Sunday's AP News Story & Responsible Wealth

April 17, 2011

If you read Sunday's Associated Press (AP) story, "Super rich see federal taxes drop dramatically," you may be left with the false impression that United for a Fair Economy (UFE) is a network of wealthy individuals who support higher taxes on themselves. Well, that's close, but not exactly right. UFE is a cross-class organization with supporters of all financial means who understand that concentrated wealth and power undermine the economy, corrupt democracy, deepen the racial divide, and tear communities apart. We have several program areas where we seek to advance progressive policies and support movements for long-term change.

The AP story was referencing a member of UFE's Responsible Wealth project. Responsible Wealth is a network of 700 business leaders, high-wealth, and high-income individuals who understand that inequality is bad for everyone, including themselves. Through the Responsible Wealth project, high-wealth individuals work to reign in CEO pay through shareholder activism, advocate for progressive tax policies at a national level, and work in cross-class alliances with state groups working to advance progressive policies at a state level.

In addition to the Responsible Wealth network, other projects of UFE include our Popular Economics Education initiative that provides tools for grassroots groups seeking to better understand the forces behind economic inequality, the Racial Wealth Divide project that explores the intersections of race and economic inequality, the Tax Fairness Organizing Collaborative supporting 28 state groups working on progressive tax policies at a state level, and our federal tax advocacy deeply engaged in preserving a strong estate tax, rolling back the Bush tax cuts for top income-earners, and ending the special tax breaks for income earned from wealth.

If this sounds good to you:

Note: The later versions of this Associated Press story included a corrected reference to both the Responsible Wealth project and UFE.

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I want to know how Mr Eric

I want to know how Mr Eric Shoenberg was able to pay only $2,000.00 on $200,000.00 income. I had never seen less than 30% Federal Tax on $200,000 income and above. Who is his accountant.

Marginal vs. Effective rates...

In response to the first post above, no one earning $200K pays anything close to 30% of their income in taxes. They may be in the 33% tax bracket which kicks in at about $172,000 for a married couple, but that 33% only applies to the income they earn over $172K. The rest of their income is taxes at 10%, 15%, 25%, and 28% according to the graduated brackets. In the end, their total effective tax rate is closer to 22% for a family earning $200K.

That said, even by that measure, Eric's tax is outrageously low... that's because his income is mostly from investments as opposed to his work. Income from investments (capital gains and dividends) are taxed at a top rate of 15% no matter how much you make! Add in some unusual circumstances, losses claimed, itemized deductions, charitable giving, etc. and Eric got his tax all the way down to $2,000. Now again, Eric does not thing this is right at all. He, and we, think he should pay the same as someone who made their $200K going to work each day. That's what we're trying to change.

See my response to the comment above for additional details.

you misspelled wealth on the

you misspelled wealth on the main page

 

Thanks for the correction

Thanks for pointing out the typo... Just fixed it.

I want to know how Mr Eric

My household income has grown from $50K to right at $300K in the past 10 years and for the past six I walk into my accountant and my instructions are "Get my taxes to 15% of my gross income" and the most I have ever paid is 16% but never lower than 12 and never higher than 16%. I think this discussion of taxes based on "taxable" income is one of the problems society has in understanding the difference across the classes.

We should move reform to a progressive tax on gross income.Income up to $30K pay 0%, up to %50K pay 5%, up to 100K pay 7.5%,   up to 250K pay 10%, $1Million plus pay 15%, 

Corporations should also pay a flat rate against gross profits.

Eliminate all deductions. and if a corporation exists in any business that recieves any kind of subsidies and posts of gross profit of more than 15% or a net profit of more than 3% it should not qualify for any type of subsidy,

 

HOW did Mr. Shoenberg only pay $2K in taxes???

I earned just under $400K last year.  I paid OVER $120K in taxes which is far, far too much.  HOW did Mr. Shoenberg earn pay only 1%???

