Master of Ossus rants about American IncomeTax

[Master of Ossus]

According to the Tax Policy Center's analysis of Obama's (and McCain's) tax proposal, Obama's tax policy basically means that my post-tax income fell by over 10%. I feel so much better off with a Democrat in office.

In seriousness, though, the more interesting thing is that he still has a MASSIVE projected shortfall on his budget. And that was before this policy shift of his. Realistically, the US is going into a LOT more debt, because politicians simply won't let the middle class pay its fair share of the nation's tax burden. The problem, frankly, is that the tax base has gotten too small--only half of Americans with incomes pay anything at all in income taxes, and even with the very high tax burden that Obama plans to levy on the upper class, it's insufficient to fund the sort of government projects that Americans have grown accustomed to.

It's simply mind-blowing that the brain-bug that is the "fact" that the lower and middle classes can't afford to pay income taxes (but the rich can painlessly afford to see their after-tax incomes reduced by 10+% instantaneously) has shielded people making $30,000/year from paying even $5 in Federal income tax and the country expecting a balanced budget.

[Fingolfin_Noldor]

It's simply mind-blowing that the brain-bug that is the "fact" that the lower and middle classes can't afford to pay income taxes (but the rich can painlessly afford to see their after-tax incomes reduced by 10+% instantaneously) has shielded people making $30,000/year from paying even $5 in Federal income tax and the country expecting a balanced budget.

I don't understand. I was a student on F-1 visa and I earned income less than 30,000 for a few months and I still got taxed both state wise and federal wise. How is this possible?

[Admiral Valdemar]

Waste of $500 billion. For that much money I could right now, order 1,800 Delta IV Heavy launch vehicles which would have a greater effect on our economy than bridges -- like putting 36,000 tons into LEO.

I'm sure the people will appreciate the added satellite TV channels when their roads, bridges and utilities are crumbling before them. The US is in dire need of an overhaul, and now is as good a time as any. If they have the money for a few trillion in bailing out failing Keynesian paragons, they can afford to do up a bridge or two.

Although I would also love to have a functioning space station that isn't a joke and a good inroads towards making a Lunar base and space colonies. I'm sure the printing presses can cope.

As the late S. R. Hadden put it: "First rule in government spending: why build one when you can have two at twice the price?"

[Master of Ossus]

It's simply mind-blowing that the brain-bug that is the "fact" that the lower and middle classes can't afford to pay income taxes (but the rich can painlessly afford to see their after-tax incomes reduced by 10+% instantaneously) has shielded people making $30,000/year from paying even $5 in Federal income tax and the country expecting a balanced budget.

I don't understand. I was a student on F-1 visa and I earned income less than 30,000 for a few months and I still got taxed both state wise and federal wise. How is this possible?

You're a student on an F-1 Visa and don't have nearly the deductions that a typical wage earner who's making $30,000 has to offset federal income taxes.

What the FUCK are you talking about? The middle class doesn't pay income tax? You're full of shit. I was middle class over 20 years and I paid out in Fed income tax every damn year of it. Sure, I got a refund check most years, too, but that's because of how I set my withholding. That doesn't mean I got everything back, because I didn't. I paid thousands in Federal income tax every fucking year.

Either back that shit up, asshat, or retract it. Provide proof that people making $30,000 a year live Federal income tax free - except I don't think you can.

It's in the god damn article I just linked you to, Broomstick. There are so many deductions for meaningless stuff that the "middle class" no longer pays much of anything in income taxes--as pointed out to you, earlier, only half of Americans with wages pay income tax.

Here it is, again. In 2004, over 42 million tax returns were filed for people who had NO income tax liability.

When all of the dependents of these income-producing people are counted, roughly 120 million Americans – 40 percent of the U.S. population – are outside of the federal income tax system.

This percentage has been steadily rising, since then, and according to Tax Policy Center it is now over 50%.

Someone making $30k per year is well below the median income in the US, and so they very likely face no income tax liability, despite their income. (Indeed, the "portrait" that the Tax Foundation research paints involves someone making $40,000 per year back in 2004).

