Who pays for government?

[fromderinside]

Let's not forget that we are slightly above average as a percent of GDP, but our GDP per capita is much higher than most of Europe. 30% higher than France, for example.

Then why do we seem to get so much less bang for our buck? For example roads in Germany are much better with few potholes or these steel slabs you see around here all the time. And that is with all the extra investment Germany puts into public transportation - much better coverage, more modern fleet etc.
Or take power. Most local power lines are buried there which means very few outages.
I know part of the reason is smaller population density but in Atlanta metro we have power lines strung between timbers even within built-up areas. Also many potholes and crappy public transport.

...and the last time you went to the polls and voted for more property tax, more sales tax, higher state income tax, was .....

Ya get the pothole ya deserve.

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What confuses me is that according to this, I don't pay taxes, barely (almost in the next quintile). Last time I checked, I do pay Federal taxes and don't get any "government transfer".

Do you have kids or other dependents? They make a huge difference in amount of taxes owed, between exemptions, child tax credit and the EITC, latter two being refundable so you can actually owe negative federal tax (your tax refund is higher than your withholdings). But if you are a single guy with no kids, forgettaboutit! You will have to pay significant federal income tax even in the lowest quintile.

Why not? You're consuming benefits of the state without contributing new taxpayers.

.... something about the poor me whine in your single taxpayer posts just gets my dander up.

 

[Axulus]

An odd criticism in that the numbers involved are rather large.

If we assume 25 million households per quintile, the total net taxes paid by quintile are:

5th - receive $215 billion
4th - receive $313 billion
3rd - receive $228 billion
2nd - pay $18 billion
1st - pay $1,163 billion
Total net = pay $425 billion

The percentages are -51%, -74%, -54%, 4%, 274%.

The top 20% pay 274% of the net taxes collected.

It's just facts.

Do you have any idea what the third quintile is receiving in the category of "average government transfer"? That isn't a snub, I'm clueless on what it is saying. I paid federal taxes, but the numbers say I don't.

The numbers are CBOs, so the stats are most likely not cooked, but your numbers above make no sense in the context we are viewing them. There is something the numbers are telling us, and I think it is getting lost in the translation.

Ignoring the percent taxed verses transfers received, the top 20% and 1% pay the gross amount of taxes, but are paying within a reasonable margin relative to the percent of national income they took in.

It's including all the amounts the government pays to senior citizens on social security and medicare. Therefore, the situation will significantly reverse when you retire.

 

[Axulus]

That would suggest that all healthcare provisions, including payroll contributions, are being treated as a 'transfer' even though the money is spent by the government and never reaches the actual taxpayer. That might explain why the figure for 'transfers' is so much higher than people would expect by calculating based on their own taxes.

It's spent by the government (as in the case for Medicare), but it is still the equivalent of giving the person the money to pay off the medical bill.

 

[Derec]

...and the last time you went to the polls and voted for more property tax, more sales tax, higher state income tax, was .....

Last time I had a chance to. Of course it didn't pass, my vote being one among the millions.

Ya get the pothole ya deserve.

Nay, it's the other bastards.

Why not? You're consuming benefits of the state without contributing new taxpayers.

What benefits of the state?

.... something about the poor me whine in your single taxpayer posts just gets my dander up.

I understand why there is some form of child credit. But the sheer scale of it in the US tax system is staggering.

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...and the last time you went to the polls and voted for more property tax, more sales tax, higher state income tax, was .....

Last time I had a chance to. Of course it didn't pass, my vote being one among the millions.

Ya get the pothole ya deserve.

Nay, it's the other bastards.

Why not? You're consuming benefits of the state without contributing new taxpayers.

What benefits of the state?

.... something about the poor me whine in your single taxpayer posts just gets my dander up.

I understand why there is some form of child credit. But the sheer scale of it in the US tax system is staggering.

 

[dismal]

Sounds to me like somebody does care about who is not paying income taxes.

The data presented is only about who is paying income taxes.

If you have some data about who is not, please feel free to start up another thread.

 

[Axulus]

Direct empirical evidence of actual findings. The CBO provides a comprehensive report and cites its sources, and is considered to be nonpartisan in its analysis. The only "theoretical" part of the report is when it estimates the impact of the 2013 tax increases on the tax burden distribution.

Whether the CBO is non-partisan isn't the issue. The issue is whether they are using actual tax filings or official tax rates as the basis of the numbers?, and if using actual filings, did they use them from every person in the country or a sample?, and if a sample, how was the sample drawn and how big was it?
If they used actual filings this info about the sampling method and size would be part of the report, but I haven't locate it yet. IF they used offical tax rates and merely estimated taxes paid, then there wouldn't be any info on the sampling methods. So, can you point to exactly where in the report the CBO states that they used empirical data from actual filings and the methods of sampling used.

