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April 10, 2010 / Katie

Beauty for Ashes: Wealthy Americans Say No to Tax Breaks

The Seattle Times shares this awesome story with us:

Some rich Americans are leading a tax revolt of sorts — to pay more, not less.

Judy Pigott, a Seattle author, philanthropist and an heir to the Paccar fortune, is among the group of wealthy individuals calling on Congress to end tax breaks that have enriched people like her.

They have signed a Tax Fairness Pledge to take the money they saved as part of tax cuts enacted under President George W. Bush and donate it to groups working to overturn those policies.

The tax cuts were “based on the erroneous assumption that the trickle-down effect would somehow benefit everyone,” Pigott said. “What we have now is the greatest wealth disparity since the Great Depression.”

Go read the whole thing!

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8 Comments

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  1. Deanna / Apr 10 2010 5:34 pm

    I know it’s popular to bash the rich and say they don’t pay their “fair share” of federal income taxes (which is what is referred to in this article). Shoot, I’ve been known to repeat that refrain myself. However, the data does show otherwise. (I’m not trying to argue about who & what gets taxed, what’s fair, etc. But I believe it’s helpful to see who actually pays.) Remember, we’re only talking about the federal income tax.

    An AP article from last week (http://tinyurl.com/ybzc8x5) forecasts the following about who will be paying 2009 federal income taxes. (This data is consistent with that I’ve seen reported in IRS data in recent years as well, a few points of which I’ve included below.)

    –The wealthiest 1 percent of the population (earning 19 per­cent of the income) will pay 37 percent of the income tax.
    –The top 10 percent of earners will pay about 73 percent of the income taxes collected by the federal government.
    –The top-earning 25 percent of taxpayers (AGI over $66,532) earned 68.7 percent of the nation’s income, but pay more than four out of every five dollars collected by the federal income tax (86.6 percent).
    –About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability. About 40% of this group will actually get a payment from the government.

    Of course, we are only talking about federal income tax, which is the largest source of funds for the feds. All people pay taxes in some form, whether they be State, gasoline, property, payroll (S.S. & Medicare), etc.

    • Katie / Apr 10 2010 6:46 pm

      wow, that AP article is filled with misconceptions. For example, it says this:

      The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

      This is just a really strange stretching of the truth. Sure some people with deductions end up getting a rebate if they’ve over-paid, but this makes it sound like some people who never paid in end up getting paid, and that just doesn’t happen.

      he wealthiest 1 percent of the population (earning 19 per­cent of the income) will pay 37 percent of the income tax.

      First, I couldn’t find anything in the article that supports this claim. I wonder if perhaps you are getting confused in that right now, 35% is the maximum that anyone (making over about $360K per year) pays in taxes.

      Second, I absolutely cannot fathom why anyone would see this and think, “oh, those poor 1% who make up 1/5 of the total income!” Seriously? In what universe is it okay when one percent of the population brings in nineteen percent of the income?

      I would strongly recommend you look into the website of United For A Fair Economy, the organization mentioned in the article I linked to. The percents that you quoted above hold a bit less of a punch when you consider just how much money people are bringing in. Piggott, the woman talked about in the article, donated $600,000—half of which was savings from tax cuts. Her tax break saved her more than four times my entire household’s yearly income.

      Deanna, I gotta be honest with you; this sounds a lot like concern trolling.

      This is a liberation theology blog. That means this is a place about justice for the poor and oppressed. It is not a place where it is okay to defend the systemic inequalities that lead to the rich getting richer and the poor getting poorer in the US. Further defense of said injustice will not be tolerated here.

      • Deanna / Apr 10 2010 7:32 pm

        This was most certainly NOT concern trolling. You can find this data in dozens of places; I just read this particular article last week and thought it was relevant. Frankly, I was surprised myself at the percentages. I did say in particular that I wasn’t talking about what was FAIR, I was just trying to show who actually pays federal income taxes. I also specifically pointed out that other taxes weren’t included in these numbers.

        I’m not sure how you ascertained that I hold certain attitudes by my repeating numbers that can be found on the IRS site.

        I’m an RN who works in home care. The majority of my patients live in poverty. I have spent my entire 25+ year career trying to make certain my patients obtain adequate health care and obtain the resources they need to live in some comfort and dignity. I know more than most the economic devestation experienced by many that are chronically ill. To imply that I somehow believe that it’s great that the poor are getting poorer is quite unfair.

