Politics & Current Events
2Vermont
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Obama paid higher tax rate than Romney
http://news.yahoo.com/obama-paid-20-5-pct-tax-rate-2011-145921502.html
Two comments/questions:
(1) I assume that there is more to this story. Not knowing the tax code, I suspect that Romney is paying additional amounts in some other way than in income tax rate.
(2) There is this push to increase the tax rate on the wealthy because they end up paying a lower rate than those with less income. Here's a novel idea: If this is about making things "fair", why not reduce income taxes on those with less income??
And so I say to you, you are Peter, and upon this Rock I will build my Church, and the gates of Hell shall not prevail against it.
Re: Obama paid higher tax rate than Romney
I think you have it backwards.
Romney's effective rate is around 15% on $21M but we wont' know until he files (he filed an extension).
Obama's effective rate was 20% on almost $800k of income
The bottom 45% don't pay federal income tax, how much more can we cut at the bottom.
Above Us Only Sky
Above Us Only Sky
Even with FIcA, many make money off the government. We did this year thanks to the EITC. We got more back than we paid in, including FICA.
Its a problem.
No, I don't think I have it backwards. I thought the article was suggesting that Romney should pay more than the 15% because he makes so much more than Obama. And Obama should pay less than his 20% because he made less money.
And maybe my head has been in the sand, but 45% of the American people do not pay federal income taxes?? Seriously?
Oops...I'll change that....I meant to say otherwise.
Romney paid a larger dollar amount but a smaller percentage of his income.
Romney's top rate may be higher, but because so much of his income is passive income (taxed at 15%) his effective rate is much lower.
Yes, seriously 45% of Americans don't pay federal income tax. Mostly because of the Bush tax cuts combined with the Earned Income credit (both parties are to blame on this).
Above Us Only Sky
No, I understand the difference between dollar amount and effective tax rate. I also understand why Romney's effective rate is lower.
I guess I still don't understand the 45 % not paying taxes. I think all of us who have jobs pay federal income taxes throughout the year. However, sometimes we pay too much and we get a refund. Getting a refund for paying too much isnot the same thing as not paying taxes.
At the end of the day on April 17 there will be many many americans who get refunds greater than what they paid in because of the EIC combined with the overall historically low rates. Many of these non-tax payers are middle income families with a mortgage.
Above Us Only Sky
How do we know that this is a fact? Was an audit done to prove that that many Americans get refunded more than they actually pay out through the year?
ETA:
And Ijust want to say that, if this is fact, I bet a number of Americans don't even realize that their refund means they didn't pay taxes (just that they overpaid). I know those years when I received a refund I in no way thought I was getting away with not paying taxes.
Also, if this is fact, I would be for increasing taxes on the middle class. I have no issue with taxes in general, but it should be done fairly.
I've never qualified for EIC, whether I've been middle income or lower middle. I always figured it must be one of those things for people with kids....but they already get deductions for their kids so I never understood the point of it.
I'd be in favor of ending the EIC - and ending refundable credits that allow you to get back more than you paid - in exchange for a return to the pre Bush tax rate. I think both things have really screwed us up.
Obama's tax rate is LOWER than his secretary's rate. Seems Obama likes the tax deductions that Buffett uses as well.
Romeny enjoys a lower tax rate due to his income being capital gains.
Both are 1% ers.
We know it is true because the IRS has the data on all filers. Most people who don't have any tax liability have no idea that they aren't paying taxes because they have taxes automatically deducted from their paychecks. Many of them complain about how much they pay in taxes.
I think you hit the nail on the head in at least one aspect 2V in that a lot of people don't associate a tax refund with not paying taxes at all. Now that's not true in every case - some people do just overpay throughout the year and then get that extra back. but some people get so much back that they are effectively being paid by the government, but according to my Facebook, people don't view it that way ha (judging by all the statuses about fat tax refunds even though they barely paid in....I have a few FB friends who overshare about finances so thats how I can figure this out....)
Your original question/point though - about lowering the tax rate on middle/lower class Americans instead of raising it on higher-earning americans - I'm not sure if what 32704 said changed that thought but I'll say that I think the reason that's not really on the table is that often when raising taxes on the top earners is discussed, its in light of finding a way to reduce the deficit. so reducing taxes wouldn't really help in that regard. When the economy is strong again and we are doing better financially as a country I imagine we will see that idea surface strongly.