BTW, even if they used actual filings, that wouldn't include any of income or acquired wealth that the wealthy hide and do not report in their filings, which all reasonable people know is quite a bit. The wealthier a person is, the greater the % of their true income they are able to hide from the government, so the more their tax filings over-estimates the true % of their income paid in taxes.

Almost all the answers to your questions are in the link I provided.

 

[ronburgundy]

Let's not forget that we are slightly above average as a percent of GDP,

That's a bit like being proud of being slightly above average in intelligence in a group that includes many severely mentally challenged people.

The OECD nations among whom we are "slightly above average" include some extremely broke, worn torn, and/or corrupt nations that are part of the 2nd and 3rd world, such as Chile, Mexico, Estonia, Greece, Check Republic, Hungary, Korea, Turkey, Slovek Republic, Slovenia.

Against any nation we should have enough self respect to compare ourselves to (i.e., First world Western Europe and Canada) we are well below average.

 

[fromderinside]

That would suggest that all healthcare provisions, including payroll contributions, are being treated as a 'transfer' even though the money is spent by the government and never reaches the actual taxpayer. That might explain why the figure for 'transfers' is so much higher than people would expect by calculating based on their own taxes.

It's spent by the government (as in the case for Medicare), but it is still the equivalent of giving the person the money to pay off the medical bill.

I presume an abnormally high number of people who pay taxes are both in low tax quintiles and in the age groups of those under 35, they are getting hit twice, paying taxes and insurance rates higher than benefits.

 

[ronburgundy]

Whether the CBO is non-partisan isn't the issue. The issue is whether they are using actual tax filings or official tax rates as the basis of the numbers?, and if using actual filings, did they use them from every person in the country or a sample?, and if a sample, how was the sample drawn and how big was it?
If they used actual filings this info about the sampling method and size would be part of the report, but I haven't locate it yet. IF they used offical tax rates and merely estimated taxes paid, then there wouldn't be any info on the sampling methods. So, can you point to exactly where in the report the CBO states that they used empirical data from actual filings and the methods of sampling used.

BTW, even if they used actual filings, that wouldn't include any of income or acquired wealth that the wealthy hide and do not report in their filings, which all reasonable people know is quite a bit. The wealthier a person is, the greater the % of their true income they are able to hide from the government, so the more their tax filings over-estimates the true % of their income paid in taxes.

Almost all the answers to your questions are in the link I provided.

Nothing in that report comes remotely close to accounting for wealth that the rich hide from their tax filings.

 

[Axulus]

Let's not forget that we are slightly above average as a percent of GDP,

That's a bit like being proud of being slightly above average in intelligence in a group that includes many severely mentally challenged people.

The OECD nations among whom we are "slightly above average" include some extremely broke, worn torn, and/or corrupt nations that are part of the 2nd and 3rd world, such as Chile, Mexico, Estonia, Greece, Check Republic, Hungary, Korea, Turkey, Slovek Republic, Slovenia.

Against any nation we should have enough self respect to compare ourselves to (i.e., First world Western Europe and Canada) we are well below average.

I'm talking about in comparison to the developed economies on continental Europe. When you look at investment in infrastructure (which is what that post was about), and compare what percent of GDP we spend compared to the OECD average, you have to take into account that our GDP per capita is close to the top in the world. 3% of a bigger number per person means that we would actually be spending more on infrastructure per person compared to these other economies.

 

[ronburgundy]

That's a bit like being proud of being slightly above average in intelligence in a group that includes many severely mentally challenged people.

The OECD nations among whom we are "slightly above average" include some extremely broke, worn torn, and/or corrupt nations that are part of the 2nd and 3rd world, such as Chile, Mexico, Estonia, Greece, Check Republic, Hungary, Korea, Turkey, Slovek Republic, Slovenia.

Against any nation we should have enough self respect to compare ourselves to (i.e., First world Western Europe and Canada) we are well below average.

I'm talking about in comparison to the developed economies on continental Europe. When you look at investment in infrastructure (which is what that post was about), and compare what percent of GDP we spend compared to the OECD average, you have to take into account that our GDP per capita is close to the top in the world. 3% of a bigger number per person means that we would actually be spending more on infrastructure per person compared to these other economies.

