Interesting... -- LiveWire Teen Forums

http://www.cbpp.org/4-10-06tax2.pdf

TAX FOUNDATION FIGURES DO NOT REPRESENT MIDDLE-INCOME TAX BURDENS
Figures May Mislead Policymakers, Journalists,
and the Public

Greenspan Warns Against Seriously Flawed Approach Tax Foundation Uses
In a 2002 Congressional hearing, Federal Reserve Chairman Alan Greenspan warned that the type
of approach the Tax Foundation uses � dividing total tax receipts by the Gross Domestic Product (or a
similar measure), to determine the overall average tax rate (i.e., to determine the percentage of total
income in the nation that is paid in taxes) � is simply not valid. Greenspan flatly stated: "you can't use tax receipts over nominal GDP as a tax rate."
Chairman Greenspan explained one reason that such an approach is improper: although capital
gains taxes are counted as part of federal tax receipts, the capital gains income on which such taxes are paid is not counted in GDP. The Tax Foundation uses a closely related Commerce Department income measure � NNP, or Net National Product � that also omits capital gains income. Counting capital gains taxes as part of tax receipts, while failing to count as income the very capital gains income on which these taxes are paid, distorts � and inflates � average tax rates.

Two-Thirds of Tax Units Pay More Payroll Tax Than Income Tax
April 15 is synonymous with taxes in the United States, but most Americans actually pay more payroll taxes than federal income taxes. In 2006 workers and employers each paid 6.2 percent Social Security tax on the first $94,200 of earnings and 1.45 percent Medicare tax on all wages. While the statutory obligation to pay payroll taxes is split evenly between workers and employers, most economists believe that the employer tax usually translates into lower wages, so workers bear the full burden of the tax. Thus, the total payroll tax rate equals 15.3 percent of earnings for most workers.
About two-thirds of taxpayers owed more payroll taxes (including the employer portion) than individual income taxes in 2006. Many households (including most retirees) do not have any wage income and thus pay no payroll tax. Among households with wage earners, 86 percent have higher payroll taxes than income taxes, including almost all of those with incomes less than $40,000 and 94 percent of those with incomes less than $100,000. If only the employee portion of payroll taxes is considered, 44 percent of taxpayers and 56 percent of wage earners pay more payroll tax than income tax, including nearly 80 percent of earners with incomes less than $50,000.
The payroll tax is very regressive with respect to current income: The average tax rate falls as income rises. The income tax, in contrast, is progressive. The regressivity of the payroll tax is mitigated to a substantial extent when Social Security and Medicare benefits are considered as well (not shown).

http://www.urban.org/publications/1001065.html

-------
"Everyone helpin' each other whenever they can we makin' it happen, from nothin' to somethin'
That's how we be survivin'" - BEP

702 users online 223005 members 915 active today Advertise Here