I wanted to know who will PAY for the stimulus. I have heard numbers tossed out such as $6,700 per household, but not all households pay the same taxes. Most households pay nothing at all. So, I took the breakdown of who pays federal taxes by percentage of income and then looked at how many people that represents.
The top 1% of taxpayers pay 39% of all federal income taxes. It stands to reason that those same earners will be required to pay the same or similar percentage of the stimulus. How much is that going to be?
Bottom line: if you are in the top 1%, you can expect to pay almost $240,000 dollars of the stimulus.
Here’s the chart.
UPDATE:
Here are the rough breakdowns per HOUSEHOLD income.
Top 1% $~350,000
Top 5% $~150,000
Top 10% $~100,000
Top 25% $~64,000
Top 50% $~31,000
Who pays for the stimulus?
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It would be a good addition to the table if it showed the current income level corresponding to each tranche.
Of course, after the inevitable inflation hits, these would change.
Now I understand why Pelosi was so down on Rice’s “barren” status. Gotta have someone to pay the bills you’re racking up for future generations.
I agree – the current average income & net worth for each group would help give some perspective to each category.
Outstanding analysis.
Isn’t only a portion of the $85 billion actually going towards stimulus spending?
Agreed that the per household or per person math on describing the impacts of our runaway federal spending is pretty lame (thanks much for doing your part and setting this up Congressional and Executive Republicans!). As per usual the mass media are doing very thin analysis if at all. Nice, though I have a query or two with no intention of making this too complicated.
Where are the corporates in this mix? Aren’t they (or rather their customers) going to carry some of this burden assuming they are profitable (and don’t have loss carryforwards) during the debt service period for all this? Are they classed as Households? One would think not. If we are talking individual income taxes for purposes of your analysis, the total package plus the interest should be allocated between corps (and other non-living forms) and humans.
Recent history may not provide good data looking ahead. We should also presume that the corporate share of this yoke is going to be lower vs. recent history as a total share for a couple of years anyway, no? Who knows how much the loss of bank earnings and their new loss carries will impact tax receipts. Same goes for the current absence of probably a few 1%er individuals that used to run and sell products for the big commercial banks and IBs.
Regards,
Jim
True, if they pay for it with taxes. But if they pay by borrowing money, then your kids will pay for it. If they pay by printing money, then people will pay in proportion to their exposure to the $US.
I did a similar breakdown last week, only instead I just divided it evenly among all tax payers. TARP + the stimulus would work out to be almost $10,000 per taxpayer, which would imho amount to a fairly awesome tax rebate.
Well, if you were once in the top 1%, perhaps you aren’t any more. With a 44% fall in the S&P, the cap gains tax is not very relevant. Let them raise it to 100%…100% of nothing is still nothing. No, they’re going to need a capital loss tax if they want any money.
Below is not a very meaningful chart but fwiw I’ve calculated stimulus cost as a percentage of income:
Income-StimCost-Stim%
$350,000-$237,070-68%
$150,000-$30,394-20%
$100,000-$12,887-13%
$64,000-$6,362-10%
$31,000-$2,626-8%
silly, you will be paying not with your taxes, but with your income via inflation. inflation, as economists know, is the most unjust and regressive hidden tax.
With the job losses mounting daily, I think all bets are off. The taxes raised are going to be nothing like what the idiotic Dems are planning for. According to Rush $1 billion in taxes has been lost to NYC and its environs just from lower and fewer Wall St. bonuses this past Dec. Supposedly the U.S. has suffered 40K job losses just this week. We are quickly falling into a pit we and even our children will never dig out of. My boomer generation has never experienced anything like this and has no conception of how awful this will get.
You might want to exclude the portion of corporate and other taxes before you run that spreadsheet.
CMS – Rush had a Congressman on yesterday (forget his name); analysis shows only .12 cents per dollar can reasonably by tagged as a “stimulus” funding. The other .88 cents is pork.
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Great chart but the figures are far too low because the cost of the package will be multiples of $825 billion. The US government has to borrow the money and will have to pay interest compounded annually for the foreseeable future.
The $825 biliion is like the cash price of buying a house. When you include the interest paid on the mortgage the actual cost can be double or triple!
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If you’re a working person or even retired military like me (yes we STILL pay taxes), then you’ll be saddled with paying for the ‘stimulus’.
No breakdown necessary.
This analysis is waaaay too simplistic. It appears the author has an agenda.
