
Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016 - spking
https://www.bloombergquint.com/global-economics/top-3-of-u-s-taxpayers-paid-majority-of-income-taxes-in-2016
======
curtis
One thing that is important to understand is that the _income_ tax only makes
up about 50% of federal revenue. The next major source of revenue? _Payroll_
tax. Income tax is a progressive tax. Payroll tax is definitely not
progressive.

According to this source [1] in Fiscal Year 2016 income tax made 47.3% of
federal revenue and payroll tax accounted for 34.1%.

I don't know what the exact numbers are if you take both taxes into account,
but I do know that the headline [2] is at best grossly misleading because so
many people are going to forget about payroll taxes.

[1] [https://www.taxpolicycenter.org/briefing-book/what-are-
sourc...](https://www.taxpolicycenter.org/briefing-book/what-are-sources-
revenue-federal-government)

[2] "Top 3% of U.S. Taxpayers Paid Majority of Income Taxes in 2016"

~~~
briHass
True, but at least in theory, the FICA (payroll) taxes fund programs that
directly benefit the employee: medicare, social security, and unemployment
benefits. The reason these appear more regressive than income taxes is due to
how Social Security pays out an amount proportional to your contributions,
while also having a cap on the max you can receive and be taxed for.

~~~
nickik
An lets be clear. Only in theory is this true.

------
heydenberk
Wealthier people also receive much greater benefits from the government. The
court system makes complex contracts possible in a way that really only
benefits holders of capital. Infrastructure for transportation and information
technology benefits everyone, but especially people who own companies that
ship goods and deliver services over the internet. Government contracts
benefit people who have a stake in the companies that service those contracts.
The police tend to provide better protection to wealthier people in wealthier
communities, who have more to lose from property crimes in any case.

In case you're not persuaded that people who can afford to pay more taxes
should pay a greater share, all of these things are valid reasons for the
wealthy to kick in a lot more of their wealth, in relative and absolute terms,
than other people.

~~~
lettergram
> Wealthier people also receive much greater benefits from the government.

I've seen this said a few times before - I'm kind of confused on what this
means? I'm technically in the top few percent (idk exactly where) and I
receive less from government than I did when I was an undergraduate in
college. I'm from a poorer family, so the government was straight up paying my
family in the past.

I don't think this is remotely true, and if you're arguing that it's
protection or something, I'm also calling B.S.. for my taxes I can easily hire
a full time body guard, buy a few machine guns and make my house and car a
fortress, and after some napkin math, I could still probably pay 10% taxes to
keep the roads up (as opposed to the graduated 45% I pay).

The vast majority of taxes go to medicare, Medicaid, social security, and
payments to foreign countries. I honestly do not see any benefit to me from
any of the above. And the people who benefit from the prior mentioned, are
also zero threat to me (retired, sick, etc.).

Not saying we should get rid of it, but it's definitely not benifiting me.

Edit: just for reference, I refused any government grants for school and took
up a job to start paying for my own food / clothing when my parents started
getting welfare. I didn't want to be a hypocrite at then (at 13), so I can say
stuff like this now.

~~~
rayiner
An ordered society with a stable government is a necessary precondition to
building a business like say Facebook. (In the absence of a State, your best
bet as a nerd is to try to make yourself as useful as possible to the most
powerful warlord who will have you.) In that sense, Facebook's shareholders
and employees receive a lot more benefits from the existence of government
than say a day laborer.

~~~
lettergram
I urge you to look at spending, you can have a stable government at 1/4 the
cost or less. That's kind of my point.

~~~
rayiner
heydenberk was talking about _benefits_ \--rich people, whose wealth is built
on large-scale organization and sophisticated transactions, benefit more (in
absolute terms) from government than poor people. You're talking about _costs_
\--can we decrease costs dramatically and still get the benefits of a stable
government? The answer to that is probably "yes."

That gets us into the realm of political philosophy. What is the purpose of
government? Achieving stability at the lowest cost? My view is that, once you
yoke people under the boot of the State, you're morally obligated to give them
Democracy. And in a Democracy, people will tend to vote for policies that
maximize the benefit to the middle 50% or so, which is going to lead to a
larger government than the minimum necessary to ensure stability. (In my view,
thus, an anarchist libertarian society is not possible, while a statist
libertarian society is fundamentally immoral.)

~~~
nickik
As for statist libertarian, I only partly agree. I think you can both have a
democracy and a political system that is fairly libertarian. I depends what
you call a democracy, a pure 51% majority rule, then its true, but in my
opinion that is equally as immoral as a libertarian state.

However, I do think that a combination of democracy and a founding system,
constitution or whatever can be better.

Switzerland is a example of a country that is very democratic but its more
libertarian in many ways then most other democracies. That has probably to do
with the way the system is set up outside of the pure democracy idea.

Not sure why you claim anarchist libertarian society is not possible, seems
that has little to do with your post.

