I don't think the Conner v. United States discussion is on the mark. The court's ruling in that case has nothing to do with the fact that compensation isn't a wage. Rather, its holding is that the taxpayer must gain something to have income. If I resell a bottle of wine I purchased for $100 at a price of $100, it is absurd to say I have income of $100. Similarly, if my $100k fair-market-value house burns down and I am reimbursed for $100k, it is absurd to say the $100k is income. Moreover, under the 16th Amendment, taxation on such receipts may not be constitutional, because only income may be taxed, and income requires net gain to the taxpayer.
Material moved over from the article page for discussion
What is the significance of any of the following? The liabilities for tax evasion are directly created by Congress, not merely sanctioned. BD2412T17:14, 29 November 2005 (UTC)
It is directly significant because if the IRS can not create any criminal offense or any liability, then they can not collect or say what is an offense. Show the Statute at Large which created a specific LIABILITY for taxes imposed by subtitle A.--bb6917:20, 29 November 2005 (UTC)BB69
2 Am Jur 2d, page 129 (1962)
Administrative Law
Section 301. -- Particular applications.
In application of the principles that the power of an administrative agency to make rules does not extend to the power to make legislation and that a regulation which is beyond the power of the agency to make is invalid, it has been held that an administrative agency may not create a criminal offense or any liability not sanctioned by the lawmaking authority, and specifically a liability for a tax [fn 2] or inspection fee. [bold emphasis added]
Footnote 2:
2. Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 4 L.Ed.2d 127, 80 S.Ct. 144 (1959); Roberts v. Commissioner of Internal Revenue, 176 F.2d 221, 10 ALR.2d 186 (9th Cir. 1949) (... regulations “can add nothing to income as defined by Congress.” citing M.E. Blatt Co. v. United States, 305 U.S. 267, 279, 59 S.Ct. 186, 190, 83 L.Ed. 167 (1938)); Independent Petroleum Corp. v. Fly, 141 F.2d 189, 152 ALR 928 (5th Cir. 1944) (... the power to make regulations does not extend to making taxpayers of those whom the Act, properly construed, does not tax); Indiana Dept. of State Revenue v. Colpaert Realty Corp., 231 Ind. 463, 109 NE.2d 415 (no power to render taxable a transaction which the statute did not make taxable); Morrison-Knudsen Co. v. State Tax Com., 242 Iowa 33, 44 NW.2d 449, 41 ALR.2d 523 (use tax).
Liability for the payment of the sales tax is controlled by statute; it cannot be controlled by rulings or regulations of the board. Acorn Iron Works v. State Board of Tax Administration, 295 Mich. 143, 294 NW 126, 139 ALR 368. Annotation: 139 ALR 380 (“retail sale”).
As the Supreme Court held in Brushaber v. Union Pacific R. R. Co,240U.S.1 (1916), the amendment did not expand the federal government's existing taxing power -- because the government had always had the power to tax income -— but rather removed any requirement for apportionment of income taxes (meaning profit or gain from any source) among the states on the basis of population. + As the Supreme Court held in Brushaber v. Union Pacific R. R. Co,240U.S.1 (1916), the amendment did not expand the federal government's existing taxing power but rather removed any requirement for apportionment of income taxes (meaning profit or gain from any source) among the states on the basis of population.
- The modern interpretation of the Sixteenth Amendment taxation power can be found in Commissioner v. Glenshaw Glass348U.S.426 (1955), in which the Court held that Congress had the power to tax any increase in an individuals wealth from any source, and that Congress had intended to impose a tax on all such gains unless they were specifically exempted in the tax code.
What, exactly, is questionable about Glenshaw Glass? The Court was crystal clear in its opinion in that case. BD2412T17:30, 29 November 2005 (UTC)
What's questionable is the interpretation of the court case instead of posting exact quote from case. If an interpretation is going to be posted then a clarification is allowed as well.--bb6917:53, 29 November 2005 (UTC)BB69
The following statement from the article is questionable.
"The Court then enunciated what is now understood by Congress and the Courts to be the definition of taxable income, "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Id. at 431."
Chief Justice Warren had completed his theoretical discussion and was moving on to an application of the law to the facts of the case. The description given was not of income in general, but of the damage award under consideration in the case. He was not defining income, merely noting that it would be absurd if "undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion" were not income.
It has never been necessary that a taxpayer have complete dominion over an accession to wealth, or that it be clearly realized by the taxpayer in order for it to be income to that taxpayer. In UNITED STATES v. MITCHELL, 403 U.S. 190 (1971), a woman was held to have received income for purposes of the income tax despite having an, at best, incomplete knowledge of the income, much less complete dominion over it. Withheld income tax and social security tax are part of an employee's gross income despite his having little dominion over the former and none over the latter.
You need to look elsewhere for the definition of income.
Note: The above commentary was inserted by an editor at IP address 152.216.3.5 on 25 January 2006.
Dear editor at 152.216.3.5:
The term "complete dominion" as used by the Court in Glenshaw Glass has a more technical legal meaning than the one you are using. For purposes of U.S. income tax law, the woman in the Mitchell case -- actually the "women" in the case -- did have "complete dominion" over the income realized in their cases -- as that term is used in Glenshaw Glass. Similarly for purposes of taxability under U.S. income tax law, I certainly have "complete dominion" over all my wages -- even the withheld Social Security tax, Medicare tax, and Federal income tax portions I never actually see or touch. The property law concept underlying the tax law discussed here is that property law is "relational." For example, as between me and everyone else in the world, I do have complete dominion over my own wages (including the withheld part) for purposes of Glenshaw Glass. The term "dominion" as used in Glenshaw Glass has a technical legal sense and not the more colloquial sense I believe you are ascribing to it.
And, yes, for purposes of U.S. income tax law, the term "realized" is also something of a term of art. The general rule is that income must be "realized" to be includible in gross income under Internal Revenue Code section 61. (Income doesn't necessarily have to be realized in the form of money, cash, etc., but there generally does have to be a "realization" event before the income can be "recognized" for tax purposes.)
Glenshaw Glass is one of the very first court cases that almost every tax lawyer studies. It is a leading case. The quote from Glenshaw Glass regarding "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion" is so pervasively repeated by American legal scholars as an example of a definition of income that, I argue, it is eminently appropriate in the main article in Wikipedia. Famspear15:27, 26 January 2006 (UTC)
Glenshaw Glass is almost as good as the Woodsam case. GG also stands for the proposition that ANY ACCESSION to wealth is gross income unless otherwise excluded. Woodsam let in a silly rule that secured loans were not income. If you are able to borrow borrow than the adjusted basis, you have realized the capital gain and have complete use of the money. I.e. buy a house a ten dollars, it goes up in value to a million dollars. Instead of selling, you take a nonfrecourse secured loand of half a million dollars. You have effectively realized a half million dollar gain because you have the cash. Daniel Shaviro has argued for an anti-Woodsam rule. John wesley 13:25, 4 May 2006 (UTC) But then again, he is Haigs-Simon, guy. John wesley13:25, 4 May 2006 (UTC)
What was used before?
Before the US started collecting a personal income tax, what was (were) the source(s) of funding for the federal government? Are those revenue sources still being used, and how much do they generate compared to income taxes?
Mostly import/export tariffs, I think. I don't have numerical references at my fingertips. -- Beland01:59, 4 May 2006 (UTC)
Income Tax doesn't go to provide any governmental services (so to speak). It's used to pay interest on the money the United States barrows from the Federal Reserve (private banks).
And why is that not mentioned AT ALL in this article? Forget that nothing is mentioned at all, as to why the tax is collected now in the first place. Nbbs10:15, 4 May 2007 (UTC)
This article is compromised by a gigantic libertarian tract that has been dumped in the middle of it. Needs immediate attention.--Nydas17:18, 7 May 2006 (UTC)
--While I do not agree with the text dump, I think that there should be a section added to the article pertaining to some of the points brought up about the legitamacy of the income tax in the US. There is a movie coming out called "America: from Freedom to Fascism" dealing with this topic and using many credible sources and arguments.
[note: Above comment was posted by user Nytemunkey on 13 June 2006]
Considering how strong some people's emotions are about the income tax, shouldn't there be a link in the main page to the protester arguments? I think it might help reduce the amount of text dumping into this article; they would see that the alternative views are also presented (not everyone immediately believes/accepts the neutral POV and inclusionist philosophy of Wikipedia). I'm annotating an essay, and came into this page because I couldn't figure out where the discussion of the anti-income tax movement was. Without the link in the main article, I'll have to add a separate link to the protester POV in what I'm writing. I can't do it right now myself because I'm operating under severe time constraints. Maybe I can remember to come back and do it, this is insurance. :) I'd actually prefer that someone else write it, though; legal stuff isn't my forte.--Tygerbryght23:48, 27 November 2006 (UTC)
Added a short details tag under "Arguments against income taxation" - probably not the best solution but should address the problem for right now. Morphh(talk)00:57, 28 November 2006 (UTC)
whats the maximum % of tax that americans pay on income tax? [Question posed by anonymous user at IP 81.149.143.157.]
For the year 2005 for individuals, the highest Federal marginal tax rate for income tax is 35%. See Progressive tax. In the early 1950s the rate was above 90%. Yours, Famspear01:03, 20 August 2006 (UTC)
To clarify, this is just "income taxes" and does not add in payroll taxes (7.5% by employee and 7.5% by employer) up to $90,000. It also does not take into account taxes that are passed down through products such as excise and corporate taxes. So the Maximum tax bracket under the income tax system does not equal tax burden. Morphh02:25, 20 August 2006 (UTC)
Yes, and it also does not include the effect what some call "double taxation" of shareholder's income -- income taxed at the corporate level and then again when the dividend is paid to the shareholder. (By the way the payroll tax is actually 7.65% for employee and 7.65% for employer, with the $90,000 income limit applying only to 6.2% of each, and no dollar limit on the income to which the remaining 1.45% of each applies.) Yours, Famspear02:40, 20 August 2006 (UTC)
Also, the $90,000 limit was for 2005 wages. For 2006, it's $94,200, and it keeps changing with inflation. Yours, Famspear02:45, 20 August 2006 (UTC)
General Question
Based soley on income tax who would end up with more after taxes, person A who made $326,452 (in the highest bracket 35%) or person B who made $326,450 (33%)? William conway bcc16:08, 21 October 2006 (UTC)
Understand that these are marginal rates, so the highest bracket is only applied to the amount of money in that range, not the entire income. In your example Person A is taxed at 35% only for his last two dollars. The answer to your question is Person A will end up with more after taxes, since he had higher income. It looks like you were using last year's brackets, so for this year, with the cut-off at $336,550:
Person A nets 336,552 - 97,654 = $238,898 (29.02% of income)
Income dollars
x Rate
= Tax owed
7,550 - 0
.10
755.00
30,650 - 7,550
.15
3,465.00
74,200 - 30,650
.25
10,887.50
154,800 - 74,200
.28
22,568.00
336,550 - 154,800
.33
59,977.50
336,552 - 336,550
.35
0.70
TOTAL
97,653.70
Person B nets 336,550 - 97,653 = $238,897 (also 29.02% of income, because the values are so close to each other)
The law of diminishing returns and marginal tax rates
An anonymous editor added the material shown below in bolding:
Contrary to a popular belief, there is no point at which one is better off earning less money (excepting, of course, those that believe in the law of diminishing returns). That is, because the marginal tax rate is always far less than 100%, an individual is financially "better off" realizing "more" income than "less" income, even though the marginal tax rate applicable to the highest level of income of that person increases as income increases.
I reverted the edit, for two reasons. First of all, the law of diminishing returns can be roughly stated as being: "As one's effort increases, the marginal benefit of each unit of effort past a certain point becomes smaller and smaller." In an income tax system of progressive taxation -- where the marginal rates increase as one's income level increases -- the realization of higher and higher levels of income does generally result in an application of the law of diminishing returns -- after considering the tax collector's take, the taxpayer gets to keep a smaller and smaller share of each dollar (to use the U.S. example). However, as the article correctly points out, the individual is still financially better off realizing more and more income than in realizing less income. That's just basic mathematics.
Second, the individual's "belief" that, because of the law of diminishing returns (which, again, does in fact apply here) he or she is not better off financially does not change the fact that he or she in fact is better off financially. Again, this is simply mathematics. The only way the individual could be worse off financially is if the marginal tax rate were greater than 100%.
Whether a person feels subjectively that working for those last, extra, heavily-taxed dollars is worth the net marginal overall benefit aside from the financial benefit is a separate question -- one which only the individual can answer. Yours, Famspear02:51, 11 December 2006 (UTC)
Just a footnote to the preceding: In labor economics there is a concept called "the backward bending supply curve of labor". This proposed phenomena suggests that as the marginal utility of income decreases with rising income, and the marginal utility of leisure increases as leisure decreases, rational workers will employ a utility calculus to arrive at the conclusion that they should work less and consume more leisure, therby maximizing their total utility. Besides the obvious difficulty in determining an individual's "supply of labor", and the fact that the marginal utility of income is a function of present and past income (everyone thinks they could comfortably live and achieve true happiness on 110% of their current income), this concept seems to me to be tautological. Claiming that individuals maximize utility is not very helpful if utility is defined as that which we attempt to maximize (a common pitfall many fall into).
See http://en.wikipedia.org/wiki/Backward_bending_supply_curve_of_labour.
It seems to me that the argument that a high marginal tax rate promotes a sense that the taxpayer "is not as well off" at higher income levels makes more sense by comparing it to the "backward bending supply curve of labor" rather than the "law of diminishing returns".70.144.194.125 (talk) 03:24, 5 March 2008 (UTC)
I’m sorry Famspear but the marginal tax rate does not need to be 100% for a person to be worse off earning more money. As an example if people making less than $100K they are taxed at 33%, and if they earn over that amount they are taxed at 35% there is an advantage to not earn the extra money. In this example, a person making $99K would have net income of $66,330. Now if that person was to earn another $1,000 they would then be taxed at 35% and would now only have a net income of $65,000. I have not looked at the current tax structure but the concept of diminishing returns is valid, and should be included. --Cferguson62 (talk) 06:59, 5 November 2008 (UTC)
This is incorrect Cferguson62. The marginal tax rate applies to the next dollar earned. In your example, they would not be taxed at 35% on the entire $100K, only the amount that falls into the 35% tax bracket. So using two brackets as described above, earning $100K would tax $99,999 at 30% and $1 at 35%, for a net income of $69,999.95. All income earned in each tax bracket is taxed at the rate in that bracket. So there is no point in which you would take home less money by earning more. As Famspear stated, the only issue is that there is less motivation to earn that next dollar as you will not get to keep as much of it (.65 on the $1, instead of .70 in your example). Morphh(talk)18:42, 06 November 2008 (UTC)
Morphh in the real world your points about my example are correct, I tried to over simplify it; and apologize. However the real definition as seen below. Shows that my example was taking an increase in tax rates are a factor of production, and because of this was correct.
The Columbia Encyclopedia, Sixth Edition
HighBeam Encyclopedia." Print law of diminishing returns. 2008. 11 Nov. 2008 <http://http://www.encyclopedia.com/doc/1e1-diminish.html
“law of diminishing returns in economics, law stating that if one factor of production is increased while the others remain constant, the overall returns will relatively decrease after a certain point”
If on the other hand you would only like to focus on real world examples here we go. There are a number of people who receive money from the federal government, because they are below a certain income level. This group does not pay any federal income taxes. If people from this tax bracket were to increase their income they will not only have to pay an income tax, which they have not previously paid, but also lose the money that they are getting from the federal government. This would also constitute a diminished return. --Cferguson62 (talk) 03:42, 12 November 2008 (UTC)
A user inserted the following material into the article:
In USA v Laugenour, case number 2:06-CV-00183-GEB-KJM, in the United States District Court for the Eastern District of California, the Laugenours in docket number 76 gave judicial notice of the "facts of the case" in which the DOJ attorneys admitted to acceptance of incentive money by officers of the court for convicting income tax case defendants. They also admitted to owing back to the people every dollar taken without a procedurally proper summary record of assessment, and they agreed that levies do not apply to the people in the private sector. They also agreed that the IRS agents intentionally put false information in Individual Master Files to make it seem that they owe income taxes when in fact they do not. The DOJ attorneys further admitted to status as common criminals with a pattern of fraud and extortion that exceeds the requirements of criminal and civil racketeering. These facts echo the sentiments of thousands of victims of crimes by IRS and DOJ employees against Americans who refuse to file returns for taxes they believe they do not owe.
The above material is tax protester rhetoric, is false, and has already been exposed in another talk page here in Wikipedia. The Laugenours were parties in the case. As parties, the Laugenours cannot give judicial notice of the facts of the case or of anything else, as explained below.
In the Laugenour case, the taxpayers filed a somewhat mangled version of a request for judicial notice under Rule 201 of the Federal Rules of Evidence. The above verbiage is based on the legally frivolous argument that the opposing side's failure to respond to the request somehow constitutes an "admission" of something. As previously noted on the talk page for the article on Income tax, there is a procedure under the U.S. legal system whereby a party can be deemed to have admitted a fact. Unfortunately, that procedure is not found in Rule 201. As explained below, a request by a party under Rule 201(d) does not result in an "admission" of anything. Indeed, a request under Rule 201 results in nothing unless the Court itself makes a ruling.
Rule 201(d) relates to requests made by one party that the Court itself judicially notice a particular fact. To qualify, however, the "fact", must be "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned" (Rule 201(b)). Examples of statements of facts of this kind would be: "Albany is the capital of New York" or "the sun generally rises in the east and generally sets in the west" or "spring is followed by summer."
By law, the judicial notice of adjudicative facts, if one is made at all, is made by only the court. The silence or acquiescence of an opposing party (such as a government lawyer) after the filing of a Rule 201(d) request does not result in any kind of "admission" under Rule 201; the silence or acquiescence also does not constitute a ruling by the court. The idea that the absence of a Department of Justice response to the Laugenours' assertions found in a Rule 201(d) request would constitute, by silence and acquiescence, an admission, agreement or confession of the Laugenours' assertions is without legal merit and is indeed legally frivolous. Yours, Famspear16:43, 4 April 2007 (UTC)
Why collect Income Tax?
Simple Question.
Why do they collect the tax, as of present day?
I'd like to know if someone can add the correct information. (Only seems reasonable asking for a reason to collect the tax, no?)
As it can't be only to pay interest on the money the US barrows from the Federal Reserve. Can it? (being facetious) Nbbs10:26, 4 May 2007 (UTC)
As Huntsville Alabama attorney Larry Becraft has pointed out on his web site US and state courts have differed widely on whether income tax operates as a direct or indirect tax. He pointed out to me that 19 CFR 351 refers to income tax as a direct tax. Since the courts cannot agree on the classification of the income tax, the courts should decide the matter in favor of the alleged "taxpayer."
Uh, Larry Becraft espouses Tax protester arguments or represents people who do espouse those arguments, and Becraft is a highly unreliable source for any information about U.S. Federal income tax. Also, his clients' losses in court are a matter of record.
And 19 CFR 351 has nothing to do with whether a Federal income tax is a direct tax or an indirect tax. That citation refers to Part 351 of title 19 of the Code of Federal Regulations. Part 351 deals with "Antidumping and Countervailing Duties" with respect to investigations of unfair import trade practices in connection with the international trade administration of the Department of Commerce. Good grief.
U.S. and state courts have most certainly NOT "differed widely" on whether income tax operates as a direct or indirect tax, for the simple reason that state courts are not generally presented with, and do not generally decide, issues involving the validity of Federal income tax, or whether any given Federal income tax is "direct" or "indirect."
Further, saying that Federal income taxes are "direct" is essentially saying that ALL Federal income taxes are direct. It's like saying that "a Chevrolet is a Lumina" -- which really means that ALL Chevrolets are Luminas. It's patently false.
Further, the FEDERAL courts not only do NOT generally disagree among themselves about the classification of the income tax, the Federal courts don't even care. After about February of 1913, the classification of any particular Federal income tax as direct or indirect is legally irrelevant. All this is already covered in the case law -- and in various Wikipedia articles such as the article on the Pollock case, the article on the Brushaber case, the article on the Sixteenth Amendment to the United States Constitution, and so on. Yours, Famspear15:09, 20 June 2007 (UTC)
Another post-script: When I say that the classification of any particular Federal income tax as direct or indirect is legally irrelevant, I am talking about legal irrelevancy with respect to the Constitutional rule about APPORTIONMENT of direct taxes. The point is that because of the 16th Amendment, NO Federal income tax after February of 1913 is required to be apportioned among the states according to population. Yours, Famspear15:19, 20 June 2007 (UTC)
Laugenour, Becraft, etc
Yes, it's me. I forgot to log in.
Okay. Becraft. You call him a tax protester, but he's an attorney, not a protester, and he defends people who KNOW they have no income tax liability, and who KNOW the income tax is and must be an indirect tax, regardless of what lower courts say.
