The rich and their taxes / by kevin murray

The rich like to portray themselves as paying far too much in federal taxes, of which they demonstrate this by surveys, based on IRS data, such as presented by the, in which the Top 5% of taxpayers in 2015, based on their Adjusted Gross Income (AGI) as reported by the IRS, had a 36.07% share of the Total Adjusted Gross Income, but actually paid 59.58% share of that Total Adjusted Gross Income, clearly indicating that they pay their taxes at a far higher percentage rate than those with a lower AGI.  However, keep in mind, that the federal personal tax system is a progressive tax system, in which, the more that you make, the higher the percentage that you will owe in taxes per the various income tiers, so in actuality, the above statistics are only proving what they are meant to prove, that the rich pay a higher percentage of federal taxes because of the progressive income tax.


What we don't hear nearly often enough, at least by certain media outlets, is more about all those taxes or tax codes that favor the rich at the expense of the poor, along with how the tax code is setup to favor certain asset classes at the expense of other asset classes.  For instance, the most egregious example of the favoritism that the rich get over those that make a decent wage salary and above, is the Social Security tax, of which this tax, as of 2018, necessitates that each employee making a wage, has 6.2% of their earnings taken from their paycheck and diverted to their Social Security account, with the exception of all those that have income exceeding $128,700, at which time when passing that wage threshold, that percentage of 6.2% actually drops to zero.  This so indicates, that those earning more than $128,700 do not have any additional Social Security tax taken out, of which regaining 6.2% of one's paycheck, is a very large number.


Further, there are lots of flat taxes, or regressive taxes, that are equally applied to rich and poor, such as taxes for groceries in some States, fuel taxes for oil, property taxes, cigarette and alcohol taxes, cable and cell phone taxes, water and sewer taxes, toll taxes, and so on, of which each of these taxes are set at certain percentage that are fixed for each individual, of which, the poor pay the same percentage as the rich, effectively making those taxes of far more impact upon those people that earn less money.


Additionally, and of massive importance, not all income or asset appreciation is captured by a given taxpayer's AGI, of which, the most glaring example of something that is not captured, unless sold, is capital gains, of which the prime examples of a capital gain, would be the appreciation in value in one's home or in one's stock and bond portfolio.  In both of these cases, the individual taxpayer does not need to pay capital gains on assets that appreciate in value, if they do not sell those assets.  In other words, if you bought shares of Apple, and it appreciated 1000% since your original purchase, but you have not sold any of those shares, you do not owe anything in taxes, though your assets have appreciated considerably by owning that stock.  Also, for those that do sell and have long term capital gains, unless your AGI is above $425,801, your long term capital gain federal tax rate is just 15%, whereas for those that earn their money through their paychecks, anything above $38,700 in that fiscal year for individuals is taxed at the 22% rate.


In summary, while the rich will complain about paying their fair taxes or more than fair taxes to the IRS, the truth of the matter is, growth of assets that are not classified as being part of a given individual's AGI, are not taxed at all, and the very, very rich are very, very good at doing just that.