Going forward in 2012, many more Americans will lose their unemployment benefits because of the deep cuts many states have made to their UI programs. Had the top 5% not had the Bush tax cuts for the past 10 years, there may not have been the current budget crisis today, and many of the unemployed might still have jobs...and therefore, may not have even needed jobless benefits.
Also, according to Authur Delaney, despite the two month extension for the payroll tax cuts, the maximum of 99 weeks for unemployment benefits will gradually be reduced in 2012.
Happy New Year to the top 5%, and everybody else be damned.
Click photo to enlarge
Personal Income Tax Rates
Among the tax provisions enacted by President Bush and extended by President Obama
in 2010 were reductions in the top marginal income tax rates, from 36 and 39 percent, respectively, down to 33 and 35 percent. What is a “marginal tax rate?”
A marginal tax rate is the rate at which your last dollar of income is taxed. So, for example, if you’re single and you make $22,000 per year, then your first $8,500 of income is taxed at a rate of 10 percent, and the rest of your income is taxed at 15 percent. In that case, 15 percent is your “marginal” tax rate (Click on chart below for all marginal tax rates and the income levels they apply to).
Source: Internal Revenue Service
|The top marginal tax rates—now 33 and 35 percent—affect American families making at least $212,301 and individuals making at least $174,401.|
According to the nonpartisan Congressional Research Service, when President Bush lowered those top rates, and when President Obama extended them, doing so was almost perfectly “regressive”—that is, the benefits went to the wealthiest Americans.
|The 1% & the 99%||Number of Households||Average Income per Household||Average Tax Cut per Household||Share of all income in the U.S.|
|Richest 1%||1.4 million||$1,370,662||$66,384||19%|
|The 99%||140.8 million||$58,506||$1,463||81%|
* The U.S. House of Representatives passed a budget for Fiscal Year 2012** that would lower the top marginal tax rate again, this time down from 35% to 25%. That budget, introduced by House Budget Committee Chairman Paul Ryan (R-WI), would reduce federal revenues by a total of $4.2 trillion over ten years, a loss that was to be partially offset with $2.9 trillion in cuts to Medicare, Medicaid, Social Security and other earned benefits.
** Congress and President Obama have yet to agree on a budget for 2012, even though the new fiscal year began on October 1, 2011. See: National Priorities Project’s analysis of the Ryan budget proposal and Defining the FY2012 Budget Debate
Taxes on Capital Gains
The tax rates discussed above apply to payroll wages, but there are two other types of income that mostly go to the wealthy and are taxed at lower rates than regular wages: "Capital gains," which are profits earned from selling assets like real estate, and "dividends" earned from stocks,
or the sale of stocks after they appreciate. Many times CEOs get stock-options in
lieu of cash salaries*, and therefore are not taxed according to the top
Under President Bush’s tax cuts, and President Obama’s two year extension (for 2011 and 2012), capital gains and dividends are taxed at a maximum rate of 15 percent. Effectively, this means taxpayers earning more than $34,500 per year in wages pay a higher marginal tax rate than millionaires and CEOs earning their income from investments and stock-options. In 2007, 80 percent of all capital gains went to Americans earning more than $200,000 per year.
* For more details, see my post: How the 1% bilks the 99%
The official top marginal tax rate for corporations is 35 percent. However, in 2010 corporations paid, on average, just 23 percent of their profits in taxes, after deductions, credits and loopholes.
“Loopholes" are parts of the tax code that exempt certain people, businesses, and activities from standard taxation, and thus cost the government money in the form of lost revenue. While the official marginal tax rate for U.S. corporations is one of the highest in the world, loopholes make effective tax rates much lower than those of peer nations. The Congressional Budget Office found that corporate taxes as a percentage of GDP are lower in the U.S. than in nearly every other developed nation.
In President Obama’s “Plan for Economic Growth and Deficit Reduction,” released in September 2010, proposed changes to corporate taxation would close some loopholes and increase federal revenues by a total of $133 billion over ten years. And yet, if all corporations actually paid 35 percent of their profits in taxes, the government would have brought in an additional $219 billion in 2010 alone.
Corporate taxes have shrunk as a share of total government revenue over time, and that's not because corporate profits have shrunk.. According to the Commerce Department and the Center on Budget and Policy Priorities, corporate profits have grown as a share of national income since 1934, while wages and salaries have declined.
Sourced: Citizens for Tax Justice, Joint Committee on Taxation, U.S. Census Bureau, Internal Revenue Service, and the Congressional Budget Office for www.CostOfTaxCuts.Com and the National Priorities Project in partnership with Citizens for Tax Justice.
My Related Posts:
- Subsidies for the Rich and Famous
- Historical Tax Rates on the Rich (1862 to 2011)
- The Second Gilded Age: History Repeats Itself
- Mellon: The Banker Who Rigged the U.S. Tax Code
- The GOP Tax Plan - Ignorance, Insanity, or Greed?
- We have a Revenue Problem, Not A Spending Problem
- 280 Corporations are "Too Big to Tax"
- Trickle-Down Economics: The Cruel 30-Year Hoax
- You Pay Hidden Entitlements for the Rich
- Record Profits + Record Bonuses = Zero Jobs
- Low Wages Kills Jobs, Not High Taxes
Other Related Articles
- "The richest 1 percent have more financial wealth than the bottom 95 percent combined."
- The total net worth on the Forbes 400 List marks $1.5 Trillion in 2011
- The Global Super-Rich Stash: Now $25 Trillion
- Historical Tax Rates and Time-line
- Capital gains from Citizens for Tax Justice
- 1977 - 2007 tax rates from U.S. Treasury
- Economic Policy Institute on capital gains taxes
- Capital gains explained from U.S. Internal Revenue Service
- The great corporate tax scam