Random charts - U.S. income taxes

 

Source: A closer look at who does (and doesn’t) pay U.S. income tax

Random charts - global taxes

 

Source: Paying Taxes 2014: The global picture. A comparison of tax systems in 189 economies worldwide (182-page PDF)

Update IV - MDET update

Previous blog entries on the MDET:
Follow-up (MDET) - Jul 4th, 2013
Consequences (MDET) - Jun 1st, 2013

The Medical Device Excise Tax (MDET) has now been in force for some time and Exclusive: IRS collected $1.4B in medtech excise tax payments in 2013 gives us a first approximation of the actual impact on medical device companies...

Random chart - tax rates

Source: The Distribution of Household Income and Federal Taxes, 2010 (CBO) 

"For most income groups, average tax rates under 2013 law are projected to remain below those in 2007, the year before the recession began, and well below those for most of the past three decades. For the top 1 percent of households, however, average rates under 2013 law will be higher than in any year since 1997."

Random picture - taxes

Source: Twitter

Random chart - Filers over $200,000

Source: Monday Map: Percentage of Federal Income Tax Revenue from Filers Making Over $200,000 Visit the source link for a larger version....

Random charts - Income and taxes

A number of charts re taxes:

Source: The Struggling Middle Class


Source: Table H-2. Share of Aggregate Income Received by Each Fifth and Top 5 Percent of Households

Source


Source: Summary of Latest Federal Individual Income Tax Data

Source: Misconceptions and Realities About Who Pays Taxes

And some articles:
Who Pays the Taxes in the USA ?
Class warfare: Who pays their fair share of taxes?
9 Things The Rich Don't Want You To Know About Taxes
By the Numbers: What the 47 Percent Who Pay No Income Tax Look Like
Millionaires Don't Pay Taxes? 1,470 of America's Richest Didn't, According to IRS

Aah, the sound and fury resulting from arguments and disagreements about taxes! Terms like "fair" and "unfair" are bandied around.... It's a very complex subject and you can 'slice and dice' the numbers many different ways. Be a little vague about exactly what you are quoting or comparing (when it comes to contrasting the rates and/or amounts paid by folks at different levels in the economy), and you can selectively "prove' almost any proposition... Is it magnitude or rates that you are citing, and when you talk about taxes are you referring to federal incomes taxes, all federal taxes (i.e. including payroll taxes, etc.), or the total tax burden (e.g. including state taxes)?

You also can throw in a little sleight of hand - talk about a certain level and then when it comes to making tax law changes you can "extend" your solution. Thus Warren Buffet in his famous editorial sets the stage by referencing the "super rich", penning 873 words about himself, the "top 400" and his "mega-rich" friends, then proposing increased taxes for those who have total incomes of less than 14% of what he pays in total federal taxes. Similarly, following all the talk of "millionaires" the tax rate increases proposed by the President kicked in at the individual level of $125,000 and the family level of $250,000!

The President and politicians of all stripes bemoan the state of the nation's tax laws that allow the various examples of "unfairness" that they like to point out. Every one of them act as if the tax code miraculously appeared out of the blue and that they had no role in its provenance, when in reality it is their creation. They shed tears about rich people and companies abusing the existing tax code at the same time that they propose the layering on of new changes encourage or discourage outcomes that they favor.

So President Obama in his latest State of the Union can decry "... loopholes and shelters in the tax code..." while simultaneously proposing to tweak the tax code a) to remove breaks for companies moving jobs and profits overseas, b) to redirect them to companies that insource jobs, c) to add a tax cut for manufacturers, which doubles if the company is in a high-tech sector, d) to include financing help for companies relocating to hard hit communities, e) to support retraining programs, f) to extend the tuition tax credit, g) to expand tax relief to small businesses that are raising wages and creating good jobs, h) to pass clean-energy tax credits, and so on...

As suggested on TaxVox "... We seem to have forgotten that the fundamental purpose of our tax system is to raise revenue to fund government. The current system is riddled with tax provisions that favor one activity over another or provide targeted tax benefits to a limited number of taxpayers. Whether permanent or temporary, these provisions create complexity, impose enormous compliance costs, breed perceptions of unfairness, create opportunities to manipulate rules to avoid tax, and lead to an inefficient use of our economic resources. The tax code has become less stable, increasingly unpredictable, and more and more difficult for taxpayers to understand..."

However, I'm not holding my breath...