Where do you factor in contributions from federal corporate taxes? Oil and gas leases and other revenues?
A big chunk of the package is tax cuts (143 billion). Is that factored in?
The federal revenue mix has fluctuated wildly throughout our history. For example in 1934 (a good year to compare what could happen, because it was also a depression year) excise taxes accounted for almost half of all revenue, and income taxes were about one-fourth; payroll taxes barely registered on the scale.
http://www.urban.org/publications/1001082.html
The error in this analysis is assuming that the tax code remains static (it NEVER does), and also does not account for improving GDP coming out of the depression/recession.
A ton of federal money was spent on programs during the 30′s to get people back to work, build infrastructure (CCC,TVA, etc.) and it did not hobble the succeeding generations because the US economy grew (partly as a result of those targeted investments such as roads, dams, schools, hospitals, etc.).
Take a look at history. The one difference I see is that FDR didn’t have to start with a crippling deficit, and Obama — unfortunately — has the multi-trillion dollar ball and chain left by the Bush administration (huge debt).
Don’t be alarmed high income citizens! My bet is that if you make reasonable contributions to the campaign funds of key Democrats or offer discounted mortgages or automobile leases to the friends and relatives of actual members of Congress, Rangel and his very helpful staff will be able to engineer tax loopholes that will mitigate your pain.
Dear Mr. Dubinsky:
Interesting chart, but you undermine your argument by not quoting any SOURCE(S). Anyone can make up a chart. Please provide source for chart: Cato Institute? Heritage Foundation? Republican National Committee? No Source = No Credibility.
I think this is more complex than discussed here. In particular, the calculation of the distribution of the burden of the stimulus is seriously flawed.
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The presses are running and everybody is going to pay. You can’t print wealth and when try to you get inflation. Inflation is just a way to tax without taxing. Money represents the value of the economy. The money is not the wealth, it is the goods and services it represents that is the wealth. Printing more money decreases the value of the money because the real wealth, the economy, hasn’t changed at all. Any money you think your getting back in tax cuts will get swallowed up by inflation. IOW, the effect of the inflation will be to transfer wealth from the people to the government. Don’t for a second think the government is going to get the short end of that stick.
1) Listing average income level for each bracket will be much less revealing than listing the average vote. Hint: it’s still just ‘one’. Believe it or not, no matter how much a person earns or pays in tax — or even if they pay no net tax at all! — they still get only one vote. That’s right, no matter how much government you pay for, or how many people you carry on the welfare rolls, you still get only one vote. So much for equal treatment under the law.
2) There is no such thing as corporate income tax. Ultimately, that gets paid by an individual, either the owner of the company (or its shares) or the consumer, or both. I expect, although I can’t prove it, that it is paid (as a hidden cost) by taxpayers in rough proportion to their income. In any case, let’s not have any more sleight-of-hand tricks prentending that there’s some giant bucket of “company” money that doesn’t really belong to anyone, which we can just grab for this project.
3) FDR didn’t start with a crippling deficit? Perhaps not, I don’t have the figures before me. However, he and generations of his big-government followers (on both sides of politics) have certainly left us with decades of crippling deficit. If you think the government spent that more wisely than you and I would’ve, well, why not hand over what’s left of your pay to them? And if you think that the porkulus will improve that deficit. . . .
4) Excellent points on inflation, interest costs and passing the buck to future generations that we are increasingly unwilling willing to bear or rear. As ever, the hidden (or overlooked) costs are the ones that end up hurting the most.
5) Good points about the impact of job losses on income, and income tax receipts. There’s a new game in town.
6) In sum, even if Andrew’s figures are open to discussion and revision, he is dead right in pointing out that the burden of the porkulus will fall unevenly, and that (as usual) the minority of productive taxpayers will carry the can for the rest of the country.
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Good analysis. At least some people are TRYING to make the wisest choice!
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@Jim You can’t tax t he corporations the whole point is giving them money so they don’t fail. Have you even be watching the news? If you tax them that negates giving them the money in the first place.
The only thing this bill stimulates is the gag reflex!!!
Factor in the debt we already have and we are never going to pay this off!!
Wrong facts.
First, this year about 43% of households will pay no INCOME tax.
Second, those people will pay 15% of their incomes, starting with the first dollar earned, in FICA taxes.
They do not pay “no taxes” as you claim, and in fact pay a higher percentage of their incomes than the very wealthy.
Get it right.