I want to see your proof that one cannot rely upon his counsel. He loses cases sometimes because of strategy, never because of espousing a falsehood, and usually because corruption and incompetence hopelessly ride the courts (including judges, DOJ, IRS, and selected jurors), as the Laugenour case has proven beyond a shadow of doubt.
Our problems with lower courts: they ignore the principles of Anastoff about the critical importance of precedent (not legislating from the bench, but honestly divining the meaning of law, rather than what they wish the law meant).
As for Laugenour's Judicial Notice of Adjudicated Facts, FRCP 26-37 deem admissions admitted if not responded to within the required time period. Opponent can petition for order to answer, but a non answer constitutes an answer.
For your reference:
Connally v. General Construction Co., 269 U.S. 385, 391 - notification of legal responsibility constitutes “the first essential of due process of law.”
U.S. v. Tweel, 550 F. 2d. 297 (5th Cir. 1977)- “Silence can only be equated with fraud where there is a legal or moral duty to speak or where an inquiry left unanswered would be intentionally misleading,”
Seaboard Air Line Railway Co. v. D. A. Dorsey, 1932.FL.40867, 149 So. 759 (1932)- "he who is silent when conscience requires him to speak shall be debarred from speaking when conscience requires him to be silent"
United States v. Dalles Military Road Co., 11 S. Ct. 988, 140 U.S. 599, 35 L. Ed. 560; Wiser v. Lawler., 23 S. Ct. 624, 189 U.S. 260; - notification of legal responsibility is "the first essential of due process of law."
Carmine v. Bowen, 64 A. 932 (1906) - Silence constitutes an implied representation of the existence of the state of facts in question and will operate as an estoppel.
Federal Rules of Evidence Article III provides for “Admission by silence”
Federal Rules of Civil Procedure Rule 8(d) maintains that the effect of failure to deny constitutes tacit admission
Ditto Florida rules of Civil Procedure 1.110(e) and Florida Statute 90.803(6)(c) (which also apply also to Administrative Process.)
Dear Bob Hurt: Gee, I thought you were contending, via Mr. Becraft, that the Federal income tax is a DIRECT tax, based on the weird reference to 19 CFR 351 that I exposed above. Now you're saying that Becraft is defending people who know the income tax is an INDIRECT tax. Well, which is it?
You brought up Mr. Becraft, not I. Wikipedia editors are not under some sort of obligation to prove to you that tax protesters cannot rely on Mr. Becraft's counsel, and this talk page is not the proper forum for that anyway. If Mr. Becraft has won a case on a point of law that you think is somehow relevant to the article, let’s hear about it.
The U.S. legal system is not based on "the principles of Anastoff," and courts do not refer to "Anastoff" to figure out how to decide cases. Our legal system came to us from English common law. We have a Constitution, and that's what we follow.
I have already explained the Laugenour case to you on another Wikipedia talk page. The Laugenours did not make proper requests for admissions under the Federal Rules of Civil Procedure. They made a mangled attempt at obtaining admissions through a completely unrelated provision - Rule 201 of the Federal Rules of Evidence -- for requesting that the court take judicial notice of their preposterous, laughable claims. The court, not surprisingly, declined to do so.
Among the hilarious claims that the Laugenours delusionally and mistakenly thought the court would treat as “facts” are the following, which you yourself posted on a talk page in Wikipedia some time back:
”Every time an IRS or Tax Division attorney from the Unite States Department of Justice makes any sort of demand relative to IRS form 1040, they are committing a felony crime.”
”Many of the people who have worked for the Internal Revenue Service or the United States Department of Justice, many federal judges, federal magistrates, and federal prosecutors have played a role in taking money or property under the false pretense that many millions of Americans and others who happened to be domiciled within the United States or its territories actual owed some sum to the United States Treasury where no procedurally proper assessment verified a valid tax debt, are nothing in the world but common criminals.”
”It is the standard operating procedure of the Internal Revenue Service to falsely state, on the Individual Master File and the Individual Master File's underlying documents, that individuals domiciled in the several states of the United States are actually operating a business in one of the Territories of the United States.”
”Congress has made an alliance with the federal court system to the effect that if the federal judiciary will enforce the collection of the 1040 tax, the federal system can operate extra-legally for the purposes of fraud and extortion.”
”Personnel within the United States Department of Justice have actual knowledge that federal judges and prosecutors receive kickbacks, dividends, and bonuses from Corrections Corporation of America and have a stake in sending people to prison for tax crimes that are never proved.”
”The CID, "criminal investigation division" of the Internal Revenue Service maintains a file on every single federal judge and federal prosecutor to extort compliance with IRS fraud.”
”Gaud P. Maragani and McGregor W. Scott are nothing in the world but common criminals with a pattern of fraud and extortion that exceeds the requisites for criminal and civil racketeering warranting: (a). Inquiry to determine how many U.S. Attorneys, IRS agents, federal judges, federal magistrates, federal clerks, and federal circuit court judges are engaged in this racket, (b). Prosecution of all U.S. Attorneys, IRS agents, federal judges, federal magistrates, federal clerks, and federal circuit court judges involved in the racket to the full extent of the law including five years in prison per count to be served consecutively [after all these are the "keepers of the law"], (c). the United States of America returning all that has been taken from the American people for a so-called 1040 tax, (d). exoneration of all those imprisoned for a so-called 1040 tax issue, (e). compensating all those who have been imprisoned relative to a so-called 1040 tax, and (f). executing each and every U.S. Attorney, IRS agent, federal judge, federal magistrate, federal clerk, and federal circuit court judge whose acts in re: the so-61led 1040 tax were the proximate cause of the death of the target of IRS racketeering [ . . . ]”
The above quotations are not “admissions” made by the government, and they are not “facts” determined in any Federal court anywhere, at any time. They are delusional ramblings by the Laugenours – from material that you yourself posted on another talk page in Wikipedia.
Neither this talk page nor the related Wikipedia article is the proper forum for you to be promulgating tax protester rhetoric, especially materials already previously discredited on other talk pages right here in Wikipedia (including your completely off-topic citations to cases like the Tweel case). Yours, Famspear20:24, 22 June 2007 (UTC)
The following discussion is an archived discussion of the proposal. Please do not modify it. Subsequent comments should be made in a new section on the talk page. No further edits should be made to this section.
I just did the second option, which was easy because I had earlier finished the first option and so I just had to copy and paste. Lets go ahead with the one you prefer. EECavazos04:04, 15 July 2007 (UTC)
The above discussion is preserved as an archive of the proposal. Please do not modify it. Subsequent comments should be made in a new section on this talk page. No further edits should be made to this section.
Misleading language
The following language in a link near the bottom of the article is misleading:
Sometimes "protesters" win in court and sometimes lose.
As of early August 2007, no tax protester has ever won in any Federal court case on a tax protester argument. The only "wins" by tax protesters that relate to Federal income tax are a few scattered wins in criminal cases, in the form of acquittal (not guilty verdict), such as Joseph Banister, Tommy Cryer, and so on. A not guilty verdict in a criminal case is not a ruling that the law under which the defendant was charged is somehow invalid. The language in the link seems to give the false impression that some Federal court somewhere has actually ruled in favor of a tax protester argument. As of this date, that has yet to happen even once. Yours, Famspear18:07, 15 August 2007 (UTC)
Stated another way, implying that a tax protester argument has ever been upheld in a Federal court is like implying that because some people have been acquitted of murder, the courts in those cases ruled that the law against murder is invalid. Famspear18:11, 15 August 2007 (UTC)
The whole definition was misleading; the IRS does not consider those who disagree with it "tax protestors", only those who both take particular frivolous legal positions and refuse to pay taxes. I've NPOV'ed it further. THF18:14, 15 August 2007 (UTC)
I removed the change to the Flat tax description:
"Proposals to abolish the progressivity of the income tax."
I don't know of any flat tax proposal in Congress that would abolish progressivity. They normally have an exemption of income to a certain amount, which creates an progressive effective rate. Some proposals are just a flat tax option and leave the current system in place. Morphh(talk)18:19, 15 August 2007 (UTC)
Regarding editor THF's comment -- yeah, if either the IRS or the courts considered everyone who disagrees with the IRS on tax law as being "tax protesters," then everyone who litigates a tax case would be considered tax protesters. In fact, tax protesters accounted for less than 10% of all litigated tax cases in a recent year (based on an unscientific survey I took about a year ago). Also, I went ahead and just deleted the definitions; they're duplicative anyway. Famspear18:21, 15 August 2007 (UTC)
Just so it is out there, I didn't delete it because I didn't think such a section should exist. It was a comment with header that should have been posted here in the talk (and I probably should have moved it here) for discussion and expansion if it is worth including. We also already have a section in the article entitled "Arguments against income taxation". To Arthur's comment above, there is much more regarding "cons" than tax protester arguments, which mainly focus on lawfulness of the U.S. income tax and obligations to pay it. There is certainly arguments against the principles of income taxation and the implementation of the U.S. federal income tax regarding incidence and wealth transfer, social engineering, economic impact, global trade, loopholes, corporate welfare, business decisions, class warfare, transparency, administration, civil rights, compliance cost, and the list goes on... We could write an entire article regarding the pros / cons of the U.S. income tax. Morphh(talk)13:53, 10 October 2007 (UTC)
why do we have no info about the distribution of federal income taxes? who pays more, who pays less? something to think about. thanks (209.7.171.6622:46, 22 October 2007 (UTC))
The statutory rates for the Income tax are listed under "Year 2006 income brackets and tax rates". If your talking about effective rates, tax incidence, tax avoidance, etc - that can be very involved and because of the complexity of the tax code can differ significantly from family to family. Also for this article, you'd have to limit the study with regard to the income tax and exclude other taxes like payroll (SS & Medicare), which 80% of American's are reported to pay more of. It would also exclude things like excise, capital gains, gift taxes, estate taxes, etc. Would it include the individual State's income tax? Strictly listing the Federal Income Tax may give a very limited picture when considering tax distribution and burden. I think the National Bureau of Economic Research did a study on this and reported that we average around 40% of our income in taxes overall.[1] However, something like this may be better for Taxation in the United States. Morphh(talk)14:28, 23 October 2007 (UTC)
I think anon was looking for information of the distribution of income tax with respect to income; i.e., the top 10% of taxpayers by income represents 85% of the income but 91% of the tax (numbers chosen at random), rather than the rates. That would require sources. — Arthur Rubin | (talk)15:20, 23 October 2007 (UTC)
Arguments for income taxation
Despite the prominence of arguments against income taxation in the United States, courts have repeatedly affirmed its Constitutionality. Most famously, Justice Holmes of the Supreme Court, no modern "liberal" by any stretch of the imagination, said in 1904 that "taxes are the price we pay for a civilized society" and to most people the stated ambition of "anti-tax" pundits to eliminate taxation would eliminate commonly enjoyed amenities (such as freeways, support for education, and even national defense) which undergird, and create the framework for, a strong market.
The main reason for the increase of taxation from the end of the Second World War was probably to create a fairer distribution of income, and a middle class society, not a society divided sharply between rich and poor, for such societies were seen prior to World War II to be incubators of political extremism of the left and right. Also, Keynesian economic theory, popular through the Seventies used taxation to create incentives for social goals.
Since most anti-tax absolutists, who preach the elimination of taxation and consequently the reduction of government to a size such that it could be (in the words of anti-tax crusader Grover Norquist) "drowned in the bathtub", support national defense, there is a question as to their sincerity.
The real goal behind private funding of anti-tax propaganda while the arguments for taxation are seldom repeated may be to merely increase the regressivity of the tax system, its tendency to take the largest "bite" out of wage income at lower levels, thereby forcing the people least able to afford heavy taxation to bear the heaviest load, while corporations (as observers including Ralph Nader have pointed out) pay disproportionally small taxes, and, in some cases, no tax at all in many tax years.
Pro-tax proponents point out that this is "regressive" not only mathematically but also historically, since it hearkens back to 18th century France, with its First Estate of the nobility protected from taxation, and its Third Estate of middle class and commoner forced to finance the numerous wars of that era (notably, France's intervention in the American Revolution) through money payments raised by corrupt and inefficient tax "farmers", and, from the penniless, forced labor (the corvee).
This regressivity increases the collection and surveillance pressure on small taxpayers who are bearing the disproportionate burden, including modern day tax farming in the form of privatized collection of back taxes and unrealistically high requirements for tax credits intended to relieve the pressure on low income taxes, notably the Earned Income Credit.
Indeed, in Britain at the end of the Thatcher era, the "poll tax" was a severely regressive head tax which affected people of low income disproportionally, and produced riots, helping to end Thatcher's Prime Ministership. The logic of "anti-tax" crusade creates new taxes to finance government actions, taxes which if unpayable on a small income will of course go unpaid.
In France of the 18th century, and according to some historians, ancient Rome, and in the USA today, "anti-tax" ideology never eliminated or eliminates taxation. It merely displaces the burden onto social classes less able to pay, producing the end of effective government in both Rome, and France.
I wanted to discuss this recently added section by 219.77.96.202 as it seems to be an argument for taxation, and not "income" taxation - in particular it should be about U.S. income taxation. The section in arguments against income taxation are directed at U.S. income taxation. So I have a problem with adding this to this article. Perhaps Taxation in the United States but some of the statements need sources as I see a lot of what I think is original research or just plain POV statements. Morphh(talk)17:58, 23 October 2007 (UTC)
A request for comment has been opened on the general topic of tax protester theories, and whether the articles that address them are NPOV. bd2412T18:06, 23 January 2008 (UTC)
I'll try to get some numbers for this.. I've seen them. Off the top of my head, I think the net tax base for the personal income tax is something like 9 trillion, with a collection of around 1 trillion in revenue. About nother 1 trillion is collected from payroll taxes and probably something like 500 billion for Corporate taxes, estate taxes, gift taxes, and excise. I'll find some sources and try to include it in the article soon. Morphh(talk)20:09, 22 March 2008 (UTC)
A libertarian viewpoint proposes the existence of a natural right to "enjoy all the fruits of one's own labor" (previously protected, some libertarians claim, by the Ninth Amendment). Taxation of income is argued to be an infringement on that right. Under this argument, income taxation offers the federal government a technique to radically diminish the power of the states, because the federal government is then able to distribute funding to states with conditions attached, often giving the states no choice but to submit to federal demands.
The FairTax legislation before the U.S. Congress repeals the income tax in favor of a national sales tax with a rebate that would "untax" purchases up to the poverty level. The Americans For Fair Taxation plan is to first pass the FairTax and then to focus grassroots efforts on HJR 16, sponsored by Congressman Steve King (R-IA), that proposes a repeal of the Sixteenth Amendment.
I took these out. The first paragraph is actually two arguments. One, that taxation is theft, thus its illegitimate. Two, that giving significant taxation powers to the federal government perverts federalism. Neither is specific to an income tax in particular.
The second paragraph shows that the FairTax is one alternative to the income tax but offers no arguments why it is superior to the income tax. —Preceding unsigned comment added by 4.158.99.242 (talk) 03:13, 14 April 2008 (UTC)
I don't think the first paragraph makes the argument of general tax theft but one regarding tax on labor, which is specific to income taxes and the Ninth Amendment being specific to the U.S. So I've added this back in - I don't think it is irrelevant. I reordered the point regarding the FairTax (added it after discussion of consumption taxes) and reduced it down to a single sentence. I think it is relevant to state there is a consumption tax bill in congress to replace the income tax. Arguments for and against the FairTax proposal are in that article, which is wikilinked. This is by no means a complete section. I expect at some point an entire article could be written regarding arguments against the U.S. income tax system. Morphh(talk)14:43, 14 April 2008 (UTC)
From my understanding about libertarian principles all taxation is thought to reduces one's ability to enjoy the fruits of one's labor. Consumption taxes increases the price level of goods and services. Property taxes make property less desirable, ect. Anyway my point about federal taxation powers still holds. Any type of consumption tax or property tax large enough to replace income tax revenue of the federal government would suffer the same flaws —Preceding unsigned comment added by 4.158.99.162 (talk) 05:35, 26 April 2008 (UTC)
Support of argument on state subjugation though income taxes
From the view of consumption, consumers (including governments) pay the cost of all taxes embedded in their purchases. From this perspective using the broadest tax base of consumers (private and public), its been calculated that an approximate average 20.8% (for fairtax supporters, figure does not factor in prebate), of all products are the embedded cost of corporate income, capital gains, personal income, and payroll taxes.
When states spend their budgets they pay state employee wages including the cost of federal income and payroll taxes. In state purchases, they pay the embedded cost of corporate income, capital gains, income, and payroll taxes. Federal taxes embedded in both state purchases and wages, cost states an average 22% of their budgets. In return states receive federal subsidies with strings attached. State budget purchasing power is increased with lower federal tax rates, and eroded with higher federal tax rates.
Taxes embedded in government spending exist under both the present system of taxing, and the FairTax. Excluding present embedded taxes from government purchases is impractical, but If the FairTax excluded sales tax on government consumption, it would substantially distort the market, increasing the tax rate private consumers pay, while removing all taxes from government purchases.
--Shomas (talk) 23:14, 18 June 2009 (UTC)
Under this argument, income taxation offers the federal government a technique to radically diminish the power of the states, because the federal government is then able to distribute funding to states with conditions attached, often giving the states no choice but to submit to federal demands.
A proposal for an improvement or replacement might look like this.
Under this argument, because 22% [1] of state budgets pay federal taxes embedded in the cost of state employee wages and state purchases, federal taxes diminish state purchasing power by the same amount. In return states are offered federal subsidies with strings that limit state free choice, and diminish state power or autonomy.
Regarding the graph showing income tax as a percentage of taxable income, how come the rate rises to 15% at around $5,000, when the first $8,025 are taxed at 10%? Comrinec (talk) 12:30, 30 April 2008 (UTC)
I suspect you're confusing the second marker as $10,000 and not the $100,000 stated. I don't believe the graph has enough detail for that income range to show you the difference between $5,000 & $8,000. Morphh(talk)20:22, 30 April 2008 (UTC)
"I suspect you're confusing the second marker as $10,000 and not the $100,000 stated."
The graph is wrong. Taxes are higher (or equal) for each income level for someone filing as married, but it shows those taxes as lower. Gabriel Duvall (talk) 00:15, 13 May 2008 (UTC)
U.S. taxes as a percent of income (effective tax rate) in 2008 for single and married filing jointly. The filing status of married filing separately is not included, which can result in a marriage penalty.
The image appears to be a graph of the effective tax rate using the income tax brackets for Single and Married filing jointly. I believe you are looking at married filing separately. It is a graph of the first two columns in the 2008 table. It does not violate OR as it creates no new synthesis of data. It is the data, just in a graph form, which I think is completely fine if we describe what is presented. Morphh(talk)13:07, 13 May 2008 (UTC)
But that's an apples and oranges comparison. If I file jointly, I'll move northeast on the graph because my spouse has income. It's plainly confusing outside readers -- google marriage penalty and wikipedia, and you'll find someone citing this graph as "evidence" that there's no such thing as the marriage penalty, when it's purely the invention of the designer of the graph divorced from the reality of the tax code. Gabriel Duvall (talk) 13:49, 13 May 2008 (UTC)
Describe it in the caption then that this does not include Married filing separately and potential marriage penalty effects. This is an issue of describing the data in a neutral way, not the data itself. Morphh(talk)13:51, 13 May 2008 (UTC)
I understand though that presenting only part of the data, may give the wrong impression. I do think it would be much better to include all tax brackets. I'll see if I can recreate the image including all data. Morphh(talk)13:59, 13 May 2008 (UTC)
I tried to recreate the image with little luck given the time I have at the moment to work on it. Perhaps someone could e-mail Dejo. Morphh(talk)16:18, 13 May 2008 (UTC)
Hello and sorry I have been away so long. I am the creator of this image. Thank you for the criticism. Let me answer some of the points one by one:
I generated the graph using the information in the table that precedes it, so it is not original research. If there are any errors, I definitely want to know about it. Please be specific though.
Tax rates at all income levels are equal or lower for the married filing jointly status. In other words, the red curve should always be lower than the black one. This is a result of the differences in where the tax brackets are positioned for each filing status (see table). The reason why couples get a lower tax rate is that they have to support twice as many people. Actually in the case of equal incomes it works out to be the same. For instance, consider two single people each making $8000 who then get married for a joint income of $16000. Either way, they are paying 10%.
Since this is a general article on US income tax, the main intent of this graph is to furnish information on what fraction of their income, most Americans are paying in tax. This gives a bird's eye view of the effect of the tax code and facilitates comparison with other countries. That said, I vote against adding any other filing status curves. That should be reserved for another article - something like "filing income tax in the US". But if there is significant demand for adding another curve, I will comply. Perhaps that can be for 2009.
I think there are a lot of interesting issues that can be clarified in separate detail articles. For example, in the marriage penalty article, it would be nice if someone made a graphic illustrating the effect of disparate incomes. Lets say we have two people with incomes I1 and I2 which sum to a combined income of S. It would be interesting to hold S constant, and see what the effect of varying I1 is. Yet another interesting graphic would be something about the effect of dependents on the tax rate.