[Alyeska]

It's simply mind-blowing that the brain-bug that is the "fact" that the lower and middle classes can't afford to pay income taxes (but the rich can painlessly afford to see their after-tax incomes reduced by 10+% instantaneously) has shielded people making $30,000/year from paying even $5 in Federal income tax and the country expecting a balanced budget.

I don't understand. I was a student on F-1 visa and I earned income less than 30,000 for a few months and I still got taxed both state wise and federal wise. How is this possible?

You're a student on an F-1 Visa and don't have nearly the deductions that a typical wage earner who's making $30,000 has to offset federal income taxes.

I make $25,000 a year and I most certainly pay Federal taxes far in excess of $5.

Federal Income Tax on last paycheck: $136.00
Year to Date Federal Income Tax: $3,331.85

You know how large of a refund I had last year? A whopping $700. I pay a shitload of federal income tax. State level? Thats nothing. Year to date on state is only $1,224.00

I am a US citizen living in the state of Montana. Thank god we have no sales tax.

[Broomstick]

What the FUCK are you talking about? The middle class doesn't pay income tax? You're full of shit. I was middle class over 20 years and I paid out in Fed income tax every damn year of it. Sure, I got a refund check most years, too, but that's because of how I set my withholding. That doesn't mean I got everything back, because I didn't. I paid thousands in Federal income tax every fucking year.

Either back that shit up, asshat, or retract it. Provide proof that people making $30,000 a year live Federal income tax free - except I don't think you can.

It's in the god damn article I just linked you to, Broomstick. There are so many deductions for meaningless stuff that the "middle class" no longer pays much of anything in income taxes--as pointed out to you, earlier, only half of Americans with wages pay income tax.

How about you tell which which fucking page it's on, because why should I have to wade through 45 pages to find YOUR proof for your statement? You think I have nothing else to do in my life than read multi-page documents you point to?

And you didn't qualify it with "average wage earner" - you said people making $30,000 a year don't pay Federal taxes. That doesn't match my experience, or the experience of anyone else I know. So either we've all been deluded for the past few decades or you're talking horseshit.

Don't quote this for a few minutes - I'm going to read your fucking second link which apparently DOESN't require me to wade through 45 pages and then edit this post to comment

[Darth Wong]

Master of Ossus, could you explain how it is that so many people earning $30,000 per year or less report paying income tax, while your article says they don't? Are you really going to pretend that they're all lying, or that every one of them is in some kind of unique circumstance? Are you going to keep citing the article, as if these people should just shut up even though they have personally been forced to pay the income tax that you say they don't pay?

[Alyeska]

Master of Ossus, could you explain how it is that so many people earning $30,000 per year or less report paying income tax, while your article says they don't? Are you really going to pretend that they're all lying, or that every one of them is in some kind of unique circumstance? Are you going to keep citing the article, as if these people should just shut up even though they have personally been forced to pay the income tax that you say they don't pay?

To be fair, he is only talking about Federal Income tax. The article says nothing about Social Security, State Income Tax, Sales Tax, or Property Tax.

On my last paycheck I paid $136 to the Feds on Income tax. On top of that I paid $50 to the state of Montana on Income tax and an additional $68.78 to the Feds on Social Security (does not count as part of any normal tax bracket). So the Feds still eat more then half of my taxes on income tax alone.

[Master of Ossus]

Master of Ossus, could you explain how it is that so many people earning $30,000 per year or less report paying income tax, while your article says they don't? Are you really going to pretend that they're all lying, or that every one of them is in some kind of unique circumstance? Are you going to keep citing the article, as if these people should just shut up even though they have personally been forced to pay the income tax that you say they don't pay?

Again, they likely don't have the sort of deductions that are generally required by people who have no income tax liability. People like Broomstick should just shut up, because they're wrong about this. Americans making $30,000, on average, do not pay income tax because their lifestyle has become so tax-favored that Congress has written in all sorts of deductions that many of them get to take advantage of.

(It's also theoretically possible that they're mistaking payroll taxes, which are paid by a significant majority of Americans, for the INCOME taxes that I was talking about, but payroll taxes go to fund specific measures like Medicare and don't go to the general government fund).

[Darth Wong]

Why should the distinction between payroll taxes and income taxes be in any way meaningful to a discussion about who is shouldering the burden of paying for government programs? It seems like pure hair-splitting to me: it's still money coming out of your paycheque and going to the government.

