No, it doesn't, but it at least puts the people's hearts in the right place, which is better than the alternative, I suppose. Here's an actual way to help the poor straight away: Do away with the payroll tax. It currently sits at 12.4% and it's regressive, which even flat tax advocates should be against. I don't think most people are even aware that 12% of their wages are being skimmed before they pay a dime of income tax. IMO, the payroll tax should be obliterated tomorrow, and an offsetting increase in income tax should shore up the rest. The poorest people are paying almost the same tax rate as is levied on capital gains. Some 3/4 people pay more in payroll tax than in federal income tax. There's no 47% when it comes to the payroll; it's just a dead weight on people's income. To me, this is unjustifiable....hoping doesn't help the poor much.
I don't know too much about taxes but that money is more or less going to the same place, which redistributes it right? I mean, if you eliminated a certain tax Congress would scramble to redefine how much of your income is taxable and increase the income tax; they'd screw with Roth 401(k) restrictions and up the tax on contributions to your traditional 401(k). They'd justify it by saying "aw we lost all that cash and we gotta make it up, to fund your healthcare/defend our territory/save GM" and I don't see what difference wiping out one tax would make. They're all different sewage pipes leading to the same dump.To me, this is unjustifiable.
It just occurred to me as well that this is another policy that hurts working families, as a one income of, say, $200,000 is taxed less than a two income household of $200,000 where the monies are relatively evenly split between spouses. The so called "marriage penalty" gets worse...
Well, if I make $200k, then my payroll tax is $117,000 * 12.4% = $14,508, which is a rate of 7.25%. My wife is a housewife who makes 0, so combined we pay 7.25%. If, on the other hand, I make $100,000 and my wife makes $100,000, then our payroll tax burden is the full 12.4%, or $24,800. Income tax kind of works the same way for married people. If you make a similar amount of money, then you pay a lot (actually, more than you would pay individually, if you can believe that; not sure what genius came up with that one). If one spouse makes significantly more than the other, then you potentially get a large break. It's a terribly unfair system, IMO. But everything looks unfair when you're the one getting fucked.
Ah okay I got you, actually now that you mention this marriage caveat I'm beginning to remember reading about this long before I understood any of it. Oh well. Yeah I think that's the "unfair" bit of things being unfair.It's a terribly unfair system, IMO. But everything looks unfair when you're the one getting fucked.
There's a world of difference between income tax and payroll tax. Income tax is progressive, and payroll tax is regressive. The payroll tax burdens the poor proportionally far more than the wealthy. The revenue it generates should be made up with a commensurate increase in the income tax, thereby reducing the tax burden on the poor. 12.4% is a shitload of money when you're making $20,000/yr. There is no standard deduction for the payroll tax, no exemption; it just is...until you make $117,000 or thereabouts. Above that level you cease to pay, because payroll is earmarked for social security, the theory being that the benefit is capped, so why shouldn't the contribution. That theory doesn't really hold water, because many people don't directly benefit from all sorts of services to which they contribute. In effect someone making $234,000 only pays 6.2%, and so on (and someone deriving their income from capital gains--the wealthiest, typically--pays 0%). Regressive taxes are a type of upward redistribution, and pretty much all economists from all sides of the political spectrum are against them. It's a universally despised way of taxation among all but the most ardent defenders of the wealthy.
Jesus christ. So what you're saying is, people making over say $117,000 are taxed less, and the justification is that they won't be needing welfare so they shouldn't have to pay for it?There is no standard deduction for the payroll tax, no exemption; it just is...until you make $117,000 or thereabouts. Above that level you cease to pay, because payroll is earmarked for social security, the theory being that the benefit is capped, so why shouldn't the contribution.
You got that right. I'm not taught anything about this, I don't know anyone that is. I can tell you how to do okay on the SATs and that's just about all the applicable knowledge I was taught in school. Thanks for the explanation anyway, that's actually insane.Civics education is clearly in the shitter when even a well informed youngster like yourself doesn't know this.
I almost think that it's intentionally obscured. It doesn't show up on your 1040 form calculations in an obvious way, and half of the tax is paid by your employer on your behalf. Therefore, it's not staring you in the face like it should be. And the cap isn't well advertised by the media, and politicians have an incentive not to tell people they're getting fucked.