Income Inequalities, The "Top Two Percent," Hidden Taxes, And So On.

Oh, where to start. Okay.

As far as I know, not an expert or anything, there hasn't ever been a society where wealth, power, privilege, knowledge, influence, and the like hasn't gravitated towards certain people. These people are then called "the rich". Fascism, Communism, Dictatorship, Monarchy, Capitalism, Democracy, Theocracy; what have you.

Isn't all that really matters is how poor are the poor, and what are the opportunities available for those that want to try and better themselves? I guess maybe so and maybe not. Depends upon the foundation on which you base your beliefs, maybe.

No matter, what about the rich?

Sometimes, there's a reason "they" are rich. Much of the time, it's because they inherited it, stole it, or lucked into it. That's one of the reasons behind a modern day estate tax, I suppose.

Well, you can inherit money, but if you're stupid/unlucky/naive, the money will go away. I really do think it takes some measure of skill to hold on to wealth, even if you didn't earn it yourself. Or even if you did earn it yourself, like the football player that had a 50 million dollar contract in 1999 that filed for bankruptcy in 2002. But really, that's all moot. You'll see.

All that semi-theory aside, let us talk about taxes. None are really hidden, despite what you may hear, and they can have the word tax in the name or not. Most of the time, when you're talking about taxes that aren't hidden, those are income taxes. An example of a "hidden" tax would be a sales tax or a property tax or a licence fee. The reason they're called hidden is that they're hard to keep track of exactly (no bill at the end of the year, right?) and that they usually aren't graduated.

Anyway, let's start at the top and work our way down, in a manner of speaking.

Corporations. A lot of them pay little or no taxes, or so I've heard. I can't confirm or deny that particular "rumor". But the "Person" that is a corporation pays taxes, in most states, besides the federal level. Sometimes, the "write offs" a corporation gets/steals/earns/is awarded are equal to more than the taxes, for a variety of reasons. That's not what this is about.

But taxes in general? There's more, sure.

The shareholders in a corporation pay taxes on the money paid out, either as income or dividends (or write off the losses) one way or another. The CEO and other officers of the corporation pay taxes on the income, bonuses, and what have you. The people buying from the corporations pay sales tax. And so on.

But the so-called "hidden" (non-income) taxes? Well, some are "progressive" (they go up in percentage the more the money amount) and others are "flat" (they are the same percentage no matter what the money amount). Most of the hidden taxes are flat, except for one thing. The more money a person has, the tendency is for the items to cost more, making the dollar amount higher (so I guess one could say they are "semi-progressive" at least in dollar amount; the sales tax dollars on a bottle of $2 beer is a lot less than on a $100 bottle of champagne; the tax on a BMW is more than that on a Yugo).

Anyway, what are the other hidden taxes that I'm really talking about? I'll just list some of them. Fees, excise taxes and the like on such things as: Phone Service, Gasoline, Tobacco, Alcohol, Car registration, Licences. Things like that. There are also others that are more obvious, such as the Social Security withholding (FICA and Medicare) and property taxes.

Now, the idea is that the more you make, the more you should contribute to the nation, as your benefit from living here is greater. What does that mean? Well, a person with ten million dollars in assets needs roads, the military, banks, environmental protection and so on more so than a person with ten dollars in assets. I think that's a valid point, although I don't think the Founding Fathers had that in mind (they were a bunch of rich land and slave owning British guys pissed off at the Monarchy, after all). But they did have the idea of being able to amend the Constitution, so they maybe had an idea that things may change in the future....

Now, I don't know if the "More to lose, then you pay more" idea is totally true; I don't feel as though I have any more to lose now then I did in 1980, but then again, I don't have 77 trillion dollars. So it's up for grabs, yeah, boyzzzz.

Regardless of the theory (influenced by basic viewpoint) the fact is that the government provides a number of good services they can do more efficiently, and somehow we need to pay for that. So we ended up with Income Taxes. They're graduated; those with more to lose pay more. But how much more is fair? Depends on what you believe in, what you think.

Although the Constitution calls for the Federal Government to do a few things and the rest are supposed to be done by the states, the few things that are done better centralized (roads, defense, monetary system, interstate trade, international trade) should be done that way.

But the basic question? At what level of government can a group function be best done. Or even, have you heard of a Federal agency ever finishing its mission? Or something.

Regardless, let's talk about who pays what.

This notion that "the rich" get such a great deal on what they pay is totally bogus, at least in the area of Federal and State income taxes. All of the below data deals with AGI for dollar amounts.

Federally, in 2000, the top 1% of filers made 15.4% of the money (another issue entirely!), paid 33.6% of all taxes and had statistically no zero/negative (0/-) returns. The top 5% paid made 29.3% of the money, and paid 54% of the taxes, again with no 0/- returns. The top 10% made 40.1% of the money, and paid 66.4% of the taxes, and had .1% 0/- returns.

Overall, this "top 2% of the population" everyone keeps harping on makes 20.9% of the money, pays 42.7% of the taxes, and has no 0/- returns. They make $200,000 or over. Now, go read that again. They make 21% of the money and pay 43% of the taxes. Oh, man, they get away with murder!
The top 1/5^th of the money earners (top 1/50^th of the people filing taxes) pay 2/5^th of the taxes. What an outrage.

The people making $100,000 to $200,000 make 19.7% of the money, pay 24.1% of the taxes, and have .1% 0/-

Overall, people making over $50,000 pay 90% of the taxes. Now, how was that about the way the poor are getting the shaft? Another way to say the same thing -- people making less than $50,000 pay 10% of the taxes.

But this is really the story: People making under $30,000 are 45% of the taxpayers, they make 14.2% of the money (Again, another problem altogether). They pay a total of -.3% of the taxes! An average of almost 30% of them had zero liability or negative returns.

More telling is the following: The bottom, those making less than $10,000 (Remember, this is AGI, not gross income) make up 19.8 million filers; they make 1.1% of the money. They paid -.6% of the taxes (meaning they were refunded 5 billion dollars) Bottom line - 18.7 million of those 19.8 million returns had zero or negative liability.

People making $10,000 to $20,000 are 23.8 million filers; they make up 4.8% of the money. They paid -.8% (refunded 7 billion dollars). Bottom line - 16.3 million of the 23.8 million had zero or negative liability.

To recap: People with an AGI of $50,000 or over make 72.1% of the money, and pay 90% of the taxes. People with an AGI of under $50,000 make 27.9% of the money and pay 10% of the taxes. (If you break it down into over and under $75,000 it changes quite a bit; 54.4 percent of the money paying 77% of the taxes, and 45.6% of the money paying 23% of the taxes.

The top 54.4% of the money makers pay 77% of the taxes. What is everyone talking about?

Yes, I know I've mixed some data points, and done some rounding. This has already taken too long -- however, I think this shows things aren't quite as bad as they seem.

Hey, I have an idea - just drop everyone with an AGI of under $20,000 from the tax roles, and send them 1% of everything collected from the top 1%. Problem gone. No extra government needed, IRS has less work to do, and so on.

Or even better, lets just pay everyone that makes less than $15,000 Adjusted Gross Income $25,000 of tax-free money to live on, don't tax the $15,000 or less, (Oh, sorry, we're already doing that) and just pay for them to live. That won't give them much of an incentive to work harder, but who cares about that. We need to take care of them. Throw in some free health care for them, and buy them houses. That's what's made America great, after all.

No, seriously, all you really need to think about is this: Why are people in the bottom 20%, and who are they? Do they stay in the bottom 20% all their lives, or do they move up in the scale? And how many of them move up?