Tax Shifts in America Today

Are you taxed enough? Or, maybe too much?

By Jim Harrison, UWUA National Representative Region IV and Steve Wyatt, UAW

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  • We all agree, no one likes to pay taxes – Taxes are the dues we pay to belong to Club USA.
  • We also understand that our taxes pay for a lot of good things in society; our schools, national defense, Medicare, and Social Security, to name a few. Individually we could never purchase these items on our own.
  • So, we don’t mind “paying our fair share.”
  • The principles of taxation have always been pretty simple:
    • The total tax burden should be distributed among individuals according to their ability to pay – those who can afford it the most, pay the most. And,
    • Taxes should be based on the benefits received – those who receive the greatest benefits should pay the most.

Does everyone pay their “fair share?”

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  • The sources of revenue for the Federal Government aren’t really complicated.
  • The Federal Government receives tax revenue from individual income tax, payroll tax (FICA and Medicare), corporate tax, and excise taxes (fuel, alcohol, tobacco, inheritance, etc.)
  • Of course, our state and local municipalities also collect taxes.
  • Over the past 30 years, the share of taxes paid by income groups has significantly changed.
  • Let’s examine each of these main sources of revenue.
  • As a result of policy changes occurring over the past three decades; Who are the winners? And, who are the losers?
  • You decide!

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  • When Eisenhower was President, the marginal rate on the highest earners was 91% ! That meant that the very highest income earners paid 91% tax on any income over $400,000 ($3,000,000 in 2010 dollars).
  • That meant the wealthy elite had to make a choice; re-invest any income over the $400K cap or be taxed on it at the rate of 91%.  Is it a coincidence that during this time a tremendous level of investment was made in America – new products, new factories, etc ?
  • By 1980 the rate had reduced to about 35%, and now after the “Fiscal Cliff” 39%
  • Meanwhile,  middle income earners have seen their rate increase from 5% to an effective rate today of about 15% (after all deductions and tax credits).
  • Individual tax payments have been seriously reduced for the wealthy and elite, and the burden shifted to the middle class.
  • WINNER = The wealthy and elite

  • LOSER = You and I

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  • It’s not bad enough that the owners and top executives of corporations are paying less in individual taxes – the corporations they run are paying even less too. In fact, many corporations are paying ZERO in corporate tax.
  • In 1962 corporate tax paid totaled 21% of all federal revenue. Today, just 8%.
  • In part, that’s because current tax loopholes allow many corporations to evade paying any corporate tax.
  • In 2008, the  GAO (Gov’t Acct’g Office) found that 23% of U.S. corporations pay zero tax in a given year. The same study revealed that 72% of large foreign-owned corporations that do business in the U.S. reported no tax liability for at least one year between 1998 and 2005.
  • Who are some of these corporations that can’t afford to pay corporate tax?
  • Exxon Mobil, Bank of America, GE, Chevron, Boeing, Valero Energy, Goldman Sachs, Citigroup, ConocoPhillips,, and Carnival Cruise Lines.

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  • So what is “Payroll Tax”? It’s the tax you see on your paystub that’s the amount you pay for FICA and Medicare.
  • Since 1980 these taxes have gone up 25%. Meanwhile, estate tax has dropped 46% and Capital Gains  has dropped 32%.
  • Income tax is “Progressive” – the more you earn the higher the rate (at least that’s how it is supposed to be).  Payroll tax is “Regressive” – since the tax is capped at a fixed rate, the more you earn, the lower the effective rate you pay.
  • How does this work out in real life?
  • You will pay 6.2% FICA tax on the first $113,700 you earn in 2013. That means, that most of us will pay FICA tax on EVERY DIME WE EARN.
  • The wealthy elite will also pay 6.2% FICA tax on the first $113,700 they earn. However, they pay nothing on any earnings over that amount.
  • Associated Press reports that David Simon of Simon Property Group was the highest paid U.S. CEO in 2012. His earnings = $137 million for the year.
  • Let’s do the math: $137M / 52 weeks = $2,634,615 per week / 7 days =  $376,373 per day / an 8 hour work day =  $47,046 per hour.
    David Simon paid his FICA in full in about his first two and a half hours of work !
  • The last area of tax revenue to review is that of excise tax. That is the tax for fuel, tobacco, liquor, tolls, etc.
  • And, then of course there is state income tax, municipal tax, property tax, and sales tax.
  • Most working families spend their entire income.  Maybe a few “upper middle class” may save a little; otherwise, your paycheck is spent taking care of life necessities.
  • On the other hand, those at the very top can’t possibly spend their entire income.  So, a large percentage of the income (that which is saved or invested in stocks) becomes tax free! If you don’t buy merchandise, fuel, tobacco, or liquor, you don’t pay tax.
  • The end result is a grossly unfair tax system.
  • Those at the very top are paying less than ever and receiving even greater service.
  • The 23 million unemployed, and millions of others earning minimum wage, don’t make enough to pay any tax.
  • Therefore, an unfair share of the burden shifts to —– yep you guessed it YOU!

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These facts are why UWUA is launching a new effort to better educate, motivate, and mobilize our members!

Enough IS Enough!!!!

Stay tuned to learn how you and your local can fight back.

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