[Guardsman Bass]

It might help if we had some comparisons of deductions available to people outside of the 40% group (i.e. the "wealthy"). It's not as if there aren't any tax shelters available for anyone above the median income.

[Master of Ossus]

It might help if we had some comparisons of deductions available to people outside of the 40% group (i.e. the "wealthy"). It's not as if there aren't any tax shelters available for anyone above the median income.

They're different kinds of shelters. Certain investments are tax-advantaged IF your income is sufficiently high for it to matter (e.g., suppose that the tax rate on some investment is capped at 25%--that's a big bonus if you're in the 42% marginal tax rate but not an advantage if you're in the 15% marginal rate).

The poor and middle class overwhelmingly benefits from flat deductions because those can eat up a significant chunk of their income, but if you're making $1 million a year then the fact you can claim a few thousand dollars as a deduction for having a dependent child isn't going to get you anywhere. Similarly, the fact that you can claim $3,000 in capital losses from last year doesn't help much if you lose a WHOLE bunch of money in capital losses one year, but will make that up in later years.

[Broomstick]

I see. When YOU discuss something it's an analysis. When I do it's being hyper-critical.

Again - MANY of that 40% are minors, you know, children. Even if there were no exemptions in the tax code they wouldn't be paying taxes anyway because they have no income since we don't ask children to work for a living. I don't find that "shocking" I find it logical. Unless you're a Ferengi.

[Alyeska]

40% Since when the fuck has 40% been "HALF"?????

You are WRONG motherfucker. Your own provide link proves that. Admit you are wrong, asshat. IT IS NOT HALF!

Conceded. It wasn't half in 2004. It's still a shockingly high percentage of Americans who aren't paying income taxes. And if you would actually bother responding to arguments rather than a hyper-technical analysis of every illustrative example then you would recognize that.

Did you miss the little piece about minors? They have never paid federal income tax, and they make up part of that 40%. So if you talk about actual taxable population (which is the logical direction to go), the number of people not paying taxes falls dramatically. Instead of 40%, it drops to around 25%.

1000 people in your 40% of them don't pay statement. The 40% is 400. Assume half of the 40% are minors. Thats 200 people. 200 people not paying out of a theoretical taxable population of 800 is only 25%. A far cry from the half you claimed or what 40% implies.

[Master of Ossus]

Try phrasing your intended statements with some concept of intelligence before posting. You made a blanket claim that is clearly false.

Again, it was not a blanket statement but an illustrative one. If you people read that post in context, you would clearly see that I was illustrating the Tax Policy Center's argument, not analyzing it in voluminous detail.

[Alyeska]

Try phrasing your intended statements with some concept of intelligence before posting. You made a blanket claim that is clearly false.

Again, it was not a blanket statement but an illustrative one. If you people read that post in context, you would clearly see that I was illustrating the Tax Policy Center's argument, not analyzing it in voluminous detail.

Not very illustrative. 40% is not half. And the real number is more likely to be around 25%. So your illustrative statement was horribly inaccurate. Hence why we got very vocal with you.

[Master of Ossus]

Did you miss the little piece about minors? They have never paid federal income tax, and they make up part of that 40%. So if you talk about actual taxable population (which is the logical direction to go), the number of people not paying taxes falls dramatically. Instead of 40%, it drops to around 25%.

1000 people in your 40% of them don't pay statement. The 40% is 400. Assume half of the 40% are minors. Thats 200 people. 200 people not paying out of a theoretical taxable population of 800 is only 25%. A far cry from the half you claimed or what 40% implies.

And, again, we're not talking about minors--57.5 million Americans EARNED INCOME BUT PAID NO INCOME TAXES (for those of you too stupid to understand this, that means they have no income tax liability). The US Labor Force that year was around abouts 147 million, which means that around 39% of people who earned income paid no income tax. Concededly, that's less than half (in 2004), but that doesn't count minors or retired people or anyone like that--that just counts the labor force. So we basically have a tax policy that exempts 37% of the labor force from paying income tax. Again, I fail to see why this is good policy.

