2008-10-03 - 11:39 a.m.
I wrote a review in response to an article I read on MSN Money section today. The article was originally written for Kiplinger, which is a "Personal Finance Magazine". You must assume when it titled that way, it is for rich people, because how many poor suckers do you know who have "Kiplinger" Magazines in their homes?
Anyway, the article and its web link are pasted below, and my response on the MSN Discussion website and that link are pasted right after it. Think critically as you read the Kiplinger article, and keep in mind, it is deliberately meant to distort your view of the numbers.
http://articles.moneycentral.msn.com/Taxes/CutYourTaxes/make-32k-youre-in-the-richer-50percent.aspx
Make $32K? You're in the richer 50%
Other new IRS data: While the top 1% of US earners, collectively, make nearly twice that of the bottom 50%, those at the top also pay 13 times more in individual income taxes combined.
After all, no matter what the conditions -- war or peace, prosperity or recession -- no issue seems to get under voters' skins more or command more attention from politicians than whether taxes will rise or fall and, frankly, whose ox will be gored.
New statistics from the Internal Revenue Service show that the highest-earning 1% of taxpayers in America make 22.06% of all income reported to the government. That's almost twice the 12.51% of total income earned collectively by the lowest-earning 50% of workers. Yes, 1.4 million taxpayers claim 22% of income earned while 68 million share just 12.5%.
But get this: When it comes to taxes paid, an even wider discrepancy shows itself, in reverse. Those earners in the top 1% pay 39.89% of all federal individual income taxes. The bottom 50% of earners pay just 2.99% of those taxes.
These income and tax-burden breakdowns come from information reported on 2006 individual income-tax returns, the latest of which have been analyzed by the government. Income categories are based on adjusted gross income (AGI), which is basically salary plus investment, rental and business income minus investment losses and expenses such as alimony paid, contributions to retirement plans, moving expenses and a few other costs.
This is the first time that the bottom half of taxpayers have paid less than 3% of the total income-tax bill.
(Note that these figures include only federal income taxes. According to one study, 56% of all wage earners pay more in Social Security and Medicare taxes than they do in income tax, and the percentage soars to 86% if you count both the employer and employee shares of those taxes.)
In 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation's individual income-tax bill.
How does your income stack up?
The data also make it easy for you to know how your income stacks up against that of your fellow citizens. The numbers show that an income of $31,988 or more puts you in the top half of taxpayers. Earning a bit more than twice that much -- $64,703 -- places you among the top 25% of all wage earners. You crack the elite top 10% if you earn $108,905 or more.
And $388,807 buys top bragging rights: Earn that much or more, and you're among the top 1% of all American earners.
If you'll be getting help with your taxes next time, here's how to make sure your choice for a paid tax professional adds up.
A Kiplinger calculator quickly shows you -- based on your AGI -- which income category you fall into and what percentage of the nation's tax burden is borne collectively by you and your fellow citizens in that category.
The following table shows the percentage of income earned and tax burden paid by people in each income category:
Measuring the tax burden
INCOME CATEGORY: Top 1%
2006 AGI: $388,807 or more
% of all income: 22%
% of income taxes paid: 40%
INCOME CATEGORY: Top 5%
2006 AGI: $153,543 or more
% of all income: 37%
% of income taxes paid: 60%
INCOME CATEGORY: Top 10%
2006 AGI: $108,905 or more
% of all income: 47%
% of income taxes paid: 71%
INCOME CATEGORY: Top 25%
2006 AGI: $64,703 or more
% of all income: 68%
% of income taxes paid: 86%
INCOME CATEGORY: Top 50%
2006 AGI: $31,988 or more
% of all income: 88%
% of income taxes paid: 97%
INCOME CATEGORY: Bottom 50%
2006 AGI: $31,987 or less
% of all income: 13%
% of income taxes paid: 3%
Source: IRS
This story was reported and written by Kevin McCormally for Kiplinger's Personal Finance Magazine.
Here is the Body of my Response:
Message #5
10/03/08
11:35 AM
In light of full disclosure, I am currently unemployed and am definitely in the bottom 50% category. I definitely earn less than $32K a year. Closer to $0K a year.
At first when I read this article I thought, oh no, someone is pandering to the rich and is attempting to guilt the hearts of the bottom 50% into believing that they are not paying their fair share of taxes. Ohhh nooo, we're cheating the government from its fair share that we owe!
Then I realized that probably (yes with fuzzy statistics) 90% of that bottom 50% was not even READING this article. So I am not so troubled about the guilt placed on the hearts and minds of me and my fellow bottom dwellers.
Nevertheless, Kiplinger's Kevin McCormally is very disingenuous in distorting the calculations and omissions he conveniently made for the purpose of his article's slant. He preyed upon what naivete his more "novice" readers may have had. OF COURSE the top 1% pay more taxes in dollar amounts. They MAKE WAY MORE MONEY than the lower 50%. The dollar amounts they earn are orders of magnitude larger. But that tax they pay is likely less % of their total income compared to the bottom 50%. I make $30K a year and they take 33%, I'm left with $20K to eke out a living for the year. They make $900K a year and 10% is taken, ohhh, heaven forbid, how hard it is to live on $890K for the rest of the year. Boo Hoo.
Also conveniently forgotten is the ingenious ways mega-corporate earnings find loopholes to dodge taxes. I suppose with the ruthlessness of the current market, the "Trickle-Down" we are going to get down here at the bottom 50% might just be in the form of sacrificial blood.
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