Why Taxes Aren’t as High as They Seem
By DAVID LEONHARDT
NYT
WASHINGTON — When people heard that Mitt Romney’s federal income tax rate was about 15 percent, the immediate reaction of many was to assume that their own rate was higher. The top marginal rate is 35 percent, after all, and the marginal rate on a couple with $70,000 in taxable income is 25 percent.
The truth is that most households probably pay a lower rate than Mr. Romney. It is impossible to know for sure, given that he has yet to release his tax return. What is clear, though, is that a large majority of American households — about two out of three — pays less than 15 percent of income to the federal government, through either income taxes or payroll taxes.
This disconnect between what we pay and what we think we pay is nothing less than one of the country’s biggest economic problems.
Many Americans see themselves as struggling under the weight of a heavy tax burden (partly for the understandable reason that wage growth has been so weak). Yet taxes in the United States are quite low today, compared with past years or those in other countries. Most important, American taxes are not sufficient to pay for the programs that many people want, like Medicare, Social Security, road construction and education subsidies.
(More here.)
NYT
WASHINGTON — When people heard that Mitt Romney’s federal income tax rate was about 15 percent, the immediate reaction of many was to assume that their own rate was higher. The top marginal rate is 35 percent, after all, and the marginal rate on a couple with $70,000 in taxable income is 25 percent.
The truth is that most households probably pay a lower rate than Mr. Romney. It is impossible to know for sure, given that he has yet to release his tax return. What is clear, though, is that a large majority of American households — about two out of three — pays less than 15 percent of income to the federal government, through either income taxes or payroll taxes.
This disconnect between what we pay and what we think we pay is nothing less than one of the country’s biggest economic problems.
Many Americans see themselves as struggling under the weight of a heavy tax burden (partly for the understandable reason that wage growth has been so weak). Yet taxes in the United States are quite low today, compared with past years or those in other countries. Most important, American taxes are not sufficient to pay for the programs that many people want, like Medicare, Social Security, road construction and education subsidies.
(More here.)
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2 Comments:
Nice try. I know how many dollars I pay in taxes, have tracked it over the years and you will be hard pressed to convince me that I do not pay enough in taxes. My question - why is it that liberals are the 'anointed ones' who are all-knowing and the only beings qualified to comment on taxation?
Key comment :
The elder Mr. Romney, who died in 1995, paid an average federal tax rate of 37 percent in the 12 years for which he released his tax returns. Mitt Romney’s tax rate has been far lower, thanks mostly to the decline in taxes on stocks and other investments.
The argument should be about tax fairness ... if I earn $100,000 working tons of overtime, I pay at the highest rate ... while Romney is the prefect example of the Bush tax cuts ... since he left Bain in 1999, and with the exception for one stint as Governor, the presumption is that he lived off his investment income ... taxed at the max 15% which could be impacted by capital losses and other special treatments.
So while the $100,000 worker lives in a middle class community and effects his taxes with a mortgage deduction, Mitt Romney has a different housing situation yet has an opportunity for mortgage tax deduction ... for example his $12 million oceanfront mansion in California (the one Romney is quadrupling in size), or his $10 million home in New Hampshire or his townhouse in Belmount MA ... and of course, the capital gains would be impacted by the $5 million ski chalet in an exclusive area in Utah, which Romney sold in 2010.
Yes, it's time for serious tax reform ... with the crux of the argument based on DoD spending ... Romney wants to increase the Navy ... so that international companies can continue to transport their goods knowing that the American taxpayers are paying for the World's Policeman (yet, it isn't the guy working overtime that is primarily concerned with keeping the goods flowing as much as the investor.)
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