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Check Out This NY Times Graphic on Tax Burden

By JLP | September 19, 2012

Here it is (click on the graphic to see it as part of a much larger graphic):

Tax Burden

Source: NY Times

I have a couple of questions regarding the payroll taxes portion of the graphic:

• At the lower incomes, why are the numbers different? If the tax is the same percentage up to income cap, then why are the percentages different?

• Shouldn’t the employer portion of social security and medicare be included in the employee’s income? It’s obvious that they are including the employer portion in the taxpayer burden. This is misleading because I’m certain the employer portion is not being included in the employee’s income. In other words, by including it as part of the burden but not including it in income, it makes the burden seem high as a percentage of income. Lying (or misleading) with statistics 101.

I don’t trust the NY Times to be honest with their “facts.” Can you blame me?

Topics: Politics, Taxes | 54 Comments »


54 Responses to “Check Out This NY Times Graphic on Tax Burden”

  1. Retiredat40 Says:
    September 19th, 2012 at 11:06 am

    The numbers look pretty much the same to me with the exception of a tenth of a percent difference. That’s probably due to some tax credit or something that certain people get. It’s extremely minor regardless.

    In what world do we consider employer contributions to SS and Medicare as income?

  2. JLP Says:
    September 19th, 2012 at 11:12 am

    That’s my point. Why are they being considered “burden” when the employee doesn’t actually pay them?

  3. Retiredat40 Says:
    September 19th, 2012 at 11:15 am

    Not sure how much of a “burden” they are considered. The point of the graph is to show that low income people pay a fairly significant amount of income in tax. That’s the part you don’t like and you want the income higher to make the “burden” lower.

  4. JLP Says:
    September 19th, 2012 at 11:22 am

    No. I want the discussion to be fair. It’s not fair when you lump employer social security contributions in with “tax burden,” which makes that number look larger than it really is. Poor Bob is not paying 10.8% of his income in payroll taxes.

  5. Retiredat40 Says:
    September 19th, 2012 at 11:24 am

    Both the employee and employer pay SS correct? So isn’t the person paying taxes? They are paying SS and Medicare. Just because the employer pays in too doesn’t make it an offset.

  6. JLP Says:
    September 19th, 2012 at 11:39 am

    yes, but the 10.8% the NY Times is showing INCLUDES the employer’s part even though the employee is not actually paying that out of his income.

  7. Retiredat40 Says:
    September 19th, 2012 at 11:50 am

    You might be right. I had to pull out an old paycheck to see what mine amounted to which was 7.6%. Not sure what they qualify as “/other federal taxes.” The tax rates are still in the ballpark although they would be slightly elevated if that is the case.

  8. JLP Says:
    September 19th, 2012 at 12:00 pm

    I would be interested to know how the federal income tax portion is calculated. Hard to believe it’s that low UNLESS most of the income at the upper levels is from from dividends and capital gains. I don’t think it is. It’s also interesting that they chose $452K + as their last bracket.

  9. Retiredat40 Says:
    September 19th, 2012 at 12:05 pm

    I thought it was kind of high. ha, ha.

  10. Mark Says:
    September 19th, 2012 at 12:19 pm

    I think most high-income IS from cap gains and dividends. Also, deductions such as property and state taxes and mortgage interest probably reduce upper-income household average tax rate.

    The maximum marginal federal tax rate is around 35%. The deductions and also the progressive rate scale pull that down to around 30%, and it doesn’t take much in dividend and cap gains income to bring it down from 30.4 to 29.

    Sadly for me, I am in the maximum bracket – 30.4%!

  11. Jack Says:
    September 19th, 2012 at 1:14 pm

    They also do not include how much the higher-income people are paying AS EMPLOYERS. As employers, they pay half of the payroll taxes, plus corporate income taxes (the highest in the world, BTW).

    Also, how much are they losing in reduced bond interest in municipal bonds?

    If one is going to bitch about their not paying taxes on municipal bond income, they you have to add in some phantom income and tax to balance out the lower interest rates.

  12. BG Says:
    September 19th, 2012 at 4:57 pm

    Why stop at $452k? Romney admits he is around 14% on his yearly $46 million “income”.

