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By garlic (Tue Nov 16, 2004 at 10:55:02 AM EST) (all tags)
From this IRS spreadsheet I made up some graphs that I thought were interesting. These statistics are from 2002.


The 'population' I used here was the number of returns filed. So, joint returns count as one person in this chart, and only those who filed a return count in this chart. I think you have to be pretty close to income-less to not file a return. So this chart is also assuming that those with no income are insignificant. I don't know how good or bad that assumption is. The only ones I'd actually want to count that aren't counted are adults of working age without jobs.

income percentage of US population

It looks like the $50-75 group paid about 1% more of the total tax burden than those in the $75-100 group. There are about twice as many people in the $50-$75 group as in the $75-100 group.

percent of all income taxes paid per AGI group

The numbers in the following chart seem low, but that's probably because the total tax amount is applied after deductions and then credits are taken away from this.

percent of income paid in taxes

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US taxes | 28 comments (28 topical, 0 hidden) | Trackback
High taxes by ucblockhead (6.00 / 2) #1 Tue Nov 16, 2004 at 11:18:41 AM EST
Imagine three families taxed at 10%. One makes $10k. One makes $100k. One makes $1million.

Which will feel the tax burden more?

But regardless of how you answer that question, your above chart needs to be updated to include FICA, which for low-income people, is a significant fraction of the tax burden. (Especially if you count the employer's half, which you should.)

It changes the numbers significantly as it is a regressive tax. That is, someone making over $83k pays a lower percentage of their income then someone making less than $83k.
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[ucblockhead is] useless and subhuman

taxes by garlic (6.00 / 1) #2 Tue Nov 16, 2004 at 11:29:31 AM EST
In 2003, the maximum wage base for SS was 87000 as seen here. 6.22% for SS (up to 5394)and 1.45% for medicare(no upper limit).

These tables just include income tax. When you try to start including other forms of taxes, it becomes a lot more complicated. The FICA payroll deductions are probably doable, but sales and property aren't, for the amount of effort I'm willing to put in.


[ Parent ]
Sorry for the wrong figure by ucblockhead (6.00 / 1) #3 Tue Nov 16, 2004 at 11:36:17 AM EST
But it doesn't really matter. The point is that FICA is a huge chunk and will dramatically change your charts. It's also inarguable, unlike the other forms of taxes.

And you really have to double SS to include the employer's portion.
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[ucblockhead is] useless and subhuman

[ Parent ]
Here's with fica. by garlic (6.00 / 1) #5 Tue Nov 16, 2004 at 11:49:53 AM EST
The IRS spreadsheet has total dollars per AGI bracket, and total returns per bracket. Dividing the two gives you average income per bracket. I then applied the FICA tax rate (7.65%) to this average income and added it to the charts. The two highest brackets have an average income greater than 87000, so they are capped at 5394 for the social security portion of the FICA tax. I believe the porportion of earners who are exempt from all or part of FICA taxes is insignificant, but have no numbers to back this up.

taxes as percentage of income, income tax and fica tax

This is a significant boost in all but the wealthiest bracket, which is only increased by 2.5%. However, this chart does not reflect the total tax burden of any income level because it does not include things like sales tax, property tax, or estate tax.

This also does not include the employer's portion of any tax.


[ Parent ]
Employer's portion by ucblockhead (6.00 / 1) #6 Tue Nov 16, 2004 at 11:55:33 AM EST
You really need to include that as despite the fact that it is hidden, it really is part of the tax on a person's income.

The number of people exempt from FICA is larger than you might think. All California state teachers are exempt, for one. (They pay the same amount into a state pension fund.)
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[ucblockhead is] useless and subhuman

[ Parent ]
I'm not sure by garlic (3.00 / 2) #9 Tue Nov 16, 2004 at 12:26:40 PM EST
It sounds like it may have an affect on a person's total benefit package, as does unemployment insurance, health insurance, and a lot of other things. Including the employer's payment of FICA tax, but not taking into account the employer's costs for other benefits, nor the employees entire benefit package seems to not take everything into account. It also seems to go farther than is easy to do. I'm trying to get some easy to verify numbers with minimal numbers of assumptions here.


[ Parent ]
Employer's part by ad hoc (6.00 / 1) #13 Tue Nov 16, 2004 at 01:32:55 PM EST
I don't think so. It should only be included if you believe that that money would be distributed to the employee if it weren't collected by the Feds. I doubt that it would.

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[ Parent ]
Economics by ucblockhead (6.00 / 1) #14 Tue Nov 16, 2004 at 02:45:00 PM EST
If you believe that salaries are set by supply and demand in a free market than you'd have to believe that were the employee portion rescinded, it would soon adjust to go to the employee.

