WASHINGTON – 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.
The top income tax rate is 35 percent, so how can people who make so much pay so little in taxes? The nation's tax laws are packed with breaks for people at every income level. There are breaks for having children, paying a mortgage, going to college, and even for paying other taxes. Plus, the top rate on capital gains is only 15 percent.
There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.
"It's the fact that we are using the tax code both to collect revenue, which is its primary purpose, and to deliver these spending benefits that we run into the situation where so many people are paying no taxes," said Roberton Williams, a senior fellow at the center, which generated the estimate of people who pay no income taxes.
The sheer volume of credits, deductions and exemptions has both Democrats and Republicans calling for tax laws to be overhauled. House Republicans want to eliminate breaks to pay for lower overall rates, reducing the top tax rate from 35 percent to 25 percent. Republicans oppose raising taxes, but they argue that a more efficient tax code would increase economic activity, generating additional tax revenue.
President Barack Obama said last week he wants to do away with tax breaks to lower the rates and to reduce government borrowing. Obama's proposal would result in $1 trillion in tax increases over the next 12 years. Neither proposal included many details, putting off hard choices about which tax breaks to eliminate.
In all, the tax code is filled with a total of $1.1 trillion in credits, deductions and exemptions, an average of about $8,000 per taxpayer, according to an analysis by the National Taxpayer Advocate, an independent watchdog within the IRS.
More than half of the nation's tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent. Still, the wealthy have access to much more lucrative tax breaks than people with lower incomes.
Obama wants the wealthy to pay so "the amount of taxes you pay isn't determined by what kind of accountant you can afford."
Eric Schoenberg says to sign him up for paying higher taxes. Schoenberg, who inherited money and has a healthy portfolio from his days as an investment banker, has joined a group of other wealthy Americans called United for a Fair Economy. Their goal: Raise taxes on rich people like themselves.
Shoenberg, who now teaches a business class at Columbia University, said his income is usually "north of half a million a year." But 2009 was a bad year for investments, so his income dropped to a little over $200,000. His federal income tax bill was a little more than $2,000.
"I simply point out to people, `Do you think this is reasonable, that somebody in my circumstances should only be paying 1 percent of their income in tax?'" Schoenberg said.
Sen. Orrin Hatch of Utah, the top Republican on the Senate Finance Committee, said he has a solution for rich people who want to pay more in taxes: Write a check to the IRS. There's nothing stopping you.
"There's still time before the filing deadline for them to give Uncle Sam some more money," Hatch said.
Schoenberg said Hatch's suggestion misses the point.
"This voluntary idea clearly represents a mindset that basically pretends there's no such things as collective goods that we produce," Schoenberg said. "Are you going to let people volunteer to build the road system? Are you going to let them volunteer to pay for education?"
The law is packed with tax breaks that help narrow special interests. But many of the biggest tax breaks benefit millions of American families at just about every income level, making them difficult for politicians to touch.
The vast majority of those who escape federal income taxes have low and medium incomes, and most of them pay other taxes, including Social Security and Medicare taxes, property taxes and retail sales taxes.
The share of people paying no federal income tax has dropped slightly the past two years. It was 47 percent for 2009. The main difference for 2010 was the expiration of a tax break that exempted the first $2,400 of unemployment benefits from taxation, Williams said.
In 2009, nearly 35 million taxpayers got a tax break for paying interest on their home mortgages, and nearly 36 million taxpayers took the $1,000-per-child tax credit. About 41 million households reduced their federal income taxes by deducting state and local income and sales taxes from their taxable income.
About 36 million families cut their taxes by nearly $35 billion by deducting charitable donations, and 28 million taxpayers saved a total of $24 billion because their income from Social Security and railroad pensions was untaxed.
"As a matter of policy, there would be a lot of ways to save money and actually make these things work better," said Leonard Burman, a public affairs professor at Syracuse University. "As a matter of politics, it's really, really difficult."
___
Online:
Tax Policy Center: http://www.taxpolicycenter.org
National Taxpayer Advocate: http://www.irs.gov/advocate
United for a Fair Economy: http://www.faireconomy.org
http://news.yahoo.com/s/ap/20110417/ap_on_bi_ge/us_no_taxes
Sunday, April 17, 2011
Tuesday, April 12, 2011
The President Is Missing by PAUL KRUGMAN
What have they done with President Obama? What happened to the inspirational figure his supporters thought they elected? Who is this bland, timid guy who doesn't seem to stand for anything in particular?
I realize that with hostile Republicans controlling the House, there's not much Mr. Obama can get done in the way of concrete policy. Arguably, all he has left is the bully pulpit. But he isn't even using that - or, rather, he's using it to reinforce his enemies' narrative.
His remarks after last week's budget deal were a case in point.
Maybe that terrible deal, in which Republicans ended up getting more than their opening bid, was the best he could achieve — although it looks from here as if the president’s idea of how to bargain is to start by negotiating with himself, making pre-emptive concessions, then pursue a second round of negotiation with the G.O.P., leading to further concessions.