  13. clocks Says:
    September 19th, 2012 at 8:36 pm

    I can care less what percent tax Romney pays. He pays a few million per year in taxes. That is way more than his “fair share”, especially when so many don’t pay anything.

  14. BG Says:
    September 20th, 2012 at 12:15 am

    Yeah, how dare those “poor”, and “elderly”, and disabled “vets”, get away with paying no income taxes. Those bastyrds.

    BTW: its quite funny how Romney alienates his own base. The majority of those 47% that pay no income taxes are red states (deep south and midwest). What is even funnier is that those people dont even realize that Romney is talking about them.

  15. clocks Says:
    September 20th, 2012 at 6:23 am

    The only one Romney alienated are liberals. As you mention, most of the people that don’t pay taxes, don’t even realize it. But that won’t stop the liberal media from trying to make this the biggest news story of the year. They’ve been talking about it for three days now. Never mind gas is $4.50 a gallon, our ambassadors are being murdered, unemployment is huge, and we are giving guns to Mexican cartels.

  16. BG Says:
    September 20th, 2012 at 6:50 am

    They don’t realize it because they are already paying out the nose in payroll and other taxes. I hear them on my (conservative) talk radio show every morning. In their minds they are honest god fearing gun toting tax paying members of the republican party. And their party’s nomination is calling them moochers, lol.

    Another fun factoid: their effective total tax rate to the federal government is about the same as Romney’s confessed rate (why won’t he release his tax forms?). Yet it is the poor guy who is the moocher; so sayeth the almighty Willard.

  17. Jack Says:
    September 20th, 2012 at 7:23 am

    Wow, BG, you really have the ability to pack a lot of BS into two short paragraphs.

    First, there are two different groups Romney talked about in the video — the 47% that doesn’t pay U.S. income taxes, and the 47% that gets government welfare. However, Pres. Carter’s grandson edited the video so that it looks like Romney is talking about the same people. Carter refuses to release the entire video.

    Your attitude is exactly what the Democrats want — the idea that if they steal from the few and give to the many, the many will vote for them. You are angry that it is not working. Well, some people vote for what is best for the country, and for themselves in the long term, not for what is best for them in the short term. They are true conservatives.

    As for Romney’s “confessed” tax rate, he has released the last two years of income tax returns. It does seem he contributes to causes he believes in. 0bama and Biden do not. Apparently, Romney also gave his ENTIRE inheritance to charity. And I guarantee you he would not be a bishop of the LDS Church if he were not tithing.

    Finally, even that tax rate is not the whole truth. First, there are the corporate income taxes and payroll taxes he has paid as the owner of companies. Second, one should also factor in the “phantom” income and taxes of government bonds in lieu of corporate bonds.

    For instance, if a AAA-rated corporate bond pays 4%, a high-tax-bracket individual would rather have government bond paying only 3%. So if he earns $30,000 in government-bond interest, it is equivalent to earning $40,000 on a corporate bond and paying 25% in tax.

    That is why the government can borrow money at lower rates than corporations can.

  18. JLP Says:
    September 20th, 2012 at 7:49 am

    BG wrote:

    Why stop at $452k? Romney admits he is around 14% on his yearly $46 million “income”.

    I picture BG gritting his teeth as he typed that sentence.

    The fact is: Romney probably paid more in taxes in one year than we will make in a lifetime.

    BG, were you as critical of John Kerry and his wealth when he was running for office?

  19. BG Says:
    September 20th, 2012 at 7:51 am

    Full video: http://m.motherjones.com/politics/2012/09/watch-full-secret-video-private-romney-fundraiser

    Wow, a two second google search found the full video. Which part are you referring?

    “One year could be a fluke, perhaps done for show,” — Willard’s dad in 1968 as he handed over 12 years of tax returns to a reporter.

    How many years of to taxes had Willard handed over? Exactly one.

  20. JLP Says:
    September 20th, 2012 at 8:01 am

    Ugh! I hate linking to that trashy website…

  21. JLP Says:
    September 20th, 2012 at 8:04 am

    Not sure if that’s the “full video” or not. The MJ founder admitted to cutting important stuff from the video. BIG SURPRISE!

