"Mitt Romney earned $21.7 million in 2010 and paid nearly $3 million in taxes at a rate of slightly less than 14 percent, according to an early preview of the documents provided by the Romney campaign to several media outlets early Tuesday morning."
MUST BE NICE! Silver Spoon M.F. Who is voting for this guy????
I know that you don't think that I don't understand the concept of tax rates, but thanks for the implication I suppose. I know that's how it works, but I can't bring myself to be outraged by the fact that Romney *only* payed 500 times as much as me for his government services.
I don't know. I certainly don't feel sorry for him, but I can't wrap my brain around the idea that the guy pays as much income tax as 500 school teachers but somehow he's the one that's not pulling his weight.
it isn't what he is paying, it is the fact that if the rich just paid the same percentage as others do, it would go a great way toward solving the national debt...that is fair...why should the middle class pay a greater percentage?? Makes no sense...Warren Buffett said that he paid a smaller percentage than his own secretary...which is horrid IMO...
Could someone please demonstrate the math behind the tax rates for Romney and the school teacher. And are we talking about more than federal income tax? Does this include social security?
So rather than taking any of this as gospel, I decided to look at the 1040 instructions (shocking as it is to actually analyze this question objectively rather than to rely on some cleverly constructed graphic)
Let's assume this teacher earns 50,000 per year and is married filing jointly with 2 kids. (I would also similarly analyze the Romney rate, but since I'm not an accountant, I'm not even sure where to start)
She is entitled to a standard deduction of 11,600 leaving her with 38,400 of taxable income.
For herself, her spouse and her 2 kids she receives 4 exemptions at the rate of 3,700 each for a total of 14,800 reducing her taxable income to 23,600.
I can now look at the rate table and it tells me that if her income is between 17K and 69K, her income tax is calculated as follows - $1,700 (10% on the first $17,000) + 15% on the remainder which would be .15 * 6,600 which would be $990. Her total tax liability is $2690.
But wait, she has 2 children for which there are $1000 tax credits which reduces her tax liability to $690. 690/50,000 = .0138.
Given my rough calculations her actual federal tax liability is 1.3% not 25. And if her income was about 45k her rate would go negative. What gives?
So someone please demonstrate if I am wrong. I also recognize that you could redo these calculation 40,000 different ways and arrive at a different number depending on your beginning assumption. But it certainly appears to me that the 25% number is disingenuous at best and a bald faced lie at worst.
In the interest of full disclosure, a teacher's income could be taxed at 25% once she reaches 69K, but only on the income that exceeds 69K.
So let's start with a bit of honesty about the numbers and let the discussion progress from there.
Romney has negligible earned income. Remember, he joked about how little he 'earned' in speaking fees. A mere $375,000 give or take. So he pays capital gains tax, NOT income tax, and capital gains tax is a fraction of income tax.
All the flat tax folks intend to drop capital gains to zero, so those who inherit wealth or spend all their time on their yacht living off their earlier earnings, pay nothing. Those who actually EARN income are the ones who have to pay.
to me, flat tax would be the most brutal of all taxes...no more deductions for the middle classes or poor classes and the rich could care less cause they can afford it...
Big Dave- I thought about pointing out that the teacher's rate is before deductions and Romney's is not but I was to lazy to look the stuff up. Nice work.
How about if that teacher is married and teacher's spouse makes as much or a little more than teacher? That's not an uncommon scenario. And, yes, are they counting payroll taxes as well? Should they?
How about if that teacher is married and teacher's spouse makes as much or a little more than teacher? That's not an uncommon scenario. And, yes, are they counting payroll taxes as well? Should they?
Don't know the answers. All we have is a picture and a graphic that says 25%. Obviously well researched and citations provided to allow us to understand how they arrived at the number.
Regarding spouses and children. As I said there are thousands of different scenarios one could analyze to arrive at an answer, but in the end unless the teacher is making a low to mid 6 figure salary her effective federal income tax rate will not approach 25%.
How many dollars do you pay though? I get where you're coming from but guys like Romney pay for the vast majority of the government.
Here's the breakdown on who pays taxes.
Top 1% = 36.73% Top 5% = 58.66% Top 10% = 70.47% Top 25% = 87.3% Top 50% = 97.75% Bottom 50% 2.25%
If you look at the percentages it's easy to get righteous but the fact of the matter is that rich people are building the roads and paying the school teachers and buying the stealth bombers and most of us are getting back more than we put in. Myself in particular since I don't pay any federal taxes at all. There are a lot of people like me who are screaming about how the rich are screwing them and in some ways it's true but not in the amount of taxes that they're paying at least to my way of thinking.
So please demonstrate how the 25% rate is plausible. Take my example and put the numbers to it, so that we can see how it's possible that this person would pay at a 25% rate.
"Big Dave" you just got done arguing how there are "thousands" of scenarios that could apply to the teacher. Are you now saying the suggested tax rate is implausible? Especially if you factor in payroll taxes as well? Again, it seems to me that you don't like the message so you wish to dismiss it.
Levi, we live in a country where we pay taxes according to our ability to pay taxes. Is that fair? Probably. I don't think the ultra-rich who pay greater amounts of taxes are suffering for it.
It's absolutely fair Levi - our American way has allowed Williard to amass a fortune beyond the comprehension of 99% of the rest of the populace - even if his tax rate was jacked into the relative stratosphere of 50%, he would still be benefiting from that American system in a manner disproportionate to the rest of the population.
I actually agree with Big Dave about the 25% tax rate for the teacher. Even if the teacher were single with no children she'd have to be making 6 figures to have an effective tax rate of 25%. Too many people don't understand the difference between effective tax rates and marginal rates. Romney's 14% is his effective tax rate. I suspect the teacher's 25% is her marginal rate. I have several teachers as clients and I don't know any who pay taxes at a 25% effective rate.