If anyone wants the perl code I used in order to make more such graphics, I would be happy to email it to you. Best regards, Dejo (talk) 02:00, 5 October 2008 (UTC)
Where are the actual Internal Revenue figures?
I've noticed that while the IRS is all too happy to cut down whole forests for books of tax codes explaining how much money you owe them, I can't actually find data on how much money is collected each fiscal year by them. This is public domain information, is it not? Seems kind of important for being so obfuscated. --76.224.65.89 (talk) 10:25, 15 May 2008 (UTC)
Dear IP76.224.65.89: I'm not sure what you mean. It took me less than 2 minutes to find this on the IRS web site:
The figures listed there are for fiscal year end September 30, 2006. Looks like the IRS took in about 2.5 trillion dollars that year. Famspear (talk) 11:59, 15 May 2008 (UTC)
I made a correction on the date of the 1939 Internal Revenue Code. An anonymous user quite a few months ago had inserted a reference to that Code with the erroneous date of "1936", here: [2]. Per reference to text of the Glenshaw Glass case, the Supreme Court was indeed referring to the 1939 Code. There was an Internal Revenue Code prior to 1939, but the 1939 Code was, to the best of my knowledge, the first to bear a "year" in its title. In 1954 there was a complete re-codification when Congress enacted the "1954" Code. By statute, the name of the 1954 Code was officially changed in 1986 to (what else?) the "1986" Code, but without a recodification. Famspear (talk) 18:03, 2 September 2008 (UTC)
The Tax Foundation states that the tax cuts signed by U.S. Presidents Ronald Reagan and George W. Bush, contrary to popular belief, actually made the U.S. tax code more progressive, not less. In 1980, before Reagan's tax cuts, the richest 1% paid 19.05% of all federal income taxes, and by 1988, after Reagan's tax cuts, their share had increased to 27.58%. Likewise, in 2001, before Bush's tax cuts, the richest 1% paid 33.89% of all federal income taxes, and by 2006, after Bush's tax cuts, their share had increased to 39.89%.
This appears to be a partisan talking point. The footnote links to IRS data on tax distribution, not to data from the Tax Foundation as claimed in the body of the article. Second, the increase in taxes paid by the richest 1% of the population is obviously a reflection of the fact their incomes have been rising much faster than those of the population as a whole since the 1980s, hence not direct evidence of any meaningful increase in progressivism in the tax code. Third, the claim that these tax cuts "made the tax code more progressive" is obviously nonsensical - tax cuts on the richest 1% are by definition regressive. At best all they did was reduce the rise in the share of total taxes paid by the top 1%.
I can find no such claim in the given reference. There is a table demonstrating the above; however, there is another, more relevant table (Table 8) showing the tax rate as a percent of adjusted gross income, which shows clearly that the share, above, is not a result of tax policy, but is simply a result of income distribution. See Table 5, showing that the top 1%'s total share of AGI went from 8% to 22% over the same period (nearly tripled). If the tax code had become more progressive, their share should have increased commensurately. During that period, however, the tax rate on the top 1% is clearly going down, meaning that the burden on them is not increasing commensurate with their wealth.
Without a clearer citation, I'm inclined to read the above passage as an editor's (flawed) interpretation of the Tax Foundation's tables. Can someone (the author, hopefully) give a clearer citation for that passage justifying the source of the claim? Otherwise I suggest this should be excised, or at least restated. Graft | talk20:49, 4 March 2009 (UTC)
A group appointed by President Ronald Reagan in 1984, named as the President's Private Sector Survey on Cost Control (PPSSCC), was assigned the duty to uncover wasted government spending and to come up with solutions to reverse these inefficiencies. The final report on the group's findings, commonly known as The Grace Commission Report, concluded that the income tax does not go towards government programs, such as building roads, schools, bridges, or funding the military, but is instead partially lost to government waste, while the remaining money goes towards paying off interest on the national debt.[2]
Train of logic: Proponents for the income tax argue that it is justified because it pays for public services, such as military, buildings, schools, and roads. The PPSSCC (Grace Commission) revealed that it in fact does not, after concluding its study on government waste. This is used by tax protesters to argue that the income tax is not even justified because it does not go towards paying for the services which the public expects. This is why I believe it belongs under this section in this article. The entire Grace Commission Report itself is not solely about the income tax. However some of its conclusions do in fact discuss and report on the federal income tax. (Bold to highlight relevance.) LazyLaidBackEditor (talk) 03:56, 28 February 2009 (UTC)
The title of the sub-section was also improper, since this article is not about income taxation in general, but rather about the income tax in the United States, specifically. LazyLaidBackEditor (talk) 04:27, 28 February 2009 (UTC)
Wrong, on both counts. The title of the section is correct, because the article is "Income tax in the United States", so that argument sections refer to that. And, even granting the most generous interpretation, the Grace Commission report provides a rebuttal to an argument supporting income tax. It's not an argument against income tax, or even an argument against the present income tax. — Arthur Rubin(talk)08:01, 28 February 2009 (UTC)
If the article is specifically about the income tax in the United States, then "arguments against income taxation" would belong to the article about income taxation in general (morally, ethically, its efficiency, etc), since each nation handles and interprets income taxation differently. If you read the "arguments against" section it is referring to the United States income tax. (FairTax is better, repeal the Sixteenth Amendment, states' rights vs federal government authority, only the top brackets in our country pay the most, etc.) Why is section 5 titled "The complexity of the U.S. income tax laws" and not "The complexity of income taxation laws?" Your logic does not make sense concerning the paragraph about the Grace Commission's findings. Once again, it is used (even documented in a Senate Finance Committee hearing) to argue against the United States income tax and calls for its abolishment. The Grace Commission Report in its entirety is not itself an argument against the U.S. income tax, and I even made it clear before. I acknowledge that. In the history, you wrote a consensus has already been reached. Please, point me to where everyone has reached a consensus on this matter? LazyLaidBackEditor (talk) 15:44, 28 February 2009 (UTC)
Your edits are still nonsense, but I can't seem to find the consensus that Grace Commissions's report is not about income taxation, nor can it rationally be so interpreted. I think it was in the Tax protester discussion. It's still clearly not relevant, but I won't remove your nonsense again unless I find the previous consensus. — Arthur Rubin(talk)16:55, 28 February 2009 (UTC)
There may be material in the Grace Commission report that critiques the U.S. federal income tax. The article material, however, seems to be primarily a notation to the effect that the Grace Commission was critical of spending, not taxation. Thus, the material is just a bit tangential. If there are some specific critiques of the U.S. federal income tax in the Grace Commission report, perhaps those critiques could be mentioned. Taxing and spending are functional opposites. I therefore removed the material. Famspear (talk) 00:06, 1 March 2009 (UTC)
^President's Private Sector Survey on Cost Control (1984-01-12). "Grace Commission Report IPO281G"(PDF). With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.
Revenue Sources
"Forty percent of Americans pay no federal incomes tax at all although it is the government's largest revenue source."
Thanks, it probably was intended to state that income taxes are the government's largest revenue source, which is not paid by 40%... I've rewritten the section for better lead into the topic and reworded that statement, adding some sourced opinion on why it is a concern. Morphh(talk)21:25, 14 April 2009 (UTC)
David Frum
David Frum is a conservative advocate. He has been an opinion columnist/editor. He served in Bush's administration. He is not an economist, nor does he have any schooling about economics, taxes, etc. His opinions about the historical nature of our top tax brackets do not belong on this page.
Furthermore, the paragraph about his opinions implies a difficulty with comparing current top tax brackets with previous top tax brackets. In a round-about way, it says "Sure taxes on the wealthy *seem* higher today, but there were a lot of loopholes back when those tax rates were higher, so despite the numbers, rich people might be being taxed at similar historical levels." I don't know if this is true or not, but I think to imply it, or to state it here requires a much stronger source than a conservative opinion writer.
I am deleting the paragraph following the table of historical top income tax brackets.
"Some argue that the current income tax system, which is the government's largest revenue source, is too progressive and redistributive.[28] In 2007, the top 5% of income earners paid over half of the federal income tax revenue.[29] The top 1% of income earners paid 25% of the total income tax revenue Forty percent of Americans pay no federal income tax,[29] which raises moral concerns regarding wealth redistribution and the economics for controlling the size and spending of government."
First and foremost you don't have to pay federal income tax. There is no legal requirement to pay it. And how does 40% of Americans not paying federal income tax equate to redistribution? They're still paying pretty much every other tax. YVNP (talk) 08:23, 23 July 2009 (UTC)
Under the assumption that you believe "you don't have to pay federal income tax" (false in the real world, and relegated to the Tax protester family of articles per previous consensus), and that the you don't believe the reason the "40%" (actually, more like 25% of adults, per the last (2006?) IRS statistics) don't pay federal income tax is that they don't earn enough income, this would be a reasonable argument. It's just not accurate. — Arthur Rubin(talk)14:09, 23 July 2009 (UTC)
History of top rates Section
I've been trying to rework this section all morning. It's kind of a mess. First off, the source is the National Taxpayers Union, which is a advocacy group for lower taxes. I don't think this should qualify as a reliable source - especially when their numbers here: http://www.ntu.org/main/page.php?PageID=19 do not line up with the IRS numbers here: http://www.irs.gov/pub/irs-soi/02inpetr.pdf.
Some of the inflation adjusted numbers are incorrect. Most of the information discussed in the section is readily available in the chart below without the commentary. The only benefit this section adds is a few figures on the top threshold on which the top income tax bracked is assessed. Since that data is available at the IRS site listed above, I suggest removing this (relatively new) section and incorporating the thresholds for the top and bottom tax brackets as listed by the IRS into the chart below this section. Bbrown8370 (talk) 18:54, 6 August 2009 (UTC)
Does this article need blocks?
It appears the main article is often the subject of vandalism and tax protester attacks (not necessarily the same sets of people). The result is a weak article rife with POV and undue weight. It also seems to be subject to occasional edit wars. I believe that if we want to have a quality article, there will need to be a moderator or two, and blocks in place. We need to encourage subject matter experts to contribute, but this chaos discourages them. Thoughts from the group?Oldtaxguy (talk) 04:11, 11 March 2010 (UTC)
Blocks are generally put in place only on a temporary basis, and things seem relatively calm in the article right now. Just my personal opinion. And by the way, welcome to Wikipedia, Oldtaxguy! Famspear (talk) 05:15, 11 March 2010 (UTC)
Of the last 250 edits, over 100 related to vandalism: either committing it or reverting it. Does the article need blocks? It seems to be a highly emotional topic for some. —Preceding unsigned comment added by Oldtaxguy (talk • contribs) 03:12, 25 September 2010 (UTC)
Distribution bias
I'm just wondering why the distribution subsection compares income tax paid with wealth, and uses it to argue that income tax is fairly distributed in the US (ex. "In 2007, the top 5% of income earners paid over half of the federal income tax revenue. However, as of 2004, the top 5% hold 59.2% of wealth."). It seems that the writer chose these specific statistics (including mixing years) to promote some bias they have. It would make more sense to compare the income tax percentage with the income actually earned. For example, in 2007 the top 5% of income earners paid 60.6% of income taxes, but only earned 37.4% of the total AGI. (http://www.taxfoundation.org/news/show/250.html) Shroomy115 (talk) 20:55, 1 June 2010 (UTC)
I think wealth is an important measure, as it is very common to see a person with low income and high wealth in economic data. However, I do agree that wealth needs to be fairly presented. We should not be presenting specific statistics to promote a pov. We should look at Taxation_in_the_United_States#Progressive_nature, which covers this area pretty well. Morphh(talk)13:24, 16 September 2010 (UTC)
I have added a "disputed" flag and corrected the conclusions to conform to the citations. Note that all sources cited in this section fail the wp:rs criteria.Oldtaxguy (talk) 23:09, 23 September 2010 (UTC)
Add structure & content
I have added significant structure and content to the article, including lots of in-line citations. My only deletions were an inaccurate, slang section "filing taxes", and some private web site links. Comments & well-considered edits welcome. Let's get this lead U.S. article up to true B class. Oldtaxguy (talk) 23:32, 18 September 2010 (UTC)
I have also enhanced the section on state tax. It still needs some work.
The section on Sources may be better relegated to a footnote. Further, it contains some inaccuracies; e.g., the Constitution ALWAYS takes precedence over every other source, and the code ALWAYS takes precedence over regulations.
Proposed changes to introduction and "Basics" sections
I propose to revise the introduction and "basics" sections of Income tax in the United States. Since such revisions will result in loss of some existing text, I will post a draft here first for 3-4 weeks of comment before posting changes.
The introduction contains inaccuracies and omits significant parts of the topic. I believe it should be 5 paragraphs that mention:
1. individual and corporate tax
1. state and local income taxes
1. flow-through of partnership and S corporation items
2. taxable income & basic concepts thereof
2. itemized deductions
2. business deductions
3. graduated rates
3. capital gains
4. tax returns
4. administration
5. history
The basics section should not try to do all things or provide depth. It needs to cover just the basics, with details to be in following sections. It must be concise and simple. This should be the section that answers the questions of most readers. The basics section should not cover history, controversies, economic theories, etc., but just tell the basics of how income tax works in the U.S.
Proposed outline of "Basics" section
(overview to be covered in introduction)
Basic concept: tax on income less deductions, credits allowed, estimated payments or withholding, returns
Business income & deductions
Corporations
Non-business income & deductions of individuals
Reduced Federal rate for capital gains & dividends
Losses
Who must file; types of returns; filing status
Tax rates (existing tables and chart would go here)
Phase-outs
State and local
Foreign persons & income
Tax returns
IRS and state/local tax administration
Using a comprehensive exmaple will require determining sample facts, applying the law to those facts, and presenting it simply. I think there are significant difficulties with a comprehensive example, and it should be avoided. The difficulties include determining what facts to use, how complex the example needs to be, getting the facts stated clearly and unambiguously enough to reliably apply the law to them, and presenting the example in a simple enough manner to be useful to a significant portion of readers. Rather than a comprehensive example, I think examples of specific points would work better.
Please post comments here. I will read and consider all comments posted within the next 2-3 weeks before posting a draft. All help is very much appreciated. You can leave comments here or on my talk page. Thanks in advance for helping. Oldtaxguy (talk) 19:57, 27 September 2010 (UTC)
Proposed section to replace "basics" section excluding the tables: (please comment)
A tax is imposed on net taxable income in the United States by the Federal, most state, and some local governments.[1] Income tax is imposed on individuals, corporations, estates, and trusts. The definition of net taxable income for most sub-Federal jurisdictions mostly follows the Federal definition. The rate of tax at the Federal level is graduated; that is, the tax rates of higher amounts of income are higher than on lower amounts. The lower rate on lower income is phased out at higher incomes. Some states and localities impose an income tax at a graduated rate, and some at a flat rate on all taxable income.
Different rates of tax are imposed by type of taxpayer at differing levels of income. Federal tax rates in 2009 vary from 10% to 35%. From 2003 through 2010, individuals were eligible for a reduced rate of Federal income tax on capital gains and qualifying dividends. The tax rate and some deductions are different for individuals depending on filing status. Married individuals may compute tax as a couple or separately. Single individuals may be eligible for reduced tax rates if they are head of a household. Example: if taxable income of a single individual in 2009 is $29,999, the Federal income tax before credits is $835 plus 15% of the taxable income over $8,350, or $4,082.35.[2]
Federal taxable income is defined in a comprehensive manner in the Internal Revenue Code[3] and regulations[4] issued by the Department of Treasury and the [Internal Revenue Service]. Taxable income is gross income as adjusted less tax deductionss. Most states and localities follow this definition at least in part, though some make adjustments to determine income taxed in that jurisdiction. Taxable income for a company or business may not be the same as its book income.
Gross income includes all income earned or received from whatever source. This includes salaries and wages, tips, pensions, fees earned for services, price of goods sold, other business income, gains on sale of other property, rents received, interest and dividends received, alimony received, proceeds from selling crops, and many other types of income. Some income, however, is exempt from income tax. This includes interest on municipal bonds.
Adjustments (usually reductions) to gross income of individuals are made for alimony paid, contributions to many types of retirement or health savings plans, certain student loan interest, half of self employment tax, and a few other items. The cost of goods sold in a business is a direct reduction of gross income.
Taxable income of all taxpayers is reduced by expenses related to their business. These tax deductions include salaries, rent, and other business expenses paid or accrued, as well as allowances for depreciation. The deduction of expenses may result in a loss. Generally, such loss can reduce other taxable income, subject to some limits.
Gross income and business and other deductions are determined under the taxpayer's [[ |method of accounting]]. Most individuals use the cash method: income is taxable when received, and deductions claimed when paid. Some businesses use an accrual method, recognizing income when earned and deductions when accrued.
Individuals are allowed several nonbusiness deductions. A flat amount per person is allowed as a deduction for personal exemptions. For 2009 this amount was $3,650. A taxpayer (or married couple filing jointly) is allowed one such deduction for themselves and one for each person they support.
In addition, individuals get a deduction from taxable income for certain personal expenses. Alternatively, the individual may claim a standard deduction. For 2009, the standard deduction was $5,700 for single individuals, $11,400 for a married couple, and $8,350 for a head of household. Those who choose to claim actual itemized deductions may deduct the following, subject to many conditions and limitations:
Medical expenses in excess of 7.5% of adjusted gross income,
State, local, and foreign taxes,
Home mortgage interest,
Contributions to charities,
Losses on nonbusiness property due to casualty, and
Deductions for expenses incurred in the production of income.
Capital gains and qualified dividends may be taxed as part of taxable income. However, the tax is limited to a lower tax rate. Capital gains include gains on selling stocks and bonds, real estate, and other capital assets. The gain is the excess of the proceeds over the adjusted basis (cost less depreciation deductions allowed) of the property. This limit on tax also applies to dividends from U.S. corporations and many foreign corporations. There are limits on how much net capital loss may reduce other taxable income.
All taxpayers are allowed a tax credit for foreign taxes and for a percentage of certain types of business expenses. Individuals are also allowed credits related to education expenses, retirement savings, child care expenses, and a credit for each child. Each of the credits is subject to specific rules and limitations. Some credits are treated as refundable payments.
All taxpayers are also subject to the Alternative Minimum Tax if their income exceeds certain exclusion amounts. This tax applies only if it exceeds regular income tax, and is reduced by some credits.
All taxpayers must file income tax returns each year. These returns may be filed electronically. Generally, an individual's tax return covers the calendar year. Corporations may elect a different tax year. Most states and localities follow the Federal tax year, and require separate returns.
All taxpayers must make estimated tax payments, and may be subject to withholding taxes when they receive income. To the extent payments exceed tax shown on the return, the amount may be refunded or treated as a payment for the following year. To the extent the payments are less that tax shown on the return, the taxpayer must pay the amount due, without further assessment. Failing to make payments on time, or failing to file returns, can result in substantial penalties. Certain intentional failures may result in jail time.
Tax returns may be examined and adjusted by tax authorities. Taxpayers have rights to appeal any change to tax, and these rights vary by jurisdiction. Taxpayers may also go to court to contest tax changes. Tax authorities may not make changes after a certain period of time (generally 3 years).
^Note that the IRS prescribes tables that must be used in computing tax where taxable income is $100,000 or less. Under the IRS table, the tax for income from $29,950 to 29,999 is $4,279.
I don't know how to fix that problem either: Specific suggestions, without prejudice to the replacement issue:
7.5% is replaced by 10% under Health Care Reform; I don't know the effective date.
Expenses for the production of income are generally subject to reduction by 2% of AGI
Suggest making sure the link to 26 CFR is stable (and specify the year; I could like to 26 CFR for any year from 2001 through 2010, at this point); that particular link may include a session ID
Suggest separating the references and notes using "group=" within the < ref > tags. (Using "group=basics" and {{reflist|basics}} might properly collect the references here, but I haven't tried it.
"All taxpayers "must file" and "make estimated tax payments" are restricted;
"must file" only if unadjusted gross income would require payment of tax; i.e., for a individual who is not a dependent, total income (not just "gross" income, but including basis of capital gain/losses, for example) exceeds $3650 + $5700, and there are no additional taxes, such as Self-Employment tax or penalties.
"make estimated tax payments" only if taxes due are not covered by withholding.
Foolishly, I decided to look into the numbers related to Hauser's law. The numbers don't fit his "law". The average Federal receipts as % of GDP have been at or over 19.5% in only 6 years since 1945. The average, per OMB data, has been about 18%, with significant variations below average. 2010 is expected to be 14.8%. Thinking the OMB data may be wrong, I spot checked a few convenient years. The ones I checked are within 0.2 percentage point. Is there any research replicating/reproducing Hauser's data with reliable sourcing? Oldtaxguy (talk) 04:46, 1 October 2010 (UTC)
Hauser gave as his support a vague graph. When actual numbers are used from U.S. government budget comparison of receipts to GDP, the results are quite different than Hauser stated. The link is a text file from which one can easily compute averages for any period. The average for 1946-1993, the years Hauser referred to, is actually 17.7%, quite different than 19.5%. From 1946 until 1993, there were, in fact, only two years that it reached 19.5%. Hauser was just wrong. Whether he was ill informed or lied, only he knows.