    I still don’t see what Romeny said that wasn’t true. It’s nice to hear a politician speak honestly instead of the fake stuff we usually hear.

    BG, you know as well as I know that people indebted to the government will vote to keep the status quo. So, Romney’s right.

  22. BG Says:
    September 20th, 2012 at 8:16 am

    You really think that 47% is 100% made up of liberals?

    Yes, it is nice to hear what is said in a room that would otherwise cost you $50,000 to hear.

  23. JLP Says:
    September 20th, 2012 at 8:26 am

    BG,

    Read this.

  24. JLP Says:
    September 20th, 2012 at 8:28 am

    BG wrote:

    You really think that 47% is 100% made up of liberals?

    I didn’t say that. Romney was talking strategy. Why waste resources on a segment of the population that most likely will not vote for him in the first place?

  25. clocks Says:
    September 20th, 2012 at 8:32 am

    “They don’t realize it because they are already paying out the nose in payroll and other taxes.”

    You are talking about the money they will get back as social security?

    Personally, I’d be fine with them getting rid of both payroll tax and soc security. I know I’m not going to depend on the government to fund my retirement, nor should you.

  26. JLP Says:
    September 20th, 2012 at 9:44 am

    Clocks wrote:

    Personally, I’d be fine with them getting rid of both payroll tax and soc security. I know I’m not going to depend on the government to fund my retirement, nor should you.

    AMEN! We need to go back to the society where the elders moved in with their kids when things were tight. I think it would help us get back to a more family-oriented society.

  27. Chris Says:
    September 20th, 2012 at 10:08 am

    “We need to go back to the society where the elders moved in with their kids when things were tight. I think it would help us get back to a more family-oriented society.”

    Was that sarcasm?

  28. JLP Says:
    September 20th, 2012 at 10:18 am

    No. Not sarcasm.

  29. clocks Says:
    September 20th, 2012 at 10:34 am

    People should stop buying cars, homes, and smart phones they can’t afford, and save for retirement.

  30. Jack Says:
    September 20th, 2012 at 1:46 pm

    What’s wrong with that, Chris?

    If the elderly are dependent on Social Security, they are, in fact, dependent on their children and grandchildren.

    Just cut out the wasteful government bureaucracy between them.

  31. John Says:
    September 21st, 2012 at 3:10 am

    Maybe you should go to Fox News. After all, they are “fair and balanced”.

  32. BG Says:
    September 21st, 2012 at 7:54 am

    “You are talking about the money they will get back as social security?”

    Of course that is what I am talking about. The “poor” people don’t realize that Romney isn’t counting those taxes. As I said, they dont even realize that Romney is talking about them wwhen he talks down (secretly) about the 47% in front of his millionaire buddies.

    47% of the people pay no “income” taxes. 100% of the people think that they aren’t in that group.

  33. clocks Says:
    September 21st, 2012 at 12:56 pm

    Hey BG – Romney is releasing his 2011 tax return. Now you’ll be able to sleep at night.

  34. clocks Says:
    September 21st, 2012 at 1:31 pm

    “Romney is planning to release his full 2011 returns later Friday, which the trustee says will show Romney and his wife had $13.7 million in income in 2011″

    Is that a fair enough share?

  35. BG Says:
    September 21st, 2012 at 3:54 pm

    “Is that a fair enough share?”

    14.1%, nope not enough.

  36. JLP Says:
    September 21st, 2012 at 4:07 pm

    Not exactly 14.1% when you factor in the taxes at the corporate level.

  37. JLP Says:
    September 21st, 2012 at 4:07 pm

    Income from capital gains and dividends is not earned income.

  38. Mack Says:
    September 21st, 2012 at 5:11 pm

    Under the Federal Insurance Contributions Act (FICA), 12.4 percent of your earned income up to an annual limit must be paid into Social Security, and an additional 2.9 percent must be paid into Medicare.
    (Medicare rises to 3.8 % in 2013, with no income limit)

    Most economists firmly agree that the employee actually pays the full 15.3 % FICA tax; employers merely reduce the nominal wages of employees to cover the deceptive “Employer Share” of FICA.

