This person on the left — she represents
the poorest 10 percent of Americans. And on the right — he is the very richest
10 percent. So let’s ask this group a simple question: What percentage of your income gets taxed? Most Americans pay multiple income taxes … to
the federal government, and state governments, and local governments. But a recent analysis by two economists added
up all the income taxes. And when you do that, the data shows that
poor people pay a very small part of their income to the government. And rich people pay more. This concept, of taxing the poor at a lower
rate — and taxing the rich more… this is called: progressive taxation. It’s how taxes work in most countries. But it’s also why some critics question
whether these people… … are getting away without paying their
fair share: "The middle class and the poor that pay, if
anything, a lot less." "Why is it that 45 percent of the population
of this country is not contributing back to the rest?" But now let’s add one more guy to this group of 10: This guy — he represents the 400 richest Americans. Billionaires. Billionaires don’t make most of their money
through typical income. So their income actually gets taxed at lower
rates than these less rich people. Now, you might be thinking, don’t billionaires
pay taxes in other ways? And the answer is yes. This is just the income tax, and there are
lots of other kinds of taxes in America. And this analysis, where this data came from? It looked at all of those taxes. And it shows that, when we add them all up... There actually is someone in this group who
might not be paying their fair share. Let's go back to our first chart, with these
11 people. Remember, this is just the income tax. What happens when we add in all the other
taxes? Well, let’s look at another kind of tax:
Corporate and property taxes. These are the taxes we pay on the things we
own: Usually businesses, and property, and the money we make on them... Usually, rich people own more things. So these corporate and property taxes hit
them the hardest. Rich people also tend to be from rich families. And when they inherit a lot of money, the
government taxes them. This is called an estate tax. Put these taxes together, and it’s clear
that they place a much heavier burden on the rich -- including billionaires. Add these back onto the income taxes, and it looks like the rich really do pay way more than the poor. But now let's talk about another tax. This one's buried in your paystub. Look closely, and you'll see something called
a Medicare tax and a Social Security tax. Sometimes paystubs call them FICA. Anyway, combined, these are called payroll
taxes. Medicare and Social Security are two really
important programs: they provide health care and a modest income for when we get old and
retire. But they’re also expensive. Which is why we have these payroll taxes -- separate from the income tax -- to pay for them. So on your paycheck, you'll notice that you're
taxed 7.65 percent in payroll taxes. And your company is supposed to pay another
7.65 percent on your behalf. But economists have found that, in practice,
the way companies pay their part of the payroll tax... is by just paying workers less. So in reality, many workers pay nearly the full 15.3
percent toward this tax. And everyone is on the hook for the same percentage. But the wealthy? Once someone earns more than about $130,000
a year … the money they make beyond that isn't subject to the Social Security tax. It's capped. That means the rich pay a really small portion
of their income toward payroll taxes. And poor people and the middle class pay way
more. Add payroll taxes onto the chart, and it starts
to flatten out. The last type of taxes we’re going to look
at are the taxes we pay when we buy stuff. For example, let's say you're looking to buy
a t-shirt. When you check out, you pay a sales tax, which
is a percentage of its cost. And sales taxes apply to most things: Furniture. Toilet paper. Laundry detergent. For some items, like beer and gasoline, there
are additional taxes that get incorporated into the price tag ... before you even get
to the store. These are called consumption taxes. And we all pay the same rate on the things
we buy, regardless of how rich we are. You might think that, since rich people usually
buy more things — and more expensive things… they pay a larger percentage of their income
toward these taxes. But, relative to how much money they have,
the stuff they buy, and the taxes they pay on that stuff, take up a relatively small
portion of their income. Meanwhile, everyone, even people with almost no money, needs to buy certain basic things to survive. And for poor people, those basic things and the taxes that come with them cost them almost everything they earn. So if we chart how much of their income each
of these people pays in consumption taxes... … we can see that poor people pay a much larger
portion. When we put these taxes together… Suddenly we see a big change. The chart shows us that this line, from before,
is a lie. That America’s tax system as a whole, isn’t
very progressive. Instead, it’s mostly flat. Poor people pay about the same portion of
their income in taxes as rich people. And this guy — this billionaire — is paying
a smaller portion than everyone else. Even the poorest. If you look at just certain types of taxes, it’s natural to assume that rich people pay a bigger tax burden in the US, and that poor people aren’t exactly paying their fair share. But a more complete look at the bigger picture,
challenges that. And it suggests that, if we’re looking for
a group that isn’t paying their fair share, we might be looking on the wrong end.
This seems dishonest in the way they portray payroll taxes. The made the claim "Businesses just pay employees less" then lumped the ENTIRE payroll tax onto the employee. That is quite the leap.
It’s Vox so they’re high in production value, but left out key facts that would massively skew their presentation. Things that weren’t mentioned:
Transfer Payments. Tax credits, welfare, food stamps and other transfer payments. This would massively benefit the poorest Americans and make their effective tax rates negative. For the average poorest American in the bottom quintile transfer payments total over $45,000 and for the middle quintile totals $18,000. Source for that here
Property Taxes/Real Estate Taxes. The wealthy obviously own larger homes (often several of them) and have to pay for that in property taxes, Real Estate transfer taxes, and all the other taxes that come with owning a home. Property Taxes are wealth taxes by another name
Proportion of tax receipts paid by each group. Proportion of income paid in taxes is designed to emphasize the “some have little, while some have a lot!” level of economic discourse we have now. But showing percentage paid would show that the top 1% paid 39% of all individual income taxes.
It’s obviously misleading as fuck to show a percentage that poor Americans pay in taxes without mentioning the tens of thousands of dollars they receive from the American government AFTER those taxes are paid. I volunteer with low income Americans to help with their taxes every year. Trust me they know what credits and deductions they’re owed.
Shouldn't we be having more progressive tax on capital gains? Since most rich people get richer by investing.
Children don't pay any taxes!
The 3 people getting rich off our current system
1) Large investments 2) Business owners 3) Property owners
The rich get richer with these laws.
All income should be taxed equally, regardless of how its earned.
Here's a similar video about wealth inequality that I think does a great job. Even if you just watch the first 70 seconds: https://www.youtube.com/watch?v=QPKKQnijnsM
Let me guess: the rich
Many like to debate whether taxation is really progressive, seemingly acknowledging that it's a bit unfair to ask the rich to pay more, and that it's really done for practicality.
I wish someone would examine that more closely. If not for the government that taxes support, wealth inequality couldn't exist to any significant degree because the cost of both local and international security and law enforcement would be prohibitively high.
The original function of government was basically the king protecting his own wealth, with himself as the dictator of all government policy. It didn't pretend to be fair to the poor, at least not convincingly, and was explicitly to protect the king.
Modern semi-democratic governments carry the hope that government is good for everyone - and that the wealth inequality that government protects is ok because everyone is a bit wealthier, even though some benefit from socialized wealth protection more than others. So if some benefit more, isn't it fair to ask them to pay according to their benefit?
Yet people today seem to think that welfare means the poor benefit most from government. But take government away - the poor would still be poor but the rich would be poor too.
This video seems misleading, specifically when talking about the consumption taxes, which makes me wonder where else it's misleading.
It says rich people are likely buying more, but that the taxes don't hit their larger incomes as hard (shocker). Okay, who cares. Then the video goes on to make it look like they're paying less in consumption taxes than everyone else. So the graph at the end doesn't seem accurate or objective at all.
I do agree the wealthy are getting away with paying less in taxes, but don't bs me how how they're doing so.