Top 400 Richest pay 17% rate

http://finance.yahoo.com/news/Super-ric ... et=&ccode=

I am surprised nobody posted this yet. I know this has been discussed many times before.

As millions of procrastinators scramble to meet Monday's tax filing deadline, ponder this: The super rich pay a lot less taxes than they did a couple of decades ago, and nearly half of U.S. households pay no income taxes at all.

The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.

Over the same period, the average federal income tax rate for all taxpayers declined to 9.3 percent from 9.9 percent.

I think it has alot to do with the 15% cap gains rate, and less to do with the top (35%) rates that the democrats always focus on. Second reason would be deductions and credits that are out of control. Personally, I would rather see the tax code reformed and broadened so everyone pitches in both at the top and bottom, low rates, no deductions and credits.

Another thing I wonder is why are long term capital gains set at one year? If this term was longer, say 3-5 years, then these one year gains would be taxed as ordinary income. Why one year?

The top 1% earn 21% of the income, and pay over 40% of the income tax burden, The top 5% pay over 60% of the income taxes. As of right now, around 54% pay 100% of the income taxes.

Taxes, whether income or excise, should have no exclusions and no ceilings. Given that the federal government seems to be fixated on providing charity at the expense of the taxpayers, I think it well worthwhile to provide an exemption when the taxpayer participates in this endeavor voluntarily. If Warren Buffet is spending millions of his own dollars every year in charitable contributions to help the less fortunate among us, I fail to see why he needs to have more of his own dollars confiscated to provide charity via the federal, state or local government.

If we are going to have social safety nets, then they should be equally burdensome and beneficial to all regardless of financial condition. If we are going to tax lower income earners 6.5% on every dollar of income they earn, then we should tax the highest earners the same amount on every dollar they earn and charge their employers the same 6.5% in matching funds on every dollar as well. I think Social Security and Medicare need to be fundamentally restructured to be an defined contribution plan instead of a defined benefit one, but if we are going to have a social welfare program to provide a minimal sustenance level in old age, then we should fully embrace the social aspects of the program and divide the takings equally among all and allow them to benefit equally as well. If the excise tax generates $1 Trillion a year (about the current level) and there are 100 million who contributed (1/3 or our current population), then each of them gets $10K credited to their account for that year, including the millionaires and billionaires who contributed the lion's share of the tax receipts. After 40 or so years of working each person would have about $500K in their account. For those who never earned much, that $1 million for two wage earners would represent about 20 years worth of living expenses at $50K a year, 30 years at $33K a year - which would be a pretty comfortable retirement. When one of them dies, the remaining partner inherits the remaining amount of money in the account of their partner, and any funds remaining after the death of both gets returned to the system. Seems like a much better system, at least on paper, than the collective salvation ponzi scheme the government is currently running, doesn't it?

Maybe because capital gains are people risking their savings versus working for a wage with the employer providing the risk capital?

And if you lose that capital, you can only deduct it off other gains. So if Bernie Madoff ran off with your money, you could only recoup based on other earnings.

I understand the relative proportions of income tax paid, I was more interested in the rates for different forms of income, without turning this into a class warfare p@ssing contest like the media and Dems always do.

We don't make things anymore, or alot fewer anyway. Look at the explosion in NYSE share volume in the last few decades. Commodity and hedge fund speculators, house flippers, CEO stock options that are basically earned income given as capital gains. Interest is taxed at ordinary rates, Dividends and cap gains at 15%.

IRAs and 401Ks are taxed at ordinary rates when the money is taken out in retirement. There are alot of varying rates for money earned in different manners, or sometimes the same manner but taxed differently.

I still wonder about the history of long term cap gains (1yr why?) 109 - you can only deduct losses if they are both the same, long term loss against long term gain. Or 3000 max otherwise I think. As for risk capital, I do get it. But how are CEO granted options risk capital? Its a bonus turned into cash when they sell. Same with Hedge funds, its price speculation, not long term investing.

I like granting CEO's options but I wish they were more long term, like you could only convert them into stock after 10 years. That way they would be encouraged to think long term instead of pumping up the stock for the next quarter and I do have a problem with CEO salaries, seems like the boards used to work better and keep executive pay at reasonable levels.
Question: If you raised the tax rate to 90%, would execs spend more time hiding thier earning than running the business or just get even higher salaries?

109 - If you raise the tax rate to 90%, then the money shifts somewhere else. (from wages to stock options, caddillac health plan or some other form of compensation). And yes, wealthy people have more power to adjust their salary higher to compensate for higher rates, which makes the future distribution of wealth look even more lopsided.

I used to do moonlight consulting work on top of a regular pay check. 28% income tax, +15% SE tax,+5% state tax, thats 48% of what I billed. After the first year reporting a schedule C, I said screw this, not doing it anymore.

I thought dividend and capital gains taxes were increasing this year? Is that not true?

OmniScience wrote: I thought dividend and capital gains taxes were increasing this year? Is that not true?

The original plan was to raise capital gains taxes but the Republicans and Obama agreed to keep it at 15% for another year.

I've paid negative income tax for 8 years, now.

I'm not a rocket scientist - but I suspect It's not sustainable.

I suppose I could refuse to file my taxes ---- but then, I'd be arrested.