Setting The Record Straight

I've been hearing 'statistics' repeated over the past few months, intentionally misleading sound bites designed to inflame rather than inform. It's easy to get 'me too' angry, especially when you can't be bothered to check things out for yourself. In our information age, however, it's ridiculously easy to find things out directly from the source.*

Claim #1
   Half of wage earners don't pay any taxes.
Truth:
   Let me tell you right up front that I am a small business owner. I run a payroll every Wednesday, rain or shine. And I can tell you in no uncertain terms that EVERYONE who draws a paycheck has to pay taxes. It's against the law not to, and if you hire a professional firm to collect those taxes for you (I do), they make all the deductions automatically.
   If you get a paycheck, you cannot skip paying taxes. It's out of your hands.
   I believe what people mean when they say this is that half of American taxpayers get a net refund, they get back most or all of what they paid in during the preceding year. But the fact of the matter is that the US Government used those funds for months before returning them. Kind of like a bank where you earn no interest. Which is most banks these days.
   Fact: Half of all American taxpayers make less than $30,000 per annum*. You're a total son of a bitch if you would begrudge these people their tax refunds.
   Fact: these numbers ignore the FICA deductions, which everyone who gets a paycheck also pays - and which no one gets back at the end of the year. Also, FICA tax has a limit which most Americans never reach. In 2011 it's $106,800, at which point you stop paying FICA tax. Which means with every dollar after that amount the rich get 7.65% richer.
   Fact: saying 'half of all Americans get a net refund' - the truth - doesn't sound nearly as outrageous as 'half don't pay taxes.' This is why rat bastard asswipes never say net refund.

Claim #2
   A flat tax is a better tax option for most people.
Truth:
   It most definitely is not. The plain hard fact is that 48% of American taxpayers already pay 9% or less on their income tax* and this is after the standard deductions that all of us get. So 9% flat tax is a substantial increase for most people, especially when a flat tax usually means eliminating the standard deduction.
   But let's assume you're more attracted to the 20% option. Who benefits there? Almost 98% of all wage-earning Americans pay 16.3% or less of their taxable income. So this means the 20% option is attractive only to the top 2% of wage earners, who pay about 24%. Maybe a few people reading this are in that bracket, but I can guarantee most of you aren't.
   Fact: we have a graduated tax structure because we have a flat price structure. A loaf of bread costs the same for me or Bill Gates. But it's a much smaller percentage of his income than mine.
   Fact: flat tax proposals are the professional wrestling of politics, it's fun to watch for a while, but no one who knows anything about the real subject takes it seriously.

Claim #3
   The top 10% of wage earners pay 50% of the collected income taxes.
Truth:
   This one actually is true. And it's more like the top 10% pay over 75% of the collected taxes*.
   Fact:the top 10% also take home 75% of the country's adjusted gross income.
   Let's say that again. The top 10% of wage earners in the United States earn 75% of the taxable income. They also take the lion's share of the deductions, so they're actually making at least 30% more just in gross wages.
   Fact: if you and I are hungry for pizza but you eat 75% of the slices, I would expect you to pay for 75% of that pizza. Same thing with income taxes. If the top 10% of earners make 75% of the wages they should pay 75% of the taxes. Seems perfectly fair to me.

All right, I'm done for now. Numbers are boring to most people, which is why it's so easy for a few right-sounding but completely wrong 'statistics' to be repeated so often people take them as fact. You need to use the brain God gave you and figure this stuff out on your own.



* for much of this post I used the 2009 IRS tax stats file. Yes, they do provide this information - free of charge - on their web site. It's up to you to go get it.