2V-
Here's a source for the 45% number... it is actually closer to 47%
http://www.taxpolicycenter.org/taxtopics/federal-taxes-households.cfm
Above Us Only Sky
this is from the taxpolicycenter.org too
Who Pays No Income Tax?
Roberton Williams | Posted on July 8, 2009, 12:00 pmNearly half of all families and individuals will pay no income tax this year. But who are they? It turns out that whether a taxpayer is single or married, is elderly, or has children makes a big difference. Nearly 47 percent of single tax units will owe no tax, compared with about 40 percent of joint filers and over 70 percent of household heads. About 55 percent of the elderly and tax units with children will pay no tax. Two factors primarily explain the variation: differences in income and available tax preferences.
Income is an obvious driver?virtually no one with income under $10,000 pays tax after taking the standard deduction and personal exemptions. The percentage of non-taxpayers in each category falls as income rises and top-bracket taxpayers almost always pay something. Still, a small percentage of those making a million dollars or more a year pay no income tax.
Singles and household heads earn a lot less than joint filers: their average income is under $30,000 compared with nearly $75,000 for couples filing jointly and they are much more likely to avoid paying income tax. Overall, over three-fifths of units with income between $20,000 and $30,000 pay no tax, compared with just one-fifth of those with income between $50,000 and $75,000.
Filing status also matters because of differences in exclusions, deductions, and credits. Among those with income between $40,000 and $50,000, for example, nearly three-fourths of joint filers, two-thirds of households with children, and three-fifths of the elderly owe no tax, compared with less than half of household heads and less than a tenth of singles. The impact of refundable child and earned income credits and the exclusion of most Social Security benefits clearly make their mark.
Above Us Only Sky
Thanks for this. I can't read through this right now, but will.
2V it is definitely a fact. And, it's an anecdote, but like I said we got more back than we paid in because of the EITC. I know the difference between a refund for overpaying and a credit
trust me. I even did the calculations because I was curious. We paid less in FICa than we got back. It's nuts.
I would end the EITc and instead use that money for low income childcare.
I agree that everyone needs to pay something. Not much at the low end...but something. And it is scary how many don't realize they aren't paying. I used to do tax assistance where we did tax returns for low income individuals and ,Amy would complain about their high taxes....when in reality they made money off the government with refundable credits.
We had one year where we got back more than we paid in... it was for 2006, the year Jackson was born. It was a combo of things that came together, though - me being in school, having a kid, and the medical bills from having Jackson were high enough to meet the criteria for deducting them if I remember correctly. It was either that or we were able to pull the money out of my husband's paycheck pre-tax to pay for Jackson's birth b/c of it being a life change w/ our HSA - so that it lowered our taxable income.
My husband always figures out our effective tax rate after he does our taxes... it's definitely interesting to see.
I've never had a tax liability and have always gotten back every cent withheld. You don't want to know how much I get in average on top of my withholding. You'll cry. I promise you.
Click me, click me!
Because the government needs income to run the country and pay down debt.
ETA: Most people try to pay as little as they can get away with in taxes throughout the year exactly because they know that if they get a refund, that means you overpaid and you gave the government an interest free loan. I know not everyone knows this, but it's somewhat common knowledge among my friends.
That only works with actual refunds....not refundable tax credits. We are talking about people who get more than they paid in. You can get money from the government when you file your tax return even if you have not overpaid.
As long as the deductions are available to him, IMO he'd be a fool not to make use of them. What is he supposed to do, donate to the federal government via overpaying the IRS?
Seriously. I mean, why wouldn't you take advantage?
I just asked my DH to calculate our effective tax rates, now i'm curious. Obviously its not really applicable to this as we are Canadian, though we do have to file in the US as well from our income properties there.
It looks like our effective rate is just under 20%-- 19.93%
It would have been lower except the damn AMT...hits working stiffs with a mortgage and kids :-)
Above Us Only Sky
Now, after reading 32704's post, I'm pissed. I'd rather see those in similar tax brackets as my husband and I paying income tax than pointing fingers at the rich.
This is ridiculous.
I think it's gotta be both. I don't blame the Romneys or Obamas of the world for taking advantage of the tax code as it is written. Nor do I blame those in other brackets for taking advantage of what is available to them (child credits, mortgage deductions, etc). But I think the tax code needs to be overhauled and both ends are important starting points.
I don't blame anyone for taking advantage of the tax code as it is written. We take mortgage deductions as well, but we owed a crap load of money this year. How is it that some folks can take advantage and not pay a penny and others owe money? Something seems inherently unfair here.
ETA: Let me guess: we don't have children. Awesome.