[Master of Ossus]

Not very illustrative. 40% is not half. And the real number is more likely to be around 25%. So your illustrative statement was horribly inaccurate. Hence why we got very vocal with you.

It's more like 39% than 25%. But I stand by the example: someone making $30k per year is still below the 40th percentile in income, which means that they are quite likely not to pay income tax.

[Alyeska]

Did you miss the little piece about minors? They have never paid federal income tax, and they make up part of that 40%. So if you talk about actual taxable population (which is the logical direction to go), the number of people not paying taxes falls dramatically. Instead of 40%, it drops to around 25%.

1000 people in your 40% of them don't pay statement. The 40% is 400. Assume half of the 40% are minors. Thats 200 people. 200 people not paying out of a theoretical taxable population of 800 is only 25%. A far cry from the half you claimed or what 40% implies.

And, again, we're not talking about minors--57.5 million Americans EARN INCOME BUT PAY NO INCOME TAXES (for those of you too stupid to understand this, that means they have no income tax liability). The US Labor Force that year was around abouts 147 million, which means that around 37% of people who earned income paid no income tax. Concededly, that's less than half (in 2004), but that doesn't count minors or retired people or anyone like that--that just counts the labor force. So we basically have a tax policy that exempts 37% of the labor force from paying income tax. Again, I fail to see why this is good policy.

Minors don't earn income? Wow, I guess I worked for free when I was in high school.

[Guardsman Bass]

It might help if we had some comparisons of deductions available to people outside of the 40% group (i.e. the "wealthy"). It's not as if there aren't any tax shelters available for anyone above the median income.

They're different kinds of shelters. Certain investments are tax-advantaged IF your income is sufficiently high for it to matter (e.g., suppose that the tax rate on some investment is capped at 25%--that's a big bonus if you're in the 42% marginal tax rate but not an advantage if you're in the 15% marginal rate).

Thanks. I figured it probably lay in some investment-related areas.

The poor and middle class overwhelmingly benefits from flat deductions because those can eat up a significant chunk of their income, but if you're making $1 million a year then the fact you can claim a few thousand dollars as a deduction for having a dependent child isn't going to get you anywhere. Similarly, the fact that you can claim $3,000 in capital losses from last year doesn't help much if you lose a WHOLE bunch of money in capital losses one year, but will make that up in later years.

True.

I think that particular spread of the income tax burden might have to do with some of the welfare reforms in the 1980s and 1990s, which tried to shift welfare programs (like the now defunct ADFC) from direct payments to more "indirect" methods like tax credits (such as the Earned Income Tax Credit, and so forth).

Minors don't earn income? Wow, I guess I worked for free when I was in high school.

He's talking about the recorded labor force, so if you filed a tax return, that probably included you.

[Master of Ossus]

Minors don't earn income? Wow, I guess I worked for free when I was in high school.

[Sigh] Such a minor would be in the labor force, and would therefore be counted by that statistic. 57.5/147=.39, so 39% of the labor force isn't paying income taxes as of 2004, and that's been trending upwards to the point where Tax Policy Center characterized it as "half," (although, concededly I just took them at their word for it and didn't look for a precise percentile figure).

[Alyeska]

He's talking about the recorded labor force, so if you filed a tax return, that probably included you.

If memory serves, my parents filed tax returns on me since I was born. They put money into bank accounts and stocks when I was young.

[Beowulf]

Alyeska:
Rich people have kids too. Anyway, the data is derived from those who filed income tax returns. Minors generally don't need to file income tax returns. Even if minors do have income, for small amounts, it's still generally listed under the parents' income tax form.

It's quite possible for someone making $20k a year to have 0 federal and state income tax liability. I should know: I got a refund of everything I put in last year.

[Broomstick]

Minors don't earn income? Wow, I guess I worked for free when I was in high school.

Most minors don't - if they do, then yes, they will have to pay any applicable taxes on that income. Minors are not expected to earn income or pay taxes.

Damn few people 18 or under make $30K a year, or even enough to live on at subsistence level.

[Broomstick]

It's quite possible for someone making $20k a year to have 0 federal and state income tax liability. I should know: I got a refund of everything I put in last year.

Possible, yes - the question I suppose is just how typical it is.