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


To: Peter Dierks who wrote (50738)4/17/2012 8:28:19 AM
From: Peter Dierks  Respond to of 71588
 
Taxes—Who Really Is Paying Up
April 15, 2012, 12:08 a.m. ET

By ANDREA COOMBES
Do you pay your fair share in taxes?

Even as President Barack Obama pitches the "Buffett rule" to ensure that millionaires pay at least a 30% tax rate, some commentators are decrying the fact that about half of U.S. taxpayers don't pay any federal income tax.

But our tax system is more complex than any sound bite or simplistic headline can illustrate.

Some multimillionaires do pay a lower effective income-tax rate than some middle-income taxpayers; receiving a chunk of your income via long-term capital gains rather than a paycheck is just one reason that happens. But the top 20% of income earners paid 70% of federal taxes in 2007, according to the most recent data available from the Congressional Budget Office.

That group also pulled in 60% of total pretax income, according to the CBO.

Meanwhile, 46% of taxpayers don't pay any federal income tax, but they often pay a hefty portion of their income to levies at the federal, state and local level.

Those include payroll taxes for Social Security and Medicare; state and local sales taxes on groceries, clothing and other purchases; and federal and state excise taxes on things such as gas, cigarettes, alcohol and airline tickets.

The payroll tax for Medicare is paid by all workers, but the Social Security tax isn't levied on income over $110,100 (in 2012). So people with bigger six-figure salaries pay a lower portion of their income to Social Security taxes than those earning less.

Yet wealthy people bear a bigger share of corporate income taxes, which are ultimately borne by individuals. "All taxes have to be paid by somebody at some point," says Steve Wamhoff, legislative director at Citizens for Tax Justice, the liberal lobbying arm of the Institute on Taxation and Economic Policy, a research group. "The corporate tax is paid by the owners of corporate stock and business assets."

In 2011, federal corporate income taxes ate up an estimated 7.7% of income for the top 1% of income earners, compared with a 0.4% bite for taxpayers in the lowest fifth of the income ladder, according to the Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution.

But partly because taxpayers earn money in different ways, the top 1% of earners saw a smaller share of their income go to payroll taxes.

Then there are state and local taxes to add in. People in the lowest 20% of income earners paid about 17% of their income to federal, state and local taxes in 2011, versus about a 30% effective rate for the top earners, according to an estimate from the Institute on Taxation and Economic Policy. But the share of total taxes paid roughly matches the share of total income for each of the income groups.

Sales taxes can have an outsize effect on lower-income people. "After they buy basic necessities, they typically won't have a lot of money left over to save or invest," says Mr. Wamhoff. A wealthier family is "more likely to have a portion of their income that they can put to savings or investments that will never be subject to sales taxes."

What about those 46% who don't pay federal income tax?

Roberton Williams, a senior fellow at the Tax Policy Center, says 23% of U.S. taxpayers don't make enough money to owe that tax once they take their personal exemption and standard deduction. Another 23% qualify for tax breaks that bring their bill to zero or provide a refund.

"They start off with relatively low income to begin with," Mr. Williams says, "and therefore have low tax liability before claiming any breaks."

Wealthier people face a tax rate as high as 35% on earnings, "but they get the biggest tax breaks," he says. "They start off with such a high tax that the biggest tax breaks don't bring them down to zero. They're benefiting hugely from tax breaks—much more than the poor people—but because they start off at the high level, their tax bills stay positive."

That said, 1,470 millionaires were among those who paid no federal income tax in 2009.

Write to Andrea Coombes at andrea.coombes@dowjones.com

online.wsj.com



To: Peter Dierks who wrote (50738)4/19/2012 7:09:03 PM
From: Hope Praytochange1 Recommendation  Read Replies (3) | Respond to of 71588
 
Even if the Democratic president escapes being defined by these flare-ups, they still feed a story line that can erode public confidence in Washington institutions, fuel a perception of federal excess and frustrate Obama's argument that government can be a force for good.

The White House response has been textbook — a mix of outrage and deflection. "The president has been crystal clear since he was a candidate about the standards that he insists be met by those who work for the federal government and on behalf of the American people and for the American people," says White House spokesman Jay Carney.

