By using this site, you agree to our Privacy Policy and our Terms of Use. Close
Aielyn on 12 June 2012
Edit Thread
richardhutnik said:
Aielyn said:
spaceguy said:




While Mitt Romney does pay way too little tax, that image is inaccurate and misleading.

Mitt Romney's effective tax rate is 13.9%. The school teacher's effective tax rate is not 25% - that's the tax rate within the bracket she earns. Assuming that the school teacher is single, she only pays 25% tax on $6000 of her income (in 2010), or $1500. On the rest of her income, she pays a total of $4681.25, so that her total tax is $6181.25, or about 15.5% effective tax rate.

 

Anyway, on the general topic, "the rich getting richer" isn't a problem, but "the rich getting richer at the expense of everyone else" is.

Did you factor in Social Security taxes also?  The percentage of income taxed paid in for social security is flat for everyone up to a certain level.  Beyond that, it then turns regressive, because above a certain income, people pay no taxes into the system for social security.

Either way, the teacher's effective tax rate is higher than that which Mitt Romney pays.  This happens because the system is rigged to end up benefitting investors, because it is believed that investing will fix everything.

The way things got this way, starting in the 1980s, the top tax rate kept getting dropped, and everyone else was also given tax breaks to, to sell this.  Tax rates lowered on everyone to now, around half the people don't pay any income taxes at all.  With the cut in income tax came a raise in social security taxes.  Now with this a reality, you have politicians, who have argued for cutting taxes further on the top end (well all tax payers) arguing those who pay no income taxes now (they got cut, and had the Earned Income Tax Credit added) because they make too little, to need to start paying, because "everyone has to put skin in the game".  Question here: Why the heck would anyone support cuts on the high end, if it means their taxes will go up also in the process or they don't get anything?  Unless you sell a big bill of goods, you see how things got to where they are now.


I didn't address the more complicated elements of the tax system, because I'm Australian, and thus do not know all of the finer points, like tax credits, social security taxes, etc. I figured I'd restrict attention to regular taxes.

In Australia, there are no "social security taxes" - we have an aged pension for those who need it, and we have a direct social security protection, but they all operate under regular taxes. We then have superannuation, which is added cost to the employer beyond the official wage, and goes into a private account that you can't access until retirement age.

But then, I looked at America's income taxes... and they're atrocious. People earning less than $8500 a year are still paying 10% tax - that's absurd. In Australia, if you earn less than $6000 a year, you pay no income tax (we do have a "medicare levy", though - ) - that is, 0%. It's then 15% for every dollar over $6000, until $37,000, then 30% up to $80,000, then 37% up to $180,000, then 45% above that. But more than this, the current government has established a change starting July 2012, in which the tax-free threshold is increased to $18,200 (up from $6000).