, I am getting really sick and tired of the random, agenda-based commentaries (like this ones, and ones to the contrary as well) that try to imply that our taxes are in worse shape than they really are. We need a fair look at what''s really going on, with ALL the numbers, then we need to determine what our priorities are (eg should we be encouraging investment by taxing it less, or making more money by taxing it more thus discouraging it a bit?), then we can fix it.

-fel

I have a few problems with "taxing the wealthy", as they use fewer public services (in theory). A wealthy family will send their children to private school, have private medical insurance etc etc, yet they are expected to pay for these services twice.

There's a word for it. Communism.

It just pisses me off.

[edited by - Nurgle on April 18, 2004 3:29:28 PM]

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I have a few problems with "taxing the wealthy", as they use fewer public services (in theory). A wealthy family will send their children to private school, have private medical insurance etc etc, yet they are expected to pay for these services twice.

There''s a word for it. Communism.

It just pisses me off.

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i dont find it that disturbing personally. government distribution of wealth is pretty much the only thing keeping us from a medieval like society, you know that whole thing with landlords and peasants.

its called socialism btw.

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Original post by capn_midnight
uh, what do you have to back that up? seems awfully close to a slippery slope argument to me.

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The flat tax proposals that I''ve seen have suggested a rate in the range 17-21%. That would raise taxes on people currently paying lower rates than that. Specifically, it would raise taxes on the poorest. As for the new exemptions, there''s nothing about a flat tax that suggests it would produce a change in current behaviors. It''s not like people are going to stop cheating on their taxes just because the tax rate is flat.

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Original post by capn_midnight
so what do you propose, penalize the rich for their prosperity and good fortune?

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That''s a possibility. What do you propose? Increasing taxes on the middle classes and the poor? Do you think they should be further penalized for their misfortune?

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Original post by LessBread

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Original post by capn_midnight
uh, what do you have to back that up? seems awfully close to a slippery slope argument to me.

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The flat tax proposals that I''ve seen have suggested a rate in the range 17-21%. That would raise taxes on people currently paying lower rates than that. Specifically, it would raise taxes on the poorest. As for the new exemptions, there''s nothing about a flat tax that suggests it would produce a change in current behaviors. It''s not like people are going to stop cheating on their taxes just because the tax rate is flat.

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A flat tax would encourage people to seek higher wages. There have been many time where my dad has worried about getting a raise because it might put him in the next tax bracket, countering any increase in funds he might recieve.

I wonder how many people listed as being tax evaders are just people who couldn''t handle the complexity of our tax code and wound up paying two or three days late (that is technically tax evasion). With a flat tax, it will be much easier to pay your taxes, it just gets taken out of your paycheck as it has always been done for most people with no need to file any sort of tax return at the end of the year. With mandatory tax withholding from paychecks, bingo-bango, zero tax evasion.

Sure, I enjoy getting my tax return in April/May, but when I think about it, it really pisses me off, because it basically amounts to the government overcharging me and leaving me with the responsibility of finding out. Imagine if McDonalds consistently overcharged everyone, and only provided forms once a year to allow people to prove they were overcharged, given that they can work out the complex language. They''d make out like bandits! Certainly your hardest working people wouldn''t bother with the time-consuming hassle of filling out such a form.

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Original post by capn_midnight
so what do you propose, penalize the rich for their prosperity and good fortune?

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That''s a possibility. What do you propose? Increasing taxes on the middle classes and the poor? Do you think they should be further penalized for their misfortune?

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no, I think the government should do what the rest of us have to do, learn to live within our means. (that means cut spending) And until I stop seeing poor people with piles of beer bottle behind their house, I refuse to believe it is souly their misfortune that has led them to where they are.

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capn_midnight | Captain Midnight | deviantArt
ACM | SIGGRAPH | Generation5

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Original post by felisandria
This article, though certainly informative, seems rather leading. Frankly, I'm not sure whether or not to take it seriously on a lot of things because they "forget" to tell us certain things that I think would be important for a fair look at what's really going on. Let me give a few examples.

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Ok. Let's take a closer look.

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Original post by felisandria
First, tax fraud of $311 billion a year is a terrible thing. But, they fail to give statistics as to who exactly is doing what. Which taxpayers are doing this? Is a middle class family less likely to indulge in tax fraud than a rich family? Where do poor families fit in? The apparent intent is to make you believe that it's the rich people doing it, but no facts are given to support that.

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Is the question of who is cheating more important than the fact that there is cheating going on? If you read further down in the article, the author does identify who is doing the cheating - and it's not middle class families and poor people:

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Large corporations and rich individuals have greater incentive and many more opportunities to cheat – by understating income or shipping money to foreign tax havens, by inflating deductions or claiming expenses that never existed, or by speculating in the stock market and then not reporting the gains. People with a job or a pension have no similar opportunity to lie about income or evade taxes.