And bear in mind that this was just the first of several chances for Republicans to hold the budget hostage and threaten a government shutdown; by caving in so completely on the first round, Mr. Obama set a baseline for even bigger concessions over the next few months.
But let’s give the president the benefit of the doubt, and suppose that $38 billion in spending cuts — and a much larger cut relative to his own budget proposals — was the best deal available. Even so, did Mr. Obama have to celebrate his defeat? Did he have to praise Congress for enacting “the largest annual spending cut in our history,” as if shortsighted budget cuts in the face of high unemployment — cuts that will slow growth and increase unemployment — are actually a good idea?
Among other things, the latest budget deal more than wipes out any positive economic effects of the big prize Mr. Obama supposedly won from last December’s deal, a temporary extension of his 2009 tax cuts for working Americans. And the price of that deal, let’s remember, was a two-year extension of the Bush tax cuts, at an immediate cost of $363 billion, and a potential cost that’s much larger — because it’s now looking increasingly likely that those irresponsible tax cuts will be made permanent.
More broadly, Mr. Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice!
I’m not exaggerating. The House budget proposal that was unveiled last week — and was praised as “bold” and “serious” by all of Washington’s Very Serious People — includes savage cuts in Medicaid and other programs that help the neediest, which would among other things deprive 34 million Americans of health insurance. It includes a plan to privatize and defund Medicare that would leave many if not most seniors unable to afford health care. And it includes a plan to sharply cut taxes on corporations and to bring the tax rate on high earners down to its lowest level since 1931.
The nonpartisan Tax Policy Center puts the revenue loss from these tax cuts at $2.9 trillion over the next decade. House Republicans claim that the tax cuts can be made “revenue neutral” by “broadening the tax base” — that is, by closing loopholes and ending exemptions. But you’d need to close a lot of loopholes to close a $3 trillion gap; for example, even completely eliminating one of the biggest exemptions, the mortgage interest deduction, wouldn’t come close. And G.O.P. leaders have not, of course, called for anything that drastic. I haven’t seen them name any significant exemptions they would end.
You might have expected the president’s team not just to reject this proposal, but to see it as a big fat political target. But while the G.O.P. proposal has drawn fire from a number of Democrats — including a harsh condemnation from Senator Max Baucus, a centrist who has often worked with Republicans — the White House response was a statement from the press secretary expressing mild disapproval.
What’s going on here? Despite the ferocious opposition he has faced since the day he took office, Mr. Obama is clearly still clinging to his vision of himself as a figure who can transcend America’s partisan differences. And his political strategists seem to believe that he can win re-election by positioning himself as being conciliatory and reasonable, by always being willing to compromise.
But if you ask me, I’d say that the nation wants — and more important, the nation needs — a president who believes in something, and is willing to take a stand. And that’s not what we’re seeing.
http://www.nytimes.com/2011/04/11/opinion/11krugman.html
I realize that with hostile Republicans controlling the House, there's not much Mr. Obama can get done in the way of concrete policy. Arguably, all he has left is the bully pulpit. But he isn't even using that - or, rather, he's using it to reinforce his enemies' narrative.
His remarks after last week's budget deal were a case in point.
Maybe that terrible deal, in which Republicans ended up getting more than their opening bid, was the best he could achieve — although it looks from here as if the president’s idea of how to bargain is to start by negotiating with himself, making pre-emptive concessions, then pursue a second round of negotiation with the G.O.P., leading to further concessions.
And bear in mind that this was just the first of several chances for Republicans to hold the budget hostage and threaten a government shutdown; by caving in so completely on the first round, Mr. Obama set a baseline for even bigger concessions over the next few months.
But let’s give the president the benefit of the doubt, and suppose that $38 billion in spending cuts — and a much larger cut relative to his own budget proposals — was the best deal available. Even so, did Mr. Obama have to celebrate his defeat? Did he have to praise Congress for enacting “the largest annual spending cut in our history,” as if shortsighted budget cuts in the face of high unemployment — cuts that will slow growth and increase unemployment — are actually a good idea?
Among other things, the latest budget deal more than wipes out any positive economic effects of the big prize Mr. Obama supposedly won from last December’s deal, a temporary extension of his 2009 tax cuts for working Americans. And the price of that deal, let’s remember, was a two-year extension of the Bush tax cuts, at an immediate cost of $363 billion, and a potential cost that’s much larger — because it’s now looking increasingly likely that those irresponsible tax cuts will be made permanent.
More broadly, Mr. Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice!
I’m not exaggerating. The House budget proposal that was unveiled last week — and was praised as “bold” and “serious” by all of Washington’s Very Serious People — includes savage cuts in Medicaid and other programs that help the neediest, which would among other things deprive 34 million Americans of health insurance. It includes a plan to privatize and defund Medicare that would leave many if not most seniors unable to afford health care. And it includes a plan to sharply cut taxes on corporations and to bring the tax rate on high earners down to its lowest level since 1931.
The nonpartisan Tax Policy Center puts the revenue loss from these tax cuts at $2.9 trillion over the next decade. House Republicans claim that the tax cuts can be made “revenue neutral” by “broadening the tax base” — that is, by closing loopholes and ending exemptions. But you’d need to close a lot of loopholes to close a $3 trillion gap; for example, even completely eliminating one of the biggest exemptions, the mortgage interest deduction, wouldn’t come close. And G.O.P. leaders have not, of course, called for anything that drastic. I haven’t seen them name any significant exemptions they would end.