Okay, so then the comparison is not the average of 35 OECD countries which includes the 2nd and 3rd world nations I listed, but rather a subset of 1 Western Europe countries plus Australia and Canada. But the comparison must be conentualized by the #1 direct determinant of infrastructure needs in developed countries, which is population density. Nations with less population density (population spread out over larger areas) have more infrastructure (roads, sewers, electric grid, water mains, etc.) that connects them that must be maintained. The exception to this is countries with low overall density but whose population lives in densely populated pockets with vast wastelands in between in which almost no one lives and no infrastructure really exists (e.g., Australia and Norway). Of those 16 nations, the US has a lower population density that 12 of them, meaning more miles of infrastructure they need to be spending to maintain. All 4 of the countries with lower density (Australia, Canada, Finland, Norway) are of the sort with a huge % of their landmass where no one lives and no infrastructure exists to be maintained. IOW, the size of the land mass on which the population is spread out, subtracting huge land tracts with almost no population, predicts that the US has more people connecting infrastructure that needs to be built and maintained than any of those 16 developed nations, yet we spend less on it than almost half of them. And keep in mind that these differences in population density are massive. On average, Belgium has more than 10 times as many people per square mile than the US. This is because the entire 11 million people of Belgium are in a landmass the size of Massachusetts, which only has half as many people as Belgium spread out in smaller towns across the state with little unpopulated landmass. Thus, for each aspect of the infrastructure to be of equal quality as in these other countries, the US would need to spend more than any of them, and much much more than most of them whose smaller populations are more huddled in concentrated areas, reducing infrastructure costs.

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[untermensche]

There is no logic to saying the infrastructure is fine because X is spent.

Spending means nothing.

The condition of the infrastructure is what matters and US infrastructure is neglected and rotting and primitive.

http://www.infrastructurereportcard.org/

 

[bilby]

The figures presented in the OP might or might not indicate that taxation, adjusted for 'transfers', in the US is (highly) progressive; let's accept, for the sake of argument that it does show this.

The real question, that these figures cannot answer, because they only tell half the story, is 'is this a good or a bad thing?' or to put it another way 'how progressive should taxation be in the US, and is the progressiveness right now too high, too low, or about right?'

It seems to me that the ideal level of progressiveness in taxes and transfers would be just sufficient to offset the tendency inherent in the economy towards wealth concentration.

We can see that wealth is becoming increasingly concentrated in the US; from this, I conclude that regardless of how progressive the current tax structure might be, it needs to be more progressive, in order to achieve the best outcomes for the majority of the people.

The absolute numbers, and even the ratios of tax paid by percentile, are irrelevant; I am sure nobody is surprised to discover that taxation after transfers is progressive. But if wealth concentration is still occurring fairly rapidly, that fact in itself is sufficient to indicate that the regime is not sufficiently progressive to achieve the optimum result for all Americans.

 

[Jayjay]

That's not a useful number.

Suppose the lunch bill is $0 (you found a fly in your soup or something). One guy puts in $1 and the others take it away. The first guy ends up paying an infinite percentage. But in reality hardly any money exchanged hands and the group got a free meal anyway.

An odd criticism in that the numbers involved are rather large.

What is odd is why you think the metric has any meaning. The amount of money that changes hands doesn't matter: Consider a hypothetical country that uses tax revenue only for wealth transfers, in other words it collects taxes and pays exactly the same amount back to people. The total would be zero in this case, and therefore any amount - be it $1 or $1 billion - of taxes paid by the richest quintile would be an infinite percentage. Heck, you could even imagine a country that pays more than it taxes, and finances it from other revenue sources such as profits from government owned businesses. In this case the total of taxes plus transfers would be a negative amount. Calculating a percentage of something from something doesn't make sense if the values of that other something is on a scale that is not fixed to zero.

If we assume 25 million households per quintile, the total net taxes paid by quintile are:

5th - receive $215 billion
4th - receive $313 billion
3rd - receive $228 billion
2nd - pay $18 billion
1st - pay $1,163 billion
Total net = pay $425 billion

The percentages are -51%, -74%, -54%, 4%, 274%.

The top 20% pay 274% of the net taxes collected.

It's just facts.

What does it mean if a richest quintile pays 274%, 100%, 0%, -100%, or 1,000,000,000% of the net tax burden? What does that tell us?

Answer: absolutely nothing.

 

[ronburgundy]

There is no logic to saying the infrastructure is fine because X is spent.

Spending means nothing.

The condition of the infrastructure is what matters and US infrastructure is neglected and rotting and primitive.

http://www.infrastructurereportcard.org/

There is some logic to the amount of $ spend to maintain infrastructure impacting the quality of that infrastructure. As a I explain in my post above, the problem is that it is not simply $ per person that matters but rather $ per amount of infrastructure needed, and how the population is spread out matters at least and often more than the shear number of people using it. The low pop density of the US with sprawling suburbs and people spread out in rural areas rather than tightly packed rural villages with little in between as in most of Europe, means that providing the same quality of needed infrastructure in the US requires much more per capita spending to get it.

 

[untermensche]

There is no logic to saying the infrastructure is fine because X is spent.

Spending means nothing.

