Who Truly Pays Income Taxes
With all the talk of the rich not paying their fair share of taxes and the tax cuts earlier this years only going to the rich, here are some truths to contemplate and you as the reader can comprise your own viewpoint.
· The statement above might be true when you look at it from a pure dollar point of view. Someone who makes 0,000 versus someone who makes,000, if they each get a 5 % tax cut, the first one pays,000 less in taxes, where the 2nd one only pays,500 less in taxes.
· I believe if you wish to make an argument who pays more in taxes, you need to look at a percentage of earnings paid and not the dollar figure.
Let’s take a look at some truths here from the most recent statistics from the Internal Revenue Service that can be found on their site:
· The leading 25 percent of earnings earners pay 86 % of all individual, federal income taxes. That is up from 84 percent in 2002.
· The top HALF of income earners pay 97 % of all individual, federal earnings taxes, which also means that the lower half of all income earners in this nation pay 3 % of all individual, federal earnings taxes. The medium in 2006 was simply over,200.
· Exactly what is incredible is that the leading 1 percent of income earners pay 39 % of all personal, federal earnings taxes, which is up virtually 6 percent given that 2002.
· Twenty Years ago, the leading 1 % paid a little over 27 percent of all personal, federal earnings taxes, and the top HALF paid about 94 percent.
All the discuss the lower earnings bracket not getting enough of a tax cut has a mathematical issue. How can you cut taxes for someone who already pays very little or absolutely nothing? That was in fact answered throughout the tax cuts in 2003 by cutting the most affordable bracket from 15 % to 10 %. So individuals who pay many of their taxes in the lower of pair of most affordable brackets received a 30 % tax cut. This certainly is not a large dollar figure, but a good portion cut. In addition tax credits were enhanced.
Anyhow, the concern we have at hand is that the taxes are paid by a smaller sized and smaller sized part of the population. This leads to several issues:
· There is a large part of the population that is no longer contributing, even if it is a small amount. Any tax law modifications do not affect them and therefore they do not care.
· The smaller the pot from where the taxes come from, any changes in the economy or the behavior of individuals will certainly have a much larger effect on the amount of money gotten by the treasury.
The issue is even worse than people not paying any taxes, you can really get money back even if you do not owe any. There are pair of that come to mind, the Kid Tax Credit and the Earned Income Credit. I think the 2nd one is a good idea as it is a reward to work, and the more you work, the more you get and it is topped at a low earnings and favors individuals with children. There is absolutely nothing incorrect with the Youngster Tax Credit, however I do not see why someone actually has to get a refund beyond their over payment.
The tax laws are likewise screwed once you make too much money in the federal government’s viewpoint regarding credits and deductions. Anybody making more than 0,000 is rich in the federal government viewpoint. I would definitely disagree on that, ask a mother or papa with two or 3 children making in the low 0s if they feel rich. Anyway, once you reach that level, numerous of the deductions like tuition are being phased out, the youngster credit vanishes just to discuss a couple of. You will not get a dollar for dollar deduction any longer for your mortgage, charity, state taxes etc. I might go on and on. In some scenarios, since of the stage outs, the reliable tax rate for a particular income range (like the earnings from 0K to 5K, which is simply an example as it depends on the scenario), remains in the confiscatory category where literately a big piece of extra earned money goes to the federal government. This is balanced out somewhat by not having to pay social security taxes anymore, however that is story for a various day.
I think what we need is a flatter tax with less reductions. Everyone must pay something, since when you have actually some money invested, you may actually have some interest how it is invest. We require to be charitable to the ones in need and the unfortunate, however that is not virtually half the population that pays only 3 percent of the taxes. We must be more charitable with households than with single individuals, nonetheless they should all pay the very same rate, simply the dollar figure when you begin taxing must be various.
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