Random chart - US tax rates

Source: Romney’s Tax Returns and Effective Tax Rates of the Rich

From 2009 (latest available from the IRS), "... The table also shows the average, or effective, tax rate that taxpayers in each income group pay. For the entire universe of American taxpayers, the average tax rate is 11 percent of our AGI. The highest average tax rate paid by anyone earning under $100,000 is 8 percent. That shows the power of the sundry tax credits available to the "middle-class..."

Random charts - "Buffet tax"

Source: Millionaires Support Warren Buffett’s Tax on the Rich


Source: Stormy Political Climate Biggest Concern to Millionaire Investors

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Source: Pew Tax Expenditures Database "Tax expenditures are a measure of the government revenue losses resulting from provisions in the tax code that allow people or businesses to reduce their tax burden by taking certain deductions, exemptions, exclusions, preferential rates, deferrals or credits. By reducing the revenue that would otherwise have been collected by the government, tax expenditures are similar to government spending... the sum of tax expenditure estimates rivals discretionary spending in some years."

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Source: Sugar Policy: Sweet Deal for Producers, Sour for Consumers

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Source: The Oil Drum

E/J-GTRRA votes

The "Bush tax cuts"... surely no right-thinking Democrat would ever have voted 'yea'....

Senate roll-call votes on the 1) Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16), and the 2) Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA; P.L. 108-27), collectively known as the Bush tax cuts...

The Bush Tax Cuts and the Economy

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Source: A Taxpayer Receipt Interesting idea from an outfit call third way. "The Problem: Taxpayers have no idea where their money goes. The public is misinformed about where the federal government spends its money. A 2005 Washington Post/Kaiser Foundation poll found that by a margin of two to one, Americans believe the federal government spent more on foreign aid than on either Social Security or Medicare.1 This is among many surveys that show that voters know little about where their money is spent....

The Solution: A Taxpayer Receipt: We suggest providing each taxpayer with a receipt that shows them exactly how their money is spent to the penny. Taxpayers could either receive a receipt online (if they file electronically) or through the mail that breaks down their tax bill and provides them the exact contribution they made towards twenty to thirty budget items of interest. Below is an example of what a receipt might look like for a typical taxpayer with a 2009 U.S. median income of $34,140, who paid $5,400 in federal income tax and FICA. It is very easy to generate and extremely informative to taxpayers..."

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Source: Rich Pay 40% of Nation's Tax Burden, Hillary Clinton Says It's Not Enough

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Source: Judicial Watch: Taxpayers pay $101,000 for Pelosi's in-flight 'food, booze.'

"Judicial Watch, the public interest group that investigates and prosecutes government corruption, announced today that it has obtained documents from the Air Force detailing House Speaker Nancy Pelosi’s use of United States Air Force aircraft for Congressional Delegations (CODELs). According to the documents, obtained by Judicial Watch through the Freedom of Information Act (FOIA), the Speaker’s military travel cost the United States Air Force $2,100,744.59 over a two-year period — $101,429.14 of which was for in-flight expenses, including food and alcohol..."

Massive cuts? Or not?

A couple of weeks ago Kenneth Feinberg, the Special Master for TARP Executive Compensation for the U.S. Department of the Treasury, came out with his rulings on executive compensation. These were immediately splashed across all the front pages. Most of the declarations went like this: "The Obama administration plans to order that top earners at firms that received billions of dollars in government bailouts will see cash payouts cut by an average of about 90 percent from last year, a source familiar with the matter said on Wednesday The sweeping cuts, negotiated by the U.S. pay czar Kenneth Feinberg will mark a bold move for an administration that has recently railed against excessively high pay on Wall Street." Wow, 90% pay cuts, jubilation in many circles. However, reading on it turned out that this was salary, and that "total compensation ... will be reduced by an average of about 50 percent." OK, 50%, that is still quite a substantial hit...that's showing those Wall Streeters! Rah, rah, score one for "Main Street!"

A few of those in favor of pay cuts cavilled... the cuts only effected companies that were TARP recipients... only the top 25 earners at these firms were effected... they were still left with untold lucre, etc. Those against the pay cuts bemoaned government's interference in matters that did not. However, both sides seemed to agree that big cuts had been effected in remuneration for certain executives.

Well, maybe not. A look at the detail showed a different picture:

• Average cash compensation rates will fall more than 90 percent for the final two months of 2009, compared to the annualized rate for 2008. Base cash salaries are limited to $500,000 for more than 90 percent of employees affected by the ruling.
  
