
Top 1% of Income Earners pay 45% of California's Taxes - elsewhen
http://www.sacbee.com/news/politics-government/capitol-alert/article71944477.html
======
mdorazio
Of course they do! Just look at the chart here: [http://www.sacbee.com/site-
services/databases/article9349178...](http://www.sacbee.com/site-
services/databases/article9349178.html) and the referenced franchise tax info.

I am really tired of seeing sensationalist headlines like these. The top 1% of
income earners earn an absolutely massive portion of all income in the state,
but _only_ pay 45% of taxes. We should be asking if that's enough, not
implying that the wealthy are somehow propping up the state's finances when
inequality is accelerating every year.

~~~
11thEarlOfMar
What is missing is that the total income in the state in 2012 was $1.1
Trillion.

So the top 1% earned 28% of the income, but paid 45% of the total taxes:

[https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...](https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf)

~~~
lisper
But that too is as it should be. Extra tax on the wealthy means they have to
settle for the Citation Jet instead of the Gulfstream. Extra tax on the poor
means they have to choose whether to pay for food or rent this month.

~~~
mc32
Right but that goes against the narrative which permeates indie media where
the 1% are freeloading devils with offshore accounts who are running the state
into the ground because they are not paying their fair share of taxes.

Mind you I'm not a 1%er. Not that that should have any bearing. But indie
media have their dead horse they like to climb on and it wears thin.

~~~
basch
who has more to lose if order and the fabric of society break down, those with
or those without? if you already have nothing, and live in uncivilized
territorty, the breakdown of order will make things worse, but marginally less
so than for those isolated from the ills of poverty.

lets call a spade a spade and treat tax like what it is, a protection racket.
you are protecting yourself from two things: alien invaders and zombie hoards.
health care, food, housing, and, entertainment keep the hoards from destroying
your logistics infrastructures and disrupting transportation routes. it also
keeps them just alive enough to keep buying what you are selling. defense,
police forces, and tough crime laws reduce your risk of having your factories
and warehouses bombed or burned to the ground. in short, you are paying for
muscle and placation, keeping the peace. (edit: forgot, you are also paying
for intellectual property protection, so your inventiveness cant be cloned or
repackaged.)

why should the 'rich' pay the majority of the taxes? because it benefits them
the most to have low crime healthy consumers. whose problem does it end up
being if the 99% are unemployed, homeless, starving, diseased, and unable to
consume. whose house slash bunker is going to get broken into, the person with
nothing, or the person with years of survival stockpile? why should the 'rich'
pay the majority of the taxes? because they are the ones with something to
lose (a business, a family, a lifestyle), worth paying to protect.

all that said, im not defending the current tax code or federal government as
an efficient or effective way to put that "protection/socialorder" tax to good
use.

~~~
prostoalex
Considering most of the rich can move at a moment's notice, aren't you over-
estimating their reliance on "low crime healthy consumers"?

There's an entire cottage industry in places like Monaco, Panama or St Kitts &
Nevis built on rejecting that thesis.

Additionally, is California with its high income tax rates significantly safer
and healthier than states with no such tax, like Washington or Nevada?

------
mikeash
The HN title continues the proud American tradition of conflating "taxes" with
income taxes, ignoring all others. And of course this makes it look like
wealthy people bear more of a burden than they really do, since other taxes
hit the poor far more.

This happens constantly. I can't remember ever seeing a statement of the form
"the top X% pay Y% of taxes" which _didn 't_ ignore a substantial set of taxes
that hit the poor the most.

I think someone is out there manipulating public opinion on tax policy, and
doing an amazing job of it.

------
bko
For those curious about how the percentage of taxes paid in relation to
percentage of income earned, these statistics shed some light on the issue:

> According to a projection from the non-partisan Tax Policy Center, the top 1
> percent of Americans will pay 45.7 percent of the individual income taxes in
> 2014—up from 43 percent in 2013 and 40 percent in 2012 (the oldest period
> available)... In 1979, the top one percenters earned 8.9 percent of pretax
> income and paid 18 percent of federal income taxes. In 2011, the top 1
> percent earned 14.6 percent of income and paid 25.4 percent in 2011 of
> federal income taxes.

[http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-
fede...](http://www.cnbc.com/2015/04/13/top-1-pay-nearly-half-of-federal-
income-taxes.html)

------
evanpw
New Jersey tax authorities are worried about the drop in revenue from one guy
moving to Florida: [http://www.bloomberg.com/news/articles/2016-04-05/tepper-
s-m...](http://www.bloomberg.com/news/articles/2016-04-05/tepper-s-move-may-
affect-new-jersey-budget-forecaster-warns).