You might have expected the president’s team not just to reject this proposal, but to see it as a big fat political target. But while the G.O.P. proposal has drawn fire from a number of Democrats — including a harsh condemnation from Senator Max Baucus, a centrist who has often worked with Republicans — the White House response was a statement from the press secretary expressing mild disapproval.
What’s going on here? Despite the ferocious opposition he has faced since the day he took office, Mr. Obama is clearly still clinging to his vision of himself as a figure who can transcend America’s partisan differences. And his political strategists seem to believe that he can win re-election by positioning himself as being conciliatory and reasonable, by always being willing to compromise.
But if you ask me, I’d say that the nation wants — and more important, the nation needs — a president who believes in something, and is willing to take a stand. And that’s not what we’re seeing.
http://www.nytimes.com/2011/04/11/opinion/11krugman.html
Sunday, April 3, 2011
To be or not to be that is Libya
To be, or not to be: that is the question:
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them? To die: to sleep;
No more; and by a sleep to say we end
the heart-ache and the thousand natural shocks
That flesh is heir to.
Over five hundred years ago, Shakespeare’s Hamlet remarked, "To be or not to be that is the question." Where there may be certainty of war when we are attacked, there should be much debate when the prospect is arbitrary and uncertain. Hopefully, the United Nations will resolve the predicament, but that is uncertain at best. Every army needs weapons and leadership and that may be lacking. Too many American Presidents from Harry Truman, LBJ, and George W Bush have discovered the awful truth, that it is far easier to get into war than extract us from it.
The problem with Libyan criticism is one need to be certain of their facts. On one hand, to not intervene in Libya could mean certain death for a democratic movement and many Libyans, and that would be wrong. On the other hand, to intervene, we could become mired in another war with no real hope of success. Time will determine whether, as LBJ once said before invention in Vietnam," It was like being in a thunderstorm walking on a Texas highway with no where to go and no where to hide."
Perhaps Johnson, himself, best summed up his involvement in the Vietnam War as President: “I knew from the start that I was bound to be crucified either way I moved. If I left the woman I really loved — the Great Society - in order to get involved in that bitch of a war on the other side of the world, then I would lose everything at home. All my programs.... But if I left that war and let the Communists take over South Vietnam, then I would be seen as a coward and my nation would be seen as an appeaser and we would both find it impossible to accomplish anything for anybody anywhere on the entire globe.
LBJ Goes to War 1964—1968
http://en.wikipedia.org/wiki/Lyndon_B._Johnson
China says Middle East should solve problems itself. However painful this may sound, ultimately this is the correct approach for a lasting peace in the Middle East. Too often, we ignore a massive tradition of historical advancement and think WE ALONE CAN SOLVE THE PROBLEM. Where is the Arab League? There is at least 7000 years of civilization in the Middle East. It is time for this region to solve its own problems.
Whether 'tis nobler in the mind to suffer
The slings and arrows of outrageous fortune,
Or to take arms against a sea of troubles,
And by opposing end them? To die: to sleep;
No more; and by a sleep to say we end
the heart-ache and the thousand natural shocks
That flesh is heir to.
Over five hundred years ago, Shakespeare’s Hamlet remarked, "To be or not to be that is the question." Where there may be certainty of war when we are attacked, there should be much debate when the prospect is arbitrary and uncertain. Hopefully, the United Nations will resolve the predicament, but that is uncertain at best. Every army needs weapons and leadership and that may be lacking. Too many American Presidents from Harry Truman, LBJ, and George W Bush have discovered the awful truth, that it is far easier to get into war than extract us from it.
The problem with Libyan criticism is one need to be certain of their facts. On one hand, to not intervene in Libya could mean certain death for a democratic movement and many Libyans, and that would be wrong. On the other hand, to intervene, we could become mired in another war with no real hope of success. Time will determine whether, as LBJ once said before invention in Vietnam," It was like being in a thunderstorm walking on a Texas highway with no where to go and no where to hide."
Perhaps Johnson, himself, best summed up his involvement in the Vietnam War as President: “I knew from the start that I was bound to be crucified either way I moved. If I left the woman I really loved — the Great Society - in order to get involved in that bitch of a war on the other side of the world, then I would lose everything at home. All my programs.... But if I left that war and let the Communists take over South Vietnam, then I would be seen as a coward and my nation would be seen as an appeaser and we would both find it impossible to accomplish anything for anybody anywhere on the entire globe.
LBJ Goes to War 1964—1968
http://en.wikipedia.org/wiki/Lyndon_B._Johnson
China says Middle East should solve problems itself. However painful this may sound, ultimately this is the correct approach for a lasting peace in the Middle East. Too often, we ignore a massive tradition of historical advancement and think WE ALONE CAN SOLVE THE PROBLEM. Where is the Arab League? There is at least 7000 years of civilization in the Middle East. It is time for this region to solve its own problems.
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