55% of Americans Say Their Income Taxes are Fair; 46.6% Paid No Income Tax in 2011

The percentage of Americans who think their income tax is fair has fallen to 55%, the lowest level since 2001 according to a recent Gallup Poll on Income Tax Fairness.

Gallup’s history of asking this question stretches back to the 1940s. From 1943 through 1945, during World War II, few Americans complained about their taxes, with an average of 87% of Americans saying their taxes were fair. That dropped down to an average of 61% in 1946, the first year after the war.

Gallup resurrected the question in the late 1990s, when an average 48% said their income taxes were fair, including the historical low of 45% in 1999. Americans’ views of their taxes as fair improved from 51% in 2001 to 58% in 2002, shortly after the Bush administration put into place a round of tax cuts.

46.4% Pay No Income Tax

According to the Tax Policy Institute 46.4% paid no income tax in 2011.

The Gallup question specifically stated “Do you regard the income tax you will have to pay this year is fair?” It did not ask if the system was fair.

If those who pay no income tax think their zero share is fair (and logically they should), then a mere 16% of those who do pay taxes think their share is fair.

Here is my math: 55% think their share is fair. Subtract the 46.4% who pay nothing (and logically should be happy about that),  the net is 8.6 percentage points. (8.6 / 53.6) * 100 = 16%

I wonder if some people who pay no income taxes misunderstood the question and said taxes were unfair because they want those who do pay taxes to pay more. Perhaps some of those who pay nothing, want more money back.

Bear in mind that most of those who pay no income tax still pay property taxes, sales taxes, and payroll taxes (Social Security and Medicare). So, perhaps some of those who said their zero share was “unfair” do not realize they pay no income tax.

For more on who pays and who doesn’t, How Stuff Works answers the question Is it true that only 53 percent of Americans pay income tax?

Here is the answer in a nutshell: The top 20 percent of Americans earn 53.4 percent of the total U.S. income, but pay 67.2 percent of total income tax.

Is that fair? Are your taxes fair?

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

55% of Americans Say Their Income Taxes are Fair; 46.6% Paid No Income Tax in 2011

States and cities take gun laws into their own hands with tax plans

On Capitol Hill today, 68 members of the U.S. Senate, the world’s greatest deliberative body, voted “aye” on the question of whether it’s okay to talk about gun control.

The law on which debate will soon begin includes, among other things, an expansion of background checks for gun buyers.

Progress on anything in Washington lately has been incremental at best. On gun control in particular, states and cities are moving faster, and one thing they’re considering is taxing guns and ammunition.

Since April 1, Cook County, home to Chicago, has had what it calls a “violence tax.”

“It’s a $ 25 tax per firearm that we sell,” Fred Lutger explains. He owns Freddie Bear Sports, in Tinley Park, Ill.

Revenues go to the Cook County Health & Hospitals System. Last year, it treated more than 800 victims of gun violence, at an average cost of $ 52,000 per patient.

Lutger says he’s concerned about the level of gun violence in Chicago, but he points out Tinley Park is in the suburbs, a half hour from downtown.

“They gotta curb it,” he says. “But this isn’t the way to do it.”

Politicians in many cities and states think it is.

Nancy Staudt, the Edward G. Lewis Chair in Law and Public Policy at the University of Southern California, says a tax on firearms isn’t unlike other taxes on tobacco or alcohol.

“Individuals who want to own guns, that’s fine,” she says, noting many constitutional rights are not limitless. “The Second Amendment allows you to own guns, but there are certain costs to society of owning that gun, and you’ll need to help pay for those.”

The California State Assembly is considering a five-cent tax on each and every bullet, to pay for an early childhood mental health program. Next door, Nevada is considering its own tax — on both ammunition and firearms, to pay for mental health services and to help crime victims.

“It sends a message to Washington that this is important to us,” says Nevada Assembly Majority Leader William Horne, who sponsored the bill.

Rep. Linda Sánchez (D-Calif.) has taken notice. She wants a 10 percent tax on all concealable firearms purchases. State, tribal and local governments, Sanchez says, could use that revenue “for antiviolence campaigns, gun safety campaigns, and firearm buyback programs.”

Sánchez says a tax is the only way to fund those programs. As of today, however, she’s failed to find a single Republican to cosponsor her bill.

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States and cities take gun laws into their own hands with tax plans

Americans are getting back together...with their debt

At the end of last year, Americans were borrowing money at the fastest clip since 2008, that could be seen as the bad news. If you prefer to think of it as good news though, at the end of last year, Americans were borrowing money at the fastest clip since 2008. That’s according to the Federal Reserve.

It’s the paradox of debt — leverage, as Wall Street likes to say. According to Matt Phillips, with the business website Quartz, this borrowing is, “for the economy, in the short term, a good thing.” Phillips said this debt isn’t being used for mortgages; mostly people are buying cars with auto loans and borrowing to pay for college.

“In auto loans, there is subprime and subprime has been growing as a share of pie,” said Phillips. “If we do want to do any fundamental reshaping to the way the economy works, a necessary precondition to that is to have economic growth. And if economic growth depends on consumer debt, then as long as it doesn’t get out of control, you can argue that this is a good thing.”

Phillips says the U.S. economy is still largely fueled by debt and consumer spending — and has been for the last 30 years.

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Americans are getting back together...with their debt

As gas prices rise, consumers take their foot off the pedal

The average price of a gallon of regular unleaded gasoline is up again this morning to $ 3.78, according to AAA’s Daily Fuel Gauge Report. Chris Low, chief economist with FTN Financial, joins Marketplace Morning Report host Jeremy Hobson to explain what’s causing the price spike and its impact on buying.

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As gas prices rise, consumers take their foot off the pedal

Walmart Senior VP Asks "Where are All the Customers? And Where’s Their Money?"; "February MTD Sales a Total Disaster"

Here’s an interesting story from Friday regarding sales at Walmart that just came my way: Wal-Mart Executives Sweat Slow February Start in E-Mails.

Wal-Mart Stores Inc. had the worst sales start to a month in seven years as payroll-tax increases hit shoppers already battling a slow economy, according to internal e-mails obtained by Bloomberg News.

“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company”

Murray’s comments about February sales follow disappointing results from January, a month that Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, said he was relieved to see end, according to a separate internal e-mail obtained by Bloomberg News.

“Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do?” Geiger asked in a Feb. 1 e-mail to executives. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?”

Murray declined to comment and Geiger didn’t return telephone and e-mail messages seeking comment.

Both executives attributed the performance to increased payroll taxes and delayed tax returns, which Geiger called “a potent one-two punch,” according to the e-mails.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Mike “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Mish’s Global Economic Trend Analysis

Walmart Senior VP Asks "Where are All the Customers? And Where’s Their Money?"; "February MTD Sales a Total Disaster"