    FICA taxes are essentially handled as “income-taxes”. In practice there’s no real difference between IRS “Income Taxes” & FICA “income taxes” — but most Americans are easily fooled by the terminology.

    FICA is legally a ‘tax’ — not any sort of insurance premium or annuity payment. FICA taxpayers have no fundamental legal claims to any FICA benefits at all; benefits paid out are purely at the discretion of the sitting Congress (from a strictly legal standpoint).

    Anyone here who feels they are now under-taxed (BG ?) — is totally free to send generous personal checks to the US Treasury (which has a special account & address for just such donations).

  39. Jack Says:
    September 21st, 2012 at 5:52 pm

    And the “phantom” income and taxes for government bonds.

  40. BG Says:
    September 21st, 2012 at 5:52 pm

    “Income from capital gains and dividends is not earned income.”

    Exactly, so cap-gains and dividends are also not (double) taxed for SS/Medicare either.

    Here’s an interesting read and also why Romney was able to get _millions_ into a IRA account (tax advantage), which is otherwise impossible to do (for someone like us):

    Mitt Romney exited Bain Capital with rare tax benefits in retirement

  41. Jack Says:
    September 21st, 2012 at 6:23 pm

    No, but they are double tax as income.

    And of course, what you don’t pay in SS you don’t get in benefits later.

    As for his IRA…. Well, don’t bitch about those who abide by the law, go work to change the law.

  42. BG Says:
    September 21st, 2012 at 6:42 pm

    Mack) Good write-up, and you are exactly correct on the FICA taxes/benefits.

    Also, I’m not saying I’M under-taxed, I’m saying Willard is under-taxed (he is the one calling all the poor guys moochers even though their effective tax rate is in the same ballpark: ~14%).

  43. Jack Says:
    September 21st, 2012 at 7:01 pm

    Of course, they also can expect benefits ostensibly tied to how much they pay in taxes. Shall we eliminate Social Security and Medicare, BG? I’m all for that!

  44. BG Says:
    September 21st, 2012 at 11:27 pm

    “…they also can expect benefits…”

    SCOTUS 1960 Flemming v. Nestor, says otherwise.

    Anyhow, since Romney appears to be having difficulty getting his message out about the 47%, I believe it is my civic duty to help spread the message to members of that group.

    As I said earlier, those sad folks dont even realize that Romney is talking about them.

  45. Jack Says:
    September 22nd, 2012 at 6:11 am

    There is a difference between having a RIGHT to a thing, and EXPECTING that thing. I did not say they had a RIGHT to it, I said they could EXPECT it.

    Similarly, there is a difference between INCOME taxes and PAYROLL taxes. Payroll taxes are for specific programs, and the benefits from those programs are linked by statute to the taxes one pays into them.

    Yes, it is sad that there are some people who do not realize that Romney is talking about them, but those people are are the ones who will not vote for him, because they are the ignorant ones.

  46. Valkyrie Frost Says:
    September 22nd, 2012 at 11:58 am

    Interesting that a post on the NYT would turn into a political debate about Mittens and his 47% comment.

    Personally, Romney and the upper 1/10th have the tax code just the way they want it. Forty years ago, a rich guy had to work very hard and pay accountants and lawyers good money digging up tax shelters to protect their wealth from the high taxes of the day. Over the last 15 years, folks like Romney don’t have to work hard at all to protect their wealth from high taxes because the govt is no longer taxing them at super high rates.

    Hell, everyone would love to pay ONLY 14.1% in tax to the fed govt. Unfortunately, the tax code is set up to tax workers (aka the middle class) at a much higher rates than the poor or the elite.

    A doctor making 300K per year may never pay as much as someone like Romney does in a single year, but he does pay a much higher portion relative to his income and living costs.

    The solution is to move into a different tax paradigm where folks like Romney pay a bit more and those at the bottom pay a bit more, too.

