2008 Tax Data analysed and my thoughts on contentious issue

1. Crocodile tears, facts and national debate: A curious case of framing!

2. Taxation
• US Taxation is progressive.
– Higher the income, higher the marginal tax rate
– Assuming no deduction, 10% tax rate upto 174000, 20% for income above 174001 to
300000
– A filer earning 274000 will pay 17400 (10% on the first 174000) and 20% (20000) on the
additional 100000 for a total of 37400, an effective rate of 13.65%
– That filer is not paying 28% (76720) on all the 274000
• IRS publishes by income slabs: 0-200K, 200-500K, 500K-1000K and
1000K+
– Cannot easily compute for 250K
• Data is available at the IRS website irs.gov
• IRS derived these by sampling
– Not clear why sampling is used rather than processing all the returns
• Could be exact and actual without loss of anonymity
– Not clear why data for the top 100, 400 or 1000 is not made available
• Tax year 2008
– everything in this presentation is for tax year 2008.

3. Tax Data for 2008
Income TaxableIncome Income Tax Tax/Income %TaxShare %IncomeShare
0-200K 3,591,956,977,000 494,962,708,000 13.78% 47.98% 63.54%
200-500K 790,018,422,000 193,699,168,000 24.52% 18.78% 13.98%
500-1000K 332,577,165,000 93,899,363,000 28.23% 9.10% 5.88%
1000K+ 938,372,909,000 249,019,686,000 26.54% 24.14% 16.60%
Total 5,652,925,473,000 1,031,580,925,000 18.25% 100.00% 100.00%
Source = http://www.irs.gov/pub/irs-soi/08in12ms.xls [http://www.irs.gov/taxstats/indtaxstats/article/0,,id=134951,00.html]
Prepared by ofrancis1999@gmail.com
Anyone can calculate these figures directly For the tax year that ended Dec, 31 2008,
0-200K income group accounted for 63% of
from IRS data 08in12ms.xls as follows:
the income with a 48% tax share. As a
for 0-200K income group: function of the income, the tax liability for
TaxLiability = SUM(N10:N21) this group was 14%.
TaxableIncome = SUM(J10:J21)
Tax share is the proportion of tax liability
200-500K figures are taken out of row 22 from cells N22,J22
for the income group of the total tax liability
500-1000K figures are taken out of row 23 from cells N23,J23 for all the income groups.
For million or more, 1000K+, income group
TaxLiability = SUM(N24:N28)
TaxableIncome = SUM(J24:J28)

4. 2008-IRS Data for Charts
0-200K/86,306,702 Income/#ofReturns TaxableIncome in 1000s
In the income group 0-200K 0-200K/86,306,702 3,591,956,977
by one count there were 86,306,702 200-500K/3,459,900 790,018,422
returns. 500-1000K/574,263 332,577,165
1000K+/319,240 938,372,909
There were 319240 returns with a taxable
Income/#ofReturns IncomeTax in 1000s
Income of a million or more 1000K+.
0-200K/86,306,702 494,962,708
As a group the returns with 0-200K 200-500K/3,459,900 193,699,168
taxable income had the highest total 500-1000K/574,263 93,899,363
Income tax liability (494,962,708,000) 1000K+/319,240 249,019,686
and this group also had the highest
aggregate taxable income
(3,591,956,977,000).

5. Taxable Income Distribution
TaxableIncome in 1000s
938,372,909, 17%
332,577,165, 6%
0-200K/86,306,702
200-500K/3,459,900
500-1000K/574,263
1000K+/319,240
790,018,422, 14%
3,591,956,977, 63%
In the tax year 2008
63% of taxable income is from 0-200K income group.
14% of taxable income is from 200-500K income group.
6% of taxable income is from 500-1000K income group.
17% of taxable income is from Million+ income group.

6. Income Tax Distribution
Tax Liability in 1000s
249,019,686, 24%
0-200K/86,306,702
494,962,708, 48% 200-500K/3,459,900
500-1000K/574,263
1000K+/319,240
93,899,363, 9%
193,699,168, 19%
48% of 2008 tax liability is attributable to 0-200K income group.
19% of 2008 tax liability is attributable to 200-500K income group.
9% of 2008 tax liability is attributable to 500-1000K income group.
24% of 2008 tax liability is attributable to Million+ income group.