But taken altogether, the events have overwhelmed the president's agenda. The Secret Service scandal broke while Obama was in Cartagena last weekend for a Summit of the Americas with more than 30 Western hemisphere leaders. Back home the headlines and the news anchors were hardly focusing on the summit, instead playing up the fact that 11 Secret Service agents and uniformed officers had been sent home on accusations of misconduct.

By the time the president got home, General Services Administration officials were appearing before congressional committees about a lavish Las Vegas conference and junkets to resorts, and more evidence of excess was beginning to emerge. Obama's attempts to draw attention to his efforts against oil market manipulation on Tuesday and to help the economy on Wednesday were drowned out by further Secret Service revelations and by the publication of gruesome photos depicting GIs with the bodies of Afghan insurgents.

"Even though you may not be losing ground because it's not the White House taking the hits, you're no longer gaining ground because the White House doesn't get its message out," said Ari Fleischer a former spokesman for President George W. Bush.

Obama quickly tried to put distance between himself and the accounts of misbehavior. White House spokesmen avoided getting into specifics, instead citing investigations under way and referring reporters to the Secret Service or the GSA or the Pentagon.

"If it's at an agency, White Houses do their best to keep it arms' length and let the agency take the hits and deal with it," Fleischer said. "I think that's what's going on here." Yet, the president can't turn his back on the problems, either, and is ultimately held responsible for restoring the reputations of troubled agencies.

"Part of the president's job is to protect the institutions of government," said Paul Light, an expert on government bureaucracies and professor of public service at New York University. "He is administrator in chief whether he likes it or not."

Some Republicans were folding the Secret Service and GSA episodes together with Solyndra, a solar firm that received a half-billion dollar federal loan and was touted by the Obama administration before declaring bankruptcy last year.

"Presidents are to be held responsible," Sen. Jeff Sessions, R-Ala., said Thursday. "They also need to be responsible for insisting that from the top to the lowest employee that not one single dollar will be wasted in this government," he added. "I don't sense that this president has shown that kind of managerial leadership."

What's more, each the recent events also works in its own corrosive way. The GSA's $823,000 Las Vegas conference, complete with gourmet food, clown and mind reader, have given Republicans ammunition to attack government bloat. And for that, there is a ready audience.

"If he could see what I see on a daily basis, how some of the money is being spent, he would want to throw up," said Linda Heck, a Ford Motor Co. retiree protesting in Elyria, Ohio, Wednesday not far from where Obama was speaking to a community college crowd.

"I'm sitting in focus groups right this minute where it just came up," said Democratic pollster Mark Mellman. "It's an example — talking about the GSA — of what's wrong with government. It gives them some ammunition and something to talk about."

Romney this week called the GSA "embarrassing" to the Obama administration and made a point of stressing that leadership is set at the top. Still, his criticism seemed aimed more at painting a bloated government than as a direct shot at Obama.

"It damages this president indirectly because he is being portrayed as the president of big government," Light said. As governor of Massachusetts from 2003 through 2006, Romney encountered his own troubles, including fights with the head of the Massachusetts Turnpike Authority over management and construction problems with Boston's "Big Dig" highway project.

Romney this week was more nuanced about the Secret Service, which is also providing security for him on the campaign trail. He urged firing Secret Service employees caught in the incident involving prostitutes but said he had confidence in the response by agency Director Mark Sullivan, whose swift action on the agents and uniformed officers suspected of wrongdoing won praise from other Republicans.

As a result, the Secret Service scandal is not, at this point, seeming to hit the White House. But it has damaged an institution whose public image has been upright and heroic Mellman said such falls from grace increase public cynicism, which itself can be damaging in a democracy.

"What it does do is contributes to the very low confidence that people have in all of our institutions," he said. For Obama, the photographs that purport to show U.S. soldiers with the bodies of Afghan insurgents feeds an on-and-off image of American warriors over the last 10 years that was most notoriously damaged by pictures from Abu Ghraib, an Iraqi prison where U.S. military police photographed themselves abusing detainees.

In recent months, American troops have been caught up in controversies over burning Muslim holy books, urinating on Afghan corpses, an alleged massacre of 17 Afghan villagers and other misdeeds. Those images and accounts come as public support for continuing the U.S. combat presence in Afghanistan is waning and as Obama works to negotiate an exit strategy with Afghan President Hamid Karzai.

Karzai is calling for a quicker withdrawal of international forces