Forum Post: Hard Information on the Transfer of Taxable Personal Income
Posted 13 years ago on Oct. 18, 2011, 12:38 p.m. EST by Franklin
(5)
This content is user submitted and not an official statement
Siphoning Taxable Personal Income from Middle-Class and Working-Class Families 1986 to 2007.
The purpose of certain changes in the income tax code in 1981, 2001 and 2003 was to transfer the Taxable Personal Income (TPI) SHARE of the TOTAL TPI (TTPI) from the lower Income Groups and 97% of the taxpayers to the upper Income Groups making up 3% of the taxpayers. In 1986, the TPI SHARE of the Bottom 50% Income Group of taxpayers, was 16.66%. By 2007, it had been reduced to 12.26%, a loss of 4.4% in TTPI SHARE. In 1986 the TTPI SHARE of 25% to 50% Income Group of taxpayers was 24.3%. By 2007, this had been reduced to a 19.04% SHARE, a reduction of 5.27%. In contrast, from 1986 to 2007, the TTPI SHARE of the Top 1% of taxpayers more than doubled from 11.3% to 22.83%.
These changes have had large but measurable effects on the distribution of the TTPI in the United States. During just the four tax years of 2004 to 2007 (the last year for which detailed statistics are available), a total of $3.743 TRILLION dollars of TPI were transferred from the Bottom 97% of the taxpayers up to the Top 3%. Of this, $1.235 TRILLION came from the Bottom 50% of taxpayers Income Group (average TPI’s of less than $30K); while $1.481 TRILLION came from the Top 25% to 50% Income Group (average TPI’s of $30K to $60K). $896.721 BILLION came from the Top 10% to 25% Income Group (average TPI’s of $60K to $115K); $96.744 BILLION from the Top 5% to 10% Income Group (average TPI’s of $115K to $132K); $23.608 BILLION from the Top 4% to 5% Income Group (average TPI’s from $144K to $160K; and $9.6667 BILLION from the Top 3% to 4% Income Group (average TPI’s of $162K to $192K)
This information is documented in two IRS Spread Sheets that were uploaded to the Internet in early 2010. Spread Sheet 07in03etr.xls provides the 2001 to 2007 TPI statistics for the ten Income Groups (1) Top 0.1%, (2) Top 1% [less Top 0.1%], (3) Top 1% to 2%, (4) Top 2% to 3%, (5) Top 3% to 4%, (6) Top 4% to 5%, (7) Top 5% to 10%, (8) Top 10% to 25%, (9) Top 25% to 50%, and (10) Lower 50%. Spread Sheet 07in01etr.xls provides the 1986 to 2007 TPI statistics for 1986 to 2007 for Six Income Groups: (1) Top 1%, (2) the Top 1% to 5%, (3) the Top 5% to 10%, (4) the Top 10% to 25%, (5) the Top 25% to 50%, and (6) the Top 50%. Both Spread Sheets can be instantly retrieved and downloaded FOR ANALYSIS by using the search terms 07in01etr.xls and 07in03etr.xls. The IRS calls Taxable Personal Income “Adjusted Gross Income”
Additional Details: The Effects of Hollowing Out the Taxable Personal Income of Middle-Class and Work-ing-Class Families in the United States.
Over a period of just four tax years, Republican changes in the U.S. tax code have transferred $1,235,424,998,278 from the bottom 50% Income Group; $1,480,822,926,355 from the bottom 25 to 50% Income Group; $896,721,438,406 from the bottom 10 to 25% Income Group; $96,744,065,589 from the bottom 5 to 10% Income Group; $23,608,464,659 from the bottom 4% to 5% Income Group; and finally, $9,666,741,620 from the bottom 3% to 4% Income Group for a total of $3,742,988,634,907. Almost $4 TRILLION dollars in income from American middle-class and working-class families transferred in four years to top income taxpayers. Most of this actually went to Top one-tenth of 1% of tax payers, with TPI FLOOR's of $1.549 MILLION in 2004, $1.849 MILLION in 2005, $2.045 MILLION in 2006 and $2.155 MILLION IN 2007. In many cases, this income was taxed at a lower effective tax rate than the Wages and Salaries tax rate.