I have modified this article and Hauser's Law to reflect his inaccuracy. I would argue that adding up some public numbers is not original research, just fact checking. Oldtaxguy (talk) 21:14, 16 October 2010 (UTC)
Why we should not have a debate >>IN<< articles
The interchange between user:Arthur Rubin and user:Amodio11 in Income tax in the United States is a perfect example of why we should not have sections "arguments for/against" particular taxes in the article on such tax. There are wide differences of opinion as to what should be.
We should be describing what is, not what should be. WP should not be a forum for debate. It should be an encyclopedia. I suggest significant curtailment of pro & con sections in any and all articles.
If someone wants the highly controversial pro & con stuff, write a separate article on it, which readers can completely ignore, or better yet, do your own website. Oldtaxguy (talk) 03:09, 11 October 2010 (UTC)
I've noticed a tendency within some tax articles for common words to be linked, in violation of Wikipedia guidelines. The guidelines caution to avoid overlinking, and state, in part:
What generally should not be linked
Unless they are particularly relevant to the topic of the article, avoid linking terms whose meaning can be understood by most readers of the English Wikipedia, including plain English words, the names of major geographic features and locations, religions, languages, common professions, common units of measurement,[3] and dates (but see Chronological items below). ...
An example article
For example, in the article on supply and demand:
almost certainly link "microeconomics" and "general equilibrium theory", as these are technical terms that many readers are unlikely to understand at first sight;
consider linking "price" and "goods" only if these common words have technical dimensions that are specifically relevant to the topic.
do not link to the "United States", because that is an article on a very broad topic with no direct connection to supply and demand.
definitely do not link "potato", because it is a common term with no particular relationship to the article on supply and demand, beyond its arbitrary use as an example of traded goods in that article.
Make sure that the links are directed to the correct articles: in this example, you should link good (economics), not good. Many common dictionary words link to disambiguation pages.
Thus, linking United States in this article is clearly contrary to policy. Some of the other links appear to violate policy. The others are discussed in more detail within the article itself, and should be internal links to the article, if provided at all.
I have revised the basics section, consolidating (with rewrite) parts that were before and after the rate tables. The tables and graph are now a separate section "Tax rates", including the examples. I bolded 2008 in the graph description and removed a confusing reference to marriage penalty. Oldtaxguy (talk) 03:11, 24 October 2010 (UTC)
Proposal to remove false material from unreliable source
The addition by [User:Student7] relies on a letter to the editor of a local Florida newspaper by a writer described as "Robert L. Leichtenberg is a West Melbourne real estate appraiser and Marine veteran who served in Vietnam." Some of the claims are demonstrably false, including the distribution of taxes for the top 1%. See IRS Statistics on Income Excel spreadsheet showing top 1% paid 40% of total income tax on 27% of total AGI. The claim regarding 2009 taxes is patently unsupportable, as the data is not available to anyone yet (and likely won't be for a year), as filings for the year are not done. I propose to remove the added text altogether. In the meantime, I will tag as not reliable source. Oldtaxguy (talk) 03:35, 27 November 2010 (UTC)
If you are sure about the 2009, go ahead and remove it. I did have "questions" about the material when I entered it. "Too good to be true." Ah, well. :) Student7 (talk) 13:41, 29 November 2010 (UTC)
Removed. The newspaper item was published 5 weeks after the extended due date for calendar year 2009 returns. See Form 4868 regarding automatic extensions. Fiscal filers may not even have filed yet. Also see my link above to SOI. The Summer 2010 SOI Bulletin promised 2008 individual data in the Fall issue, which isn't out yet. Oldtaxguy (talk) 01:51, 30 November 2010 (UTC)
True material from reliable source
Thanks. Basically, the tertiary source had the wrong year. I have found the correct year (2007) and a proper cite and less extravagant claim. For credibility, this was the "worst case" year. The gap closed somewhat in years subsequent to 2007.
Found one on "no income taxes" from the NY Times. Of course, they have caveats all over the place ("and justly so" etc.) but the figure still stands. Student7 (talk) 16:53, 2 December 2010 (UTC)
Found one for the CBO. http://www.allegromedia.com/sugi/taxes. The problem here is not lack of solid info. It is rather analysis of CBO data to produce the top x% paying y% of all taxes. It's just that CBO doesn't quite frame them in an easy-to-read (and therefore disputatious) format. Not quite sure what to do about that. The figures are most likely correct. Student7 (talk) 17:10, 2 December 2010 (UTC)
The Times must have had an incredible crystal ball to predict 2009 tax results on April 13, as they appear to have done. I have added to the paragraph to indicate the date of the Times article, and point to IRS statistics. Oldtaxguy (talk) 21:37, 2 December 2010 (UTC)
Archiving
The talk page is pretty long here, so I've setup archiving under a pretty conservative approach - only threads at least 120 days old will be archived. Ravensfire (talk) 16:36, 21 February 2011 (UTC)
Redundant history section
I plan to revert the addition of a History section at the beginning of the article. It is redundant with the Legal history section later in the article. Further, the second paragraph is about general history of taxes, not the article's subject Income tax in the United States. I'm posting here to request reasons the edit should not be reverted. Alternatively, the editor could move the nonredundant parts to the Legal history section. Also, About.com is NOT a reliable source. Oldtaxguy (talk) 04:39, 21 February 2011 (UTC)
Agree that it was mostly redundant. Merged one line. I think we should consider moving this to the top of the article. Student7 (talk) 14:35, 23 February 2011 (UTC)
I disagree; history of tax provisions should be after the more user-relevant information. In nearly 40 years of advising clients, not one has ever asked how some aspect of the tax law got that way. I believe it's good to have the most useful information near the beginning of the article. While the history of a legal provision may be useful to understanding, it is rarely the first step in understanding. Let's keep history near the end. Oldtaxguy (talk) 01:45, 24 February 2011 (UTC)
I understand and you may be right. Nevertheless, an encyclopedia is different than tax advice. A person reading this may be less interested in how much money he's getting back than the nature of US Tax Law, say for research or because they are from another country. History provides that basis for how it got that way. Student7 (talk) 19:52, 25 February 2011 (UTC)
comment in the page from a reliable source
At the bottom of the article there is the following comment:
"The Tax Foundation claimed that, for 2007, the top 1% of earners paid more than the bottom 95% combined[45], entirely due to the top 1% of earners having nearly a quarter of total reported income.[46]"
if you exclude the top 5%, the bottom 95% paid slightly less than the top 1%.
it seems these are more similar, even though the top 1% paid a little more 451 billion vs. 440 billion. I would call these roughly the same, rather than "more than" even though it is. You're making a comparison and it seems more appropriate to say the taxes paid by the top 1% is approximately the same as the bottom 95%.
This of course assumes that the Tax Foundation is reliable, but it is not. It is a front group for industry lobbyists, primarily funded by one David Koch. Koch Industry finances a wide variety of front groups, such as the Heritage Foundation and Cato Institute, which cross-feed each other information in order to appear legitimate. Any information from the Tax Foundation must be considered tainted and untrusted. —Preceding unsigned comment added by 76.104.235.129 (talk) 17:49, 22 March 2011 (UTC)
I express no opinion on the Tax Foundation as to whether it is a "reliable" source. However, the standard is not whether the source is considered "tainted" or "untrusted" or "legitimate" by a Wikipedia editor.
If the organization is a front group for industry lobbyists, etc., that might indicate bias. However, the mere fact that the source is biased is not a valid ground for complaint.
The rule in Wikipedia is that we look to reliable, previously published third party sources.
Wikipedia does not prohibit citations to conservative or liberal sources merely because they are biased. They surely are biased -- by definition. A biased source can still be a reliable source for purposes of Wikipedia. Famspear (talk) 18:59, 22 March 2011 (UTC)
Another way of putting it is to say that a reliable source (as that term is used in Wikipedia) does not have to be neutral. Here is the rule:
All articles must adhere to the Neutral point of view policy (NPOV), fairly representing all majority and significant-minority viewpoints published by reliable sources, in rough proportion to the prominence of each view. Tiny-minority views need not be included, except in articles devoted to them. Where there is disagreement between sources, use in-text attribution: "John Smith argues that X, while Paul Jones maintains that Y," followed by an inline citation. Sources themselves are not required to maintain a neutral point of view; indeed most reliable sources are not neutral. Our job as editors is simply to present what the reliable sources say.
(bolding added) (from the Wikipedia rules on Verifiability).
One of the things that I have heard said is that the total amount of revenue (measured as percentage of GDP) being brought in by income tax is historically low. Does anyone know where reliable statistics on this matter can be found? And if so, should such statistics be in this article? I think that if they can be found, the total amount of revenue brought in each year (again, as a percentage of GDP) should be placed along side the charts of the marginal tax rates for each year. —Preceding unsigned comment added by 108.3.183.96 (talk) 02:59, 15 April 2011 (UTC)
The Federal Budget each year has had historical tables with total Federal revenue as a percentage of GDP. Here are the FY 2012 tables in Excel. These are in total, not by type of tax. Other tables in the budget can be used to construct the info by type of tax, which is more variable. Oldtaxguy (talk) 03:48, 15 April 2011 (UTC)
Shouldn't the 2009 tax computation example include the "making work pay" tax credit?
This credit was in effect in the 2009 tax year and should reduce a single taxpayer's tax by $400 (with certain limits). —Preceding unsigned comment added by 98.164.3.40 (talk) 18:25, 17 April 2011 (UTC)
Question from anon user
Why is the Internal Revenue Service being cited as an authority on the Constitutionality of the Federal Income Tax Amendment to the Constitution? The IRS is (1) not a Constitutional authority and (2) heavily biased in its opinion for obvious reasons. — Preceding unsigned comment added by 68.108.237.244 (talk • contribs) .
That's a long article, so I'm not sure what you're referring to. At any rate, the IRS is a source. Under the rules of Wikipedia (neutral point of view), a source is not required to be unbiased. The IRS is the agency charged with enforcing the tax law, so there's no need to debate whether the IRS is or is not a "Constitutional authority." The rule in Wikipedia is: reliable, previously published third party sources. Famspear (talk) 23:27, 30 April 2011 (UTC)
Reverting statement unsupported by source
I have reverted a statement that income taxes raised $310 million in 1866. The statement not only is not supported in the cited source, it is false. For details on 1866, see Government Revenue, and drill down within the categories. Total Federal collections are shown as $558 million, including $179 million from customs duties, and $196 million from excise taxes. The total is supported by the table on the 38th page (page 1104) of a Census Bureau publication. I have been unable to find a reliable source on income tax revenue that year, but the above clearly indicate it was less than $112 million. Oldtaxguy (talk) 22:40, 18 May 2011 (UTC)
Delete massive table, move history
I have deleted the massive table inserted by an annonymous IP editor. While it may be accurate, it is LARGE, and provides very limited information within the scope of this article. Further, the last column of the table had become nearly irrelevant since the 1920s. The links provided that purport to support data in the table do not support anything before 1940, and one of the links is on balance of trade, not tax. I also moved the History section back to where it was. Oldtaxguy (talk) 00:25, 31 July 2011 (UTC)
Distribution statement on wealth
The article currently has several statements relating wealth and income, with the wealth portions mostly unsourced.
"In 2007, the top 5% of income earners paid over half of the Federal income tax revenue.[42] However, as of 2004, the top 5% hold 59.2% of wealth. The top 1% of income earners paid 25% of the total income tax revenue.[43] Again however, the top 1% hold 23.5% of wealth."
My main issue is not with the numbers, but the way it's presented. It implies that the top 5% of income earners are also the top 5% of wealth holders, which from what I've seen in studies is not often true. The research I've seen on this point shows most often the high wealth holders have low to moderate incomes - retirees, while high income earners are workers. This direct correlation appears to be WP:OR & WP:SYN. We need sources for this content or the wealth portions need to be removed, reworded, or placed in a more appropriate context. It also is presented as a back and forth that doesn't seem appropriate for NPOV. Also see WP:EDITORIALIZING, "More subtly, editorializing can produce implications not supported by the sources. Words such as but, however, and although may imply a relationship between two statements where none exists, perhaps inappropriately undermining the first or giving undue precedence to the credibility of the second." Morphh(talk)12:30, 18 June 2011 (UTC)
We also need to verify the sourcing here. According to other sources, for 2004 the top 1% paid 36.89% of income tax revenue. Seems we should also update it to a more current year - the data is available. An appropriate correlation would describe the percentage of income held by each group, which I believe is available in the sources. While presented with a bias matter of fact tone with weasel words, this sentence does this "The Tax Foundation claimed that, for 2007, the top 1% of earners paid more than the bottom 95% combined,[45] entirely due to the top 1% of earners having nearly a quarter of total reported income.[46]" Morphh(talk)13:03, 18 June 2011 (UTC)
Made some changes to correct inaccuracy and moved the wealth portions to the bottom - we still need to address it. It's still one sided. We need to include some additional points of view. Morphh(talk)15:16, 18 June 2011 (UTC)
I rm the distribution of wealth because it came from a blog. Left the "retirees vs wage earners statement" since it was separately sourced. Student7 (talk) 20:34, 12 August 2011 (UTC)
Can the tax tables be enhanced?
The table is great! Why are 1981-2007 missing? This is actually a very interesting period in history because tax rates were lowered most of the way toward where they ended up in the asset bubble period leading to the Great Depression. We have taken a slower trajectory this time, but we have actually hit a higher peak in the debt supercycle : http://static.safehaven.com/authors/mauldin/17527_a.png. Leading into both peaks we had a stock market boom, but less real GDP growth: http://zfacts.com/p/318.html Anyway, in addition to the missing data point, I think that tax rates, their progressive or regressive nature, and the effect on the economy is a very interesting topic.70.113.69.97 (talk) 11:02, 26 July 2011 (UTC)
The first table you cite is the "total debt of the US", most probably including the private debt (or else the number would make no sense). But, of course, only the federal debt is relevant in this article, if at all. Gray62 (talk) 08:43, 2 August 2011 (UTC)
I also cannot understand why the tax rate table ends in 1980. Is someone opposed to showing the rates from 1981 on?? Jeisenberg (talk) 22:15, 26 July 2011 (UTC)
Yes, why no data after 1980? Clearly this data is readily available.
Is it to help cover people on the Left who say things like "The rich are paying lower taxes than they have any time in the last 50 years"?
Note that the article sourced for this table includes data up through 2011. — Preceding unsigned comment added by 68.40.154.129 (talk) 11:19, 5 August 2011 (UTC)
All: for your pleasure, I just updated the table, starting from the first year of modern income taxes (1913) running through 2010, mostly every other year. It is quite interesting, especially how the top bracket jumps really abruptly in the early years. — Preceding unsigned comment added by 205.204.29.58 (talk) 02:28, 31 August 2011 (UTC)
Proposed removal of historical rate tables
The tables of tax rates in the past serve little use and are far too long. The article exceeds WP length guidelines even without these lengthy tables. The tables are also unencyclopedic. I propose to remove them in about one week. The change of the tables to year by year is really extreme. Comments? Oldtaxguy (talk) 19:32, 25 October 2011 (UTC)
Condensed table; wordsmithed in a few places. Also added POV tag to Controversies section, which is entirely POV material. Oldtaxguy (talk) 17:00, 1 November 2011 (UTC)
The utility of the table was, I think, enhanced by the addition of the inflation adjusted top bracket amount by another user. I disagree with the above user's deletion of the top bracket amounts. The change was material, and should have been discussed here. Comments? Oldtaxguy (talk) 02:29, 10 November 2011 (UTC)
"Please don't edit it further." Now 8 of Somedifferetnstuff's edits later, we're back to even more objectionable than it started. The use of the arbitrary tax bracket points, unrelated to the tax law at the time and not inflation adjusted, creates massive misperceptions. Per my orignial comment, I'm deleting altogether. I was going to move the original table as in place before this editing round, but don't have the rights to be able to do so without a LOT of work. If Somedifferentstuff wants the table, he/she should create an article and put it there. Oldtaxguy (talk) 19:53, 11 November 2011 (UTC)
I added the table with top bracket amounts and inflation data back, I agree with Oldtaxguy the inflation data enhances the utility of the table. Sayitaintso (talk) 00:02, 17 November 2011 (UTC)
The section is about the history of income tax in the U.S.. Showing the rates at different times in history is appropriate. It clearly states that it hasn't been adjusted for inflation. Letting other users see historical tax rates is useful information. Only showing the top bracket with inflation adjusted figures is misleading due to the fact that it wasn't only the top bracket that had high rates at various points in the historical timeline. If you want to add inflation adjusted figures you need to do it for at least the top 3 brackets. Regarding the comment section of the chart, I have no problem with the information points being re-added. Somedifferentstuff (talk) 01:13, 12 November 2011 (UTC)
We could add the top three backets to the table, but I think it would be harder to read without adding much information (most of the years have more than 20 brackets and the top 3 would be very similar) I didn't add the inflation for the first bracket because it didn't add much (there wasn't an obvious trend up or down) and besides the chart in the same section only shows the top brackets. Sayitaintso (talk) 00:16, 17 November 2011 (UTC)
That doesn't work without creating a POV issue. Here is the data for 1964:
1964
Adjusted for Inflation CPI: 31
Married Filing Jointly
Rate|Over|But not over
16.0% $0 $7,238
16.5% $7,238 $14,476
17.5% $14,476 $21,714
18.0% $21,714 $28,952
20.0% $28,952 $57,904
23.5% $57,904 $86,857
27.0% $86,857 $115,809
30.5% $115,809 $144,761
34.0% $144,761 $173,713
37.5% $173,713 $202,665
41.0% $202,665 $231,618
44.5% $231,618 $260,570
47.5% $260,570 $289,522
50.5% $289,522 $318,474
53.5% $318,474 $376,379
56.0% $376,379 $463,235
58.5% $463,235 $550,092
61.0% $550,092 $636,949
63.5% $636,949 $723,805
66.0% $723,805 $868,566
68.5% $868,566 $1,013,327
71.0% $1,013,327 $1,158,088
73.5% $1,158,088 $1,302,849
75.0% $1,302,849 $1,447,610
76.5% $1,447,610 $2,895,221
77.0% $2,895,221
According to the article now for 1964, couples making OVER 2.5 MILLION had a high tax rate. What is left out, which creates a neutrality issue, is that couples making over 550k ALSO HAD A RELATIVELY HIGH TAX RATE - 61% - So if you want to add inflation adjusted figures, you need to also do it for a median rate as well. I've tagged the article until this takes place or the chart is removed. Somedifferentstuff (talk) 00:31, 22 November 2011 (UTC)
Let me see if I'm interpreting you right: in order to avoid POV, we must add 100k of tables? As indicated above, I think having the tables at all creates problems, including the fact that historical tables are unencyclopedic and contrary to WP policy on too much stats. Absence of some sort of inflation indication when presenting historical rate brackets clearly creates POV problems, and using arbitrary income points unrelated to the tax law at the time is highly problematic (and only one organization, lobbyists at that, does it). I still favor either a highly condensed table or chart, or none at all. If you want tables and lists, put them in a list. Let's get rid of the lengthy tables in this article.Oldtaxguy (talk) 04:28, 22 November 2011 (UTC)
Your gross misrepresentation doesn't hold water as the tables add less than 5k of information. Also, historical tables are not unencylopedic if they clarify information. I agree that we should get rid of the arbitrary rates, there is plenty of real information to use. I think the solution is to add the inflation adjusted information to a single staggered table (every other tax year) with three qualifications (first bracket/median bracket/top bracket) which would deal with the neutrality issue that is currently in place (presently it only shows inflation adjusted figures for the top bracket). Somedifferentstuff (talk) 10:23, 22 November 2011 (UTC)
I'm not convinced it creates a POV issue. The first and last brackets are more significant than the middle. The table currently shows the number of brackets, the rate at which the first dollar of income is taxed, the rate at which the last dollar is of income is taxed and the dollar amount of the highest bracket - which is the inflection point where the tax rate vs. income goes from an upward sloping line to a flat horizontal one. Although I'm not opposed to adding the middle bracket, I'm not sure it will improve the table - it will probably just make it harder to understand. Furthermore, I could make an argument that the taxable income for the first tax bracket starts at $0 (see source) and therefore doesn't need to be shown. Sayitanitso (talk) 18:00, 22 November 2011 (UTC)
It's definitely a neutrality issue. If I don't know anything about taxes and come to this article, I'll see that, in 1964, millionaires had a high tax rate. What I won't see is that even non-millionaires had a relatively high tax rate. Listing the total number of brackets doesn't solve this because most of the cut off points aren't illustrated. By introducing a medium bracket it creates some context that is lacking from only showing the top and bottom brackets. Somedifferentstuff (talk) 18:58, 22 November 2011 (UTC)
The table labeled "Partial History of Marginal Income Tax Rates..." clearly indicates that in 1964 there were 26 brackets that ranged between 16% and 77% and the highest bracket started at $400,000 ($2.85M in 2011 dollars.) Implying that 16% is applied to the first dollar earned while 77% is applied to the last dollar earned over $400,000 ($2.85M in 2011 dollars) - And further implying that there were 24 other progressive steps between $0 and $400,000 not shown.
