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The IRS could recover $12 for every $1 spent on scrutinizing the ultra-wealthy's taxes
(www.businessinsider.com)
this post was submitted on 20 Jun 2023
281 points (99.0% liked)
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Could seems to be doing some heavy lifting here. What are you deriving that from?
Top 1%: $4.25 yield per $1
Top 0.1%: $6.25 yield per $1
What do these points actually mean?
Per DQYDJ:
What is the top one percent household income in the US in 2022?
In 2022, the threshold for a household to be top 1% was $570,003 in earnings.
Sure, that's hard to do by all standards, even silicon valley. The article goes out of its way to highlight the Top 1% and above are "adept" at evading taxes.
But what's this about Top 10%?
Summary bullet-point:
Content:
So, they really mean Top 10%.
Top 10%: $12 yield per $1
Weirdly enough, the article does not speak to this group beyond potential profit. No mention of tax evasion, no mention of avoidance, just profit. One must assume it's much easier to squeeze that ~33.2 million people (10% population) million via audits.
What does top 10% actually mean?
Per DQYDJ:
What was the top 10% household income percentile in 2022?
The threshold to be in the top 10% of household incomes in 2022 in the United States was $212,110.
That's... a bit odd. 212k household is pretty easy to do even here in Des Moines for any two professional or STEM earners.
Per SoFI, the average salary in the US is $60,575. Double that to approximate household and you're at $121,150. If we shift to median to help rule out outliers, $56,420/$112,840.
With a median of $112, it's hard to see how "top 10%" is only double. This screams of an outsize "middle" range. Shift back to the DQYDJ page and the chart shows exactly that: roughly linear scaling from the 10% mark up through 90%, with a severe spike at 99%.
It's quite clear something is up with the >=99% spike, worthy of audits and scrutiny.
The callout of 10% - despite significant drop in household earnings - makes a person wonder when the focus will shift to 15%, then 25%, etc. We've left the land of clear problem and seem to be opportunistically extracting revenue at that point.
As a separate point, I agree that the headline is being somewhat disingenuous by calling the top 10% "ultra wealthy". $212,110/yr is still much more wealth than most Americans could ever dream of having, but it's not "ultra wealthy". Just "wealthy" or "very wealthy" imo.
But again, it doesn't matter whether you're "wealthy", "very wealthy", or even "not even wealthy at all". Pay your taxes.
Entirely disagreed. Even in Des Moines, Iowa, it's well within the reach of literally any two individuals pursuing IT or other similarly-skilled positions. It's much easier in dense population centers.
Let me get this straight. You don't consider 3 or 4 times the national median household income "wealthy"? National median household income is about $62k.
It's pretty rare for a couple to have two specialized degrees like what you're mentioning.
I'm in IT with no degree. It's not hard to do.
I do not consider merely 3x median household as "having a great deal of money, resources, or assets; rich", no.
In the current economy, I'd consider it the bare minimum necessary to, say, afford a single-family home built in the last 50 years.
I'd consider it enough to pay off student loans, to afford a couple well-used cars - and their payments, to afford daycare - enabling starting a family, etc.
I'd consider it enough for both earners to be able to set aside savings for future earmarked uses e.g. home repairs, retirement, etc., so long as they maintain consistent employment.
I would not consider it either actively at, or enabling future qualification of "having a great deal of money, resources, or assets; rich". You could argue it's at a threshold enabling saving for a rainy day, but there's no way it's going to facilitate mass asset acquisition, building a fuck-you-sized cash reserve, etc. That bracket's money isn't making them money; that bracket is just as dependent on having a job.
Alternative question: Do you feel that a household making the median income as "poor"?
Quite likely, yes.
If I plug the median (~$62,000) into an income tax calculator and select Iowa to include state tax, the effective annual household income is ~$50k.
The average mortgage payment as of 2023 (and yes, it should be median ideally, but that wasn't available) is ~$2,300 per lendingtree.com.
~50,000 - (12 * ~$2,300) = ~22,400 annual remaining.
Playing a bit of hearsay with nerdwallet (and their referenced Experian), the average used car payment as of 2023 is $516/month. If we assume our average family is paying for a car...
~22,400 - (12 * ~$516) = ~16,208 annual remaining, or ~1,350 per month... for the entirety of utilities, interest payments, groceries, clothes, school-related/extracurricular (for any kids), daycare, etc.
But let's look at it from the other side - if we don't assume these averages, here's what your median household is looking at.
~50,000 / 12 = ~$4,166/month... for the entirety of mortgage, any auto payment, any fuel/maintenance, any home improvement/supplies/maintenance/repairs (hope that water heater doesn't go), any groceries, any utilities like water, gas, electric, internet, cellular, any day care costs, any costs of kids education / extracurricular activities, etc. This is expected to somehow cover 2+ people.
Yes - I'm pretty confident in stating that the median household income is likely to be lacking sufficient money to live at a standard considered comfortable or normal in a society. Or, if poor is to be directly compared to wealthy, I'd say they're exceedingly unlikely to manage having a great deal of money, resources, or assets; rich.
I feel attempting to tie concepts such as poor and wealthy to arbitrary points of income is largely futile, as the real indicator would be the relative ability of a household to cover average/expected expenses and save/amass cash.
That previous "top 10%" benchmark of ~$210,000 will be pulling ~$153,000 annual/$12,750 monthly after taxes. Subject it to the same considerations- average mortgage, average car payment, etc. - and they're looking at $119,200 annual/$9,900/month.
I'd say they're much less likely to be in the situation defined by poor - factor in the entire gamut of expenses and they'll still have some discretionary income - but they're also not at the point of qualifying as wealthy. At best, they'd be able to retire more comfortably.
Compare this to, say, the $995,000 pre-tax / $593,251 after-tax annual / 49,437 after-tax monthly of the 1% margin and that... changes. The relative gap between the entire gamut of usual expenses and actual monthly income is immense; wealth aggregation is almost unavoidable.
That's wealthy.
Edit: Per latest Census Bureau data, the median household income in the US is ~71,000, compressing the gap between them and that "top 10%" a bit.