Who Pays America's Tax Burden, and Who Gets the Most Government Spending?

[b_justb]

While many studies answer the ques*tion of who pays taxes in America, the question of who gets the most government spending is often overlooked. Just as some Americans bear a larger portion of the nation’s tax burden than others, some Americans also receive a larger share of the nation’s government spending.

This report summarizes the key findings of a comprehensive 2007 Tax Foundation study of federal, state and local taxes and government spending. The results show that when we consider the distribution of government spending as well as taxes, it provides a dramatically altered view of how U.S. fiscal policy affects Americans at different income levels than is apparent from the distribution of tax burdens alone.

Overall, we find that America’s lowest-earning one-fifth of households received roughly $8.21 in government spending for each dollar of taxes paid in 2004. Households with middle-incomes received $1.30 per tax dollar, and America’s highest-earning households received $0.41. Government spending targeted at the lowest-earning 60 percent of U.S. households is larger than what they paid in federal, state and local taxes. In 2004, between $1.03 trillion and $1.53 trillion was redistributed downward from the two highest income quintiles to the three lowest income quintiles through government taxes and spending policy.

| STORY |

 

[puzzleannie]

statistics applied to large groups are not always accurate indicators of the reality of the situation.

down here where half our population is retirees for half the year, mostly from midwestern farm states, many, even a majority of them are retired farmers, and receive farm subsidies from the government in amounts that seem obscene to those of relying on SS or savings. The rest of us of course have SS and medicare, also money coming out of the US Treasury, although we have also been contributing all our working lives (in some cases more than we will ever draw out).

Does your analysis factor in payments and subsidies to corporations, which then turn around and pass on huge bonuses, stock options and perks to high level high paid staff and stockholders?

does it take into account those who operate businesses in industries that are highly subsidized by the government in the form of supression of foreign competition for their products and services for instance, or in the form of payments, credits etc. for employing certain classes of people, using certain energy conservation measures etc.

A rich person can afford to build a house incorporation energy conservation features that qualify for tax credits. A poor person cannot do this. A rich person can sock excess income away in tax sheltered savings, a poor person living hand to mouth cannot do this.

don’t let your statistics get in the way of the truth.

 

[1ke]

down here where half our population is retirees for half the year, mostly from midwestern farm states, many, even a majority of them are retired farmers, and receive farm subsidies from the government in amounts that seem obscene to those of relying on SS or savings.

What are these farm subsidies that retired farmers are being paid? We want some of those on our farm!

 

[puzzleannie]

the way I hear it from them is that they receive payments for land that is not under cultivation for certain crops. go figure. the reality is they work hard and live very meagerly all their lives on very little money, but retire with a generous “pension”.

 

[1ke]

the way I hear it from them is that they receive payments for land that is not under cultivation for certain crops. go figure.

In very specific areas-- highly erodable land-- there are some government programs that allow farmers to place their land in Resource Conservation Programs. These are not “highly lucrative”.

the reality is they work hard and live very meagerly all their lives on very little money, but retire with a generous “pension”.

This is false to call the RCP a “pension” for farmers or to imply that farmers automatically receive money when they retire. This is completely untrue.

First, not all land (not even much land) qualifies for the RCP. Secondly, it’s not a lot of money.

 

[b_justb]

puzzleannie:

Don’t let your statistics get in the way of the truth.

The statistics don’t get in the way of anything. The rich pay more taxes and receive less benefits from those payments. The poor pay less and receive more tax dollar benefits. This is the way it is.

The idea that the rich pay no taxes is incorrect; the rich do pay taxes and quite a large chunk of them. The idea that the rich should be penalized for being rich puts the burden of caring for the poor (by taxes) where? Back onto the poor who are already upside down on the payment to recipient of tax monies. How long can any society keep that up?

 

[vern_humphrey]

What are these farm subsidies that retired farmers are being paid? We want some of those on our farm!

They include the CRP (Conservation Reserve Program) which pays farmers to keep land out of production.

My Congressman, Marion Berry (D), 1st District of Arkansas, has received millions in subsidies. Nowadays, he breaks his farm into “partnerships” to make it difficult to trace the money to him.

 

[1ke]

They include the CRP (Conservation Reserve Program) which pays farmers to keep land out of production.

My Congressman, Marion Berry (D), 1st District of Arkansas, has received millions in subsidies. Nowadays, he breaks his farm into “partnerships” to make it difficult to trace the money to him.

I was being facetious, I know what the CRP is.

Your Congressman is the exception to the rule, likely because he owns thousands of acres and possibly special treatment.