        • Katie / Apr 10 2010 8:05 pm

          I just read this particular article last week and thought it was relevant.

          Okay, so I’m just curious, what relevance do you think that it has?

          My response to the information about who pays most of the income taxes in America is to say that it speaks to a system that sustains such inequality that nearly half the Americans living within it are so poor they don’t have to pay income taxes. That is incredibly disturbing and speaks to a terrible trend, one which the wealthy folks that the linked article discusses are trying to, in their own small way, begin to make more just.

          I hope you will understand why posting that information without any critical commentary on your part looked like concern trolling.

        • Katie / Apr 10 2010 8:09 pm

          Also the article you posted is full of misinformation so that in and of itself was suspicious. It is highly slanted towards the wealthy and the upholding of the status quo with quotes such as:

          “We have 50 percent of people who are getting something for nothing,” said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

          Yeah, because that’s a fair characterization of what’s happening here.

          My “favorite” part was probably the “math” at the very end.

  2. Regina T / Apr 11 2010 12:36 am

    Kudos to those who wish to give back. The system is definitely skewed towards the wealthy, and the scaling back of tax liability for the wealthy is, in my opinion, the biggest contributor to the wealth disparity in this country. In the 70s, the wealthy used to pay up to 70% in taxes, and were still able to retain their wealthy status and live luxurious lives.

    That article Deanna cited liked to claim certain things that aren’t necessarily true. It talked about a large portion of taxpayers actually receiving a check from the govt for “tax credits”, yet didn’t acknowledge that a credit counts as income the following year, in many cases. Remember when you got your $800 stimulus check? It was considered income when you filed your taxes that year.

    They also “forgot” to discuss that when they say “got a check from the federal govt” they didn’t explain that the majority of earners still paid taxes….the check was for the overpayment that is based on family size, AGI, and deductions. That doesn’t mean they didn’t pay any taxes.

    Also, they didn’t even touch the REALITY of bigger expenses that middle and lower income earners have because of child care expenses, commuting, groceries for a family of four, clothing, artificially inflated housing costs, and the basic expense of living a decent life on an income far less substantial than the wealthy…..who often earn money (interest income) that doesn’t come from a daily job.

    I absolutely hated the statement in that article that said vast numbers of people got to receive all the benefits of roads, defense, schools, etc without paying for it. What a crock that is! Those people still pay taxes in the form of an interest free loan to the govt in every paycheck. There is no interest paid by the govt for the use of their tax dollars for an entire year. That statement is full of classism and attempts to label that 40% as slackers, and most of them are anything but.

    I’m not against anyone working hard and earning the most money they can, within reasons that include the use of integrity, honesty, fairness, and ethics. I am fortunate to have grown up poor, thus knowing the power of money (cause we didn’t have any), and being married to someone who’s income allows me the luxury of not having to work and focus on raising my kids. We are by no means wealthy, and in fact, owed taxes this year, even though we paid over $30,000 in federal income tax. We don’t live a lavish life. We take one or two vacations a year. We drive cars that are over 6 years old (one is 9). We eat out a couple of times a week. Modest living describes us to a T. But here’s the kicker. We live with integrity. We don’t seek special treatment. We don’t ask for more than a fair share. We don’t seek ways to unfairly reduce our tax burden. We give of our time and money to various charitable organizations. And we don’t think we are better than anyone else who feels we should be given preferential treatment because we make more money than others.

    We live an ethical life that emphasizes fairness, equity and morality. We do things because they are the right thing to do, not because they will make us more money. In essence, we conduct our lives in such a way that we will be able to sleep at night and not suffer any guilt for our actions. I don’t view my family as a business, I view it as the very core of my existence that sustains my beliefs, values, and happiness. And I sleep very well at night.

  3. Linda / Apr 11 2010 8:38 am

    It’s kind of heartening that there are rich people in society that feel this way. The trend I have seen is for the wealthy to see themselves as outside of the society in which they live: if we just build enough gated communities, the rest of society can go to hell. Glad to see that’s not entirely so.

  4. bananacat / Apr 13 2010 9:02 am

    I’ve been both extremely rich and moderately poor, and several places in between. I grew up around business owners and got some of idea of how this works. The wisest and most successful CEOs realize that draining money from poorer classes in order to save a little bit in taxes will hurt you in the long run. Success for most businesses depends largely on consumption. Paying a little more in taxes to benefit your society will pay off in the long-term because more people will have extra money to spend on your product.

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