7. Tax Rate by Income Group
(Income tax/income) is 13.8% tax rate for 0-200K group
Income/#ofReturns TaxRate (Income tax/income) is 24.5% tax rate for 200-500K group
0-200K/86,306,702 13.78%
(Income tax/income) is 28.2% tax rate for 500-1000K group
(Income tax/income) is 26.5% tax rate for 1000K+ group
200-500K/3,459,900 24.52%
500-1000K/574,263 28.23%
1000K+/319,240 26.54%
TaxRates are effective rates computed by dividing tax liability by taxable income.
The source for the data is IRS.
For clarification contact ofrancis1999@gmail.com

8. Expert Opinions
• David Stockman
– Reagan era Budget Director & xCongressman
– 1995 top 5% had $8 trillion
– 2010 top 5% had 40 trillion
– http://www.nytimes.com/2010/08/01/opinion/01stockman.html
– http://money.cnn.com/2010/11/15/news/economy/bush_tax_cuts_faqs/index.htm
– Appeared on Dec 2nd episode of Colbert Report http://bit.ly/dUu17s
– Appeared on Dec 3rd on MSNBC/Countdown
• Warren Buffet, Bill Gates
• Senator Alan Simpson Chair of President Obama’s Commission
• Senator Phil Gramm, Vice Chairman, UBS

9. The 700 Billion $ Taxcut we got
Real billionaires did not want it
• For whom did the legislators fight?
– Acute short-sighted
• But for sure
– it is money we did not have
– Our children will have to pay with interest
– Send the money back to treasury
• It is not a game, it is my grandchildren’s
future
My personal opinion…

10. One way Billionaires spend money
• Real Billionaires like Warren, Bill donate
95% - most of their wealth
• Others are qualified HNW
– Invest in hedge funds
– Bid up the stock market
– Blow up the market
– Buy elections
• Paid servants bail them out.
• Money flows to cover their losses
My personal observation and opinion…

11. Social Security
• It is a form of regressive taxation
• So is medicare/medicaid tax
• Gov can convert it into a total scam
– If the program is killed without returning the
contributions, reducing benefits
• Privatizing Social Security will make it a
speculative player
– A cushion for the billionaire HNW players
My personal observation and opinion…

12. Get Rid of Social Security
• Stop collecting
• Return the contributions
– Either as cash
– Or tax credits
• Allow people to save for
retirement
– Expand IRA
– Expand 401K for all
My personal observation & opinion…

13. Hold them responsible..
• Who signed off on 800 Billion dollar bank bailout
but cry foul for 100 Billion auto bailout
• Who gave 800 Billion taxcut but seek to cut
small social benefits
• Who spent a trillion dollars on unnecessary
wars, doled out nobid contracts
• Who apologize to oil companies
• Call them out, reject deception and
misrepresentations

14. Ask for total Disclosure!
• Did you know corporations can make
unlimited political contributions?
• Foreign interests can influence the
election process
• Ask your state senator and your district
congressman to enact strong disclosure
law – NOW --
• Democracy is at stake…

15. References and Disclosures
• http://i125.photobucket.com/albums/p43/harryrambler/Crocodile_Tears.jpg
• http://opinionator.blogs.nytimes.com/2010/11/11/a-republican-for-higher-taxes/
• http://media.photobucket.com/image/debate/stephdiva87/debate.jpg?o=40
• http://dailycaller.com/2010/11/26/patriotic-millionaires/
• www.irs.gov/pub/irs-soi/08in12ms.xls
• http://www.irs.gov/taxstats/indtaxstats/article/0,,id=134951,00.html
– IRS Data is by sampling
• http://www.nytimes.com/2010/08/01/opinion/01stockman.html
• http://money.cnn.com/2010/11/15/news/economy/bush_tax_cuts_faqs/index.htm
• Errors are entirely the authors responsibility ofrancis1999@gmail.com
• For clarifications contact ofrancis1999@gmail.com
Submitted with the earnest hope that readers can answer simple questions
on contentious issues that we face.