Unfortunately, as their biggest donors turned into the biggest tax cheaters, politicians have reacted by handcuffing the tax police. Congress has consistently under-funded IRS enforcement efforts and computer upgrades that would catch more tax dodgers.

Congressional misdirection of IRS resources is even worse than their failure to properly fund the agency. Statistics cited by Johnston show that the IRS polices the poor more than the rich, even though the rich have greater opportunity and incentive to cheat.

Corporate tax dodgers get off easy, too: in 2002, the IRS assessed just 22 penalties against corporations, a decline of more than 99% from 1993 when 2,400 penalties were imposed. Audits of corporate returns fell sharply from 26 per 1000 returns in 1997, to only 7 audits per 1000 returns in 2003.

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Of course, you don't have to believe any of that, but counter examples would be nice to convince others not to believe it either.

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In the year 2000, at the height of the last economic boom and before the most recent round of tax cuts were enacted, IRS data shows that the richest 400 taxpayers paid 27% of their income in federal, state, and local taxes. On average, these 400 taxpayers each had taxable income of $151 million. All other taxpayers had average taxable income of only $34,600, and yet their tax burden was 40%.

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Original post by felisandria
Okay, now this is a bit of number manipulation. If you look at the graphs, the social security tax is a big chunk'o'change for the "average" $34,600 a year household. For the "rich" people you can barely see the line. Now, the obvious reaction to that is "well, duh". Everyone puts about the same into social security and gets about the same when they start receiving benifits at retirement. That's basically like complaining that when a rich person goes to McDonald's they spend a fraction, percentage-wise, that a poor person pays for a happy meal, so rich people happy meals should cost $20 and poor people happy meals should cost $.02 to make it "fair"... despite the fact that you get the same little burger, fries, and drink. Basically, all they've pointed out is that the average rich person makes more money than the average poor person, which I think we're all pretty much aware of. They don't even bother noting the obvious other conclusion... that even though the percentages are different, the rich people would end up paying $40,770,000 in taxes and the poor people would end up paying $13,840, using the numbers and percentages given by the article.

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I don't see how that constitues number manipulation or somehow restates the obvious. And when you look at the section further down in the article titled "Social Security Taxes Subsidize Income Tax Cuts", the argument from the first section that you quote from becomes even stronger.

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Three quarters of US households pay more Social Security taxes than income taxes. Employers deduct the tax straight out of paychecks and send the money directly to the Federal government. A middle-income household pays 9.6% of its income in social security taxes, while households in the top 1% of income pay less than 2%.

Social Security tax rates have increased since 1980, while income tax rates have been cut repeatedly.

During the last presidential campaign, both candidates promised not to spend the Social Security surplus. And candidate Bush specifically promised not to use the surplus to finance tax cuts. But as Johnston reports, that’s just what he did: “In June 2001, President Bush signed his tax cut package that lowered rates on the rich, eliminated the estate tax for one year, and gave more than half of the $1.3 trillion tax cut to the richest 1% of taxpayers. It was a tax cut that also promised years of budget deficits . . . and more raiding of Social Security so that the middle class could subsidize the rich.”

The Social Security tax only applies to income up to $87,000 and people earning above that ceiling get a break from paying the tax.

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It looks to me that the poor and middle classes are paying a much greater share than they ought to be.

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Investors pay lower income taxes than workers. Roughly 85% of stock market wealth is owned by 10% of American households and there is no logical reason why income from those investments (called “capital gains” by the tax code) should be taxed less than income from work. But the top tax rate on wages is 35% while the top tax rate on capital gains is only 15%. This rate structure gives the richest households enormous advantages without producing any obvious social benefit. If we reversed the favor – and let workers pay lower tax rates than investors – then working families might have greater opportunity to accumulate wealth.

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Original post by felisandria
Now, what they haven't bothered with here is saying what the AVERAGE tax rate is. Granted it's in the 20% range, which is more than the 15%, but it's nowhere near as bad as what they're trying to portray. Furthermore, the money put into the stock market had to be earned initially, and it was taxed at that point. It's a tax on a tax, just like the interest you pay taxes on when you have your money in the bank... you were taxed when you earned the money you needed to make the money, now that you've made money on the previously taxed money you earned, it's going to be taxed again. There's no logical reason not to? How about the fact that it was taxed in the first place? Or perhaps the fact that the government LIKES invested money and want to encourage people to do so, because it results in the economy humming away more happily? I suppose my biggest problem with this is the complete lack of equivalent complaint regarding people getting tax breaks on their mortgages. Apparently tax-loophole-type things are only bad if they're good for the rich.