~~~
nugget
California officials are aware of these risks also. I give a lot of credit to
Gov Brown for constantly reminding the state legislators that the good times
won't last forever. The challenge with a tax system that draws so heavily from
top earners is that you have greater ups (during boom times, like the current)
and greater downs (during recessions, like 2008-2010). Moreover, such a huge
amount of California's tax haul is due to one-time events such as stock and
real estate sales which are even more amplified during boom times.

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apitaru
This is grossly misleading. What I'd love to see is a chart that shows tax-
paid-per-dollar-earned. I know it won't tell the whole story, but it'll tell a
straight story.

~~~
criddell
Yeah, you really do need more information to decide if that's fair or not.

I don't really see a problem with tax brackets though (I'd rather see a
formula though rather than discrete ranges).

I'd argue that a lower income bound and upper taxation rate should be
established - say $20,000 and 60%. That means that no person earning less than
the lower bound will be taxed and no person will pay more than the upper bound
in taxes. Then it's just a matter of describing a curve that satisfies those
two constraints.

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ben_jones
There's ten people in a room and you are tasked with distributing $1000 among
them. The catch is you have to get everyone to vote on the distribution. Seems
easy right? Everyone get's $100. But wait somebody has a suggestion. Why don't
we give $500 to the two handsomest people in the room? Everybody votes yes.
Eight people leave shocked and angry.

Edit: this wasn't intended to be a 1:1 analogy of wealth distribution. It's
just something interesting I think of about human nature when the topic is
brought up. A lot of people outside the 1% will defend the 1%, there's nothing
wrong with that, but I wonder if those people count themselves among the
future 1% or even feel some connection to it for one reason or the other. I
wonder if this skews our perception of wealth inequality and if wealth
inequality is actually a graver threat because of such a shroud.

~~~
Randgalt
The better analogy is you have 10 people in a room and only a few of them are
producing anything yet they are forced to give a portion of their production
to everyone else in the room.

~~~
entee
The Randian view of this is just not very productive. Let's take a Randian
hero, a self-made man (and it seems to always be men in her world) who is
super creative, independent and gets shit done. Maybe he runs a construction
company. He's the 1 guy in the room.

Now, he could build one house with his bare hands but then he would have one
house to sell. OR he could hire another 4 people, build 5 houses and sell them
all. Clearly in the second scenario he'd make far more money and create more.
But in the second scenario, who are the "makers" and the "takers"? Maybe our
hero had the creative drive so he deserves some extra credit, but surely the
workers also did some making.

The idea of "makers" and "takers" that animates the Randian world view doesn't
really make practical sense. To make something at scale, no matter your
personal genius, you need lots of others to join you in that enterprise. And
to have what you made be worth anything, you need a lot of people to buy it.

Bottom line: everyone is a maker and everyone is a taker, thinking about
taxation in those terms doesn't hold up to moral or practical scrutiny.

~~~
sp332
Her name is Ayn Rand, not Raynd.

~~~
entee
Fixed, thanks!

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poke111
One of the interesting explanations I've seen for income inequality is that
globalization has massively increased the size of the market. So the top end
for incomes has massively expanded along with it. But on the bottom end, the
floor of 0 never changes. So an increase in income inequality is a natural
consequence of globalization.

~~~
undersuit
It's always been a problem with the floor. You can only be so poor, so hungry,
or so cold. You can never be too rich, too sated, or too comfortable.

