How a janitor ends up with a higher tax rate than a millionaire, and seven more charts that show how the richest Americans beat the IRS.

[one...two...tree 2,762]

"We don't pay taxes. Only the little people pay taxes," billionaire hotelier Leona Helmsley famously (and allegedly) sniffed. She wasn't entirely correct: The superrich do still pay taxes. The wealthiest 1% of taxpayers pay 32% of all income tax collected by the federal government.

But the superrich don't pay as much as they used to—and thanks to a combination of tax cuts and preferential tax policies, their tax obligations can be less demanding than the so-called little people's. In fact, the very wealthiest Americans' tax burden has been steadily dropping for years, even as they've enjoyed astounding income growth not seen by the vast majority of Americans.

Tax rates for the wealthy have fallen substantially since they peaked in the 1940s. During the past 30 years, they have been cut at a much faster rate than middle- and low-income taxpayers'.

Just how much of a windfall are tax cuts for the wealthy? The extension of the Bush tax cuts passed last year will provide $146,000 in annual tax savings, on average, to each of the wealthiest 0.1% of Americans.

The superrich get an additional boost from relatively low tax rates on capital gains. Income from long-term investments, which makes up a larger portion of wealthier taxpayers' incomes than middle- and low-income taxpayers', is taxed at lower rates than wages.

Payroll taxes (deductions for Social Security, Medicare, and unemployment insurance) are mostly paid by the bottom 90 percent of earners. When they're factored in on top of income tax, the gap between the tax rates at the very top and everyone else shrinks even more—so much that the effective tax rate for people earning more than $370,000 is nearly the same as for those earning between $43,000 and $69,000 a year.

Leona Helmsley's distaste for paying taxes eventually landed her in federal prison. But the rich have little need to break the law to avoid the tax collector. As Martin A. Sullivan of Tax.com recently calculated, a New York janitor making slightly more than $33,000 a year pays an effective tax rate of nearly 25%. And the effective tax rate for a resident of the Park Avenue building named after Helmsley, earning an average of $1.2 million annually? A cool 14.7%.

http://motherjones.c...ns-charts-graph

[Obama 2012 1,714]

Always amused by these.

The interesting part about it, is the Janitor is also more likely to use more government services than the "super rich" individual.

I love how MJ points out the Capital Gains tax as well. I'm sure as a liberal kook website they want it to be raised very high.

The ignorant part about it, is that the government makes MORE money when the Capital gains taxes is lowerd than if it is raised. This is what got Obama in trouble during the Presidential debate back in '08. Charlie Gibson even called Obama out on it. The idiot was like "well, uh I uh want to uh raise it out of fairness." --- Yes, raise the tax and make the government less money. Proof in the pudding that liberals are extreme kooks that don't have a damn clue how an economy works.

[mawilson 2,133]

I call BS on this chart.

Payroll taxes = Social Security and Medicare taxes

Social Security tax: 6.2% on earnings up to $106,800

Medicare tax: 1.45% on all earnings

Let's run the numbers for the janitor:

Social Security tax: 6.2% of $33,080 = $2,050.96

Medicare tax: 1.45% of $33,080 = $479.66

Total payroll taxes: $2,530.62 - not $5,062 as the chart claims

Now for the millionaire:

Social Security tax: 6.2% of $106,800 = $6.621.60

Medicare tax: 1.45% of $1,167,708 = $16,931.76

Total payroll taxes: $23,553.36 - not $11,836 as the chart claims

[mawilson 2,133]

Oh man - the income tax numbers are all f*cked up too.

Using this calculator:

The janitor pays $4,543 on his AGI of $33,080 (or 13.73% as a percentage of income.)

The millionaire pays $386,342 on his AGI of $1,167,708 (or 33.09% as a percentage of income.)

In total, the millionaire pays $386,342 + $23,553 = $409,895 which is 35% of his AGI.

The janitor pays $4,543 + $2,531 = $7,074 which is 21.3% of his AGI.

[mawilson 2,133]

[Mr. Big Dog 10,747]

I call BS on this chart.

The millionaire numbers are averages from tax returns filed from a particular zip code which represents a certain building in NYC - the numbers are not representing an individual return. Your calculation assumes that the millionaire's AGI is 100% derived from work income. It usually isn't. Hence, the FICA taxes ought to be considered in that light. After all, you don't pay FICA taxes on divident, interest or capital gains and other types of income.

[Zero Sum 305]

Averages, averages...

[Azzudiin 26]

Your social security tax figures are wrong also, if the janitor is self employed classification he will pay double on social security, remember the company you work for pays part of social security. Self employed have to pay it all alone.

The charts are worthless but I do feel everyone should be paying the same percentage of tax. Just because you can afford a better accountant shouldn't allow you to pay a lesser percentage.

[Zero Sum 305]

Maybe all these 'maybes' need to be addressed at tax.com with that certain Michael A. Sullivan.

[mawilson 2,133]

The millionaire numbers are averages from tax returns filed from a particular zip code which represents a certain building in NYC - the numbers are not representing an individual return.

So it's essentially made-up BS that I have no way of verifying.

After all, you don't pay FICA taxes on divident, interest or capital gains and other types of income.

You do, as of 2013. Peepaca changed that.

Your social security tax figures are wrong also, if the janitor is self employed

Where does it say that the janitor is self-employed?

[mawilson 2,133]

The charts are worthless but I do feel everyone should be paying the same percentage of tax. Just because you can afford a better accountant shouldn't allow you to pay a lesser percentage.

The rich are paying a higher percentage - not lower - if you consider the same *type* of income.

Clearly, capital gains are not taxed as regular income. Whether that should be changed is a subject for a separate discussion.

[Mr. Big Dog 10,747]

So it's essentially made-up BS that I have no way of verifying.

You can verify the numbers - the IRS sells the stats.

You do, as of 2013. Peepaca changed that.

The numbers refer to data pre-2013.

[mawilson 2,133]

The numbers refer to data pre-2013.

Why whine about something that's no longer true?

[Zero Sum 305]

The rich are paying a higher percentage - not lower - if you consider the same *type* of income.

Clearly, capital gains are not taxed as regular income. Whether that should be changed is a subject for a separate discussion.

The numbers in those charts *probably* mix the income types for any meaningful discussion about income sources and comparisons about who pays more % or not. What is clear is that IF the numbers are for total income, THEN Steven's OP holds some water. We need someone to look at the 1040 instructions, line by line and get back to us.

[Mr. Big Dog 10,747]

Why whine about something that's no longer true?

Is it 2013 already? Who won last November's elections? Tell me it wasn't The Donald...