Customer Base. These tax code changes were strongly supported in Congress by Corpo-rate America and by the Republican owners of large and small businesses. Many of these business owners do local business or business only within the borders of the United States. Local newspapers and their local or national advertisers depend upon lo-cal or national consumers. Both groups do not understand that they are CUTTING THEIR OWN THROATS when $3.743 TRILLION dollars has been transferred from their customer base in the United States to the powerful and the privileged who invest these income gains in foreign countries.
Credit. Many of the houses, cars, trucks and other high-cost goods purchased by middle-class and working-class families from 2004 to 2007 were purchased on credit. A large percentage of the consumer goods purchased on credit in the U.S. came from China. From 2004 to 2007, the trade deficit with China amounted to $757 BILLION ($162.25 BILLION in 2004, $202.3 BILLION in 2005, 234.1 BILLION in 2006, and $258.5 BILLION in 2007). Much of the money in the Chinese loans to the United States from 2004 to 2007 probably came from these huge trade deficits. If the $3.743 TRILLION earned by middle and working-class families had remained in the pockets of those families would there have been the large trade deficits and the need to borrow money from China?
The Real Estate Bubble and the Great Recession that began in December 2007. If the $3.743 TRILLION earned by middle and working-class families had remained in the pockets of those families, many of the homes purchased with the high-interest-rate, no down payment, and non-document mortgages and other kinds of sub-prime "poison mortgages" could have been purchased with SOUND prime-rate and sub-prime mort-gages that could have been used in SOUNDF mortgage-based securities sold by Wall Street.
If the $3.743 TRILLION earned by middle and working-class families had remained in the pockets of those families, most of the automobiles and other high-cost goods could have been purchased from 2004 to 2007 with actual cash-in-hand or at worst with “nor-mal” credit costs similar to those before 2001. College loans could have been paid for out of savings or acquired with ”normal” credit costs.
can you summarize this in a way that regular people can rapidly gain the gist?
I hope this helps.
The Total Taxable Personal Income (TTPI) in any tax year is the TAX REVENUE from Personal Income taxes (as opposed to the TAX REVENUE from Corporate Income taxes. In 1970, 84% of the TTPI came from Wages and Salaries. By 1979, this percentage had been reduced 1.5% to 82.5%. Twenty-eight years later, in 2007, 67.2% of the TTPI came from Wages and Salaries. This is close to the same percentage of the TTPI in the final years of the Great Depression.
The transfer of $3.743 TRILLION dollars from middle-class and working class salaries and wages from 2004 to 2007 greatly damaged the U.S. Economy because it reduced CONSUMER demand at the very time that U.S. real estate interests created a number of poison mortgages (i.e., no down payment and no document mortgages) to fuel the Housing Bubble of 2002 to 2007. Wall Street securitized these poison mortgages and sold them throughout the country and throughout the World. The national and then international Credit Markets froze and the Great Recession began with job losses of 83,000 in February 2008. By the end of December 2008, 3,613,000 Americans had lost jobs. No jobs mean even lower consumer demand. By the last month of the job recession in February 2010, 8,750,000 jobs had been lost. The Republican Party wants high unemployment to continue to November 2012.
This looks like a good thread on facts. I will have to take some time on it.
Someone re-turned me onto: "Capitalism Hits the Fan" by Richard Wolff: http://www.youtube.com/watch?v=0HTkEBIoxBA. I really like the Q&A at the end when he talks about China and also what our government is doing with our mortgages.
