Make $32K? You're in the richer 50%

[Steve James]

http://articles.moneycentral.msn.com/Ta ... rcent.aspx

While the top 1% of US earners, collectively, make nearly twice that of the bottom 50%, those at the top also pay 13 times more in individual income taxes combined.

With the presidential election right around the corner, what better time to take a fresh look at how the nation's tax bill is distributed among its citizens?

After all, no matter what the conditions -- war or peace, prosperity or recession -- no issue seems to get under voters' skins more or command more attention from politicians than whether taxes will rise or fall and, frankly, whose ox will be gored.

New statistics from the Internal Revenue Service show that the highest-earning 1% of taxpayers in America make 22.06% of all income reported to the government. That's almost twice the 12.51% of total income earned collectively by the lowest-earning 50% of workers. Yes, 1.4 million taxpayers claim 22% of income earned while 68 million share just 12.5%.

But get this: When it comes to taxes paid, an even wider discrepancy shows itself, in reverse. Those earners in the top 1% pay 39.89% of all federal individual income taxes. The bottom 50% of earners pay just 2.99% of those taxes.

These income and tax-burden breakdowns come from information reported on 2006 individual income-tax returns, the latest of which have been analyzed by the government. Income categories are based on adjusted gross income (AGI), which is basically salary plus investment, rental and business income minus investment losses and expenses such as alimony paid, contributions to retirement plans, moving expenses and a few other costs.

This is the first time that the bottom half of taxpayers have paid less than 3% of the total income-tax bill.

(Note that these figures include only federal income taxes. According to one study, 56% of all wage earners pay more in Social Security and Medicare taxes than they do in income tax, and the percentage soars to 86% if you count both the employer and employee shares of those taxes.)

In 1986, the top 1% of earners reported 11% of all income and paid 26% of the income taxes; the lower-earning 50% made 17% of the income and paid 6% of the nation's individual income-tax bill.

How does your income stack up?

The data also make it easy for you to know how your income stacks up against that of your fellow citizens. The numbers show that an income of $31,988 or more puts you in the top half of taxpayers. Earning a bit more than twice that much -- $64,703 -- places you among the top 25% of all wage earners. You crack the elite top 10% if you earn $108,905 or more.

And $388,807 buys top bragging rights: Earn that much or more, and you're among the top 1% of all American earners.

I wish

[Darth Rock&Roll]

If you are young, you are likely not making much more than 50k.
if you are over 35 and not making much over 40k, then you don't have much in the way of passion or you are happy with your lot and can accept it.
Many are like this in their thinking.

Not everyone in the top 10% deserve to be there and are there by virtue of the incompetence of others or nepotism, or inherited rights. cest la vie.
I would rather that than a communist society that says no matter how hard I strive, my lot shall be same to those who do not strive at all.
preposterous in my view.

It has been said that if you take a poor man and give him riches, in a short time he will be poor again. If you take a man who has worked for riches and take his riches away, in a short time, he will gain them back.

It is not unfairness that casts our lot, it is our own way of cutting the path.

the path is much easier to cut in a democratic nation than elsewhere, that much is provably true.

I have no sympathy for slouches or complainers who won't lift a finger to better themselves.

[dragontigerpalm]

I wish that you would share your experience and elaborate on the passion that took you to the top and enabled you to climb back up after having taken a precipitous fall.

[Darth Rock&Roll]

why do you wish that? Are you bored and in need of entertainment? I hear masturbation is enjoyable, try that instead of throwing your unwarranted mocking around. Thanks.

[zenshiite]

When I was self-employed SS taxes were definitely murder. I still owe alot of back taxes from that period... and that's just on the federal level. State, local and city taxes were killing me more. I'd be in the poor house from taxes alone.

[Darth Rock&Roll]

yes, but you can always pay taxes at a fair rate if you should decide to make the arrangements to do so. btdt btw and that's all i did, called them up, made agreeable terms to my liking and proceeded to make good on my tax debt. even if you take a long term plan, they will accept it. It's when you avoid the inevitable that it all comes crashing down.

[dragontigerpalm]

why do you wish that? Are you bored and in need of entertainment? I hear masturbation is enjoyable, try that instead of throwing your unwarranted mocking around. Thanks.

Because your first post while a wee bit arrogant is definitely presumptuous and demeaning to those who occupy the lower rungs of the economic ladder. Some though might find inspiration in hearing how your experience led to such a point of view. Of course if you came to your view via the vicarious experience of others then your position might not carry as much weight. A more apt saying to consider is to be kind to those you pass on the way up because you might meet them on the way down.