More importantly, the top 1% of earners earn about 19% of the income yet they pay 37% of the tax.

The top 5% earn 33% of the income yet they pay 57% of the tax.

The bottom 50% earns 13% yet pays 3% w/nearly half paying NOTHING??

Still, this is not enough wealth distribution for you folks?? 

I am extremely resentful that I work nearly a third of my life to pay the expenses of others who pay nothing.  It's high time that those living off of OTHER PEOPLE'S VERY HARD EARNED MONEY STEP UP TO THE PLATE AND PAY THEIR "FAIR SHARE".

 

It's about the type of income....

Judging from the roughly 30% tax rate you pay on your $400K, I'm going to guess that it's virtually all from salaries and wages... that is, you actually work for your money. That's one reason you pay so much more than Eric. This year was an exception for Eric because he had a lot of losses, exemptions, etc. to claim... that's how he got all the way down to $2K in taxes on $200K in income.

However, in a "normal" year for Eric, he earned $500K to $700K, and even then he only pays about 13% of his income in taxes. The difference is that almost all of his income comes from capital gains and dividends (as opposed to wages / salary) which are taxed at a top rate of 15%, while your salary is taxed at a top rate of 35%. This is the same reason the 400 wealthiest families in the nation only pay 16.6% of their income in taxes... because the vast majority of their income is also capital gains and dividends.

This is one of the great injustices of our tax system that we are trying to eliminate... the bias that favors income from wealth over income from work. If you haven't checked it out, see our online fact sheet on the wealth vs. work bias in our tax system at http://faireconomy.org/wealth_vs_work

compare our taxes

Hello, Don't think lower earners aren't paying their fair share. My Federal adjusted gross income for 2010 was $40,667 and my tax bill was $11,761. We paid about the same percentage, but I bet your remaining $280,000 went further than my $28,906! I understand your resentment, I feel it, too!

I'd like to be able to retire one day, or help my daughter pay her $40,000 in college debt, maybe update my 1997 car, remodel my house, take a vacation...

Why did you only pay $2,000 in taxes?

The question is, why doesn't Mr. Eric redistribute your own wealth?  If he thinks higher taxes are appropriate, why not start with his own wealth?  Why not send the government 35% of $200,000 income? 

This organization would be well-served to study economics (and history for that matter).  I challenge ANYONE to identify a civilization whose liberty, freedom, and economy thrived by redistributing the earnings of its producers... I'm waiting. 

Re: Why did you only pay $2,000 in taxes?

On your first question, taxes are not charity. Taxes have been slashed for the wealthiest taxpayers over the course of the last several decades. We need to restore progressivity to the tax code and to generate adequate revenue to fund the government. The cuts that politicians from both parties are proposing and passing will hurt real people who are already struggling while doing almost nothing to reduce the deficit. Increasing taxes on the wealthy from the historically low rates that they are at now, needs to be a big part of the solution.

As for your challenge, the basic answer is all of them. All societies that have ever prospered have relied on some form of redistribution as an essential part of their prosperity.

I'm waiting.

Are you seriously going to play that card of calling fair taxation the redistribution of wealth? such an absurd point meant only to create some idealogical fear in people.

Rather than seeking to identify a civilization who thrived on this false concept of redistributing earning of it's producers why don't you count up those societies and civilizations that collapse due to the consolidation of wealth and power, which by the way has been taking place over the past 10 years at a rapid pace unparrelleled in history by those that tried it in the past.

You suggest this organization study economics and history but if you can't look back as far as Rome, the french revolution, the fall of the british empire, or the collapse of the soviet union, then just take a glance over at lybia right now. Tax fairness is not redistribution of wealth, its taking care of our own society and ensuring those that can, do, and those that can't, are provided a means to get on a track where they can.

If your going to claim some historic wisdom, then at least "DRINK from the fountain of knowledge and facts rather than gargling in it and spitting out what doesn't fit your spin.

DJL_Deltona, Fl.