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I don't consider payroll tax to be in the same category as income tax.
Payroll tax in many ways, especially for lower income folks is actually more of an investment payment, for future specific long term benefits (medical insurance and payments in old age).
I've always thought lumping payroll tax with income tax was just a way for advocates to "muddy the water" concerning the tax fairness issues.
I've never believed such hogwash; unless 100% of the federal taxes which were withheld from every paycheck of yours were refunded to you the following January, you paid taxes!!!!!
Furthermore, if that was the case, you're a major league knucklhead for not adjusting your W-2 every summer to avoid receiving such an outsized refund.
Interesting what happens when you begin to pay attention...
facts are facts
fact....the bottom 50% pay less than 3% of all taxes to the federal government
fact...45-51% of EARNERs pay near nothing to nothing in federal INCOME tax..and of those 45-50%, nearly half of them pay nothing in federal income AND payroll tax
as I have shown..I earn 60k and pay NOTHING in federal income OR payroll tax..in fact I get back MORE than what I paid in federal INCOME and PAYROLL COMBINED
a married couple gets 11k and 7400 deducted just from the standard deduction and the personal exemption (3700 each) thats over 18k right off the top of your taxable income...if you were earning 25k you ar now down to less than 7k of taxable income..and in that bracket its less than $700...then take the credits like TUITIOn, or HEALTH CARE credit..and you are down to zero taxable income
and let's not forget the EIC....((earned income tax credit )).....The maximum income limit for the EITC rises to $49,078, up from $48,362 in 2010.The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children..... http://www.irs.gov/newsroom/article/0,,id=233465,00.html (broken link)
Last edited by workingclasshero; 10-12-2011 at 09:53 AM..
If it's a forced payment then it's a tax, I think. Besides, not everyone lives to be old enough to get back the money they pay in to the Social Security system. You could call income taxes an "investment payment" for benefits as well (millitary defense, infrastructure, etc.)
The difference is that one provides a specific potential benefit to the individual paying the tax.
A payroll tax is kind of like funding an insurance policy, with specific benefits that will be ultimately received by the payee. Medicare is the same for individuals no matter how much they contributed to the fund, so lower income folks reap a significant advantage here. Social Security is heavily tilted towards providing a higher percentage of payouts to lower wage contributors.
This retirement benefit calculator shows how this works at normal retirement age:
An individual who averaged $25K a year in income receives a monthly benefit of $860
An individual who averaged $75K a year in income receives a monthly benefit of $1745
So, even though the individual making $75K has contributed 3x the amount to the fund, they only get slightly more than 2x the benefit.
The key word here is "suggests" ~ Definition of SUGGEST
a: to seek to influence
b: to call forth
c: to mention or imply as a possibility
d: to propose as desirable or fitting
e: to offer for consideration or as a hypothesis
Now if we go on "facts"
A childless full-time worker earning minimum wage pays $500 federal income tax in 2011.
[T]he Congressional Budget Office data on tax rates by income group shows that the total net federal tax rate for the poorest fifth of households — that is, those most likely to pay no federal taxes — was still positive.
Quote:
In 2006, the last year for which there is data, this rate was 4.3 percent. The average income-tax rate for this group was indeed below zero: -6.6 percent. But the combined rate of payroll, investment and excise taxes was 10.9 percent, leading to a net positive rate of 4.3 percent.
A positive federal tax rate for these poorest 20 percent of households suggests that fewer than half of them pay no federal taxes.
Or...10% at most.
Did you read the thread topic and supporting research?
Did you read the thread topic and supporting research?
LINK to that actual statment??????
and what does that 'statement" say """" But the combined rate of payroll, investment and excise taxes """"
because from YOUR (cbo) charts
Effective Federal Tax Rates for All Households, by Comprehensive Household Income Quintile, 1979-2006
Effective Individual Income Tax Rate
Year.....Lowest Quintile.......Second Quintile.......Middle Quintile
2004 .....-6.2......................... -0.9..................... 3.0
2005..... -6.6......................... -0.9..................... 3.0
2006..... -6.6......................... -0.8..................... 3.0
the lowest has an effective rate of NEGaTIVE 6%
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hmm...