As a thought experiment, imagine it the other way...imagine that the FICA was entirely taken out before the salary was determined...would salaries stay the same, or would they go down in proportion to the FICA?
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[ucblockhead is] useless and subhuman

[ Parent ]
ad hoc was talking about the employer contribution by lm (6.00 / 1) #16 Tue Nov 16, 2004 at 03:15:41 PM EST
Obviously, the employee contribution would go to the employee if FICA were rescinded.

I can't think of any aspect of supply/demand price theory that would predict the employer contribution going to employees if FICA were rescinded, though.


There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]
well... by ucblockhead (6.00 / 1) #17 Tue Nov 16, 2004 at 03:37:21 PM EST
Supply and demand sets the price for labor, which is not the employee's salary, but rather, what the employer pays for the employee. That is, the employee's salary + benefits + the employer's FICA contribution + other costs.

The actual salary is not the price of labor, set by supply and demand. That is essentially an artificial number.
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[ucblockhead is] useless and subhuman

[ Parent ]
But by ad hoc (6.00 / 2) #20 Tue Nov 16, 2004 at 04:36:57 PM EST
that's only if you believe salary is set by supply and demand. I don't think that's the case.
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[ Parent ]
I think you've confused price with cost by lm (6.00 / 1) #24 Tue Nov 16, 2004 at 11:55:04 PM EST
The price of labor is the salary. Taxes and benefits are additional costs to buying labor. I can see an argument for including benefits as part of the price of labor, even if I don't agree with it. I don't see any similar argument, however, for taxes. When a firm is able to reduce a cost, such as payroll taxes, the money almost always goes into either purchasing additional capital or increased profit.

There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]
How is FICA not an income tax? by lm (6.00 / 1) #11 Tue Nov 16, 2004 at 12:59:23 PM EST
Do you really buy into the pipe dream of it being an `insurance policy'?

Granted, the employer's portion isn't an income tax. (Methinks the blockhead is wrong on that one. I highly doubt that a reduced payroll tax would result in a boost to salaries. It is much more likely that the difference would go to dividends of shareholders or increased compensation for corporate officers.) But withholding for employees is definitely an income tax. The money collected, in fact, is being used to make up some of the shortfall in the general budget. The odds of me or you being able to collect is very unlikely.


There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]
It is an income tax. by garlic (3.00 / 2) #12 Tue Nov 16, 2004 at 01:30:34 PM EST
It is not specifically called out on the IRS individual income tax spread sheet. It is included in a seperate location under employment taxes, so it flew under my radar. With some more looking, I found some FICA numbers, but I haven't found anything grouped like the other income tax numbers yet.


[ Parent ]
It is and it isn't by ad hoc (6.00 / 1) #21 Tue Nov 16, 2004 at 04:40:43 PM EST
FICA is a "salary" tax, not an income tax, exactly. FICA is charged against your salary and wages. Income tax is charged against your income from all sources. FICA is not charged against your bank interest income, stock dividends, inheritance, gifts, lottery winnings, or capital gains on the sale of your house, for example.
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[ Parent ]
good clarification. by garlic (3.00 / 2) #22 Tue Nov 16, 2004 at 04:47:15 PM EST
thanks. This means I made an error in my FICA numbers I added for ucblockhead. I'm going to correct it and update the file, so it'll magically look like they were always correct.


[ Parent ]
I corrected the chart above. by garlic (3.00 / 2) #23 Tue Nov 16, 2004 at 05:05:29 PM EST
I made the mistake of applying the percentages to the AGI instead of to the salaries of each group. So now the FICA tax is calculated based on the salary, and the percentage shown is the percent of FICA of the AGI. Those making more than $200,000 pay an average of 1.8% of their income to FICA tax, while those making under $20,000 pay 7.42% of their AGI to FICA taxes.


[ Parent ]
OK, I think I did this right by DesiredUsername (6.00 / 3) #4 Tue Nov 16, 2004 at 11:44:56 AM EST
I don't really want to take too much time on it because I have a life (well, part of one). And I didn't make graphs because I'm low on HuSiDisk space.

Here's the process: First, multiple the number of returns in each category by the average income of that category. (For "less than $20" I used $10,000 and for "more than $200,000" I used $500,000.) That gives me a total taxable income for the US population. Now express each group's income as a percentage of that.

<$20: 0%
$20+: 1%
$30+: 4%
$50+: 7%
$75+: 7%
$100+: 17%
$200+: 64%

So, as a group, people who earn more than $200k/yr are earning 64% of the income in the US. How much tax are they paying? According to your second graph (which I reproduced without thinking), they are only paying 40% of the taxes. Meanwhile the $50k/yrs are earning only 7% of the income but paying 13% of the tax.

Even if I adjust the "$200+" category average to a mere $250/yr, both they and the and the $100+ category are the only ones earning more than they are paying (both expressed as percentages).