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Wouldn't it be more fair to compare the average tax rate, which you ball park at 20%, against the average capital gains tax rate rather than the top capital gains tax rate of 15% as you have above? It seems to me more reasonable to place greater taxes on "unearned" income rather than "earned" income. That is, the situation should be reversed. The tax on earned income should be lowered so that more people have the money to invest. And the difference should be made up by increasing the tax on the returns of those investments rather than by taxing earned income, ie. labor. As for people getting tax breaks on their mortgages, I think that indicates that the government wants to encourage people to buy homes. Home building is a major industry and it's generally agreed that home ownership is a major benefit to society.

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In 2000, only 52,000 estates out of over 2 million deaths that year were large enough to pay estate taxes . Even though the heirs of rich families kept 75% to 80% of their family’s fortunes, the tax generated vast sums for the government. According to the analysts at United for a Fair Economy, “In 2000, the estate tax alone raised more than double the total amount of federal income taxes paid by the bottom half of American taxpayers.” And yet the tax is slated for extinction by President Bush.

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Original post by felisandria
Let's discuss how many of those 52,000 estates were actually estates from people that would be considered "rich" by the average Joe, and how many of those involved family farms that are only worth a lot because the land is worth something, as is the equipment. I have seen far too many family farms destroyed because, though the people involved were barely eking out a living, the farms were "valuable" in and of themselves. If you have nothing and you inherit farmland that you're theoretically going to keep trying to feed your family with (usually that you've been farming for years already and supporting the relative you've inherited it from), how exactly are you going to get the money to pay off the inheritance tax? You barely have enough money to buy your kids shoes... if you sell the land then how are you going to feed them next year?

The problem is that inheritence tax law has not been intelligent enough in the past to differentiate between some trust fund baby, and a guy who is trying to scratch a living out of the dirt in Nebraska. I'd rather not have any inheritence tax if they can't be smarter about it.

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Ok, let's discuss it. How many of those estates involved family farms? If you have a number it would help to put things into perspective. From what I understand, it's not estate taxes that are killing family farms, but rather greater industry consolidation and monopolization and the flagging commodity prices that result. In my experience, most family farms with enough acreage to fall into the realm you describe typically split that acreage into parcels that are then transfered to the children and then held in trust long before the patriarch of the farm dies. I've seen this done in my own family as well as in the families of kids I went to high school with. I've yet to seen any of them lose their farms to estate taxes.

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Original post by felisandria
State taxes: They didn't bother backing up the statement that "Many states have also cut taxes for their best-off residents." It doesn't make a lot of sense to me either.

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Well, in California the tax rate for the wealthiest is lower than the it is for the rest, something like 7% compared to 9%. This factoid came out during last years debates in the special election for Governor. It was put forth by the Green candidate, Peter Camejo, who happens to be a very successful financial analyst. As a side note, it was interesting to see Camejo discuss these issues with Sean Hannity on his show a couple of times. They disagreed a lot, of course, but it was clear that Hannity still respected Camejo in spite of their disagreements.

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Original post by felisandria
I guess I would say in general I agree that our tax program is screwed up. That's a true statement. But, I am getting really sick and tired of the random, agenda-based commentaries (like this ones, and ones to the contrary as well) that try to imply that our taxes are in worse shape than they really are. We need a fair look at what's really going on, with ALL the numbers, then we need to determine what our priorities are (eg should we be encouraging investment by taxing it less, or making more money by taxing it more thus discouraging it a bit?), then we can fix it.

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I agree for the most part, but from what I've gathered examining the AskQuestions.org website, "agenda-based" doesn't seem to be a fitting characterization of them given how their agenda is set. It also doesn't seem random either - people asked questions and then voted on which questions should be answered. That's quite different than picking questions out of a hat. As for the matter of balance - one that you don't bring up - I think the report could have made greater use of information coming from the Heritage Foundation, the Cato Institute or similar so that it's answers could have been more rounded out.



[edited by - lessbread on April 18, 2004 6:01:28 PM]

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Original post by capn_midnight
A flat tax would encourage people to seek higher wages. There have been many time where my dad has worried about getting a raise because it might put him in the next tax bracket, countering any increase in funds he might recieve.

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I didn''t know that people needed encouragement to seek higher wages. I have heard of people worrying about getting raises that put them into the next higher tax bracket, but I''ve never heard of anyone declining a raise because of that worry.

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Original post by capn_midnight
I wonder how many people listed as being tax evaders are just people who couldn''t handle the complexity of our tax code and wound up paying two or three days late (that is technically tax evasion). With a flat tax, it will be much easier to pay your taxes, it just gets taken out of your paycheck as it has always been done for most people with no need to file any sort of tax return at the end of the year. With mandatory tax withholding from paychecks, bingo-bango, zero tax evasion.