I don't think it implies that the tax rates were 16% (low) until your income reached the top bracket - and then all of a sudden the rate jumped to 77%.
Each year has a definite first and last bracket, but not a clear middle. Since the progression is not linear and the number of brackets are all different, what would you show as the middle bracket for 1964? Sayitanitso (talk) 09:08, 22 November 2011 (UTC)
You would list the TOTAL number of brackets on the left side of the table for each year. This lets the reader know the number of brackets for any given year. Then you would show the low/median/high brackets with their rates as well as their inflation adjusted figures. Since there were 26 brackets for 1964 you'd have to pick either the "high median" or the "low median". Using the "low median" the table would show a 47.5% tax rate on income over $130,285 (inflation adjusted). Somedifferentstuff (talk) 10:39, 22 November 2011 (UTC)
The table already lists the number of brackets in each year, under "Income Brackets" - we could change the column header to "Total Brackets" if it makes it more clear. Also, most of the "First Brackets" start at $0 (I recall a few years listed in the source that didn't start at $0 - i'd have to double check to be sure). So with that in mind, are you suggesting that we only add the middle bracket with rate/income/adj.2011 columns? Calling it "median" might be misleading - it makes me think of a bracket where the number of tax payers that pay less equal the number of tax payers that pay more . Sayitanitso (talk) 16:27, 22 November 2011 (UTC)
I would use "Tax Brackets" and then list the total number. I see what you mean by the first brackets starting at zero. Since that is the case I would use the 2nd bracket and call that category "Low Bracket", then call the next one "Medium Bracket", and the last one "Top Bracket". Since some years won't have an exact middle, like 1964, I'm fine with using either the higher or lower value from the middle range. I would also use the "Single" category from the sourced tax tables so it is clear that we are demonstrating each individual's tax liability. Somedifferentstuff (talk) 18:36, 22 November 2011 (UTC)
User User:Locke Cole has not discussed his removal of the POV tag, so I have added a request on his/her talk page that he/she revert the removal. I believe no concensus has been achieved as to the neutrality of the tables. Oldtaxguy (talk) 00:43, 19 December 2011 (UTC)
I won't be reverting the removal. Consensus exists here except for, as far as I can tell, you. Consensus does not require a unanimous decision. I'm sorry you disagree. Move along. —Locke Cole • t • c10:35, 19 December 2011 (UTC)
Distribution of wealth vs. distribution of tax
I have reverted the edit adding a reference to an article on opinions on "optimal" distribution of wealth. The article does not discuss distribution of taxes. It discusses distribution of wealth. Further, the article is not a "survey" but a construction by a panel. Thus, addition to this article is not supported by the journal article cited. Oldtaxguy (talk) 23:34, 29 November 2011 (UTC)
Income tax rates vs income tax burden
Should we also add some qualifier to the recent addition regarding tax rates that such does not necessarily indicate tax burden. The line added "Overall effective Federal tax rates on the top 0.01 percent of earners have declined from about 70% in 1960 to about 35% in 2005, while effective rates for the middle class have remained constant over the same period." appears to present a case of a significant decreased in progressivity in the tax code; however, tax rates does not equal taxes paid. The tax rolls show little decrease in revenue, so while the rates were very high, they were also riddled with loopholes and exemptions that negated such high rates on income. The sentence is certainly true and appropriate for the section, but I'm just concerned that it could be perceived incorrectly by a reader and perhaps some further clarification might be in order. Morphh(talk)13:41, 29 December 2011 (UTC)
I agree some clarification is in order. The targeted business credits doubled with the 2004 and 2005 acts, and the number of special provisions has also increased dramatically, all during the period that taxes on capital income have been halved. While the AMT was designed to make up for earlier special breaks, it has not been updated for the ones of the last decade. My high net worth clients' effective income tax rates are below 25% for the first time ever, and I'm not seeing the very top end, where it's likely lower. The press focuses only on top rate, but the extras available only to the top fraction of a percent are huge. Further, any incidence analysis (which the paper I cited includes) incorporates inherent assumptions about indirect incidence of corporate tax. Pre-2003, many corporations (e.g., Microsoft, Oracle, most banks) accumulated very high amounts of earnings, often in excess of a full year's total revenues. The IRS has not enforced the accumulated earnings tax in years. Thus, it could be argued that corporate tax falls only on the corporations, not on shareholders OR workers, as is usually assumed in some mix. Note that the article cited puts 2/3 of corporate tax on capital. If that is reduced, as many argue it should be, the total burden on the very top is below that on the middle class.
Perhaps a paragraph on the topic. I'm not sure where the best place to put it is. If it's away from the tax rate discussion, it will be lost in other noise for those who want to see what the level of progressivity is and has become (or rather what has gone away). Suggestions? Oldtaxguy (talk) 04:54, 30 December 2011 (UTC)
Distribution of income tax
The subsection on distribution of income tax did not provide any context for the data in the section. Without this context, its inclusion under "Controversies" was not clear. To address this, I've added some new material and updates to the existing section. To provide context, I've added an introductory paragraph aiming to explain why the distribution of income tax is the subject of debate. I have also added the latest tax figures released by the IRS and included more relevant details from the OECD study. If you have any queries or comments about the edits, I'd be happy to discuss them here. Thanks, Kalkaska sand (talk) 15:59, 23 February 2012 (UTC)
I reverted the edits. The edits as written, and the sources cited, are purely political opinions supporting a single point of view. As such, they violate WP:POV.Oldtaxguy (talk) 23:45, 23 February 2012 (UTC)
Hi Oldtaxguy, thanks for explaining here why you reverted my edits. I do not believe the material I was adding was a violation of WP:POV, so I'd like to understand more why you chose to remove all the information I had added, such as the most recent IRS data. The source material I used did include some opinion pieces, such as the Clive Crook commentary, but these are all reliable sources, and were either used to demonstrate an opinion or as a secondary source for data - should I have cited the primary source directly?
In its reverted form the section does not convey any context as to why it is included in the "Controversies" section. Otherwise, maybe the section should be moved to its own standalone section.
Also, would you agree to re-adding the material that was not cited to the news pieces? In particular, I'm thinking of the updated figures from the IRS, which was cited to the Tax Foundation and the additional data from the 2008 OECD study. Thanks, Kalkaska sand (talk) 19:15, 24 February 2012 (UTC)
Is the U.S. tax system really progressive? Much of the political debate regarding taxes has for the last 25 years been focused on marginal tax rates, which appear progressive. However, based on [IRS Statistics on Income by size of AGI for 2001-2009] and [IRS SOI Top 400], this progressivity disappears at incomes above $10 million, and at high incomes the U.S. system becomes very regressive. Further, this lack of progressivity at higher incomes has become more pronounced over the last 40 years, according to [one study].
Some examples: 1. Joe is a single self employed Texas resident making $105,000 in 2009. Joe paid $15,200 of self employment tax and $18,400 of income tax in 2009. His combined Federal tax rate is 32%. (See [IRS Form 1040 instructions, page 88]) 2. Ed is an investor who earns all of his income from dividends and capital gains and makes $10 million in 2009. His tax rate is 15%, the flat rate of tax on such income. 3. Mitt Romney and Warren Buffet have disclosed that their effective Federal tax rates are about 15-17%.
Is such a system progressive? Those advocating lower taxes for the rich say yes, and too progressive at that. IRS data indicate that average Federal income tax rate increases for an average return through AGI levels somewhere between $200k and $500k, but then declines. (tables cited above) [IRS SOI Top 400] Table 1 indicates that the average tax rate of the top 400 (by AGI) for 2007 was 16.62% on average AGI of $270 million, less than Joe's Federal average income tax rate, above, on $105,000 of AGI. For working people, the Social Security and Medicare taxes add 15.6% to their tax rate. For the rich, the cap on those taxes and the fact that investment income is not taxed eliminate any noticeable impact on effective tax rate. Thus, many working class people pay a higher tax rate than the rich, as pointed out by [Warren Buffet].
The media likes to quote other IRS data, though, with a top grouping beginning at lower income levels than the point at which overall rates decline. Should we believe such press reports? In light of the IRS and other studies cited above, I think not.
There have been significant discussions in these pages about whether the Tax Foundation is a reliable source. As a source for a particular rate table for a particular jurisdiction, they seem to be reliable. For analyses, however, many of their studies have been controversial.
I reverted your edits as one sided because the entire edit ignored the regressivity at upper income levels. I believe that any edits regarding progressivity that fail to cite the sources given above are inherently very biased. Further, based on these and other data, it is very clear that a discussion implying that the U.S. system is progressive conveys a political view in violation of WP:NPOV. I would prefer to see the Controversies section title changed to Opinions, since most of the supposed controversies are artificially created to promote personal or political gain.. Oldtaxguy (talk) 02:40, 27 February 2012 (UTC)
Oldtaxguy, I appreciate the detailed response, would you be willing to work with me to help improve this section? I would like to be able to find a solution with this section that makes it more accessible to readers who do not have your background knowledge of the subject. As I mentioned above, without any explanation of the debate, a reader could come away thinking that the progressivity of the tax system is unchallenged. Likewise, they have no broader context on who supports increasing progressivity and who feels that the system is progressive enough (or even too progressive). I think this is where the opinion pieces have a role to play.
Also, as far as I'm aware, Wikipedia holds verifiability above all else, and I think we should include verified facts so long as it is clear where this data is from and what side in the debate it represents. Since data from the OECD is already included, it seems to me that we should mention their finding that the U.S. and Australia collect the most tax from the top 10% of income earners, relative to share of market income, as this is one of the key facts about the U.S. in their report.
Finally, you've said that the section (and my edits to it) are biased since they do not cite the sources you mention: why not add these, rather than removing material? This way both sides of the debate will be covered. Clearly the section as it stands does not provide the best overview of the debate or the range of data in support of either side's convictions. I hope that we can work together to improve this. Thanks, Kalkaska sand (talk) 19:22, 28 February 2012 (UTC)
I would support replacing the distribution section in its entirety with a new heading Progressivitiy and the following text:
IRS data indicate that Federal income tax average rates increase through income levels between $200k and $500k, but then decline. At income levels above $10 million, the Federal income tax becomes regressive. Average Federal income tax rates for the top 400 individual tax returns (ranked by adjusted gross income) have declined since 1993, to a low of only 16.7% in 2007. ref> [IRS Statistics on Income by size of AGI for 2001-2009] and [IRS SOI Top 400] /ref> Since the tax is imposed on income, taxpayers with higher incomes pay higher tax.
Note that I've left off some characters so the footnote would show.
I have a few comments on your suggestion: overall, I'm not sure that replacing the current section with your wording would be an improvement, although I agree that the section should be renamed something like "Progressivity", as that is the focus of debate. Maybe "Debate over progressivity." Since I have a few concerns here, let me put these into bullets:
Replacing the section with your wording would remove valid, reliably sourced and relevant information (the IRS and OECD data)
Your proposal also doesn't provide any context for lay readers: there's no explanation, or even mention, of the term "progressive"
The sources you've used here are primary sources, which you've provided an interpretation of (as the sources only provide figures, not commentary). As far as my understanding goes, this sounds like original research, which we should avoid.
Having said all this, I think there is a compromise to be found here. Below is a redrafted version of the section that I think could work together with the data you provide above, if you're able to find secondary sources. The one question mark I have is regarding the sentence stating that the U.S. employs a progressive tax system: it seems that the vast majority of sources agree with this, including the IRS website, but I'm not sure how it should be sourced. Let me know what you think. Thanks, Kalkaska sand (talk) 19:58, 5 March 2012 (UTC)
The distribution of income taxation in the United States is a point of political debate, particularly regarding the tax burden of the highest income classes compared with the lower 50% of income earners.[1][2] Economists and commentators have debated the extent of the current taxation system's progressivity—the extent to which it is true that as income increases the proportion of tax paid also increases.[3][4]
In the United States a progressive tax system is employed which equates to higher income earners paying a larger percentage of their income in taxes. According to the IRS, in 2009 the top 1% of income earners earned 16.9% of adjusted gross income and paid 37% of federal individual income taxes.[5] The top 5% of income earners paid 59% of the federal income tax, while earning 32% of the adjusted gross income.[5] The bottom 50% of income earners paid 2.25% of the total taxes collected, and earned 13% of the income reported.[5]
Similar figures for distribution of income tax were reported in 2008, when the top 1% earned 20% of income and paid 38% of all income tax.[6] The top 10% paid 70%, earning 46% and the top 25% paid 86%, earning 67%. The top 50% paid 97%, earning 87% and leaving the bottom 50% paying 3% of the taxes collected and earning 13% of the income reported.[6]
A 2008 study by the OECD ranked 24 nations by progressiveness of taxes and separately by progressiveness of cash transfers, which include pensions, unemployment and other benefits. The United States had the highest concentration coefficient in income tax, a measure of progressiveness, before adjusting for income inequality. The United States was not at the top of either measure for cash transfers. Adjusting for income inequality, Ireland had the highest concentration coefficient for income taxes. Overall income tax rates for the U.S. are below the OECD average. According to the OECD, Australia and the United States collect the most tax from the top 10% of income earners, "relative to the share of market income that they earn".[7]
Basic / capital gains...
Sentence: From 2003 to 2010 2011, individuals were eligible for a reduced rate of Federal income tax on capital gains and qualifying dividends. Actually, the reduced rate on or partial exclusion of capital gains extended much earlier, and will probably extend at least into 2012, although there is also a 2.9% surtax on capital gains starting 2012. The surtax is probably too complicated for "basics", but should probably be mentioned further down. — Arthur Rubin(talk)06:22, 18 May 2012 (UTC)
A chart showing the effective tax rates for the 2012 tax year (assuming standard deduction and standard personal exemption) comparing two unmarried individuals filing separately, with various ratios of 1st earner to 2nd earner, versus a single return of the same total amount for a married couple filing jointly. The "marriage penalty" (when the black line is above a given colored line) depends on the income disparity between the members of the couple and the total income level.
I created this chart because I was curious about how the "marriage penalty" worked for the past tax year. I think I got the numbers right (I did some comparisons with actual tax filings). It would be useful to have something like this in this article, to show how the marriage penalty is dependent on total income and income disparity between the wage earners. I'm not sure whether I'm being clear enough in the associated description, and the chart itself isn't really clear except in the full version: the lines aren't that far apart. Comments or suggestions? Where should it go in the article? - Parejkoj (talk) 23:42, 4 February 2013 (UTC)
2013 top tax rates
Could someone verify the inflation-adjusted (to 2011) top tax rate. I mean, the inflation rate for 2013 is not yet established, but inflation in 2012 was not 0. — Arthur Rubin(talk)14:34, 18 January 2013 (UTC)
Arthur, if I'm understanding your question correctly, you're asking about the tax rates, not the dollar amounts of taxable income applicable to each rate.
The answer is that the tax rates themselves are not adjusted for inflation. The correct highest marginal tax rate for U.S. federal income tax for individuals is 35% for tax years 2003 through 2012. For the tax year 2013, it is 39.6%. Famspear (talk) 22:03, 18 January 2013 (UTC)
No, actually, I'm only asking about the $400K, which is supposed to be inflation-adjusted from $400,000 in 2013 to 20011, not the entire line. — Arthur Rubin(talk)22:20, 18 January 2013 (UTC)
OK, I have just very quickly checked the tables for 2011, 2012 and 2013 in the article by comparing them to the official tax rate schedules published by the Internal Revenue Service, and the article appears to be correct. The $400,000 figure for 2013 (for the 39.6% bracket for single individuals) was set by statute, in the Act signed by the President on January 2, 2013. I believe that for 2014, the $400,000 figure will be adjusted for inflation. Famspear (talk) 22:40, 18 January 2013 (UTC)
I think the OP is disputing that $400k from today was worth the same amount in 2011 (i.e. that there was 0 percent inflation over that period), not that the IRS may increase the bracket cutoff point(s) due to that inflation. In other words, it's not about what the government will do, it's about how the value of money has changed over this period (if it has). BlueGuy213 (talk) 10:47, 13 February 2013 (UTC)
Yes, the table has some errors in it. I think we're going to have to go through the entire table, at some point. For example, the highest marginal individual income tax rate for U.S. Federal income tax for 1944 was 91%, not 94%.
The heading for the table is also misleading, because it seems to imply that the RATES are "inflation adjusted." What is (or at least could be) adjusted for inflation is the dollar amount of the range of income in each tax bracket to which a given rate applies.
I will try to correct the tax rates in the chart soon. I have the actual IRS instructions (including the tax rate schedules) for Form 1040 from 1913 to the year 2013. Famspear (talk) 12:31, 13 February 2013 (UTC)
OK, I have corrected the table in the article for the year 1944 rate, which was indeed 91%, not 94%. And I am confirming that the highest marginal tax rate ever was indeed 92%, for tax years 1952 and 1953, according to the actual tax rate schedules in the IRS instructions for Form 1040 for those two years. Those two years aren't shown in the table in the article, though. Famspear (talk) 12:36, 13 February 2013 (UTC)
I notice that the Tax Foundation material that was cited refers to an applicable surtax rate of 3% for the year 1944 -- to the effect that the 1944 table by Tax Foundation includes the effect of that surtax rate. That might be the source of the difference (i.e., 91% nominal highest marginal rate, versus 94%). I'll have to try to remember to check on this later. Famspear (talk) 13:12, 13 February 2013 (UTC)
- The article signals there is a neutrality question per 'controversies'.
I guess this pertains, at least, to the 'libertarian' sub-section of that.
I don't see anything here pertaining to. I have to ask, and I would like to see the author try and support this:
Is this a real controversy?
More pertinently, how is this particular article an appropriate place to offer links as though to disseminate this ideology? How does this POV amount to a real controversy? Would it be appropriate for other people that disagree with other laws to use Wiki to place a 'controversies' section and link to articles about their practices? It seems strange in this light doesn't it.
J Civil 10:01, 1 May 2013 (UTC) — Preceding unsigned comment added by Jan civil (talk • contribs)
For example, a single taxpayer who earned $10,000 in 2013 would be taxed 10% of each dollar earned from the first dollar to the 8,925th dollar (10% × $8,925 = $892.50), then 15% of each dollar earned from the 8,926th dollar to the 10,000th dollar (15% × $1,075 = $161.25), for a total of $1,053.75. Notice this amount ($1,053.75) is lower than if the individual had been taxed at 15% on the full $10,000 (for a tax of $1,500). This is because the individual's marginal rate (the percentage tax on the last dollar earned, here 15%) is effected only on the portion of income exceeding that taxed at a lower bracket (here exceeding the first $8,925 of income taxed at 10%).
This ensures that every rise in a person's pre-tax salary results in an increase of their after-tax salary. Otherwise, a person earning a pre-tax 2013 salary of $8,925 at 10% ($8,925 - $892.50 = $8,032.50) would enjoy the same after-tax salary of $8,032.50 as they would if they earned a pre-tax salary of $9,450 at 15% ($9,450 - $1,417.50 = $8,032.50); a person earning a pre-tax salary between the values of $8,925 and $9,450 would have earned less after-tax money (e.g., a pre-tax salary of $9000 taxed at 15% results in a post-tax salary of $7650). However, it does occur for some wage earners that their marginal tax rate goes down once they have reached the taxable limit for the FICA or social security tax which in 2012 was paid at a rate of 4.2% on earned incomes up to $110,100, after which point the wage earners marginal tax rate decreases by 4.2% until the next income tax bracket is reached.
The computations are wrong. For the year 2013, the U.S. Federal income tax on $10,000 would be zero, not $1,053.75. The material fails to take into consideration basic the fact that TAXABLE INCOME equals (in this case) gross income less the standard deduction and personal exemption. A single taxpayer (claiming only himself or herself) who earned gross compensation of $10,000 in 2013 would be taxed only on TAXABLE INCOME -- on each dollar in excess of the sum of the standard deduction (which happens to be $6,100 for the year 2013) and personal exemption ($3,900), or $10,000. The excess of the $10,000 gross income over $10,000 is of course ZERO!! So, the taxpayer's taxable income of zero, times 10% (or any other tax rate for that matter), results in a tax of zero.
The illustration that was attempted would work if you change the gross compensation figure to a higher number -- say, $22,000. Here's how it would work:
A single taxpayer (claiming only himself/herself) who earned $22,000 in 2013 would be taxed ONLY on TAXABLE INCOME, which means only on each dollar earned from the first dollar in excess of $10,000 (that is, the first dollar of income in excess of the sum of the $6,100 standard deduction and the $3,900 personal exemption). The 10% rate would apply, beginning at the first dollar of gross income in excess of $10,000, up to the 8,925th dollar in excess of that same $10,000. After that, the 15% rate would kick in. In this case, gross income of $22,000 less 10,000 equals $12,000. So, of the $12,000 in taxable income, $8,925 would be taxed at 10% and the remaining $3,075 would be taxed at 15%. The tax would then be the sum of $892.50 ($8,925 x 10% = $892.50) and $461.25 ($3,075 x 15% = $461.25), for a total tax of $1,353.75.