I have tried to organizes ALL these great documentaries on: http://www.just-gov.com
We have been mislead by Reagan, Bush Sr, Clinton, Bush Jr, Obama, and nearly every other public figure. Economic growth, job creation, and actual prosperity are not necessarily a package deal. In fact, the first two are horribly misunderstood. Economic growth/loss (GDP) is little more than a measure of wealth changing hands. A transfer of currency from one party to another. The rate at which it is traded. This was up until mid ’07′ however, has never been a measure of actual prosperity. Neither has job creation. The phrase itself has been thrown around so often, and in such a generic political manner, that it has come to mean nothing. Of course, we need to have certain things done for the benefit of society as a whole. We need farmers, builders, manufacturers, transporters, teachers, cops, firefighters, soldiers, mechanics, sanitation workers, doctors, managers, and visionaries. Their work is vital. I’ll even go out on a limb and say that we need politicians, attorneys, bankers, investors, and entertainers. In order to keep them productive, we must provide reasonable incentives. We need to compensate each by a fair measure for their actual contributions to society. We need to provide a reasonable scale of income opportunity for every independent adult, every provider, and share responsibility for those who have a legitimate need for aid. In order to achieve and sustain this, we must also address the cost of living and the distribution of wealth. Here, we have failed miserably. The majority have already lost their home equity, their financial security, and their relative buying power. The middle class have actually lost much of their ability to make ends meet, re-pay loans, pay taxes, and support their own economy. The lower class have gone nearly bankrupt. In all, its a multi-trillion dollar loss taken over about 30 years. Millions are under the impression that we need to create more jobs simply to provide more opportunity. as if that would solve the problem. It won’t. Not by a longshot. Jobs don’t necessarily create wealth. In fact, they almost never do. For the mostpart, they only transfer wealth from one party to another. A gain here. A loss there. Appreciation in one community. Depreciation in another. In order to create net wealth, you must harvest a new resource or make more efficient use of one. Either way you must have a reliable and ethical system in place to distribute that newly created wealth in order to benefit society as a whole and prevent a lagging downside. The ‘free market’ just doesn’t cut it. Its a farce. Many of the jobs created are nothing but filler. The promises empty. Sure, unemployment reached an all-time low under Bush. GDP reached an all-time high. But those are both shallow and misleading indicators. In order to gauge actual prosperity, you must consider the economy in human terms. As of ’08′ the average American was working more hours than the previous generation with far less equity to show for it. Consumer debt, forclosure, and bankruptcy were also at all-time highs. As of ’08′, every major American city was riddled with depressed communities, neglected neighborhoods, failing infrastructures, lost revenue, and gang activity. All of this has coincided with massive economic growth and job creation. Meanwhile, the rich have been getting richer and richer and richer even after taxes. Our nation’s wealth has been concentrated. Again, this represents a multi-trillion dollar loss taken by the majority. Its an absolute deal breaker. Bottom line: With or without economic growth or job creation, you must have a system in place to prevent too much wealth from being concentrated at the top. Unfortunately, we don’t. Our economy has become nothing but a giant game of Monopoly. The richest one percent already own nearly 1/2 of all United States wealth. More than double their share before Reagan took office. Still, they want more. They absolutely will not stop. Now, our society as a whole is in serious jeapordy. Greed kills.
Additional Details:
In 1986, the 30.94 million taxpayers in the Bottom 25% to 50% Income Group had a 24.3% share of the TTPI. By 2007, the number of Income Group taxpayers had grown to 35.27 million but only had a 19.04% share, a drop of 5.27%. The average per capita taxable in-come and after-tax disposable income in this Income Group was $43,150 in 2004 and $47,490 in 2007. The TTPI share percentage changes in 21 successive years show that the Bottom 25% to 50% TTPI SHARE went UP a total of 1.95% in 6 of those years, and went DOWN a total of 7.21% in 15 of those years. 7.21%-1.95% = 5.27%
The siphoning off of personal taxable income from this Income Group for the years 2004 to 2007 amount to percentages losses of 3.8%, 4.7%. 4.97%, and 5.3%. If there had been TTPI share of 24.3% in those four years, the GAINS for the bottom 25% to 50% would have been $264.4 BILLION, $349.2 BILLION, $404 BILLION, AND $463.3 BILLION, totalling $1.481 TRILLION dollars over four years.
In 1986, the 15.3 million taxpayers in Bottom 10.001% to 25% Tax Group had a 23.92% share of the TTPI. By 2007, the number of taxpayers had grown to 21.2 million but only had a 20.66% share, a drop of 3.26%. The TTPI share percentage changes in 21 successive years show that the Bottom 10% to 25% TTPI share went UP a total of 2.32% in 7 of those years, and went DOWN a total of 5.58% in 15 of those years. 5.58%-2.32% = 3.26%.