A *typical *farmer in the CRP gets very little money.

 

[vern_humphrey]

I was being facetious, I know what the CRP is.

Your Congressman is the exception to the rule, likely because he owns thousands of acres and possibly special treatment.

A *typical *farmer in the CRP gets very little money.

The CRP was not designed for the “typical farmer.” The whole Department of Agriculture is not designed for the “typical farmer.”

I can show you thousands of typical famers living around me who get nothing and struggle to pay dental bills for their kids, buy new school clothes, and so on. And I can show you a few score “atypical farmers” who literally get millions from the Department of Agriculture.

Marion Berry, while sitting on the Agriculture Committee steered through an “Emergency Bill” that just happened to bring him some $80,000. What kind of “emergency” makes it harder or more expensive to not farm the land?

I talk to rice growers here in Arkansas – including one who calls himself a “small farmer” (he farms 7,000 acres.) They say, very beligerantly, “Do you know what it costs to grow an acre of rice?”

Now, why would anybody grow a crop that costs more to grow than they can get for it on the open market?

Why, because the government subsidizes it, of course!

Why does rice sell for so little?

Because they over-produce it, of course!

Why do they over-produce it?

Why, because the government subsidizes it, of course!

Why does the government subsidize it?

Why because it costs more to grow it than it brings on the markert, of course!

And on and on and on.

Oddly enough, Arkansas County, Arkansas would be the third poorest of all 3,015 counties in the US if not for the subsidy. And if you go there, you see it really is the third poorest of all 3,015 counties in the US because only a handful of people get the subsidy and it doesn’t trickle down!

 

[1ke]

The CRP was not designed for the “typical farmer.” The whole Department of Agriculture is not designed for the “typical farmer.”

Yes, I know, that was my point. Annie talked of farmers retiring on the fat-cat program… I was saying it’s not a fat cat program for average farmers-- it’s NOT a farmer pension program!

We **are **farmers.

 

[1ke]

Now, why would anybody grow a crop that costs more to grow than they can get for it on the open market?

Why, because the government subsidizes it, of course!

Why does rice sell for so little?

Because they over-produce it, of course!

Why do they over-produce it?

Why, because the government subsidizes it, of course!

Why does the government subsidize it?

Why because it costs more to grow it than it brings on the markert, of course!

And on and on and on.

I disagree with this portion of your post.

 

[StMarkEofE]

Table 1. - Individual Income Tax Returns with Positive Adjusted Gross Income (AGI): Number of Returns, Shares of AGI andTotal Income Tax, AGI Floor on Percentiles in Current and Constant Dollars, and Average Tax Rates, by Selected Descending Cumulative Percentiles of Returns Based on Income Size Using the Definition of AGI for Each Year, Tax Years 1986-2000 [All figures are estimates based on samples]
Descending cumulative percentiles

Year: Total…Top 1%…Top 5%…Top 10%…Top 25%…Top 50%

Number of returns: [1]
1986: 102,087,623…1,020,876…5,104,381…10,208,762…25,521,906…51,043,811
1987: 106,154,761…1,061,548…5,307,738…10,615,476…26,538,690…53,077,380
1988: 108,872,859…1,088,729…5,443,643…10,887,286…27,218,214…54,436,429
1989: 111,312,721…1,113,127…5,565,636…11,131,272…27,828,181…55,656,361
1990: 112,812,262…1,128,123…5,640,613…11,281,226…28,203,066…56,406,132
1991: 113,804,104…1,138,041…5,690,205…11,380,410…28,451,026…56,902,052
1992: 112,652,759…1,126,528…5,632,638…11,265,276…28,163,190…56,326,380
1993: 113,681,387…1,136,814…5,684,069…11,368,139…28,420,347…56,840,694
1994: 114,989,920…1,149,899…5,749,496…11,498,992…28,747,480…57,494,960
1995: 117,274,186…1,172,742…5,863,709…11,727,419…29,318,546…58,637,093
1996: 119,441,767…1,194,418…5,972,088…11,944,177…29,860,442…59,720,884
1997: 121,503,284…1,215,033…6,075,164…12,150,328…30,375,821…60,751,642
1998: 123,775,831…1,237,758…6,188,792…12,377,583…30,943,958…61,887,915
1999: 126,008,974…1,260,090…6,300,449…12,600,897…31,502,244…63,004,487
2000: 128,227,143…1,282,271…6,411,357…12,822,714…32,056,786…64,113,572

 

[StMarkEofE]

The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%) The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%). The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%). The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%). ***The top 1% is paying nearly ten times the federal income taxes than the bottom 50%! ***And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%). The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%) , and the top 50% earns 86.01% (2002: 85.77%) of all the income.

