The Shocking Truth About Taxes

The super rich are different from you and me. For one thing, their tax rates are lower.

According to IRS statistics, the nation’s top 400 taxpayers increased their average income by 392% and slashed their average tax rate by 37% between 1992 and 2007, Dave Gilson reports in Mother Jones. Furthermore, when you factor in payroll taxes, the tax rate for Americans earning $370,000 is nearly equal to the rate for those making between $43,000 and $69,000 a year.

Meanwhile, at TAPPED, Jamelle Bouie notes that, in 2007, more than 10,000 Americans reported incomes of $200,000 or higher and paid no income tax at all. These lucky ducks are known to the IRS as HINTs, which stands for High Income, No Taxes.

Pseudo-farms of the rich and tax-dodging

The ultra-rich are using deluxe hobby farms to dodge millions of dollars in taxes, Yasha Levine reports for The Nation:

Take Michael Dell, founder of Dell Computers and the second-richest Texan, who qualified for an agricultural property tax break on his sprawling 1,757-acre residential ranch in suburban Austin and saved over $1 million simply because his family and friends sometimes use the land as a private hunting preserve to shoot deer. Or take billionaire publisher Steve Forbes, who got more than a 90 percent property tax reduction on hundreds of acres of his multimillion-dollar estate in upscale Bedminister, New Jersey, just by putting a couple of cows out to pasture.

Agricultural tax breaks were originally designed to help farmers stay on their land as suburban sprawl grew up around them. As neighborhoods shifted from rural to residential in the 1950s and ’60s, farmers struggled to keep up with rising local taxes.

So, who’s a farmer for tax purposes? Levine reports that the standards are ridiculously low in many states, like New Jersey, where a yard full of weeds can qualify as a farm.

Worst of all, tax breaks for faux farms are depriving public schools of billions of dollars of desperately needed revenue. In Texas — which loses over a billion dollars a year in property taxes from pseudo-ranches of the rich and famous — hundreds of public school students are taking to the streets to protest massive proposed layoffs of teachers and support staffers, Abby Rapoport reports in the Texas Observer.

Tax me, I’m rich

A group of self-proclaimed “trust fund babies” is demanding higher taxes, Pete Redington reports for Working In These Times:

Resource Generation recently teamed up with another nonprofit that organizes affluent activists, Wealth for the Common Good, to form a Progressive Tax Campaign. They will be organizing and advocating a change in the policy, laws and perceptions of our tax system. Specifically, the campaign aims to draw attention to the social services that taxing the wealthy could fund, and advocates higher tax bracket rates for top income earners, as well as higher taxes on investment income.

Major debt

Student loan debt is likely to reach $1 trillion this year, outpacing credit card debt for the second year in a row, Julie Margetta Morgan reports for Campus Progress. Student loans can be a smart investment if they lead to a lifetime of higher earnings. However, Margetta Morgan notes, the average bachelor’s degree holder will shell out $250 a month for a decade to pay back the loan.

Many Americans won’t pay off their debt until their own children are in college. President Obama was still making payments into his late 40s.

As college tuition continues to rise, we can expect students to borrow even more for their education in years to come. Much of this debt is guaranteed by the taxpayer. Margetta Morgan argues that colleges should be doing more to educate students about smart borrowing.

The economics of happiness

Kristy Leissle reviews the new documentary, The Economics of Happiness, for YES! Magazine. The film argues that community is the foundation of happiness and that globalization is the enemy of community. The movie also examines what ordinary citizens can do to nurture their own communities.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. 

Related Stories:

As Colorado Slashes Funds For Education, Tom Cruise Pays $400 In Property Taxes

Student Debt For College Likely To Exceed a Trillion Dollars

Most Americans Think Taxes Are Fair: Do You Agree?

 

Photo courtesy of MoneyBlogNewz via flickr
by Lindsay Beyerstien, a Media Consortium blogger

89 comments

Jane R.
Jane R.5 years ago

Sad but true. The rich get richer and the poor get poorer. Thanks to our government.

John B.
John B.5 years ago

A bit too imprecise an article to let one know of the hundreds of billions that are not collected so that the fellow making $50K can be hounded by IRS

April Thompson
April Thompson5 years ago

Not surprised!

Maggie C.
Maggie C.5 years ago

How about making student loans straight interest rather than compound interest.

Tom Y.
Tom Y.5 years ago

Since it's unlikely that the US can return to deriving its executive income from tariffs, now might be the time to put its government structure on a diet: say, a low flat tax levied on incomes, with a Tax Freedom Day in April; and a modest consumption tax on goods and services. Jointly, the budget needs to be radically slashed.

Kathlene Lentz
Kathlene Lentz5 years ago

I'm shocked!

NOT!

joanna e.
joanna e.5 years ago

The farm tax has been here for a loooong time. In California when you see oil wells pumping away and a few cows milling around you will know the tax structure is out of whack.
Keep special interests out of the tax system.

Barbara V.
Barbara V.5 years ago

I think the whole damnable thing is part and parcel of the corruption of the government in favoring the rich to get by without paying their fair share of taxes. Then the same government wants to do away with Medicare and Social Security for those of us with lower and limited incomes. Many of us do not have pensions. This is unconscionable. Are we going to LET them get by with this horror the way they've allowed the wretched rich to get by? Or are we going to fight for what we earned the right to? If we DON'T fight, then I give up on my fellow Americans, for we will have been aptly named "a nation of sheep."

Jan W.
Jan W.5 years ago

These are the same wealthy people who are crying about middle class and lower income people who receive Social Security and Medicare as 'freeloaders'?

Really? Haven't they bent the system (the system which they designed thorough 'paid for Congressmen' and lobbyists) so that THEY are the freeloaders?

Heather G.
Heather G.5 years ago

JW H, your numbers are meaningless unless you include what percentage of INCOME that 1% earned, not just the percentage of tax they paid.