I just received my first Social Security retirement benefit (payment)

Padreruf said:

I believe Congress will raise the age to receive retirement benefits to 70 (that's when I started taking my check) -- applying to persons under 50. Also, Congress has to raise the upper limit of income to be taxed to around 300,000 or so. Those 2 changes make SS whole from what I understand.

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4Q Basket Case said:

This is federal income tax, not payments into SSI. But it does illustrate that the highest income earners already (1) account for the significant majority of federal income tax receipts, and (2) pay taxes significantly out of proportion to their share of the income.

This particular study was published in January of 2023 and covers the tax year 2020. Over time, I've seen several similar ones covering previous years, and while the exact percentage breakouts vary a bit, the gist of all is the same -- the high earners do in fact pay a lot of the freight for the country as a whole.

Who Pays Federal Income Taxes? | IRS Federal Income Tax Data, 2023 (taxfoundation.org)

For example, the much-villified 1% account for about 22% of overall income, but pay about 42% of federal tax receipts. If you ratchet that down to the top 5%, they account for about 38% of all income, but about 63% of all income tax receipts.

Half of all taxpayers account for about 2% of receipts.

Yeah, I know the stories about people with nine-figure incomes paying no tax are out there. Some of them might even be true. But they're by far the exception. Taken as a whole, high earners more than carry their weight.

Point being, contrary to what politicians and the talking heads would have you believe, you can't just put the screws to the high earners. There simply aren't enough of them to bail out the finances of a 350 million population. We're all going to have to bear some of the burden.

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How America actually taxes the affluent

It was factual, not “demagoguery,” as some have charged, for President Biden to say that billionaires pay lower tax rates than their secretaries.

thehill.com

NationalTitles18 said:

The income tax was designed to be progressive from the start.

And it isn't progressive enough curently.

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Tidewater said:

This is not an argument one way or the other, but it is one my favorite statistics from US history: the highest marginal income tax rate in US history was 100%.
FDR executive order 9250 October 1942.

"No salary shall be authorized under Title III, Section 4, to the extent that it exceeds $25,000 after the payment of taxes allocable to the sum in excess of $25,000."

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NationalTitles18 said:

While I find that excessive, historically tax rates were much higher for those with higher incomes.

Not only that, but of course now the very rich structure income in ways that it is not taxed or is taxed at lower rates.

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4Q Basket Case said:

The author uses some of his own first sentence quoting Mark Twain.

The federal government doesn't tax assets (property taxes, car taxes, etc. are state and local). It taxes income. So the fact that some billionaires -- a measure of assets, not income -- pay a lower tax rate on income than others is irrelevant to the assertion that they pay a bigger percentage of the dollars collected in federal income tax.

The author (Bob Lord) didn't dispute any of the facts cited in the linked article. And he doesn't back up his claim that the 2020 data was, "cherry-picked." He just says that it appears to have been the case.

Turns out, not so much.

Here's another article, from a different source, showing the breakout for historical years. Starts out with 2020 -- same numbers as the link in my post above. But scroll down a bit over halfway through and it shows 2017, 2018, and 2019. 2020 is slightly higher. But the previous 3 years, all pre-pandemic, weren't much lower. At all.

The same chart also shows 1980, 1990, 2000, and 2010. Note how the percentage of federal income tax receipts paid by the top 1% and top 5% has roughly doubled.

Who Pays Income Taxes? - Foundation - National Taxpayers Union (ntu.org)

Then Lord drags state and local taxes and income inequality (which he conveniently doesn't define) into his attempt to discredit an article that doesn't even pretend to address either.

The article I linked in my original post, and the article linked in this one, describe what actually is and has been in recent years.

Bob Lord doesn't like the current setup and is arguing what he thinks it should be.

Lies, damned lies and statistics indeed.

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Go Bama said:

This is not my field of expertise. I posted an article by someone who is an expert in taxes.

I appreciate your well thought out response, but Lord is a tax lawyer, plus his thoughts are published. IIRC, you are a banker. Maybe you know more than Lord does.

I’ll keep an open mind.

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