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Naturally by DesiredUsername (6.00 / 2) #7 Tue Nov 16, 2004 at 11:58:29 AM EST
No, I didn't do this right. But I'm working on something else, so I'm not even going to try to fix it.

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[ Parent ]
hmm... by garlic (6.00 / 1) #8 Tue Nov 16, 2004 at 12:17:56 PM EST
I don't think your numbers are correct. First, the average incomes are probably better calculated by taking the total AGI of the category and dividing it by the number of returns in that category.

Second, for the percentage of groups income compared to total income, you are better off using these total AGI of group numbers and dividing by the total AGI.

This chart includes the total percent of US income each bracket gets, and the total percent of US income tax each bracket pays.

total % of tax paid and total % of income received


[ Parent ]
per person by garlic (3.00 / 2) #10 Tue Nov 16, 2004 at 12:56:45 PM EST
The above chart is per tax bracket, but as we saw in the first chart I have in the diary, each tax bracket doesn't contain the same amount of people. So here's the data in the above chart per person.

% per person


[ Parent ]
it would be interesting to see that with FICA by infinitera (3.00 / 0) #27 Thu Nov 18, 2004 at 01:52:41 AM EST

if you don't like rmg, you are a bad person. - rmg

[ Parent ]
I'll look into it. by garlic (3.00 / 0) #28 Thu Nov 18, 2004 at 04:55:25 AM EST
My fica numbers are sort of faked up instead of taken off the IRS site, and before I do all the twists and turns I did to get that per person graph to FICA numbers, I'd rather get some real numbers instead of guessed at numbers.


[ Parent ]
It would be interesting to look at the other taxes by Big Sexxxy Joe (6.00 / 1) #15 Tue Nov 16, 2004 at 02:56:54 PM EST
that people pay.

For example, sales tax.  Also social security (which is really just money that the government runs off of the same as other taxes).  And various fees people pay to the government for random crap.  Also captial gains taxes (which are lower than normal taxes).  If you include these other taxes the graphs would look very different.

I'm like Jesus, only better.

well by garlic (3.00 / 2) #18 Tue Nov 16, 2004 at 04:01:41 PM EST
sales tax differs by state and county and municipality. It is collected by the states, and not the federal government, so the IRS doesn't have any stats on it. It's also not something that would be easy to get in terms of % of income.

Social Security was brought up by ucblockhead, and I added that in to a chart in response to him, faking up the numbers more than for the other charts. It's a set percent of income up to 87000, and afterwards its 5394 + Medicare.

Random crap fees are not easy to do at a federaly level, nor would it be that easy to compare these fees as a percentage of income, since that's not how they are applied.

Capital gains taxes are income taxes, and capital gains are a part of your adjusted gross income, so those numbers are reflected in the tables. Capital gains were 3.7 percent of all adjusted gross incomes, and and 14.4% of the adjusted gross income of those making $200,000 or more.

There are other taxes the IRS does have some stats on, like gift, excise, and estate that are collected at a federal level. I don't know about you, but I didn't pay any gift or estate tax last year, and while I've paid some excise tax indirectly, I don't know how much, nor what % of my income that was.


[ Parent ]
Well it's not easy to chart by Big Sexxxy Joe (6.00 / 1) #19 Tue Nov 16, 2004 at 04:36:38 PM EST
but that doesn't mean that they aren't significant.

I'm like Jesus, only better.
[ Parent ]
Sales taxes by ucblockhead (3.00 / 0) #25 Wed Nov 17, 2004 at 03:39:46 AM EST
Sales taxes tend to disproportionally hit the poor. However, it's really hard to define as it all depends on the cost of living in the area. To make matters worse, it varies widely from place to place, from 0% in some places to as high as 9% in others. Each state has its own rules as to what gets taxed as well. It would take a huge survey just to estimate it. I highly doubt you can even make a wild-ass guess based on data available on the internet.

Garlic's tables also don't include state income tax, though I suspect that the numbers probably won't make much of a difference in most states.

How the tax burden is applied varies widely from state to state, so once you look at state level data like sales tax and property tax, it stops making sense to have a national chart.
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[ucblockhead is] useless and subhuman

[ Parent ]
for instance, by garlic (2.50 / 2) #26 Wed Nov 17, 2004 at 04:02:09 AM EST
In Illinois, sales tax varies from town to town. Property tax varies from county to county. To estimate what % of income on each group sales tax costs, I'd have to get data on how much income each group spends on taxable items. With only some goofing around on the internet, I don't know that I could get that info per AGI group, although I could probably get some estimates per town.

Property tax payments are probably even harder. The tax itself is most likely always passed on to the resident of the property, not the owner of the property. Many property residents are businesses, not individuals, who try to pass the tax on to their customers, as with all their overhead costs. Of all of this, what should be counted as a property tax on individuals?

Finally,


[ Parent ]
US taxes | 28 comments (28 topical, 0 hidden) | Trackback