    Perhaps we could start with a tax cap at 30%. The idea is for your total tax liability to all govt taxes to be capped at 30%. If you’re being taxed at 40%, then you get a rebate from all govt sources to reduce your burden down to 30%. That would include fed tax, payroll tax, state inc tax, local sales tax, property taxes, etc.

    This would not save Romney or the rich anything, but it would cut the taxes of the working middle class, especially in high tax states like NY and MA.

  47. Valkyrie Frost Says:
    September 22nd, 2012 at 12:01 pm

    I also find it funny that everyone wants to cut taxes when no one can agree to cut spending. Seems we all want our govt services, like the world’s biggest military x 25, but we are unwilling to pay for it through taxes.

  48. Valkyrie Frost Says:
    September 22nd, 2012 at 12:11 pm

    Congress and the Fed Reserve are call the end of year spending cuts “the fiscal cliff.” They are predicting dire consequences if congress does not act. Funny how Congress is the one who created this “cliff” by not compromising not once, not twice, but three times over.

    I think it’s time we stop requiring the teaching of Algebra II and cut four years of English down to two for high school students and start requiring one year of basic economics and the one year of macro economics and one year of political analysis.

    Clearly, our population is under educated in what really makes the world go around. Yet, these are the people that are allowed to vote time and time again.

    Clearly BG and Jack are on different political teams, but they can at least have an informed and intelligent conversation. The masses watching Fox News and MSNBC programs full of political garbage have no such foundation or education.

  49. Valkyrie Frost Says:
    September 22nd, 2012 at 12:20 pm

    Does the 47% matter? Not the to 47% on either side.
    47% will vote Obama, no matter what.
    47% will vote Romney, no matter what.

    It’s only about 6% that matter in elections.
    That’s the swing vote. Those are the undecided independents in swing states that will decide the election. JPL, your vote will not count in TX becasue TX will vote Romney. My state of GA will also vote Romney. So, if I vote Ron Paul or Obama, it will not matter.

    It’s the 6% swing votes in WI, NC, VA, PA, OH. Those voters are mostly middle class and that’s the people Obama and Romney must bring into their camp.

  50. Stacey Says:
    September 22nd, 2012 at 2:36 pm

    Late to the party here, but wanted to understand what Mack #38 meant by “FICA taxes are essentially handled as “income-taxes”. In practice there’s no real difference between IRS “Income Taxes” & FICA “income taxes” — but most Americans are easily fooled by the terminology”

    In my mind the difference is federal withholding tax (directly from my gross) goes toward my Form 1040 income tax liability in April. Fica taxes (social security– my part 4.2, employer/self-employed part 6.2+ medicare 1.45 (my part) + 1.45 (employer/self-employed part) have no bearing on my income tax return. However, all these components comprise an employer’s quarterly (or semi-weekly, or monthly) 941 payment.

  51. Valkyrie Frost Says:
    September 24th, 2012 at 3:45 am

    Stacey, MAck was addressing the concept that even though an employer pays have the employees payroll tax (aka FICA + Medicare), it’s actually paid by the employee in the form of a lower salary. Meaning, if your salary is $50K today, it would be $54K if your employer did not have to pay half your FICA.

    If you are self employed, then you pay the whole tax and you charge your customers/clients appropriately. Employees typically do not see FICA taxes on their tax return, but it’s there. It shows up when you report additional income from a 1099 source, aka self-employed.

    Finally, since Congress has been spending funds out of the SS Trust since the 1980′s to pay for some deficit spending, FICA really has become a regressive tax on the working class.

  52. Valkyrie Frost Says:
    September 24th, 2012 at 3:46 am

    Somebody shoot me for my spelling and grammar fail!

  53. Jack Says:
    September 24th, 2012 at 5:13 am

    One could just as easily argue that the employer pays all of the payroll tax. Employers must pay higher wages to attract workers whose wages are taxed.

  54. BG Says:
    September 24th, 2012 at 7:15 pm

    Corporations (employers) don’t pay taxes, customers do.

    …and around we go…

    If you want to make it seem like corporations are paying ridiculous amounts in taxes, add in the payroll tax. If you want to make it seem like poor people are paying a ton in taxes, add in the payroll tax.

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