Since I work with taxes I often battle the misconception that the poor/middle class pay the majority of the tax in this country. This simply is not true. From the Tax Foundation ( http://www.taxfoundation.org/press/show/22335.html):
"The truth is that the vast majority of federal income taxes are paid by high-income earners. According to the most recent IRS data available, the top 10 percent of households - with incomes roughly $100,000 or greater - pay roughly 70 percent of all federal income taxes. That share is up from just below 50 percent in 1980. If you include the top quarter of all taxpayers, the share balloons to 85 percent."
"In 2004, some 42.5 million Americans filed a tax return but had no tax liability after taking advantage of their credits and deductions - up from 32 million just four years earlier. Non-payers account for 32 percent of all tax filers, a 160 percent increase in the number of non-payers since 1985. "
Considering the stats above...it kinda makes one wonder how Obama plans to give 95% of American's a tax break. I'm an accountant and can't get the numbers to work?!?!?!?
I thought maybe the poem below put the tax topic in terms everyone can understand and relate to. It really does make you stop to think!
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How Taxes Work….
This is a VERY simple way to understand the tax laws. Read on - it does make you think!
Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out to dinner. The bill for all ten comes to $100.00. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men – the poorest – would pay nothing, the fifth would pay $1.00, the sixth would pay $3.00, the seventh $7.00, the eighth $12.00, the ninth $18.00, and the tenth man – the richest – would pay $59.00.
That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement – until one day, the owner threw them a curve (in tax language a tax cut).
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20.00." So now dinner for the ten only cost $80.00.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six – the paying customers? How could they divvy up the $20.00 windfall so that everyone would get his "fair share?"
The six men realized that $20.00 divided by six is $3.33. But if they subtracted that from everybody's share, the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduced each mans meal by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so the fifth man paid nothing, the sixth pitched in $2.00, the seventh paid $5.00, the eight paid $9.00, the ninth paid $12.00, leaving the tenth man with a bill of $52.00 instead of his earlier $59.00. Each of the six mean was better off than before. And the first four continued to eat for free.
But once outside the restaurant, the mean began to compare their savings. " I only got a dollar out of the $20.00," declared the sixth man who point to the tenth. "But he got $7.00!"
"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar too… It's not fair that he got seven times more than me!"
"That's true!" shouted the seventh man, "why should he get back $7.00 when I got only $2.00? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night he did not show up for dinner, so the nine sat down and ate without him. But when it came time to pya for the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLAR short of paying the bill! Imagine that!
And that, boys and girls, journalist and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!
"The truth is that the vast majority of federal income taxes are paid by high-income earners. According to the most recent IRS data available, the top 10 percent of households - with incomes roughly $100,000 or greater - pay roughly 70 percent of all federal income taxes. That share is up from just below 50 percent in 1980. If you include the top quarter of all taxpayers, the share balloons to 85 percent."
"In 2004, some 42.5 million Americans filed a tax return but had no tax liability after taking advantage of their credits and deductions - up from 32 million just four years earlier. Non-payers account for 32 percent of all tax filers, a 160 percent increase in the number of non-payers since 1985. "
Considering the stats above...it kinda makes one wonder how Obama plans to give 95% of American's a tax break. I'm an accountant and can't get the numbers to work?!?!?!?
I thought maybe the poem below put the tax topic in terms everyone can understand and relate to. It really does make you stop to think!
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
How Taxes Work….
This is a VERY simple way to understand the tax laws. Read on - it does make you think!
Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out to dinner. The bill for all ten comes to $100.00. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men – the poorest – would pay nothing, the fifth would pay $1.00, the sixth would pay $3.00, the seventh $7.00, the eighth $12.00, the ninth $18.00, and the tenth man – the richest – would pay $59.00.
That's what they decided to do. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement – until one day, the owner threw them a curve (in tax language a tax cut).
"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20.00." So now dinner for the ten only cost $80.00.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still eat for free. But what about the other six – the paying customers? How could they divvy up the $20.00 windfall so that everyone would get his "fair share?"
The six men realized that $20.00 divided by six is $3.33. But if they subtracted that from everybody's share, the fifth man and the sixth man would end up being PAID to eat their meal. So the restaurant owner suggested that it would be fair to reduced each mans meal by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so the fifth man paid nothing, the sixth pitched in $2.00, the seventh paid $5.00, the eight paid $9.00, the ninth paid $12.00, leaving the tenth man with a bill of $52.00 instead of his earlier $59.00. Each of the six mean was better off than before. And the first four continued to eat for free.
But once outside the restaurant, the mean began to compare their savings. " I only got a dollar out of the $20.00," declared the sixth man who point to the tenth. "But he got $7.00!"
"Yeah, that's right," exclaimed the fifth man, "I only saved a dollar too… It's not fair that he got seven times more than me!"
"That's true!" shouted the seventh man, "why should he get back $7.00 when I got only $2.00? The wealthy get all the breaks!"
"Wait a minute," yelled the first four men in unison, "We didn't get anything at all. The system exploits the poor!"
The nine men surrounded the tenth and beat him up. The next night he did not show up for dinner, so the nine sat down and ate without him. But when it came time to pya for the bill, they discovered, a little late what was very important. They were FIFTY-TWO DOLLAR short of paying the bill! Imagine that!
And that, boys and girls, journalist and college instructors, is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore.
Where would that leave the rest? Unfortunately, most taxing authorities anywhere cannot seem to grasp this rather straightforward logic!