------
fedups
Having society dependent so heavily on such a tiny fraction of the population
makes it particularly vulnerable to events that affect that tiny slice.

Especially for governments that are bad at long term planning for tougher
times.

~~~
lintiness
if we had government that spent as a function of some trailing average of tax
receipts (it could be a greater than 1 multiplier), we'd have built in
responsibility with a counter-cyclical kicker. makes way too much sense for
politicians who want control.

------
rdl
A lot of that is because in California capital gains are taxed as income; the
set of people who have meaningful capital gains in a given year is small (a
core of people in that set every year, and another set who are in it some
years due to infrequent sales of assets like houses, businesses, major equity
stakes from stock grants or options, etc.)

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jcoffland
This is ridiculous. Of course the top _income_ earners pay the most taxes.
When you are uber rich the trick is convert all your income to capital gains
to avoid the taxes. There are a lot of tricks to further reduce your capital
taxes to a fraction of what you would pay were it income.

~~~
elsewhen
California taxes capital gains at the same rate that they tax income as you
can see in the table on the following page:
[http://taxfoundation.org/article/high-burden-state-and-
feder...](http://taxfoundation.org/article/high-burden-state-and-federal-
capital-gains-tax-rates-united-states)

~~~
jcoffland
But there are many more loop holes (or call them creative financing tricks)
that allow you to avoid paying taxes on capital gains.

------
lukeschlather
The headline is inaccurate. The headline should read "Top 1% of Income-Earners
pay 45% of California's Income Taxes."

The rest of the data don't really give a meaningful view either since they
ignore California's 10% sales tax. According to IETP, California's tax system
is proportional or even slightly regressive. (Higher-income earners pay a
smaller share of their income as tax.)

[http://www.itep.org/whopays/states/california.php](http://www.itep.org/whopays/states/california.php)

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TheCoelacanth
The title is inaccurate. The article says that the top 1% of earners pay 45%
of _income_ taxes. It says nothing about what percent of total taxes that they
pay. Since income tax is 68% of California's taxes, they could pay anywhere
from 30% to 62% of the taxes.

------
brainbug_alpha
Equal is unfair. [http://www.amazon.com/Equal-Is-Unfair-Misguided-
Inequality/d...](http://www.amazon.com/Equal-Is-Unfair-Misguided-
Inequality/dp/125008444X)

------
brosky117
I'm not very up to date with tax policy or politics but it sounds reasonable
to me that everyone pay a fixed percentage. That or just have a consumption
tax. Are there good reasons not to do it that way??

------
blazespin
This stat be based on the marginal utility. Tax paid on 100k is much more
painful for a family than tax paid on 1 million.

------
mchahn
As a die-hard liberal I think the top 1% should pay 99% of the taxes. The
numbers add up (to 100%).

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awqrre
This is the top 1% that doesn't use loopholes?

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mtgx
And how much is their income compared to the total? 80%?

What matters if the percentage, not the total amount. Of course someone who
earns $1 million a year would pay "more" in taxes than someone who earns
$100,000 (at least I would hope they do).

~~~
dustcoin
Using the numbers in this article[1], 1% of the taxpayers make only about 24%
of the total income in CA, not 80%.

[1] [http://www.sacbee.com/site-
services/databases/article9349178...](http://www.sacbee.com/site-
services/databases/article9349178.html)

~~~
YPCrumble
A better question would be what percent of the wealth do they own? That would
be much, much higher. If your investment portfolio doubles, are you richer? Of
course. But it doesn't count as income. You're just making money off the backs
of the poor whose wages are being depressed in favor of giving more money to
capital.

------
cynoclast
And what, 80% of the income?

Nationally they have like 80% of the wealth:
[https://www.youtube.com/watch?v=QPKKQnijnsM](https://www.youtube.com/watch?v=QPKKQnijnsM)

~~~
elsewhen
the top 1% earned 28% of the income and paid 45% of the taxes:
[https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/...](https://www.ftb.ca.gov/aboutFTB/Tax_Statistics/Reports/2013/Personal_Income_Tax/B-3.pdf)