~~~
harryh
US Government spending as a % of GDP: 37.6%

Switzerland government spending as a % of GDP: 34%

[https://data.oecd.org/gga/general-government-
spending.htm](https://data.oecd.org/gga/general-government-spending.htm)

Strip out the military (where the US spends quite a bit maintaining global
hegemony), and the Swiss have a bigger government than the US.

~~~
nickik
Yes, and Switzerland and US both are pretty small. Compare Switzerland to the
countries around it.

My point was not that Switzerland is a libertarian paradise but rather that it
is not true that more democracy makes the government larger.

------
pm24601
This is so much BS. Wealthy people slide their income into whole owned
businesses. Those businesses use deductions to reduce their income in ways
that you or I can't.

Simple example, to avoid paying income tax on $40,000

1\. Create a business.

2\. That business buys a car.

3\. That business then leases the car to the business's owner

4\. The owner as an independent contractor to the business deducts the 'cost'
of leasing the car.

5\. The business depreciates the car net the lease 'income'.

Result: The cost of the new car is a tax deduction for the business.

The business owner never has to take the $40,000 to go out and buy the car
themselves.

How about that fancy mansion?

Also simple!

1\. Have a separate LLC buy the house.

2\. Host company events at the mansion.

3\. The company pays a high fee for the privilege of hosting the CEO's
Christmas party at the CEO's house.

4\. All the CEO has to do is make sure to invite enough customers' CEOs to the
event and it becomes an IRS approved business function.

------
getcrunk
In other news, top 3% of us taxpayers earned the majority of income in 2016

~~~
refurb
So you’re willing to concede that the rich pay their fair share?

~~~
coldtea
How did you come up with that?

The article just says that top 3% of US taxpayers pay the majority of income
taxes.

If they pay 60% of all income tax paid, but have e.g. 80% of income, they're
still paying "the majority of income taxes", but not a fair share of them.

~~~
harryh
Your hypothetical is not the case (as you can see in one of the graphs in the
article).

I don't know what "fair share" means exactly, but the 3% in question make far
less a % of national income than they pay in income taxes.

~~~
coldtea
My hypothetical was an extreme example to show how this can be still fair.

Besides this extreme example, you can get the 3% much lower in their share of
income and still be justified for the taxes they pay.

Say, a person makes 1M year and a 999999 people make 10K per year. The first
person earns just 0,01% of the total income combined, but he might be the only
one paying taxes if the others are below the taxable income level.

So, he might pay e.g. 20% of 1M (and 100% of taxes), while he only makes 0.01%
of the income -- and that could still be fair.

Now add many dirt poor, many middle class, and a 3% of upper middle class,
millionaires, billionaires and so on.

------
djrogers
There’s a lot of talk about wether this is ‘fair’ or not - let’s set that
aside and ask if it’s good policy to have so much of the country’s revenue
depend on the income of so few people.

Does this make the government more or less beholden to the rich? Does this put
the government more or less at risk of exposure to financial events that only
impact the wealthy? And does this incent the government to enact policies that
increase the wealth of the top 3% over the bottom 30%?

Those are the questions we should be focusing on - not what’s ‘fair’. Life
isn’t fair - if it were the wealth of the top 3% would be determined by how
hard they work and how much good their work does to society. That’s not how we
live, so let’s get back to crafting our society based on what’s good for it as
a whole instead of how we feel about how much tax someone else pays.

~~~
JamesBarney
How would shifting the tax burden more onto the poor reduce the influence of
the rich on the government?

It seems like the wealthy's influence on politics is two fold. Indirect,
people who get elected to Congress have wealthy friends, and interact more
with wealthy people. I.e. they have way more friends that are doctors than
burger flippers.

Direct, wealthy people and directly contributing larges amounts of money to
access politicians.

It seems like the first would be unaffected, and the second would mbe made
worse because the poor would have less, and the rich more disposable income to
use to donate to and influence politics more.

------
wonderwonder
The top 1% paid about 37% of income taxes. They also own over 38% of the
wealth and 'took home 85% of income growth between 2009 and 2013. In 15
states, the top 1% captured all income growth during the same four-year
period'. Based on this I would argue that they are in no way being taken
advantage of and that income disparity is a very real problem that is only
getting worse. This also does not include payroll taxes which are almost
always paid by the middle and lower class while only sometimes by the wealthy
as they are able to leverage their wealth to generate income.