PS: The computations in the second paragraph of the removed text are wrong, for essentially the same reason: They fail to take into account that the rates in the tax rate schedules are imposed on TAXABLE income, not on GROSS income. Famspear (talk) 05:21, 15 November 2013 (UTC)
Dear EllenCT: I added some language to clarify that section. The rates described in that section relate only to U.S. individual income taxes, not to corporations. Famspear (talk) 06:06, 29 December 2013 (UTC)
(edit conflict) Thanks for the change Famspear. Ya, usually when you see federal income tax, it refers to the personal income tax. The rates in that section are personal rates. Also, the section was specifically about "Marginal tax rates", not effective rates. As to the source, you had used the terminology "top income earners" which is usually a reference to individuals, not corporations, which the source didn't support. Additionally, the figure of 12.6% was the average rate for "companies in 2010" - nothing about the "top". What it did reference was 57 top businesses paying close to 0%. So according to your fierce debate in Talk:Taxation in the United States, Verizon, et al. customers are getting an awesome deal. Morphh(talk)06:36, 29 December 2013 (UTC)
I deleted that along with your other stuff but accidentally hit enter before finishing the edit summary. That section wasn't about effective rates either, and it's cherry-picking to just suddenly mention "the largest corporations". That "largest" isn't even defined and the claim's accuracy is dubious makes it worse. VictorD7 (talk) 09:39, 29 December 2013 (UTC)
That makes no sense. There is no effective rates section, your theories of cherry-picking bear no relation to the meaning of the term, you deleted two highly accurate and reliable sources without replacing them or discussing them here, and the plain meaning of largest makes my edit the most accurate on its face and in any likely alternative construction. Shame on you! EllenCT (talk) 12:38, 29 December 2013 (UTC)
EllenCT, the average for the S&P 500 is closer to 29%.[5] You're lumping all large corporations into a single group saying they pay below 13% and in "many cases" zero, but the sources don't support that - See the distribution. NYT states of the S&P 500, about .02% paid 0%. What it does describe is that about 1 of every 7 in the S&P pay below 10%. What looks to be described as 12.6% in the USA Today article was the average for all companies in 2010. Morphh(talk)14:56, 29 December 2013 (UTC)
No it's not. How can the average be 29.1% on the top corporations, but as you state, they "remain below 13%"? It's not the "impeachable sources" that are the issue -it's your misrepresentation of them, which is a reoccurring theme with your edits. I don't trust a thing you write anymore and this is a perfect example. Even after explaining above the simple error in your edit, you act like you didn't even read it, suggest it's "perfectly accurate" and say nonsensical things like "Deleting them is abject censorship of politically important topics". You make me want to drive an ice pick through my eye - it's so frustrating. Morphh(talk)14:44, 30 December 2013 (UTC)
That's still not correct. The 13% is an average, so only half of them are below it. In addition, the term "many" attributed to a 0% rate is unsupported - it's also a WP:WEASEL word and should not be used. Morphh(talk)03:02, 31 December 2013 (UTC)
Are you saying that the median would be preferable to the mean? What do you propose as an alternative to "many" -- the number? EllenCT (talk) 03:17, 31 December 2013 (UTC)
I'm saying you didn't specify that it was an average. The way it's phrased, all corporations have an effective rate below 13%. I don't know if the average is mean or median - the source just says "average effective tax rate" and I haven't dug into the GAO report. As for the term many, yes - I'd only include what you can verify in the source. The NYT reported 9 in the S&P and USA Today reported 57 - don't know which is more accurate. If you include a figure attribute it to their analysis. The 1 in 7 figure is another one that could be attributed. If you did want to include a many statement, you could quote Nick Yee, but essentially he just said that many companies pay much less then the top rate. Morphh(talk)03:55, 31 December 2013 (UTC)
First sentence is good. Second sentence has an issue. The USA Analysis said they had a 0% rate, which is different than paying no tax. While one might assume that's the same thing, it may not be for a variety of reasons. It actually looks like USA Today renamed their article (if you look at the url compared with the current title), probably due to this reason. The 1 in 7 figure comes from the NYT. "About one of every seven companies had an effective tax rate lower than 10 percent, including Amazon at 6 percent and Verizon at 9 percent. Nine companies paid no taxes at all."[7] Ahh Ha, there is the distinction between USA Today's 57 and NYT 9. USA Today said 0% tax, NYT said no taxes. Take your pick on which you'd like to include, but personally I'd go with the NYT. Their analytics are fairly high quality - IMO, more reliable for this type of data, which is partly visible from their nice breakdown and awesome graphs. Morphh(talk)15:18, 31 December 2013 (UTC)
The "13%" figure is for 2010, not 2012 (according to your own source), and it's disputed. Several scholarly sources place the effective US corporate tax rate in the mid 20s to 30s (listed on page 4), and the GAO report you use has been specifically criticized by the Tax Foundation among others ([8], [9]). I'm not necessarily saying your report is wrong and the other studies are right, but we shouldn't be rushing to add heavily disputed material. Let's get any additions sorted out with precision and consensus here first before adding them to the article. Also, the "13%" only refers to the federal rate paid by profitable companies (counting unprofitable corporations, like sources count non-filing individuals in tax incidence calculations, reduces the denominator and leads to a higher average rate, as your own source explains), and your sentence follows mentioning deducting state/local taxes, which can easily be misleading (I think your source gave a 17% total foreign/state/local US corporate rate). Any corporate edit would need to be properly qualified in the text. I'm also not sure why pointing out that a few dozen companies paid no taxes is notable for that section. Others pay much more than the average effective rate, and they aren't mentioned. Does the article include similar breakdowns for other tax types?
On top of that, regarding the other edit, there's the question about why you're only including effective income tax rates for the top 25% and not the entire population, especially in a section titled "Marginal tax rates" when there's already an "Effective rate" section below. Your own figures' source also gives the 25-50% rate as 6% (rounded), the top 50% rate as 13%, and the bottom 50% as 2%. For now, I'm reverting your edits, though I do think we might be able to use your material to develop an edit for the Effective rate section that's currently weakly sourced and several years out of date. VictorD7 (talk) 00:04, 1 January 2014 (UTC)
Regarding the heading for this section: "Top effective rates" -- there is no such thing as a "top effective rate" in this context.
The effective rate is determined by dividing the tax amount by gross income. For each individual for each year, there is only one effective rate. There is no "top" or "middle" or "bottom" effective rate for that person for that tax year.
There IS such a thing as a "top" marginal rate for that individual for that same year. For example, for year 2013, a single individual with gross income of $50,000 would have slices of that income taxed at 10%, 15%, and 25%. The "top" marginal rate would be 25%. Subtract the standard deduction of $6,100 and the personal exemption of $3,900, and you have taxable income of $40,000 (assume no other deductions). The tax would be $5,928.75 (ignoring the effect of having to use the tax tables published by the IRS, which could change the tax by just a few dollars).
In other words, [$50,000 - ($6,100 + $3,900) - $36,250] x 25% = $937.50. And $937.50 + $4,991.25 (from the tax rate schedule for single individual for 2013) = $5,928.75 in tax. (The $36,250 is also from the tax rate schedule.)
So, the effective rate would be about 11.8575% (that is, $5,928.75 of tax divided by $50,000 of gross income). Some of that gross income was taxed at a zero rate, some at 10%, some at 15%, and some at 25%. The effective rate, though, is only 11.8575%. There is only one effective rate.
Now, let's look at this language, which I removed from the article earlier:
"Effective rates paid by the top income earners are much less, because the majority of their income comes from Capital gains."
That statement may or may not be true, but it's misleading because I think it misses the point about the arithmetic of how the effective rate is computed. Regardless of whether the income "comes from "Capital gains" or not, the effective rates paid by "top income earners" are much less than the "top marginal rates" for such earners because (as illustrated above) that's the way arithmetic works -- regardless of whether the individual is a high income person or a low income person.
Now, under U.S. federal income tax law, capital gains for individuals are generally taxed at lower rates than ordinary income, so a person whose gross income consists largely of capital gains may well have a tax that is lower than it would be if his income were strictly ordinary income. But the capital gain component is just one factor that causes the effective rate to be lower than the highest marginal rate for that individual for a given year. The main reason the effective rate is lower than the highest marginal tax rate is just the arithmetic itself.
Also, if a majority of the income of "top income earners" comes from capital gains, we would need some sourcing for that statement if it's going to be part of the article, and we would possibly need to see the definition of "top income earners" that is used by that source.
Many high income people have lots of income from investments (interest income and dividend income) -- income that that is actually ordinary income, not capital gain. If a high proportion of your income is in the form of capital gains, you might actually be selling your investments -- that is, selling the very assets that are generating your capital gains. Of course, you could be using the sale proceeds to buy other investments (that is, other capital assets). You can have capital gains without directly selling investments, such as when you have capital gains reported to you from a partnership in which you hold an interest, but I'm not going to get into that detail now. Famspear (talk) 19:17, 29 December 2013 (UTC)
Did you even read the sources I originally included? The idea that someone who claims to have more than a mere passing familiarity with the U.S. tax situation thinks the fact, that most high income earners pay effective tax rates way below the nominal top bracket rates because of capital gains and shelters, is questionable at all is hard for me to believe. But "some sourcing" you shall have. EllenCT (talk) 07:26, 30 December 2013 (UTC)
Dear EllenCT: What you believe or do not believe is not important to the rest of us. I don't remember bringing up my "familiarity" with the U.S. tax situation on this talk page, but since YOU brought it up -- yes, I have have been studying U.S. Federal tax law for a long time -- perhaps longer than you have been alive. And I've prepared thousands of U.S. federal income tax returns -- for both high and low income individuals, for partnerships, for corporations, trusts, estates, non-profit organizations (yes, even non-profit organizations can incur federal income tax liability) and so on. I am an attorney and a certified public accountant, I have taught tax law, and I advise other attorneys on tax law issues. I have been recognized in federal court as an expert on U.S. tax law. The rest of us are not here to try to get you to "believe" us. We're here to edit Wikipedia. And, if you want others to take you seriously, you would do well to cool the inflammatory rhetoric. For example, your repeated use of phrases such as "shame on you" in an edit summary or on the talk page is not helping you. Famspear (talk) 15:34, 30 December 2013 (UTC)
Dear Ellen: If you're posing your question (about finding an "inaccuracy") to me, I think you're confusing me with another editor. I'm not "looking for inaccuracies" in this post: [10]. Somebody else removed that one. The post of yours that I removed was this one: [11]. I removed it because, as I stated in the edit summary, the material was both "dubious" and "unsourced." I have already explained why it was dubious -- and I stated that the statement could be either correct or not correct. It's not my job to prove that everything you post is correct or incorrect. And, obviously, the material was unsourced. "Unsourced" means that you provided no source -- no citation -- for the statement. Famspear (talk) 02:43, 31 December 2013 (UTC)
Please excuse my confusion about which text you removed. Does my recent correction meet with your preferred standard of accuracy? EllenCT (talk) 03:21, 31 December 2013 (UTC)
I question if it just injects pov into that section (issues with WP:STRUCTURE) as it comes across as WP:IMPARTIAL - let's make a specific point about low capital gains on the rich. The section is marginal rates for the personal federal income tax and then we toss in effective rates for a capital gains tax - different rate measure on a different tax for a select group. We going to add in estate taxes too, how about payroll taxes? We're not discussing the effective rates on anyone else. It's inserted there with select data to make a political point. It's not a false point, but it does bias the section. What would be neutral is not to inject pov here, but to cover the different viewpoints in a section or article that specifically deals with that topic. Morphh(talk)15:08, 30 December 2013 (UTC)
Why do you think the truth injects bias? I think failing to mention the effective rates introduces far more bias. This article is about income tax. There should be an even more thorough discussion of effective rates in Taxation in the United States which we have in fact been discussing concerning the ITEP overall incidence graph. EllenCT (talk) 01:30, 31 December 2013 (UTC)
It's about placement and selective data. For neutral presentation, we place it in a section with the purpose of discussing the effective rates and presenting those viewpoints along with the full range of data. That way we're not picking select groups and taxes to make a point. Morphh(talk)03:28, 31 December 2013 (UTC)
Shouldn't the top marginal rate for 1988-1990 be listed as "28%"? I know a subset of the top bracket faced an unusual bubble provision that led to a higher effective rate, but the nominal top marginal rate was 28%, and that's usually what I've seen given in sources. VictorD7 (talk) 19:20, 29 December 2013 (UTC)
Yeah, and that's sort of a problem with the term "top marginal rate." Normally, the term "top marginal rate" could be considered redundant, in that the nominal tax rate on the highest level of income -- the income at the "margin" -- would also be the highest nominal rate found in any of the slices of income. But, for that weird three year period, that was not the case. One way to solve the problem would be to avoid the use of the term "marginal" and just say "the highest rate for that year was [fill in the blank]", even if that rate wasn't the rate applicable to the highest slice of income for that year. Or, we could just briefly explain how it worked for those three years (but that might confuse people). Any ideas? Famspear (talk) 19:39, 29 December 2013 (UTC)
I'd suggest sticking with "marginal" and citing "28%", since the bubble was really more of an effective rate phenomenon, and maybe adding an explanatory note so people could scroll over an explanation without it consuming too much text space. VictorD7 (talk) 19:53, 29 December 2013 (UTC)
discussion and table on "average" tax rates for 2013
Items about the future consequences of legislation, no matter how supposedly authoritative the source, are speculative by nature and do not belong in Wikipedia. CBO projections are notoriously unreliable. Further, the table on average rates (based on IRS statistics) that appears in this section may contradict the CBO analysis.
The graph of "effective" tax rates includes income, property, sales, and other taxes, and also includes a share of corporate taxes "economically borne" by shareholders. As previously discussed, it is based on conjectures, assumptions, and economic theory, rather that actual tax calculations. Without major caveats, it is inappropriate and political in nature. The Times article cited fails to make any of these observations. See prior discussions (now archived) on this topic.
The statements about corporate tax rates are misleading at best, and sourced from unreliable sources. Global effective tax rate is an accounting, not tax, concept, as previously discussed (now archived). The Tax Foundation is a lobbying group, and USA Today is hardly [WP:RS] for economic analyses. Oldtaxguy (talk) 04:00, 7 January 2014 (UTC)
@Oldtaxguy:, Tax Foundation is a 501(c)3 and precluded from lobbying, so for the accuracy of your craft - you may want to redact. That's the reason groups like ITEP have their CTJ 501(c)(4) arm. Now, do such institutions have a particular viewpoint, yes. That doesn't preclude them as sources. In many cases, it is important to include disputes and balance, in which case they can be good for referencing and attributing a point of view. In such cases, these organizations are a reliable source for their opinion and methodologies. I don't object to using sources or data from what we generally recognize as more neutral or reliable sources for economic analysis (or removing material we agree is unbalanced or misleading), but we do have to recognize that some of these organizations are part of the debate and their criticisms can be meaningful to the topic. That debate may be outside the scope of this article, which is fine, but we should be aware when such sources are appropriate and not be dismissive. Morphh(talk)16:27, 7 January 2014 (UTC)
Particularly since the Tax Foundation reference in question was simply relaying a survey of the recent scholarly literature on the topic, and it was attributed in the text. VictorD7 (talk) 20:23, 7 January 2014 (UTC)
Overall effective Federal tax rates on the top 0.01 percent of earners have declined from about 70% in 1960 to about 35% in 2005, while effective rates for the middle class have remained constant over the same period.
The revert was undone by an editor who only added a parenthetical citation defining middle class as "(the middle three quintiles)" while stating that the sentence's source had seen "peer-review" and was "utterly reliable", which mostly missed the point. Just because a source (peer reviewed or not) states a fact or opinion doesn't mean that particular inclusion is appropriate for a particular article or section, much less that we're required to include it. This is especially true since the author admits that his methodology differs significantly from most other sources. This inclusion is unacceptable for numerous reasons, including:
It's describing total federal taxation in a section otherwise about federal income taxes. The section is somewhat ad hoc and probably needs broader editing, but the section is entirely about income tax rates. The paragraph the sentence appears in is there to set up the following chart titled "Historical income tax rates". The sentence on total taxation is out of place. The paragraph and subsequent chart read much better without the awkwardly off topic sentence inserted.
The sentence's source, a Saez paper, flat out states that income taxes are not responsible for the steep drop in the top 0.01%'s rate since 1960, since the higher marginal rate of 1960 was largely offset by large deductions, with the high effective 1960 rate being due to corporate and estate taxes, making the sentence even more misleading since it's located in a personal income tax section. From page 12:
"Interestingly, the larger progressivity in 1960 is not mainly due to the individual income tax. The average individual income tax rate in 1960 reached an average rate of 31 percent at the very top, only slightly above the 25 percent average rate at the very top in 2004. Within the 1960 version of the individual income tax, lower rates on realized capital gains, as well as deductions for interest payments and charitable contributions, reduced dramatically what otherwise looked like an extremely progressive tax schedule, with a top marginal tax rate on individual income 91 percent. The greater progressivity of federal taxes in 1960, in contrast to 2004, stems from the corporate income tax and the estate tax."
The sentence cherry-picks an absurdly small portion (0.01%) and compares it to "the middle class", rather than providing comprehensive, neutral coverage of the population. This is obviously a political talking point; POV and undue emphasis.
The claim is false, or at best a careless and misleading observation. The study's own data shows that, far from remaining constant, the middle quintile rates have changed dramatically over the decades. The starting date is also cherry-picked. While the rates are similar in 2004 (the paper's most recent year) and 1960, they rose substantially by the late 1970s and fell sharply between 1980 and 2004. From the paper's table (page 13):
1960/1980/2004
p20-40 - 13.9/16.3/9.4
p40-60 - 15.9/21.4/16.1
p60-80 - 16.7/24.5/20.5
p80-90 - 17.4/26.7/22.7
p90-95 - 18.7/27.9/24.9
p95-99 - 23.5/31.0/27.2
p99-99.5 - 34.0/37.6/31.3
p99.5-99.9 - 41.4/43.0/33.0
p99.9-99.99 - 55.3/51.0/34.1
p99.99-100 - 71.4/59.3/34.7
Look how hard he has to work to find this alleged decline in progressivity. Most of those in the top quintile saw higher rates in 2004 than in 1960. Even most in the top 1% only saw their rate drop a few points over that time. The top quintile rates dropped a few points since 1980, but the middle three quintiles dropped even more, several points each. Saez is reduced to focusing on the top 0.01% to find his substantially larger rate drop for high earners, and even then the drop has almost nothing to do with the marginal personal income tax rates the section is actually about. Even the bump since 1960 for the middle quintiles is described by Saez as mostly due to payroll tax increases, not marginal income rate changes.
Though the current inclusion doesn't mention his conclusion on progressivity reducing over time, it's also worth pointing out that his methodology is fatally flawed in multiple respects. For example, he totally ignores the bottom quintile. He mentions this but never really bothers to explain why he excludes it (other sources include it). The millions making up the bottom 20%, and the even greater number who no longer pay income taxes, are far more deserving of mention here than a cherry-picked 0.01% of the population. Those with zero or negative liability who weren't claimed as dependents by a payer increased from 14.8% of the population in 1984 to 49.5% in 2009. That's a far more relevant phenomenon when covering changes to the topography of US taxation in recent decades.
These various observations are reinforced by other sources: "To summarize, average individual income tax rates fell most dramatically for the bottom 80 percent of taxpayers from 1979 to 2007, with the bottom 40 percent now receiving more in refundable tax credits than is paid in taxes."[12] - "Nonpayers have grown substantially over the last two decades. In 1990, only about 21 percent of returns had no tax liability, about half of what it is today."; "Though most nonpayers of the income tax are generally low income, the number of nonpayers in middle income categories has grown. The median income of nonpayers has increased by 40% over the last 9 years."
Unlike the Saez inclusion, the growing non-payer phenomenon is actually on topic. But I'm mainly just mentioning it here to underscore how inappropriate the current sentence is. Whether to add material on non-payers is a separate issue from deleting the "0.01%" sentence. Does anyone have any rational, compelling arguments for keeping the latter? VictorD7 (talk) 01:45, 11 January 2014 (UTC)
Your assertions about the source being "POV, cherry-picked and absurd" are interesting. They are also original research, which has no place in Wikipedia. They are nothing more than your personal opinion.
The sources you present (Cato and Heritage) are equally potentially biased, given that they are both noted conservative/libertarian organizations with a known opposition to taxation in general.
