Can I get some help here? I am having a discussion of sorts with my boss at work on who pays more in taxes. I said I thought the very wealthy paid more in taxes, he said the rich did not pay their share in taxes. From everything I can find, the rich do pay more in taxes, perhaps he means % of income. But even that it seems they pay more.
Your boss clearly does not know what he is talking about if he thinks that the rich pay less in taxes. From both an actual dollar standpoint and a % standpoint, the rich pay more in taxes. The top 60 percent of taxpayers pay 100% of all income taxes.
I notice that you said they paid more taxes, but his reply was they do not pay their "share". Depending on what he views as their "share" this could explain his claim (however misguided it is)
Also, as I pointed out in another thread in the post Bush tax cut world, the rich shoulder more of the tax burden.
All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers. The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.
Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 per cent dropped from zero percent to –4 percent, mean ing that the average family in those quintiles received a subsidy from the IRS. By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.
Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 per cent to 5.4 percent.
And I don’t understand corporate tax. Isn’t that double taxing? Cooperation gets 2 billion dollars and then pays taxes on it, then they pay the employees and each of them pay taxes on it. Why does the entity pay taxes at all, why not just the people who are being paid?
The United States imposes a tax on the profits of U.S. resident corporations at graduated rates ranging from 15 to 35 percent. Most corporate income is taxed at the maximum rate. Corporate shareholders also pay individual income tax on dividends and on capital gains from sale of their shares. The maximum tax rate on both dividends and capital gains is currently 15 percent, but both are scheduled to revert to pre-2001 levels (ordinary income rates of up to 39.6 percent on dividends, a maximum rate on capital gains of 20 percent) after 2010.
The corporate income tax is the third largest source of federal revenue, after the individual income tax and payroll taxes.
Taxable corporate profits are equal to a corporation’s receipts less its current expenses (including wages and interest), deductions for the cost of inventory when goods are sold, and depreciation of capital investments. U.S. resident multinational corporations pay tax on their worldwide profits, but tax on the profits of their controlled foreign subsidiaries is deferred until those profits are repatriated (that is, paid back as dividends) to the U.S. parent corporation. U.S companies receive a tax credit, subject to various limitations, for foreign income taxes associated with their foreign-source income. U.S.-based corporations that are owned by foreign multinational companies face the same U.S. corporate tax rules on their profits from U.S. business activities as do U.S.-owned corporations.
A corporation does not have to pay taxes on the wages that they give out as stated above, so it in effect avoids a double taxation.
Corporations must be taxed at least to an extent to prevent individuals from accumulating tax-free income within corporations as almost anyone would do if that loophole existed.
Many U.S. businesses are taxed as "flow-through" enterprises and are not subject to the corporate income tax. These include U.S. corporations organized under subchapter S of the Internal Revenue Code (S corporations), partnerships, and sole proprietorships. Instead their shareholders or partners include their allocated share of the businesses’ profits in their taxable income under the individual income tax, so the type of business you set up matters as well.
Hope this helps.