In 2004, the tax payers in this Income Group had taxable personal incomes of $60,041 to $99,111 and an average income of $76,557. In 2007, the taxpayers in this Income Group had an average taxable income of $85,891 with taxable personal incomes ranging from $66,532 to $113,017.
The siphoning off of income from this Income Group for just the four tax years of 2004 to 2007 amount to percentages losses of 2.1% ($147 BILLION); 2.8% ($213 BILLION) 3.1% ($249.8 BILLION) and 3.3% ($286.7 BILLION). If 1986 TTPI share of 23.92% had been the TTPI share of this Income Group from 2004 through 2007, the total GAIN to this income group would have been $896.7 BILLION over four years
In 1986, the 5.1 million taxpayers in Bottom 5.001% to 10% Tax Group had a 11.02% share of the TTPI. By 2007, the number of taxpayers had grown to 21.2 million but only had a 10.66% share, a drop of 0.41%. The TTPI share percentage changes in 21 successive years show that the Bottom 5.001% to 10% Income Group TTPI share went UP a total of 1.3% in 8 of those years, and went DOWN a total of 1.71% in 13 of those years. 1.71%-1.3% = 0.41%.
The tax payers in this Income Group had a per capita average income of $115,007 in 2004, $121.117 in 2005, $127,532 in 2006 and $132,316 in 2007. If the 1986 TPI SHARE percentage of 11.02% had remained constant throughout the tax years of 2004 to 2007, the per capita GAINS in taxable income and disposable income would have been $1,173 in 2004, $3,613 in 2005, $4,310 in 2006 and $5,089 in 2007.
The siphoning off of income from this Income Group for just the four tax years of 2004 to 2007 amount to percentages losses of 0.001% ($7.64 BILLION); 0.0032% ($23.96 BILLION) 0.0036% ($29.25 BILLION) and 0.0041% ($35.9 BILLION). If 1986 TTPI share of 11.02% had been the TTPI share of this Income Group from 2004 through 2007, the total GAIN to this income group would have been $96.774 BILLION.
Additional Details:
In 1986, the TTPI SHARE of the Bottom 50% of taxpayers (51.04 million taxpayers) was 16.66%. Using 1986 as the base year and looking at the TTPI SHARE percentage changes in successive years over the 21-year period, the Bottom 50% TTPI SHARE went UP a total of 1.45% in 5 of those years, was the SAME in 2 of those years, and went DOWN a total of 5.85% in 15 of those years. 5.85%-1.45% = 4.4%. In 2004, the TTPI SHARE loss: 16.66%-13.42% = a loss of 3.2%. In 2005, the TTPI SHARE loss since 1986 was 16.66%-12.83%= 3.8%, and a loss of 0.59% from the previous year. In 2006, TTPI SHARE loss was 16.66%-12.51% = a loss of 4.1% from 1986 and a loss of 0.31% from the previous year. In 2007, the TTPI SHARE loss: 16.66%- 12.26%= a loss of 4.4% from 1986 and a loss of 0.26% from the previous year. Thus in 2007, the TTPI share for the 70.54 million taxpayers in the Bottom 50% had been reduced 4.4 percentage points from 1986 to 12.26%.
If the 16.66% share had been the share of the Lower 50% in each of the four years 2004 to 2007, the 3.2%, 3.8%, 4.1%, and 4.4% differences times the TTPI's of $6.86 TRILLION (2004), $7.51 TRILLION (2005), $8.1 TRILLION (2006), and $8.8 TRILLION (2007) would have amounted to GAINS of more than $223 BILLION in 2004, $287.8 BILLION in 2005, $336.8 BILLION in 2006, and $387.7 BILLION in 2007, totaling $1.235 TRILLION dollars over four years.
Dividing the dollar amount of the TPI SHARE of the Bottom 50% by the populations in each of the four years, the average per capita income in the Bottom 50% of taxpayers was $14,149 in 2004; $14,526 in 2005, $14,979 in 2006 and $15,287 in 2007. The per capita in-creases at 16.66% SHARE would have been $3,423, $4,340, $4,963 and $5,496. If the TTPI income share of the Bottom 50% had remained at 16.66% in just those four years, the av-erage per capita income for the Bottom 50% would have been $17,573, $18,866, $19,942, and $20,783.