[https://www.businessinsider.com/top-one-percent-every-us-
sta...](https://www.businessinsider.com/top-one-percent-every-us-
state-2016-11#-2)

------
ars
So next time you hear about a tax plan that "benefits the rich", this is why.

It's really hard for a reduction in taxes to benefit the poor because they pay
so little in the first place.

~~~
andybak
It sure doesn't feel that way to some.

$1 is a very different amount depending on your income.

~~~
anonymous5133
The "feeling of a $1" is more of an opinion type statement whereas the other
comparisons are more fact based.

~~~
andybak
Let me put it another way.

$1 feels like the difference between eating and not eating to some people
whereas other people wouldn't stoop to pick a dollar up from the sidewalk if
they dropped it.

How "fact-based" do you need this to be?

~~~
ars
But the question at hand is not income, it's tax reduction.

When you get comparisons in the news about this tax plan or the other, they
don't adjust the numbers based on how "$1 feels".

They just use a percent of income - but since low income people pay so little
tax in the first place, even a percent reduction looks meager.

------
dkural
Indeed, and how much of the income did they make?

Keep in mind when a company "succeeds", they're succeeding on top of trillions
of dollars of infrastructure - human capital (enabled by education! try hiring
the same talent in an underdeveloped country), the transportation, subsidized
energy production & grid, and municipal infrastructure underpinning movement
of physical goods & digital goods; and finally the public order that assures
safety of people, and the enforceability of contracts.

~~~
bluedevil2k
This is the Elizabeth Warren argument. It fails to point out that those
trillions of dollars of infrastructure was paid for already with taxes (which
the top 10% mostly account for). So when she spouts the “they’re only
successful because of the roads, the schools, blah blah” you can rephrase that
as “they’re only successful because of the taxes they’ve already paid into the
system”.

~~~
dkural
A lot of it is property taxes, payroll taxes, local taxes etc. and in any
event, paid by a different generation. If we're willing to go further back,
let's also not forget that a lot of this was achieved by slave labor & after
emancipation, an entire people denied basic civil rights. In any event, it was
not as if Bill Gates paid for the Hoover Dam. Keep in mind some of the tools
for creating capital and income was not available to large swathes of society
- like access to subsidized higher education, homesteads / farmsteads, and
mortgages. These are federal means to build capital which sets the stage for
earning higher incomes.

~~~
bluedevil2k
>> let's also not forget that a lot of this was achieved by slave labor

C’mon, you know this isn’t accurate at all, “a lot” is just an over the top
false statement.

------
DannyBee
The trick isn't getting them to pay the majority of income tax, the trick
nobody has succeeded at (but desperately want to) is to get them not to want a
proportionally larger say in the government for that money.

IE people want rich folks to simultaneously pay most of the money the
government is getting from income taxes but also

1\. Not get a larger say automatically

2\. Not spend a lot of money on politics to try to get that larger say.

Regardless of whether one thinks these are good goals, neither is really
happening right now, nor has it ever really happened (at least in the US).

(and the position that you just have to take away enough of their money
through taxes that they can't afford to do that is clearly silly in a variety
of ways. About the only thing it shows is that you can't scale your government
effectively)

------
petermcneeley
This is highschool math. Lets say you someone earning 70k and someone else
30k. Even with a flat tax rate of 10% the 70k earner pays 70% of the tax.

~~~
djrogers
Your numbers are overly simplistic and do not reflect reality even closely -
we don’t have a flat tax, and the article clearly shows that the top 3% earn
about 25% of the income and pay about half of the income tax.

Throwing out completely made up figures when the correct ones are available
doesn’t help much.

~~~
anonymous5133
Pretty sure his example was just to illustrate his point. He even points out
"even if" to show that it is an example and not the current tax system.

------
cameldrv
Is the point of the article to demonstrate that the tax system is unfair to
the rich? If that's the point to be made, they're only looking at the most
progressive part of the tax system. Add in payroll, property, state income,
unemployment, and sales taxes, and the picture looks quite different.

~~~
refurb
Actually it doesn’t look that different.

Yes, the top incomes earners might pay 60% of income, but they still pay 50%
of all taxes.

------
matt4077
Remember that national income taxes are but a fraction of total government
revenue. It does not include, among other things, consumption taxes (like VAT)
which disproportionally affect lower-income people. Nor does it include social
security, which has a similar bend.

------
zimablue
The thing is, if you own all the wealth, you pay yourself "income" effectively
through the rent you're taking off the rest of society. The slaveholders I'm
sure paid more taxes than the slaves. There are layers of indirection =>
you're rich so you can afford/get your way into an expensive university,
you're placed in a position through nepotism, you "rise" to a senior directory
of a company, you make X million but all you've really done is take your
oligarchy shares.