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For the most part, the biggest tax evaders are people who can handle the complexity of the tax code - in fact they handle it so well they are able to work out how to evade it. Payroll taxes won''t stop tax evasion under a flat tax anymore than they do now. And what about taxes on other forms of income?

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Original post by capn_midnight
Sure, I enjoy getting my tax return in April/May, but when I think about it, it really pisses me off, because it basically amounts to the government overcharging me and leaving me with the responsibility of finding out. Imagine if McDonalds consistently overcharged everyone, and only provided forms once a year to allow people to prove they were overcharged, given that they can work out the complex language. They''d make out like bandits! Certainly your hardest working people wouldn''t bother with the time-consuming hassle of filling out such a form.

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If you''re getting overcharged, it''s possible that you filled out your W2 incorrectly. McDonald''s isn''t the government, so that anology doesn''t hold up. If McDonald''s consistently overcharged people, people would stop eating there.

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Original post by capn_midnight
no, I think the government should do what the rest of us have to do, learn to live within our means. (that means cut spending) And until I stop seeing poor people with piles of beer bottle behind their house, I refuse to believe it is souly their misfortune that has led them to where they are.

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National governments never live within their means. That''s a benefit of owning the printing presses. And that some poor people have piles of beer bottles in back of their house doesn''t mean that all poor people do. To suggest that all poor people are not misfortunate because some poor people drink beer is down right silly. I know a lot of people who work their asses off and whether they drink beer or not has no bearing on whether they are poor.

Do you have Excel? Check out this set of tables. It has various data about income tax revenues. Note that it''s from the IRS website. Of particular interest is the last table, titled "Total income tax share (percentage)".

According to the table, in 2001, the top 1% of income earners paid about 34% of the total IRS income tax revenues. The top 5% of income earners paid 53%, etc etc, and the top 50% of income earners paid 96% of all income tax revenue.

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It looks to me that the poor and middle classes are paying a much greater share than they ought to be.

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The top half of income earners pay nearly the entirety of income tax revenues. The bottom half pay next to nothing. I suppose that nothing is more than they ought to be paying?

If you look, there might be more recent statistics available. It''s been a long time since I trolled around in there.

The vast majority of taxes is paid by the wealthiest because the vast majority of income is received by the wealthiest.

A mildly progressive income tax is justifiable because the other taxes people pay -- sales tax, property tax, gas tax, cigarette tax, etc. -- are regressive, so a progressive income tax helps to offset that.

I''m all for lower taxes, but there are a hundred things that are higher on the todo list for me, at the top of which is paying down the national debt and ending agricultural and other domestic subsidies. The next 98 things are ending prohibitions of various sorts, lowering barriers to entrepreneurship, and tort reform.

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Original post by LessBread
...argument as to why article authors believe that the rich are more likely to cheat on taxes...
Of course, you don''t have to believe any of that, but counter examples would be nice to convince others not to believe it either.

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Short term-employment manual labor is often paid in cash, under the table. Do you think that information gets reported to the IRS?

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A middle-income household pays 9.6% of its income in social security taxes, while households in the top 1% of income pay less than 2%.

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That doesn''t mean that the middle-income household pays more.

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Wouldn''t it be more fair to compare the average tax rate, which you ball park at 20%, against the average capital gains tax rate rather than the top capital gains tax rate of 15% as you have above? It seems to me more reasonable to place greater taxes on "unearned" income rather than "earned" income. That is, the situation should be reversed. The tax on earned income should be lowered so that more people have the money to invest. And the difference should be made up by increasing the tax on the returns of those investments rather than by taxing earned income, ie. labor. As for people getting tax breaks on their mortgages, I think that indicates that the government wants to encourage people to buy homes. Home building is a major industry and it''s generally agreed that home ownership is a major benefit to society.

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Not all unearned income is subject to capital gains - only investment income. Perhaps investment is also a major industry and it''s generally agreed that investing is a major benefit to society.

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Well, in California the tax rate for the wealthiest is lower than the it is for the rest, something like 7% compared to 9%. This factoid came out during last years debates in the special election for Governor. It was put forth by the Green candidate, Peter Camejo, who happens to be a very successful financial analyst.

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Here''s one reference:
Camejo interview

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Peter Camejo: The poorest 20 percent, who don’t hardly have any money, they pay 11.3 percent in taxes. The richest 1 percent pay 7.2 percent.

LA Weekly: Is this including sales tax?

Peter Camejo: Everything.

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So it sounds like he''s talking about more than just income tax here. That''s not really a fair comparison.