• No salary already paid this year will be "clawed back."
• Including long-term stock awards, total compensation rates for the final two months of 2009 will fall by about 50 percent from annualized 2008 rates.
• Exceptions were made to the cash compensation rule in cases where Feinberg deemed increases necessary to retain "key talent critical to a company's long term success."
• New salary rules and lower pay rates apply to the final two months of 2009.

And, lastly, Feinberg's rulings are expected to set a template for executive pay proposals to be submitted by the seven firms in 2010 if they are still holding taxpayer funds.

Bottom line: these cuts, while real, are nowhere near 90% or even 50%, and this blogger expects that there will be a stampede to pay back; and those that can, will!

Feinberg's Folly
U.S. czar poised to slash cash pay at seven firms
Wall Street, Meet Ken Feinberg, the Pay Czar
Feinberg Said to Order 50% Pay Cuts at Rescued Firms

Feinberg's cuts mean nothing
Executive Pay Cuts? Hold the Standing Ovation

Factbox: Details of pay czar rulings on bailout firms

Quick clarification: this blogger is not in favor of meddling with existing employment contracts....

Nice try...

Speaking of taxes and tax cuts, this blogger was 'going round the channels' on television (cable) looking for something to watch and happened to see a snippet of a Fox show. The host was interviewing a "Democratic activist" and apparently trying to make the criticism that Senator Obama's definition of who would get the tax cut was a moving target.

The host played four video snippets - Senator Obama on the stump saying that everyone making over a quarter of a million would pay higher taxes; an Obama advertisement saying that everyone making under $200,000 a year would get a tax break; Senator Biden saying that the middle class, those making less than $150,000 a year, would get a tax cut; and Governor Bill Richardson saying the same as Biden, but using the figure of $120,000 a year...

The host then tried to make the point that the cut off point for raising taxes seemed to be a downward-moving target. The "Democratic activist" first tried to evade the point and said that it was all totally consistent i.e. if everyone making below $250,000 a year was getting a tax cut, then clearly folks making less than $200,000/year, $150,000/year, and $120,000/year would also get tax cuts! Now, while a proposition such as this is literally true, she completely avoided the real question (i.e. is the threshold above which filers would get a tax increase slowly ratcheting down!) Nice try!! Well, give her 'props' for thinking quickly on her feet...

She could have said that Obama was being consistent (i.e. tax increases above $250,000/year, decreases below $200,000/year, and no change for those between $200,000 and $250,000/year) and that Biden and Richardson were both talking through their hats. However, she tried the line above, and when pressed further fell back on "... I think a majority of Americans make about $45,000 a year.. and they're going to get relief..."

Sex, drugs and royalties...

Wide-Ranging Ethics Scandal Emerges at Interior Dept Evidence has surfaced of high jinks and frat-house behavior at the Denver office of the Minerals Management Service , the arm of the federal government that collects royalties from companies that exploit minerals on federal lands to the tune of approximately $10 billion per year (the largest non-tax revenue stream to the government). Sex, drugs, bribes.... This blogger is waiting for the opponents of drilling to start to wave this around as prima facie evidence of the evils of drilling!

At least the blathering about a 'windfall profits' tax has subsided a bit as oil prices (and thus gas prices) have dropped and the campaigns have moved on to other topics. Note: the oil companies pay royalties to the government for oil that they get from federal and Indian lands (which accounts for approximately 33% of the domestic oil production total) - usually a royalty of 12% for onshore production, and a royalty of 16.66% on the outer continental shelf (assuming that the Secretary of the Interior has not adjusted the royalty rate, which he can do at his discretion). The royalty payments may be either in cash or as Royalty-in-kind (RIK) i.e. the delivery of the appropriate amount of crude to the Strategic Petroleum Reserve (SPR). It seems to this blogger that as the price of oil increased from about $60/barrel up to the recent high of $147/barrel the federal government has already been sharing in the 'windfall profit.'

Taxing...

Ran some numbers through the Obamataxcut.com engine, and found something interesting (Note: this blogger is not interested in the Obama vs. McCain aspect of the site, which is meant to highlight the fact that a President Obama would cut taxes on more people than a President McCain would).

A single person with two children and an AGI of $10,000 a year would get a tax cut of just under $500. A two-earner family with two children and an AGI of $10,000 a year would get a tax cut of just under $600. Huh? This blogger wonders why anyone that incredibly poor would be paying any taxes at all! Tax cut, tax cut? How about tax elimination!