The condition of the infrastructure is what matters and US infrastructure is neglected and rotting and primitive.

http://www.infrastructurereportcard.org/

There is some logic to the amount of $ spend to maintain infrastructure impacting the quality of that infrastructure. As a I explain in my post above, the problem is that it is not simply $ per person that matters but rather $ per amount of infrastructure needed, and how the population is spread out matters at least and often more than the shear number of people using it. The low pop density of the US with sprawling suburbs and people spread out in rural areas rather than tightly packed rural villages with little in between as in most of Europe, means that providing the same quality of needed infrastructure in the US requires much more per capita spending to get it.

But government spending is not the same as money spent on infrastructure.

Money spent on infrastructure is government spending minus profits extracted.

 

[ronburgundy]

There is some logic to the amount of $ spend to maintain infrastructure impacting the quality of that infrastructure. As a I explain in my post above, the problem is that it is not simply $ per person that matters but rather $ per amount of infrastructure needed, and how the population is spread out matters at least and often more than the shear number of people using it. The low pop density of the US with sprawling suburbs and people spread out in rural areas rather than tightly packed rural villages with little in between as in most of Europe, means that providing the same quality of needed infrastructure in the US requires much more per capita spending to get it.

But government spending is not the same as money spent on infrastructure.

Money spent on infrastructure is government spending minus profits extracted.

Good point. That is also true. Most semi-socialists countries in Europe use far more government workers than private contractors compared to the US, and are also more vigilant about corruption in public/private projects. Thus, less of the money spend is going into the pockets of millionaire contractors rather than the project itself. Yet, money still must be spent to produce quality infrastructure, it is just that how much is paid to private contractors is much higher than how much is actually spent on building quality infrastructure.

 

[Loren Pechtel]

Large enough samples to get reasonable data.



You realize secret Swiss accounts are things of the past?

Are they? Or are they just even more secret than before?? /tinfoilhat

If there really was a way to hide accounts would Congress be going nuts with this FATCA garbage?

 

[Loren Pechtel]

Let's not forget that we are slightly above average as a percent of GDP, but our GDP per capita is much higher than most of Europe. 30% higher than France, for example.

Then why do we seem to get so much less bang for our buck? For example roads in Germany are much better with few potholes or these steel slabs you see around here all the time. And that is with all the extra investment Germany puts into public transportation - much better coverage, more modern fleet etc.
Or take power. Most local power lines are buried there which means very few outages.
I know part of the reason is smaller population density but in Atlanta metro we have power lines strung between timbers even within built-up areas. Also many potholes and crappy public transport.

Mass transit isn't a good comparison--the effectiveness of mass transit is highly related to population density. Mass transit works pretty well in the US in the high density areas. It's just most of the US is pretty low density.

What I have noted with buried vs poles is a matter of age. Older places have elevated wires, newer construction has buried wires. Retrofitting isn't easy. How much of the difference stems from when things were built (remember, much of Germany was smashed in WWII.)

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What confuses me is that according to this, I don't pay taxes, barely (almost in the next quintile). Last time I checked, I do pay Federal taxes and don't get any "government transfer".

Do you have kids or other dependents? They make a huge difference in amount of taxes owed, between exemptions, child tax credit and the EITC, latter two being refundable so you can actually owe negative federal tax (your tax refund is higher than your withholdings). But if you are a single guy with no kids, forgettaboutit! You will have to pay significant federal income tax even in the lowest quintile.

EITC in the second quintile?!?! Check the tax code!

 

[T.G.G. Moogly]

The figures presented in the OP might or might not indicate that taxation, adjusted for 'transfers', in the US is (highly) progressive; let's accept, for the sake of argument that it does show this.

The real question, that these figures cannot answer, because they only tell half the story, is 'is this a good or a bad thing?' or to put it another way 'how progressive should taxation be in the US, and is the progressiveness right now too high, too low, or about right?'

It seems to me that the ideal level of progressiveness in taxes and transfers would be just sufficient to offset the tendency inherent in the economy towards wealth concentration.

We can see that wealth is becoming increasingly concentrated in the US; from this, I conclude that regardless of how progressive the current tax structure might be, it needs to be more progressive, in order to achieve the best outcomes for the majority of the people.

The absolute numbers, and even the ratios of tax paid by percentile, are irrelevant; I am sure nobody is surprised to discover that taxation after transfers is progressive. But if wealth concentration is still occurring fairly rapidly, that fact in itself is sufficient to indicate that the regime is not sufficiently progressive to achieve the optimum result for all Americans.

Who cares about quintiles. We all know that the upper quintile or the upper part of the upper quintile controls the wealth. Therefore they should be paying the taxes in proportion that support that wealth, which they do not. If I control 90% of the wealth I should be paying 90% of the taxes. That is certainly not the case in the U.S.