Wednesday, October 26, 2011

Philadelphia: Does George Bochetto really pay more than half his income in taxes?

Stu Bykofsky, always the contrarian, uses his perch in the Philadelphia Daily News today to let the "Top 1 Percent" respond to the Occupy Wall Street protests. I found this excerpt to be particularly confounding:
How do the members of the "1 percent" feel? I asked three - Renee Amoore, Tom Knox and George Bochetto - each a local, unapologetic, self-made millionaire. They believe they already pay their "fair share" in federal taxes.

"I don't only pay the 35 percent," says Center City lawyer Bochetto, who was raised in an orphanage. "I also pay Social Security tax, state and city income tax, property tax. More than half of my income goes to the government. That's my fair share."

Due respect to Bochetto and his rise to riches from the orphanage. Good for him! But does he really pay more than half his income to the government? If so, he needs to hire a new accountant—immediately.

Why do I say that? Because the effective tax rate for the top 1 percent of earners—and this combines and includes federal, state, and local taxes—was 30.9 percent in 2008. Here's a chart from Citizens for Tax Justice:

Granted, this is a national overview that's several years old. And granted, Philadelphia can be a little tougher on the pocketbook than a lot of places. But is it so much tougher that Bochetto loses and additional 20 percentage points off his income? Really, really doubtful—especially since the Social Security taxes actually take a bigger bite out of the incomes of low-wage earners than they do millionaires like Bochetto.

We can argue about appropriate tax rates and the responsibility of the rich to help provide services and opportunities for the rest of us. But that argument should be grounded in reality instead of unchallenged hyperbole. Bykofsky didn't help anybody by quoting Bochetto uncritically today.


deregulator said...

A few days late on this one, but you both could be right. Bochetto probably pays a marginal tax rate of more than 50 percent. This can make a difference if you're in a line of work that allows you to increase income by working more. You may decide that you don't want to take more effort if you're only getting 45 cents for every additional dollar you make. Maybe that's not important to you, but it sure can be to the people who work for the -- yes -- wealth creators. And it's not good for the overall economy.

Joel said...

I'd love to see some elaboration. Marginal income isn't the same as the entire income that he was implying—and, of course, when you get to the point you're paying marginal rates, you're NOT paying the Social Security tax anymore.

Your point is taken, and legitimate, but I'd sure love to be clear about the factual foundation.