If slaveholding is too extreme consider land-owning, the owner pays more tax
than the rentiers, but he has income he's done nothing to achieve. Rentier
capitalism is just this with more steps.

I'm sitting in an elite company, of the ten people (I'm not one) making
serious money, 5/10 are nepotism hires and the others are socially elite who
went to (and paid for) top universities.

------
iaw
It feels a little misleading to not emphasize that this is reported income.

On paper the top 0.1% appears to pay more than their fair share (2x
proportional vs. their median counterparts paying closer to parity). But as
recent articles about Donald Trump and Jared Kushner have highlighted they
have both engaged in schemes (legal or not) to reduce the amount of income
they have to report to the government.

What would be interesting here is determining the proportion of
individuals/households using expensive tax advantaging techniques by each
quantile and then try to make some estimate of the actual income for each
group is...

------
d--b
These statistics are meant to be polarizing... income taxation may need fine
tuning here and there, but seems to be generally fine.

That the top 0.0001% pay a smaller tax rate than the top 1% needs to be fixed
though.

~~~
anonymous5133
How are the top .0001% paying a smaller tax rate?

If you are talking about the capital gains rates then there is definitely a
huge reason that rate shouldn't be the same as income tax rates for obvious
reasons.

~~~
zimablue
So obvious they don't need stating or defending, huh

------
ausjke
That makes me recall that "47% paid no income tax".

If we all go to socialism directly, we will be all equally poor. If we stay
with capitalism, a gap between rich and poor is part of the deal. Tax rate is
one of the key method to stabilize the society, as the poor is the
majority(the 80%, or the 99%) and if they struggle for too long a revolution
is for sure to happen.

capitalism + welfare to the disabled(only the disabled please) + tax seems
like the best solution still.

~~~
matt4077
These labels are getting tiresome. There is not a single socialist state on
earth today. It's completely out of the question that the US would ever become
such a thing.

The often-cited examples of Scandinavia are capitalistic through and through:
It's private enterprises deciding prices, creating products, and generally
competing.

That they levy rather high taxes and use them to soften some of the edges of
that system's outcomes does in almost no way affect the dynamics within the
system. If you're a baker, and your bread isn't good, you still fail and
society will be spared suffering your products. You just don't starve.

------
zxcvvcxz
"Pay their fair share"

3% of us are floating 50% of the population. How much more "fair" can we get?

~~~
tomarr
Nothing stopping you moving to a low tax environment and conducting all your
business there if you think this is 'unfair'.

The concept of fair is alien with civilisation and taxation;
society/economy/governments services are all intrinsically linked.

~~~
ummonk
Wait, you’re in support of the common practice of wealthy going to tax havens?

~~~
XorNot
The fact the US allows their money to go while they stay in the US is the
point of contention.

If rich people want to actually _leave_ then that's fully their right to so,
but mysteriously that doesn't happen very much...

------
cft
A popular sentiment was "no taxation without representation". Why not
implement "no representation without taxation"? If you don't pay income tax,
you don't get to vote that calendar year.

~~~
coldtea
Because for rich people its trivial to pay income tax (and equally trivial to
hire top accountants and lawyers to pay as little as possible, perhaps even
less than an average middle class citizen). In any case, a rich person can pay
$100K tax and still have tons to spare.

A poor person might not even afford to pay $1K.

------
nickik
This is the problem with much of this inequality talk.

If you actually ask people what they believe to be true, the usually way
overestimate how rich the 1% are, and they WAY underestimate how much taxes
the 1% pay (or whatever 'richer' group you want pick).

If you ask them about what the 1% SHOULD pay they often pick numbers that are
actually below what they actually DO pay.

The problem as in many spaces in politics is that the waste majority of people
have no clue about the facts that they are voting on. And they have no
intensive to actually learn the facts because their individual vote
essentially doesn't matter. This is called rational ignorance, its simply not
worth informing yourself about what is voted on.

Voting is way more about proclaiming alliance to some sort of party or set of
ideologies.

~~~
afterburner
> If you ask them about what the 1% SHOULD pay they often pick numbers that
> are actually below what they actually DO pay.

Not if you ask about the percentage of their income and wealth generated
yearly that they should pay. Typically someone will say the mega-rich should
pay at least the same percentage as them, per individual. And typically the
mega-rich do not in fact pay that same percentage or more. Thanks to capital
gains and hiding wealth overseas and in corporations, the mega-rich pay way
less as a percentage than the middle or lower class do.