Everyone is missing the point. The reason Romney pays what he does is because of the kind of income he has and the lower 15% tax rate for capital gains, dividends, etc that he enjoys. Wages are taxed on a scale from 10% to 35%. We should be examining why the kind of income that is mostly earned by the very rich should get a lower marginal rate than wage income.
Why whine about fair. Life is competitive if you succeed why be punished, as to pay for those who choose not to work or those who are here illegally. Tax dollars would go further if we did not pay for illegals to go to college.
If this teacher earned above average salary, her spouse (who is, let's say, a school principal) earned $35K more than her, they both have temporary summer employment for additional earned income, you include their Social Security and Medicare taxes, they have no children, they claim the standard deduction, and they have modest investment income... it is not implausible that their effective tax rate could approach 25%.
Typical? No.
Is Mitt Rommey's scenario typical? I don't think so.
Is the graphic misleading? Perhaps. The graphic apparently came from somebody's Facebook page.
Is it likely that the person that created the graphic misunderstood the concept of effective tax rate vs. marginal tax rate? Seems likely.
Does it take away from the point they're trying to make? I don't know.
Do I think that long term capital gains and dividends should be taxed as ordinary income for everybody at all income levels? No.
[This message has been edited by David Schott (1/25/2012)]
11 things Obama didn’t tell you about tax fairness last night
By James Pethokoukis January 25, 2012, 7:28 am
President Barack Obama talked a lot about taxes and fairness in his State of the Union speech last night. Like this bit:
But in return, we need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes. … We don’t begrudge financial success in this country. We admire it. When Americans talk about folks like me paying my fair share of taxes, it’s not because they envy the rich. …Tax reform should follow the Buffett rule: If you make more than a million dollars a year, you should not pay less than 30 percent in taxes.
Are wealthier Americans really not paying their fair share? Here are some numbers on income inequality:
1. The top 1 percent pay 36.7 percent of federal income taxes and earn 16.9 percent of adjusted gross income (as of 2009).
2. The top 0.1 percent pay 17.1 percent of taxes and earn 7.8 percent of adjusted gross income.
3. The average income tax rate for the top 1 percent is 24 percent. The bottom 50 percent? Just 1.85 percent.
4. The bottom 50 percent pay just 2.3 percent of income taxes.
5. Buffett chose to leave most of his fortune to the Bill & Melinda Gates Foundation, avoiding a 55 percent estate tax.
6. Buffett actually pays 50 percent tax since capital gains and dividends taxes are a double tax on corporate income.
7. Taking half of yearly income from every person making between $1M and $10M would only decrease the nation’s debt by 1 percent.
8. Taking every dollar from everyone making more than $10M per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent.
9. IRS will give out roughly $110 billion in “refundable” tax credits this year to households that pay no income taxes.
10. If taxable income in the 35 percent bracket were taxed at 49 percent, federal income tax revenues would be just $78B higher (Tax Policy Center).
11. To get the deficit to 2 percent by 2020 using Obama’s budget baseline, it would take a 91 percent top rate by taxing just the rich.
"Big Dave" you just got done arguing how there are "thousands" of scenarios that could apply to the teacher. Are you now saying the suggested tax rate is implausible? Especially if you factor in payroll taxes as well? Again, it seems to me that you don't like the message so you wish to dismiss it.
Yes, I suppose I don't like the message. Mostly because it is false and misleading. I suppose there is some way that this one teacher may have paid in 25% of her income on what is assumed to be a modest teacher salary. If she did it was either through gross incompetence on the part of her tax preparer or stupidity on her part.
If you are married with children and make less than 100,000/year you don't pay much income tax. (This previous statement describes the demographic to which I currently belong) I do not pay much income tax and have never ever came close to the 25% rate. So I think I probably relate closely to this teacher's station in life and would guess that I have a 1040 that is very similar to hers.
So back to the message Romney 13.9% Teacher 25%
It seems to me the message to the casual viewer is that she has paid 25% of her income as tax vs Mitt Romney's 13.9%. Does this describe the relationship accurately? Again if you do the math, I see no possible way, without adding in significant other income, that this scenario is plausible. So Dave - go to www.irs.gov or other unbiased sources, research the tax rates on normal income, and create for us a scenario that shows how this could be plausible or possibly even prevalent as this graphic seems to suggest.
Just a fact to consider, The super-wealthy are always saying that if we increase their rate it will cause unemployment. Nevada, zero income tax, 25th in property tax, 33 in sales tax, so the lowest taxes of all states and DC, has the worst unemployment. Just something to think about.
Congressional Budget Office federal effective tax rates (taxes as a percentage of income) across household income groups for the four largest sources of federal revenues--individual income taxes, social insurance (payroll) taxes, corporate income taxes, and excise taxes:
Why whine about fair. Life is competitive if you succeed why be punished, as to pay for those who choose not to work or those who are here illegally. Tax dollars would go further if we did not pay for illegals to go to college.
Undocumented aliens cannot get federal financial aid. Some states allow them to pay in-state tuition or get state funding but you do not pay for "illegals to go to college". Do your homework.
Just a fact to consider, The super-wealthy are always saying that if we increase their rate it will cause unemployment. Nevada, zero income tax, 25th in property tax, 33 in sales tax, so the lowest taxes of all states and DC, has the worst unemployment. Just something to think about.
Have you ever been to Nevada? The whole state is just dirt. There is a reason we used to nuke it regularly.
Tax Rate for the Super Rich, mule train, 1/24/2012 9:11:33 AM
RE: Tax Rate for the Super Rich, 
Bridgier, 1/24/2012 9:49:08 AM
- CO