You are free to insert a sourced rebuttal and counter-claims which fairly presents that opposing POV. You are not free to remove a thoroughly-reliable source on the grounds that you disagree with its conclusions. NorthBySouthBaranof (talk) 10:37, 11 January 2014 (UTC)
How about the grounds that the decline Saez speaks of had nothing to do with the personal income tax, by his own admission, and the section (including every other sentence in that paragraph and the following chart) is about the personal income tax? Should we add the "0.01%" line to the articles on Evel Knievel and Star Wars too? If not, why not? After all, it's from a "thoroughly-reliable" source. VictorD7 (talk) 17:19, 11 January 2014 (UTC)
Oh, and none of my comments are "original research" from a policy standpoint, since that only governs article additions. As editors we're required to use editorial judgement in evaluating a potential inclusion's merit. In case I wasn't clear, I do expect further replies from you, since you haven't responded to my points yet. VictorD7 (talk) 19:29, 12 January 2014 (UTC)
Instead of negotiation through edit warring, NorthBySouthBaranof, given the limited space in edit summaries, we should hash this out here. The Distribution section, like the article, is focused on income taxes, though it does contain a long standing graph showing total federal tax rates. And it already discussed effective rates, from a distribution standpoint to boot, so I moved your Saez segment on certain total effective rate changes there from the far less appropriate marginal income tax rate section. Deletion is still preferable, but I can live with the segment there.
I added the inclusion on historical effective income rate changes and the growth of non payers because it matched up better with the preexisting Dist. section and its commentary on income taxes. It's also superior to the Saez inclusion since it includes comprehensive coverage of the population, but its facts do not dispute the Saez facts presented until now, though the piece itself does dispute the last second "progressivity" mention you tried to add in Wiki's voice as fact that I deleted. I might be willing to agree to a mention of that dispute, but we'd need to figure out the wording here and it's probably frivolous since Saez is talking about total taxation and this article is about income taxes.
If the mostly off topic Saez inclusion remains then it does need to include the fact about "middle class" rates falling since 1979, as well as the top quintile and other stuff I added, and if you want to add his "progressivity" commentary or his incorrect partisan cheap shots against Republican presidents then we'd need to add the fact that his analysis ignores much of the population, as the Mercatus piece and Saez himself point out.
But let's start at the beginning: Can you please explain why an inclusion on total taxation belongs in this income tax article?VictorD7 (talk) 11:24, 19 January 2014 (UTC)
I apologize as I haven't read any of the discussion here. But I just glanced at that section looking at the last diff by NorthBySouthBaranof and wanted to state that it appears we're comparing marginal rates (which is not stated in the text) to effective rates. The tax base in 1960 was different than in 2005 (and why did we stop at that year) - 1960 had many exemptions, avoidance methods, etc. It takes two variables to calculate the effective rate, tax base x tax rates. It appears the text may be presenting the marginal tax rate as if it is the only factor with the implication that taxation as a total percentage of their income dropped 35% while middle income stayed the same, which I don't think is the reality. I think you can see that in the taxation levels as a percentage of GDP. There was a lot of avoidance and evasion with those rates. Let's just make sure where not misleading people with statistics. Morphh(talk)22:40, 19 January 2014 (UTC)
I'd appreciate it if you'd hang around and participate in this discussion, especially since I'm dealing with someone who refuses to and prefers negotiation through edit warring. The Saez top 0.01% rate line is about total effective rates, but the sentence (convoluted to begin with) was originally in a section totally about marginal income tax rates (different on two vital points right there). The most elegant solution was to simply delete it, which I tried again days after explaining my reasoning here, only to be reverted again by NBSB. As a second option I moved it down to the Distribution section since at least it already contained a chart of total federal effective tax rates. It still didn't really belong there, but I wasn't sure where else to put it. To at least address the item's cherry-picked nature I expanded it with facts from the same source showing that "middle class" tax rates have fallen since 1979 (after rising from 1960 to 1979, I'm guessing due to inflation driven bracket creep; the author's "constant" phrasing is sloppy at best per his own figures), and indeed by more than they have for all but an infinitesimal portion of those with higher incomes. NBSB has been intent on deleting that portion while expanding the segment in a different direction to include Saez's subjective commentary on progressivity and vague partisan shots at Republican presidents that he doesn't show his work for or support in any way. My most recent edit as of this post is a stopgap solution that uses the CBO instead of Saez to fill in the info gap on middle quintile rate reductions (actually covering the entire population). I can live with that version, though who knows if and how NBSB will seek to change it, and even as is it's odd that a single out of place sentence has blown up into multiple paragraphs.VictorD7 (talk) 08:00, 21 January 2014 (UTC)
Everyone's commentary is subjective. Saez/Piketty and Stroup have different methodologies. There is no proof that one is better than the other. You have done exactly what I said you should do - find a sourced rebuttal and insert it. Now we have a balanced portrayal, with Piketty and Saez's view pitted against Stroup's view, and readers can make their own call.
You may not remove sourced material just because you think it's "vague partisan shots at Republican presidents" or you don't like the conclusions re:corporate profits. The material is relevant to the discussion and sourced directly to the peer-reviewed article in question - it goes to the reasons for the change in progressivity that Piketty and Saez claim exist. NorthBySouthBaranof (talk) 11:55, 21 January 2014 (UTC)
Again, calling something "frivolous" is meaningless and unpersuasive. Your assertion that the paragraph is "bloated" is similarly subjective. If that size graph is what it takes to ensure that both claims about progressivity changing or not changing are fairly represented, then so be it. Wikipedia is not paper, and paper encyclopedias were never written to an NPOV standard that required the inclusion of multiple viewpoints. NorthBySouthBaranof (talk) 22:48, 21 January 2014 (UTC)
It's frivolous because it has nothing to do with the article. My language was truncated because it was an edit summary with limited space. We were having the discussion in edit summaries because you refused to participate on the Talk Page. And yes, your new, undiscussed additions can be reverted for all sorts of reasons, including that they're poorly written and bloated (subjective; aka editorial judgement). At that point you're supposed to come to the Talk Page and build consensus support for your changes. "Sourced" material is properly deleted all the time. Even you've been deleting sourced material I've added from your own damn source. Ironically, your material might have had a better of chance of ultimately surviving in some form if you had waited until my planned follow up edit that would have consolidated it using virtually the same wording Saez did in the conclusion, but you reverted my first edit within a couple of minutes and got the page locked down. Now it's more likely that the entire Saez paragraph will go. I'd hate to waste an RFC on what should have been an open and shut, minor issue among good faith editors, but your behavior here may force me to.
On substance, you replaced my accurate summary of each paper's pertinent points with some frivolous, long quotes that are difficult to follow out of context and have nothing to do with this article. You've blown that paragraph up to 1650 characters (by far the article's largest), while my second edit would have preserved your format but taken it down to 919 characters. I was even willing to go along with your attempt to remove the fact that Saez's own numbers refute his "constant" wording on middle quintile rates, settling instead for the later CBO sourced addition demonstrating that, but you also removed the point about individual income tax rates not being responsible for the top 0.01%'s steep rate decline, a point Saez himself repeatedly goes out of his way to make, replacing it with redundant sentences about corporate tax reductions benefiting "the wealthy", which is obvious (except for the wording; actually high income earners; wealth is different; also "benefited" is POV language since receiving a tax break isn't synonymous with benefiting from it; others arguably benefit as well through ripple effects), and isn't as important to this article as individual income tax rates are, though I indicated before that I'm willing to include the corporate impact discussion in brief form and showed that we can do so adequately in a single clause. Heck, I've been arguing here and elsewhere that corporate taxes mostly fall on high earners for incidence purposes, so your assumption about what "conclusions re:corporate profits" I "don't like" is absurd. The bottom line is that you've given extreme undue emphasis to an off topic point about a ridiculously small portion of the population just because you felt it was a political talking point you liked. The rest of the article only mentions presidents by name a couple of times, and in those cases regarding undisputed, concrete, specific acts. You've needlessly expanded the already shaky Saez segment to include his vague, opinionated shots at two Republican presidents, claims he failed to support with specifics and that are disputed anyway, as is his overall "progressivity" claim.
There's a difference between citing hard tax rate numbers (facts) and more subjective interpretations. The original sentence, aside from an arbitrary and unexplained definition of "middle class", at least just gave the numbers. You've since dramatically expanded that to include frivolous, subjective opinions. Those opinions are currently not represented fairly, and key information is left out. That will have to change. VictorD7 (talk) 00:03, 22 January 2014 (UTC)
VictorD7, in this edit, you state that Stroup "disagrees with the claim that progressivity has decreased." I have read the source paper in question and cannot find where Stroup makes that explicit claim. It is clear that Stroup disagrees with Piketty and Saez's methodology, but nowhere does Stroup explicitly state that their conclusion in that paper was wrong or make the counter-claim that progressivity stayed the same or increased from 1960 to 2005. Stroup's paper data does not mention any year before 1986. Accordingly, I have removed the statement. If I simply missed the portion of the paper where he does make that claim, I apologize and would appreciate you noting on which page it can be found.NorthBySouthBaranof (talk) 12:43, 21 January 2014 (UTC)
I said Stroup disagreed with the claim (Saez making it), not that he claimed progressivity had done otherwise, and I didn't put specific years on it. That said, Stroup's own analysis shows progressivity increasing dramatically (he started at 1986 because the IRS data set he used did, but was proving a larger point about how one should measure progressivity), including every year since 2003, and he says as much in his prose. If you're saying Saez doesn't disagree with that, then you're acknowledging how cherry-picked and pointless the current inclusion is.VictorD7 (talk) 00:03, 22 January 2014 (UTC)
Saez hasn't seen fit to respond to this particular criticism, to my knowledge. That does not render it either more or less valid. Your assertion that Saez's study is "cherry-picked" is just that - an assertion. Wikipedia cannot and will not judge the validity of that assertion. NorthBySouthBaranof (talk) 02:50, 22 January 2014 (UTC)
Actually that's exactly what editors are supposed to do. We evaluate content. We don't add stuff at random from whatever book on the shelf our blindly thrown darts hit.VictorD7 (talk) 19:41, 22 January 2014 (UTC)
Holy crap, NBSB, you reverted the first part of my edit within a couple of minutes before I even had time to improve it further with the second edit, and now it's locked down by an admin who swooped in at the worst possible time. What are you sitting there watching and constantly refreshing this article 24/7? VictorD7 (talk) 22:50, 21 January 2014 (UTC)
Actually that shows you wiping out my entire contribution, including by you rewriting every word of the Stroup paragraph, and not for the better from a fairness, quality, or accuracy standpoint. And I'm not shocked by what you did, just worried about you given how fast you did it, and what that implies about your life. VictorD7 (talk) 00:11, 22 January 2014 (UTC)
You could have at least waited a few minutes for me to finish editing before undoing everything I did. There was no need to rush at breakneck speed to instantly revert. VictorD7 (talk) 19:41, 22 January 2014 (UTC)
I haven't had time to compare each version, but did noticed the term "claim" used a bit. We should avoid that and terms like "finding" per WP:CLAIM and use terms like said, stated, described, wrote, according to, argued. Morphh(talk)14:16, 22 January 2014 (UTC)
Streamlined proposal
Rather than have article's largest paragraph be a ridiculously bloated, off topic one, how about we replace the monstrous Saez/Stroup paragraph with a single sentence saying....
While there is consensus that overall federal taxation is progressive, there is dispute over whether progressivity has increased or decreased in recent decades, and by how much.
...and using both the Saez and Stroup papers as sources for balance. That way people can read the material from each side and decide for themselves if interested, without subjecting those more interested in the income tax (aka the actual article topic) to a messy partisan battleground dispute that only marginally touches on it, and without inviting future edit warring. VictorD7 (talk) 00:30, 22 January 2014 (UTC)
We could combine it with the CBO sentence describing the whole population since 1979 (which is currently an orphan sitting there by itself), and (as a compromise) add a sentence about the top 0.01%'s rate declining from 75% to 35% since 1960, leaving names and subjective interpretations out of the text. Maybe something like:
While there is consensus that overall federal taxation is progressive, there is dispute over whether progressivity has increased or decreased in recent decades, and by how much.[13][14] The total effective federal tax rate for the top 0.01% of income earners declined from around 75% to around 35% between 1960 and 2005.[15] Total effective federal tax rates fell 6.6 percentage points for the three middle income quintiles from 1979 to 2010, 3.1 points for the top quintile, 6 points for the bottom quintile, and 5.7 points for the top 1%.[16]
That would preserve the essence of the material and the sources where interested readers could explore further while streamlining the tangential entry to a sane level. I'd also be fine with converting the 0.01% line to a decline by point amount or the CBO sentence to actual rates per group for consistency, though I'm not sure if that's necessary. I'd also be fine with including both rates and point drops in both sentences. VictorD7 (talk) 19:34, 22 January 2014 (UTC)
Dear Ottawahitech: The rules are somewhat complex, but a brief overview would be as follows: Internal Revenue Code section 871 imposes a 30% U.S. federal income tax on interest income, dividends, rents, salaries, wages, and certain other kinds of income of a nonresident alien individual where the source of the income is within the United States. That means that a citizen of, say, China, who has never been a U.S. citizen (and indeed who has never even been to the United States) can still be taxed under the U.S. law if he or she has interest income or dividend income from investments in the United States. Further, under Internal Revenue Code section 877, certain former U.S. citizens (who become nonresident alien individuals) who lost U.S. citizenship within 10 years prior to the close of a given tax year are subject to the U.S. federal income tax for that tax year if the average annual net income tax of such individuals for the five years that ended before the date on which United States citizenship was lost is greater than a certain amount (adjusted for inflation each year), or the net worth of the individual as of such date is more than a certain amount. This is a really oversimplified explanation that does not go into the exceptions to these rules, and I don't know whether even this simplified version needs to be in the article itself. The U.S. Internal Revenue Code is full of complexities such as these. Famspear (talk) 14:01, 10 February 2014 (UTC)
Internal Revenue Code section 871 imposes a 30% U.S. federal income tax on interest income, dividends, rents, salaries, wages, and certain other kinds of income of a nonresident alien individual where the source of the income is within the United States. That means that a citizen of, say, China, who has never been a U.S. citizen (and indeed who has never even been to the United States) can still be taxed under the U.S. law if he or she has interest income or dividend income from investments in the United States.
I believe this is standard as documented in: International_taxation#Withholding_tax. Countries such as Canada, also withhold taxes on revenue generated inside Canada on anyone, resident or not. For example, withholding taxes are applied to pensions paid to those who are no longer residents of Canada.
The second part
under Internal Revenue Code section 877, certain former U.S. citizens (who become nonresident alien individuals) who lost U.S. citizenship within 10 years prior to the close of a given tax year are subject to the U.S. federal income tax for that tax year if the average annual net income tax of such individuals for the five years that ended before the date on which United States citizenship was lost is greater than a certain amount (adjusted for inflation each year), or the net worth of the individual as of such date is more than a certain amount. This is a really oversimplified explanation that does not go into the exceptions to these rules, and I don't know whether even this simplified version needs to be in the article itself.
is specific to the United States, which is the only developed country that taxes its nonresident citizens. and others, on worldwide income, and is of much more interest to non-Americans, especially in light of the Foreign Account Tax Compliance Act, and its implications for other countries. Thanks in advace for your continued thoughts, XOttawahitech (talk) 20:20, 10 February 2014 (UTC)
[17] is cited as the source yet the graph [18] does not appear in the paper. also, the graph cites the 2000 tax year, the paper was written in 1999. i will remove the graph without objection in 24-48 hours. Darkstar1st (talk) 18:44, 1 January 2014 (UTC)
The graph seems to be a graphic representation of the chart on page 24. That does no equal WP:OR. As for the 2000/1999 date, the chart itself (on page 24) uses the year 2000. Coinmanj (talk) 20:28, 16 March 2014 (UTC)
It seems there are two potential topics with taxation as theft being one, but I'm not sure that's something to be generally applied to Libertarians based on my own discussions with them, but perhaps Anarchists, Anarcho-capitalists and Objectivists. I could be wrong, but what seems more generally related to this view by Libertarians is how the revenue is spent - if it's taken from one to give it to another (redistribution of property via government force) then they would probably consider that theft, things outside what they define as the constitutional role of the federal government. I think they do have a specific opposition to a tax on their labor (income tax), which I see in our libertarianism article. As an additional source, Mises Institute The Origin of the Income Tax attributes the income tax to the vast increase in size of the federal government (revenue/spending), partly due to withholding. The article seems to sum up their main point with Frank Chodorov describing the 1913 amendment: "Whichever way you turn this amendment, you come up with the fact that it gives the government a prior lien on all the property produced by its subjects." The United States government "unashamedly proclaims the doctrine of collectivized wealth. . . . That which it does not take is a concession." Again, maybe I've not talked to "real libertarians" but they seemed agreeable to the types of taxation laid out in the Constitution prior to 1913. Morphh(talk)19:02, 18 March 2014 (UTC)
Yeah, I'm sure there are specific anti-income-tax arguments to be made. The citation to the removed section was to an article that repeatedly and broadly attacked all taxation as theft, based on Murray Rothbardian arguments. It argued that any tax - whether excise, banking, income or sales - was illegitimate theft. Ergo, that discussion really belonged in the broader article about taxation in general. NorthBySouthBaranof (talk) 21:01, 18 March 2014 (UTC)
Unsourced Effective income tax rate table needs revising and updating.
This section needs serious work. Most of the data is unsourced, though I believe it came from this short NY Times piece that in turn only vaguely sourced it to "2007" CBO data. Verification is difficult at best since a data set wasn't mentioned, and is several years old anyway. I propose updating the table with this recently published CBO data (page 9; table 2) covering 2010 and already used as a source for the page's tax burden share pie chart. Since it doesn't appear to separate out capital gains, I suggest simply deleting that column. Since the section is about individual income taxes, and payroll taxes are dealt with elsewhere, I'd also suggest focusing the table on the former only (which is the second column in the CBO table, following total federal rate), and changing the name of the Social Security tax section to "Social insurance tax", since it already mentions Medicare anyway. It can be expanded to include additional material on payroll taxes if need be. I see no value in lumping together regular and payroll taxes while excluding other types, but, if people want, we can also update the dated total federal rate breakdown near the article's bottom with the same CBO source or something more recent from the Tax Policy Center or Tax Foundation.
The frivolously tacked on "top 400" portion should probably be deleted for representing an infinitesimal percentage of the population (undue), and at least a chunk of the subsection's unsourced preface should be deleted or rewritten for neutrality. The sentence While the top marginal tax rate on ordinary income is 39.6 percent, average rates that a household in the upper income bracket pays are less is especially misleading since effective rates are typically less than marginal rates for every bracket.
I disagree with your assessment of the table. The editors at the New York Times are reliable and know what they are doing. They know how to present dense information in an easy to understand fashion as can be seen by their table. When effective income taxes are discussed the general reader wants to know how much each income group is paying in taxes from their paycheck and why that is so. For the general Wikipedia reader the taxes they have removed from their paycheck are federal, state, and payroll taxes. One of the reasons that effective income tax rates for upper income groups is lower is because of the lower capital gains tax rate. Also, the information about what the top 400 tax payers pay is quite interesting to the general public and that this is why Congress has mandated that the IRS publish the top 400 list. Guest2625 (talk) 04:13, 9 January 2014 (UTC)
I had no respect for the NY Times whatsoever even before the Jayson Blair scandal, but I'm fine with using it as a source as long as the material is verifiable. In this case it's dated at best (2007), and there are other, more direct, better sources available. The article already has a chart elsewhere (which I also suggested updating) with total effective federal rates. As both it and the table show, effective income rates for upper income groups are not lower than those with less income, but much higher. They're lower than their own marginal rates, but, again, that's true across the board, so we shouldn't be singling them out.
The chart's focus on capital gains seems to give that portion undue weight, but I can agree with you on the capital gains skewing for upper income payers being legitimate info (not enough to justify the current prose) and I can even live with its continued presence in the chart if we can find an updated source. But whatever value there is in presenting the capital gains stuff doesn't outweigh the detriment to the article of leaving badly outdated and easily updatable tax rates there, so if we can't find a good source then we should go ahead with updating the table and dropping the capital gains column. Even in that event though, lacking specific numbers, we could still write up an accurate, neutrally worded prose mention of the capital gains phenomenon above the chart that captures the concepts involved.
The Effective income tax rates section should be about the whole population, not high earners. Setting up the section to lump together payroll/income and focus on capital gains, while excluding other types like corporate taxes, and burying total federal tax rates down at the page's bottom, makes the article seem rigged to push a partisan POV agenda by underplaying how much high earners truly pay in taxes. However, rather than push to reconstruct much of the page, I'd be willing to settle for simply updating the table and tweaking the prose for accuracy and neutrality. We should also delete the "400" portion though. For one thing it's from a different source than the rest of the table. And just because a government source occasionally publishes something doesn't necessarily mean it belongs in this article. Singling out 400 individuals for tracking seems more like a political stunt than something of encyclopedic value to an article of such limited space. Singling out the top 1% is bad enough, but while I've only rarely seen the "top 400" mentioned, the top 1% has become pervasive in government publications. It'd be more legitimate to cite the number of individuals with zero or negative income tax liability, as that's in the millions and has increased dramatically in recent decades.
