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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (33335)	2/25/2009 5:32:47 PM
From: TimF	Read Replies (1) \| Respond to of 71588

This CBO analysis is talking about the AVERAGE of ALL TAXES (income taxes, property taxes, sales taxes, capital gains taxes, etc., etc.) that people pay. NOT just "income tax" which was all that the earlier article addressed. First of all the total tax burden is more important than the burden imposed by any specific tax. Beyond that, the very rich don't pay much in payroll tax. They are more likely to rely on investment income, and even if their income is largely salary income, they pay payroll taxes on only an insignificant portion of it. If I excluded the payroll tax the relative burden on the rich would look even worse. they actually HAVE A LOT MORE PROPERTY and FINANCIAL ASSETS! LOL! There is no generally applicable federal property tax, the CBO was reporting on federal taxes. As for financial assets, there is no federal financial asset tax, you pay taxes on income (including capital gains) from the assets, but that's a form of income tax. And the CBO understates the effective tax rate paid on income from capital gains. To the extent the capital gains come from sale of stock in profitable companies (and that's a pretty large share of capital gains), they are effectively not paying a lower rate of income tax, but a much higher one, as those gains are double taxed, first at the corporate tax rate, and then at the capital gains rate. But even ignoring this double taxation, an effective federal income tax rate of 19.4 percent in 2005, Is noticeably higher than the rate paid by the poor or middle class. Remember your talking about the effective total rate not the marginal rate. Again using dinkytown.net I plugged in a married couple with $90,000 of income (so solidly middle class) all of which was from salary (so none of it gets taxed at the lower capital gains rate), two kids (a fairly normal number, and slightly lower than the average kids per married couple), and a house on which they pay $5000 in mortgage interest and $800 in property taxes per year (hardly unusually high levels), and NO other credits, exemptions or deductions (even though they would be likely to have something) And the result was - "Your taxes are estimated at $6843. This is 7.6% of your total income..." 19.4% is a lot higher than 7.6% is it not? And in reality a family like that would probably pay a lower percentage, as they would have other deductions, exemptions and/or credits, or other ways of lessening their effective tax rate.