[Walter Joyce]

yes, but you can always pay taxes at a fair rate if you should decide to make the arrangements to do so. btdt btw and that's all i did, called them up, made agreeable terms to my liking and proceeded to make good on my tax debt. even if you take a long term plan, they will accept it. It's when you avoid the inevitable that it all comes crashing down.

I am thinking you're from Canada, if I'm wrong then ignore what follows.

This much I do know, in the US once you get in the hole if its less than $25,000 they won't even negotiate with you unless you can prove extreme hardship. Even if you qualify for hardship the penalties and interest keep accruing and even if you are on a payment plan the same apples. Despite the flood of ads on TV in the US that state they can negotiate your tax debt down the circumstances under which that occurs are narrow and generally speaking if you fall behind down here you're fucked with interest and penalties. I owed a little over $15,000 and every two months that figure increased by $100, and would continue to grow exponentially, even if I were to negotiate a payment plan. I am striving to make lump sum payments.

[Steve James]

Well, I've btdt too, both when I've had and when I've haven't had the money to pay. Both times were a result of not filing a return. Both times, if I'd paid a tax preparer, I'd probably have gotten a refund. The first time, I couldn't afford a preparer. The second time, I was just too lazy. In general, people with low incomes don't have the resources to use tax preparers ... or are afraid to use the ones in their neighborhoods because they're ripoff artists. The people with the know how and cash, don't worry about late returns --they get extensions-- and usually big refunds. I never got a refund when I really needed it.

[Darth Rock&Roll]

why do you wish that? Are you bored and in need of entertainment? I hear masturbation is enjoyable, try that instead of throwing your unwarranted mocking around. Thanks.

Because your first post while a wee bit arrogant is definitely presumptuous and demeaning to those who occupy the lower rungs of the economic ladder. Some though might find inspiration in hearing how your experience led to such a point of view. Of course if you came to your view via the vicarious experience of others then your position might not carry as much weight. A more apt saying to consider is to be kind to those you pass on the way up because you might meet them on the way down.

please read it again and try not to attach your own emotions to what is being said. I am not sure you understood correctly.

[DeusTrismegistus]

If you are really interested in hearing stories of people who climb up, get knocked down, then climb back up, read The Millionaire Mind. Great book.

Oh and a tax preparer is well worth the money. Filing a return sucks.

[Chris Fleming]

Another good example is The Millionaire Next Door. It gives a great contrast between those who get "economic out patient care" vs. those who make their own riches.

[Darth Rock&Roll]

yes, but you can always pay taxes at a fair rate if you should decide to make the arrangements to do so. btdt btw and that's all i did, called them up, made agreeable terms to my liking and proceeded to make good on my tax debt. even if you take a long term plan, they will accept it. It's when you avoid the inevitable that it all comes crashing down.

I am thinking you're from Canada, if I'm wrong then ignore what follows.

This much I do know, in the US once you get in the hole if its less than $25,000 they won't even negotiate with you unless you can prove extreme hardship. Even if you qualify for hardship the penalties and interest keep accruing and even if you are on a payment plan the same apples. Despite the flood of ads on TV in the US that state they can negotiate your tax debt down the circumstances under which that occurs are narrow and generally speaking if you fall behind down here you're fucked with interest and penalties. I owed a little over $15,000 and every two months that figure increased by $100, and would continue to grow exponentially, even if I were to negotiate a payment plan. I am striving to make lump sum payments.

Not at all Walter. I am a Canadian and interest penalties grow on back taxes here and yes you must prove that you are only capable of paying what you negotiate.

Of course people who fall too far behind are obviously going to be examined carefully. It's a poor attitude to let things go like that and there is consequence to ones delinquency.

Combined with the fact that you cannot get blood from a stone, I think in context your american tax collectors are as reasonable in the assertions as ours are here.

[Interloper]

Making $32K again (my salary in 1986, when I was employed fulltime in a professional position) is something I aspire to. After losing my job a couple years ago, my self-employed income has hovered between 14K-16K, though I'm slowly building my business. It's not due to slackerdom that my income is so low, and I don't feel guilty that I probably will not owe any taxes this year, thank to legit deductions. I don't know how I'd live on less than what I make now, even with my modest lifestyle, which consists of no debt, one phone with basic service, dial-up Internet, a radio, a light p/u truck (needed for work), and a small house (mortgage paid off, and protected from any potential creditors by the Homestead Act).

[shawnsegler]

try that instead of throwing your unwarranted mocking around.

Canadians need a good mocking every once in awhile. To keep you in your place and all.

Best,

S