We should also probably separate income and payroll into separate columns per the CBO and most other sources (plus it'd be more informative), though I could compromise and accept retaining the "combined" column too as long as we note somewhere that the chart doesn't include all federal taxes. VictorD7 (talk) 21:49, 9 January 2014 (UTC)
I have no problem with updating the information in the table, however, at the moment there is only the CBO report that can be used to update the effective income and payroll tax column. I'm still not sure why you want to remove numerical information from the article when as far as I can see the article is not too long and has enough room to include the top 400 effective income and payroll tax rate. Also, I'm not sure why you think there is undue weight by including the capital gains column - the NYT obviously didn't feel this was undue weight and I'm not even sure what exact undue weight you are talking about. Doesn't the table just show the effective income and payroll tax rate for different income groups, while the capital gains column helps to explain why the effective rates are as they are? Anyway, I look forward to hearing what other editors think of the table. Guest2625 (talk) 12:39, 10 January 2014 (UTC)
No, I'm suggesting that we either find the updated capital gains and income/payroll data or just leave the information as it is. I'm also looking forward to hearing what the other editors on this article think. Guest2625 (talk) 07:11, 11 January 2014 (UTC)
So far two editors support changes while one opposes, but I'm fine with waiting a while for more input. I don't think the income tax rates should be held hostage to the less important capital gains info.VictorD7 (talk) 17:13, 11 January 2014 (UTC)
Based on CBO Estimates,[8] under 2013 tax law the top 1% will be paying the highest average tax rates since 1979, while other income groups will remain at historic lows. [9]As of 2010, 68.8% of Federal individual tax receipts including payroll taxes, were paid by the top 20% of taxpayers by income group. The top 1% paid 24.2% whereas the bottom 20% paid 0.4% due to deductions and the Earned income tax credit. With 2013 tax law changes, the top 1% will pay an even larger share.[8]I've noted that some editors cling to older data even when there's easily found updated information both from government and press sources. I'm including a couple of charts here that offer both average income tax rates over time by quintile and the top 1%, as well as tax liabilities. Both rely on CBO reports, and the first includes an accompanying New York Times article. Some context, the average income tax chart does include payroll taxes. The second chart includes investment income.Mattnad (talk) 14:21, 19 January 2014 (UTC)
Soon has turned into a few months, lol, but I got distracted with a lot of other stuff on my plate and will be getting to it hopefully very soon. Bumping here because I'd prefer this not get archived yet. VictorD7 (talk) 08:06, 21 May 2014 (UTC)
Please list here your thoughts for what it will take to get this to an A class article. I know we need updates for 2015, including reading list. LK above also suggests some coverage (perhaps a paragraph with heading; this is doable) on payroll tax. Other thoughts? Oldtaxguy (talk) 03:51, 27 March 2015 (UTC)Oldtaxguy (talk) 20:08, 30 March 2015 (UTC)
Needs payroll tax section
The payroll tax in the US is effectively part of the US income tax system. There needs to be more treatment of it on this page. Unfortunately, I'm not up for the job, but I highly encourage someone else to pick up the slack. Best, LK (talk) 12:02, 20 May 2014 (UTC)
Dear Lawrencekhoo: Yeah, the U.S. federal income tax "interfaces" with the U.S. federal payroll tax system in the sense that a portion of the collection process for federal income tax (namely, the withholding from an employee's paycheck and the payment of the withheld amount by the employer to the IRS) is handled through the "payroll tax" system.
But the Wikipedia article Payroll tax already has a description of the U.S. federal payroll tax system. If we add the same kind of data to this "income tax" article, we would have to take care to avoid unneeded overlap.
Also, we would need to avoid confusion. Federal payroll taxes are not generally classified as "income taxes" -- but there are some arguable exceptions to that statement -- "sort of". For example, the Social Security tax (old-age, survivors, and disability insurance tax) imposed on an employee's compensation under section 3101(a) and withheld from the paycheck is denominated as a tax "on the income" of the individual with respect to wages realized in employment. Same for the Medicare withholding tax under section 3101(b).
U.S. federal income taxes are imposed by Subtitle A of the Internal Revenue Code (which is sections 1 through 1563), while payroll taxes -- plus the withholding provisions for income taxes -- are found in Subtitle C, "Employment Taxes" (which consists of sections 3101 through 3510). The income tax withholding provisions specifically are found in sections 3401 through 3406 in Subtitle C. Those income tax withholding provisions in the "payroll tax" portion of the Internal Revenue Code really have nothing to do with the imposition of the income tax itself, or with the substantive questions about what income is taxable and what is not, what is deductible and what is not, etc.
I think it should be discussed in this article, with the intricacies that you detail above at least touched on. It certainly should have more than a link in the "See also" section. Personally, I feel a small section containing what you said above would be appropriate. BTW, there is an article on FICA, but no article on payroll tax in the United States. LK (talk) 04:07, 21 May 2014 (UTC)
It was complicated before, as a taxpayer can get an income tax credit for overwithholding of FICA (by more than one employer). Now, it's even more complicated, as the 0.9% Medicare surtax, withheld on earned income over $200,000 (from a single employer), but later recalculated based on total earned income over $200,000 (or $250,000 if MFJ). — Arthur Rubin(talk)03:01, 27 May 2014 (UTC)
I've added appropriate references in the Withholding of tax section, as well as updating for FATCA, and adding links to W-4 and IRS withholding tables. I think the xref to other articles is sufficient, since FICA is not, per se, an income tax.--Oldtaxguy (talk) 20:26, 30 March 2015 (UTC)
I suspect that it is clearly understood by most people that any income that has the benefit of a tax exemption is taxed at a zero tax rate, and that this income is in a "zero tax bracket." Famspear (talk) 01:33, 18 June 2015 (UTC)
Article is not limited to Federal
In the USA, the Federal, most state, and many local governments impose tax. Most state and local principles for income tax are based on or conform to Federal principles. Confining the article to Federal only would be a waste of resources and tend to limit rather than increase reader knowledge. I have reverted edits by a new editor.Oldtaxguy (talk) 04:09, 16 December 2015 (UTC)
I haven't been monitoring this article closely for a while. How often does "income tax is voluntary" or "(Federal) income tax violates the Constitution" reappear? — Arthur Rubin(talk)12:48, 31 December 2015 (UTC)
The article does not cover either topic. The constitutional topic is covered in Tax protester constitutional arguments, in which it is rather resoundingly rebutted. The "voluntary" topic, to my knowledge, is not covered, as it is so frivolous. See, e.g., the coverage given by Prof. Jonathan R. Siegel of GWU Law school in his wepage and tax pages. Both views are very finge, with no RS supporting them.Oldtaxguy (talk) 21:44, 10 January 2016 (UTC)
Hello there! It is quite an ambitious undertaking to work on an article of this size, complexity, and importance. I will do my best to give it the detailed scrutiny that it deserves. Thanks for the diligent effort thus far!
"Several types of credits reduce tax, and some types of credits may exceed tax before credits. An alternative tax applies at the federal and some state levels." Is the second sentence related to the first (and the rest of the paragraph)? If so, I don't understand the connection.
"Income is broadly defined." This is not a particularly illuminating sentence. I would consider expanding it to something like "Income is broadly defined, and includes blop, bleep, and framgelian."
"capital losses reduce taxable income to the extent of gains" I don't understand what this means.
"(plus, in certain cases, $3,000 or $1,500 of ordinary income)" This might be too much detail for the lead. The rest of the lead does not use any specific figures, which I think is the way to go. This makes it less vulnerable to inflation or changes in tax code. *cough cough Ted Cruz*
I would suggest renaming Basics to Definitions.
I'll continue to add comments as I progress through the article. There's only so much of this stuff I can take in one sitting. :D Cryptic C62 · Talk01:39, 6 April 2016 (UTC)
Thanks, Cryptic C62! Your assistance is much appreciated. Rather than comment on the first 3 points, let me comment that the lead generally has only 1 sentence per topic; thus, the individual sentences are related only in that they introduce the broader topic of Income tax in the United States. I agree with your 4th comment (too much detail). The "Basics" level 1 heading encompasses all of the topic, not just definitions. For example, see the sub items "Capital gains" and "Tax returns". I think "definitions" is too limiting. Looking forward to your comments. Let's consider modifications to the lead after considering the balance of the article, then let's focus hard on the lead to make sure it's a meaningful introduction to what many attorneys refer to as the hardest area of the law. Oldtaxguy (talk) 18:52, 6 April 2016 (UTC)
It's obvious that a vast trove of good sources have been used to build this article. However, there's a lot of content for which it is unclear which (if any) of the sources back it up. Examples include Business deductions and Alternative minimum tax. A good rule of thumb is that every paragraph should end with at least one reference.
Many of the citations do not provide enough context for the reader. One example is currently Ref 30 "26 USC 263", or Ref 59 "348 U.S. at 429". This might be familiar for tax professionals, but Average Joe is unlikely to know what this means. I see that the article already makes use of the {{cite web}} template for some references. I would suggest using this throughout to ensure comprehensiveness and consistency in the references.
It is inadvisable to use "Id." in the references of Wikipedia articles. Ref 60 uses "Id." to point to Ref 59. If someone else introduces new content and new references between 59 and 60, then the pointer becomes broken. One alternative which may work well for this article is {{rp}}, which I can happily explain further if need be.
Thanks for more comments. I'll take them in the order you listed them.
- Citations appear throughout the article. Where two or more sentences state different aspects of one citation, usually the first sentence has the citation. Having a citation at the end of the paragraph has the advantage of consistency, but has the disadvantage of having earlier sentences appear uncited. Duplicating the citations certainly is an option, but may add a very significant number of duplicative references.
Note: This entire article is a summary, all in one place, of dozens of other WP articles, each with a link. Many of the sections and subsections of this article have a reference to a Main article (e.g., Business deductions refers to the article Tax deduction). These other articles themselves usually expand significantly on the topic and have many more citations (20 on Business expenses, part of Tax deduction, 17 in Standard deduction, an in-line link, etc.).
When a single reference supports multiple consecutive sentences, the consensus is that the inline citation should be placed at the end of all of those sentences, not the end of the first sentence. While this is not required by WP:INLINECITE, it certainly helps to maintain consistency across articles to avoid confusion.
As for the summarization of multiple sub-articles, here is a helpful pair of questions to ask: if the sub-article has a relevant reference, why should the burden be on the reader to dig through the sub-article to find it? On the other hand, if the sub-article does not have a relevant reference (yet), why would it be acceptable to omit the reference here as well? In short, there is no reason to omit citations in a summary section. --Cryptic C62 · Talk19:56, 11 April 2016 (UTC)
The relevant sub-articles have literally hundreds of references. Should we add that many here, or worse, expand this summary article to include all the references the sub-articles could have if your suggestion is followed? As an example, the Business deductions subsection of this article, if expanded as you suggest, would have at least an additional 14 references, assuming we reference only USC sections. Further, if fully expanded, again just using USC references, there probably should be 50-70 total just for this subsection. Full expansion would, at best, be a massive effort, and at worst create an article so long as to be unusable by the average reader. Oldtaxguy (talk) 20:27, 12 April 2016 (UTC)
I'm not suggesting expanding all of the sections, nor am I suggesting incorporating all of the references from each of the sub-articles. All that is required is to provide sourcing for the statements made in the summary sections. Example: The Penalties summary section is currently 7 sentences long. Its sub-article currently has 33 references. At the absolute maximum, the summary section would require using 7 of those 33 references, assuming every sentence came from a different source. My guess is that in reality, it would only need 3. Not a major undertaking. --Cryptic C62 · Talk15:34, 13 April 2016 (UTC)
Below is a quick shot at the "Penalties" section, taking a minimalist approach that adds only 11 references and 2k characters to this formerly 120 word, 740 character section of the article. Please note that this section, like many other sections of this article, has the potential for huge numbers of citations (in excess of 70 for this short bit). Note also that the IRS Penalties article is not well cited (the group just didn't get that far). Finally, I'm at a loss on how to put a cite on the 2nd sentence, "These penalties vary based on the type of failure." Here's the quick version:
&&&&
Penalties
Taxpayers who fail to file returns or file them file late,[1] or to file returns that are wrong,[2] may be subject to penalties. These penalties vary based on the type of failure. Some penalties are computed like interest,[3] some are fixed amounts,[4] and some are based on other measures.[5] Penalties for filing or paying late are generally based on the amount of tax that should have been paid and the degree of lateness.[6] Penalties for failures related to certain forms are fixed amounts, and vary by form from very small to huge.[7]
Intentional failures,[8] including tax fraud, may result in criminal penalties.[9] These penalties may include jail time or forfeiture of property.[10] Criminal penalties are assessed in coordination with the United States Department of Justice.[11]
I know that it may be a pain in the ass, but yes. Item 2 on the good article criteria list is "verifiable", which says "All material in Wikipedia mainspace, including everything in articles, lists and captions, must be verifiable." I think you could substantially reduce the work load by incorporating more secondary sources that summarize related claims. In the example you provided, the first three sentences have 5 citations. I would be very surprised if there were not a reliable secondary source that could cover all three. --Cryptic C62 · Talk13:22, 17 April 2016 (UTC)
Sure thing. If you do decide you'd rather re-nominate at a later date, go ahead and shoot me a message when you're ready, and I'll start reviewing it right away. No sense in having the article languish in the GAN queue a second time. --Cryptic C62 · Talk19:16, 18 April 2016 (UTC)
- In citing USC (the United States Code), it certainly would be a good idea to expand the first citation with a parenthetical reference. The USC web link is the [OFFICIAL version of U.S. law, updated almost daily by Congress. I'm very disinclined to use the WP template for web citations, since only one of the parameters applies, the URL. Please keep in mind that this is an article about law, and by its nature should have references to the law itself. Upon clicking the USC link, the reader gets a pop up window of the full official version of the particular section of the law, including statutory history and substantial other information.
Note: it has been discussed at length whether it is appropriate to cite the law in a law article, since the law itself is original material rather than second party coverage. The biggest problem is that most reliable sources on the law, other than those quoting the law or cases without commentary, require a fee to access. Thus, relying on second party coverage would effectively prevent readers from viewing reliable citations. The public press (e.g., NY Times, Wall Street Journal) have repeatedly proven themselves unreliable when covering what the law means, and even in reporting court cases saying what the law means. This is not a problem unique to tax.
- The citations to U.S. Supreme Court cases are entirely within the History section, and the multiple citations to the same case are within the same subsection. I think the better approach may be to simply delete the citations after the first. Your additional thoughts?
I went ahead and implemented the {{rp}} template throughout the History section. I think it's pretty handy in this case, but feel free to discuss further or revert. --Cryptic C62 · Talk19:56, 11 April 2016 (UTC)
Please comment on whether the History, Sources, and Controversies sections are appropriate in length, coverage, style, and bias. These were once subject to discussion, without much consensus. Also, please similarly comment on Note 1 on Puerto Rico tax. Oldtaxguy (talk) 02:46, 9 April 2016 (UTC)
Dollar amounts adjusted for inflation
There are a few places that mention the income amount that qualifies for certain tax rates. It's not clear to me though which of these are dollar amounts in terms of the time issued or is it in current dollar amount adjusted for inflation and purchasing power? If it's in terms of the amount at the time I would want to add the year it's talking about in case the reader wants to adjust it to present value. Emschorsch (talk) 21:13, 13 March 2016 (UTC)
I was referring to the history of top rates section: "the top rate was its all-time high at 94% applied to income above $200,000". That and the bullet point 2 after are unclear. I assume the $200,000 is in terms of money at the time. Is there a standard way that people adjusted to 2007 money (is that not original research?)? I'm happy to go through and adjust the rates. It's also probably worth updating all those references to $2016 since a decent amount of time has passed. Emschorsch (talk) 02:08, 16 March 2016 (UTC)
I don't think they should be updated to 2016 because inflation is constantly changing the current value. Both could be listed for reference as it is for the 75% bracket in the same sentence, but the original values should definitely be part of the article. Wolfram Alpha is pretty good at converting money via inflation, in this case it is about $2.7 million today: [[19]]. I don't think that's considered original research because it's just math on the inflation rate that Wolfram is using. Jbeyerl (talk) 13:33, 16 March 2016 (UTC)
I essentially agree with editor Jbeyer1. Wikipedia articles are full of references to historical monetary values of things in years gone by. If someone wants to adjust a particular value in an article to reflect the effect of inflation, there are tools on the internet that make that conversion easy to do. Famspear (talk) 13:59, 16 March 2016 (UTC)
Fair enough. But would you be okay with my updating everywhere it says ($x in 2007) to ($x in 2016)? It seems like updating the article to include present value amounts every 10 years wouldn't be overly burdensome, but I can understand the argument against it too. Also I just noticed the chart right below where I was concerned about that has it in 2016 amounts so my concerns really aren't very major. I was trying to follow the link but footnote 68's site has disappeared. I could access it here. Should I change the ref to link to that or does a new reference need to be found? Emschorsch (talk) 15:24, 16 March 2016 (UTC)
The adjustments for inflation using Wolfram Alpha are a little questionable to me. It's not clear what method Wolfram Alpha is actually using as I do not get the same results as when adjusting here. It seems wise to defer to the government site on this one since they explicitly state their methodology (the average CPI of year y / the average CPI of year x). This is the only section where there are adjustments for inflation. I'd like to use the gov inflation tool to adjust all the 2007 numbers instead to 2015 and put a little blurb at the top of the "History of top Rates section" explaining the methodology used to adjust for inflation and citing the appropriate things. Another problem with Wolfram Alpha is that I can't figure out how recreate the 2007 number to even confirm if it's correct. — Preceding unsigned comment added by Emschorsch (talk • contribs) 04:06, 17 March 2016 (UTC)
I'm good with PUBLISHED inflation adjustments, as those are official. IRS published many inflation adjusted items for 2016 in Rev Proc 15-53, including 2016 tax rates and brackets. However, where an official inflation adjustment has not yet been released, anything about it is pure speculation, and should not be used, regardless of what technique is used to derive it. I agree with Emschorsch that we should update annually for key things, but I have mixed views on how often to update examples. We run on volunteers, after all. Note that there are lots more items than the 51 in the above Rev Proc that are annually adjusted. I have some discomfort with presenting historical amounts on a current dollars basis, and REALLY have discomfort adjusting those annually. Oldtaxguy (talk) 12:45, 17 March 2016 (UTC)
I agree and don't think we need to update it every year. In fact I quite overestimated inflation as 100k in 2007 is only 114k in 2015 so not an overly major difference, so updating every 10 or 20 years would be fine. The important thing to me is being able to interpret the chart. There should be an "inflation adjusted" measure for all the dollar amounts in the chart. This would require updating every time a new tax plan that adjusts the top rate is proposed. This has happened every 3-8 years which doesn't seem too much to ask since it already needs to be updated to reflect the new tax plan. Adjusting for inflation using CPI has its flaws but at the very least it gives a sense of what the money is worth today for buying a standard basket of goods. How do other articles handle historical dollar amounts? If there was a wikipedia article about Adjusting for Inflation that detailed the advantages and disadvantages of each method an easy system would be for each article to just link there and then make sure all dollar amounts are adjusted to at least within the last 10 years. Emschorsch (talk) 14:11, 17 March 2016 (UTC)
That's a good point about it not being clear how Wolfram Alpha calculates its values. It took me quite a few attempts to reproduce two of the examples in the article: [[20]] and [[21]]. Depending on how you ask it, Wolfram Alpha seems to sometimes use the CPI for January or December, and sometimes an annual average of some sort. Jbeyerl (talk) 13:52, 17 March 2016 (UTC)
I found a template for inflation that autoupdates!! There seems to be some legitimate concerns with using CPI to adjust for inflation for wealthy individuals. The discussion on the talk page of the template made me think that it was okay for now since according to one user the correlation is .99 (hopefully they add a template to adjust for capital inflation in the future). I think this addresses most of the concerns raised here. I plan on including this template for all the nominal values used in this article. I recognize that it's not a perfect measure but I find it very helpful to have a ballpark figure to get a sense of the different scales involved. Though, if there exists a good discussion of the problems with using CPI to adjust for inflation it would probably be good to include it in the reference. Emschorsch (talk) 03:20, 26 March 2016 (UTC)
The more I consider inflation adjusted items, the more uncomfortable I get with the idea. Showing inflation adjustments over a short period (such as 10 or even 20 years) can be useful. However, the entire concept falls apart over long periods, particularly when discussing 1913 vs. 2015. Societal and technological changes have rendered any attempts at price comparisons completely meaningless. Nearly all items in the market basket used for computation of consumer price levels will have been substituted out, and those few remaining will have such different weights as to be noncomparable. Examples: automobiles, telephones and gasoline are now components, but in 1913 were so rare as to not even be considered in prices. The price of bread is relevant now, where in 1913 the price of flour was more relevant, since those outside cities (the majority then) baked their own bread.
In addition, some of the inflation adjusted items in tax are adjusted according to statutory formulas or required indexes. Those items (such as 2017 tax brackets, not yet released), MUST not be adjusted until the official release of the item. The official version is right by definition, and anything different from the official version is wrong by definition. Oldtaxguy (talk) 12:44, 26 March 2016 (UTC)
![[18]](https://en.wikipedia.org/wiki/File:Distribution_of_U.S._Federal_Taxes_2000.JPG){kind=link}