Posted by: bkivey | 17 April 2012

Tax Day Quiz

Today is Tax Day in the US, the day that the annual and quarterly Federal and State income tax filings are due. Right on schedule, the Occupy Whatever movement is calling for increased taxes on ‘the 1%’, because we all know that ‘the rich’ don’t pay ‘their fair share’. This shibboleth has been repeated for so long, that I doubt that those mouthing it have given any thought to what they’re saying. It’s easy to believe anything if you don’t think about it.

I invite those folks to take this little tax quiz.

  1. Define ‘fair share’. Is it ‘fair’ if everyone pays an equal percentage of their income? An equal dollar amount? Note that neither of these are options under the current system.
  2. Is it ‘fair’ if someone pays no income tax? Around 45% of income-earners in the US pay no Federal income tax at all through various combinations of credits and deductions. If a head-of-household qualifies for the Earned Income Credit (EIC), it’s entirely possible for them to get more money back than they paid in. I’ve seen this happen. Is it ‘fair’ for some folks to subsidize other people’s families?
  3. Define ‘rich’. Give the household income that you would consider ‘rich’.
  4. Consider the following: Richard and Emily are a married couple filing jointly. Richard is an auto mechanic of 20 years experience making $60,000 per year, and Emily is a teacher of 10 years experience making $50,000 annually.  Their gross household income puts them in the top 20% of households in the US. After deductions and exemptions, their taxable income is $85,000: in the top 30% of US households. Using the 2011 IRS tax tables, we find that their Federal tax rate is 16%. Is this fair?
  5. Using the same tables, we find that a couple filing jointly with a household income of $20,000 (bottom 20%), would pay 11% of their income in Federal taxes. That’s a rate only 5% less than the top quintile of households. Is that fair?
  6. What percentage of the Federal income tax collection comes from the top 20% of earners in the US?
  7. On a separate sheet of paper, please explicate the instances in which a ‘rich’ person put a gun to your head and took your money or other property.
  8. On another sheet of paper, please explain what will happen if you don’t pay your taxes.
  9. Do you believe that the size of the economy is fixed (i.e. a zero-sum game)?
  10. If so, explain how the US economy was able to accommodate an increase of hundreds of millions of people in the last 230+ years.
  11. Have you worked for a private individual (i.e. business owner)?
  12. If so, please explain how they got the money to pay you.
  13. Please list the taxes for which a private employer is liable.
  14. Have you ever worked for a public agency?
  15. If so, please explain how the money for your paycheck was obtained.

Fire Hazard

I had to remove some papers from the vicinity of my desk radio today when Dizzy Gillespie’s ‘Caravan’ came on. Absolutely smokin’.

Far Side Humor

A reasonable intelligence test is to give someone a random Far Side cartoon, and see if they ‘get’ it. I’ve seen people fail this test. I had a random cartoon flash through my grey matter today and give me a smile.

Two geriatric foxes are sitting in rocking chairs outside a hen house. The caption says “I tell you, there was a time when we did more than just guard the hen house.”


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