 

[Mirdath]

The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%) The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%). The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%). The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%). ***The top 1% is paying nearly ten times the federal income taxes than the bottom 50%! ***And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%). The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%) , and the top 50% earns 86.01% (2002: 85.77%) of all the income.

Okay. Now think about this. Let’s take Bill Gates as a good example of the top 1% – I know he’s the richest, but it was easiest to find an estimate for his income per year. 50 billion dollars. 50,000,000,000. Me, I’m poor. No debt but I’m not rolling around in cash either; I make about 20-25 thousand a year.

Bill Gates could pay my entire annual income in taxes and not even notice it. Ignoring all the little rules, let’s figure that at his tax bracket (35%), he’d pay some 15 billion dollars. Yeah, all by himself he’s paying a significant fraction of the total tax collected, but that’s not due to any unfair burden on him – it’s because he’s so much richer than anybody else. My total income tax this year is, I’d estimate, not quite four thousand dollars; but I could use that four large a lot more than Bill Gates could use the 15 billion he paid. He’s got 35 billion left. I don’t.

 

[Kevin42]

You want Bill Gates to be rich though, because that mean his corporation is doing good. When his corporation posts a profit of…lets say $1 billion, the government takes about half of that. Then when he gives some of that to shareholders, the government taxes that, and gets half of what he gives to shareholders.

All this tax money that his company and him gives to the government then benefits us as a society, or those who receive entitlements.

 

[Texas_Roofer]

Isn’t this argument internally flawed? In their report table 2, then if you look at figures 2 & 3 you see that expenditures are on defense(soldiers), social security(retirees), and education(people in school). So soldiers, retirees, and students are poor? Thank goodness they used a chart!

 

[Texas_Roofer]

The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%) The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%). The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%). The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%). ***The top 1% is paying nearly ten times the federal income taxes than the bottom 50%! ***And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%). The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%) , and the top 50% earns 86.01% (2002: 85.77%) of all the income.

Did you get to look at table 2 of the report?

 

[DanteAlighieri]

The top 1% pay over a third, 34.27% of all income taxes. (Up from 2003: 33.71%) The top 5% pay 54.36% of all income taxes (Up from 2002: 53.80%). The top 10% pay 65.84% (Up from 2002: 65.73%). The top 25% pay 83.88% (Down from 2002: 83.90%). The top 50% pay 96.54% (Up from 2002: 96.50%). The bottom 50%? They pay a paltry 3.46% of all income taxes (Down from 2002: 3.50%). ***The top 1% is paying nearly ten times the federal income taxes than the bottom 50%! ***And who earns what? The top 1% earns 16.77% of all income (2002: 16.12%). The top 5% earns 31.18% of all the income (2002: 30.55%). The top 10% earns 42.36% of all the income (2002: 41.77%); the top 25% earns 64.86% of all the income (2002: 64.37%) , and the top 50% earns 86.01% (2002: 85.77%) of all the income.

Let’s also remember something that this statistical analysis does not address: proportion.

I’m going to round numbers to make the math easy for me (I’m an English teacher, not a math teacher):

1. Over 130 million people filed a tax return in 2003 (according to a Google source).
2. 1 percent of 130 million = 1,300,000 people.
3. 50 percent = 6,500,000 people.

The average Adjusted Gross Income in 2000 was about $170,000 (radicalrevolution.net), which multiplied by 130 million is about $22 trillion. If one percent, or 1.3 million people, earn 17 percent of the nation’s income, that translates to $2.9 million each as an average income.

The bottom 50 percent, or 6.5 million people, earn 14 percent of the nation’s income – or $470,000 each. Sounds like a lot, but that leaves $21,999,999,530,000 for the top 50 percent – or nearly $3.4 million each.

In other words, though the richest pay more taxes than the poorest, the richest half of our population out-earns the poorest half by a proportion of over 7 to 1. This is significantly more than the proportional discrepancy in the amount of taxes each group pays.

Peace,
Dante

 

[Kevin42]

Isn’t this argument internally flawed? In their report table 2, then if you look at figures 2 & 3 you see that expenditures are on defense(soldiers), social security(retirees), and education(people in school). So soldiers, retirees, and students are poor? Thank goodness they used a chart!

41.8 percent of total government spending is on entitlement programs. (At least thats what I am getting from Table 25 .)

 

[Kevin42]

Blah. The more I read this, the more confused I am…I probably should just be off to bed. It’s very interesting though, because we just talked about this in AP economics today. Fun stuff .