Who Really Pays Income Taxes

Who Really Pays Income Taxes
With all the​ talk of​ the​ rich not paying their fair share of​ taxes and the​ tax cuts earlier this decade only going to​ the​ rich,​ here are some facts to​ contemplate and you​ as​ the​ reader can make up your own opinion.
· The statement above could be true when you​ look at​ it​ from a​ pure dollar point of​ view .​
Someone who makes $500,​000 versus someone who makes $50,​000,​ if​ they each get a​ 5% tax cut,​ the​ first one pays $25,​000 less in​ taxes,​ where the​ second one only pays $2,​500 less in​ taxes.
· I believe if​ you​ want to​ make an​ argument who pays more in​ taxes,​ you​ should look at​ a​ percentage of​ income paid and not the​ dollar figure.
Let's look at​ some facts here from the​ latest statistics from the​ IRS that can be found on​ their website:
· The top 25 percent of​ income earners pay 86% of​ all personal,​ federal income taxes .​
That is​ up from 84 percent in​ 2002.
· The top 50 percent of​ income earners pay 97% of​ all personal,​ federal income taxes,​ which also means that the​ lower half of​ all income earners in​ this country pay 3% of​ all personal,​ federal income taxes .​
the​ medium in​ 2018 was just over $48,​200.
· What is​ amazing is​ that the​ top 1 percent of​ income earners pay 39% of​ all personal,​ federal income taxes,​ which is​ up almost 6 percent since 2002.
· 20 years ago,​ the​ top 1% paid a​ little over 27 percent of​ all personal,​ federal income taxes,​ and the​ top 50 percent paid about 94 percent.
All the​ talk about the​ lower income bracket not getting enough of​ a​ tax cut has a​ mathematical problem .​
How can you​ cut taxes for someone who already pays very little or​ nothing? That was actually answered during the​ tax cuts in​ 2003 by cutting the​ lowest bracket from 15% to​ 10% .​
So the​ people who pay most of​ their taxes in​ the​ lower of​ two lowest brackets received a​ 30% tax cut .​
This obviously is​ not a​ large dollar figure,​ but a​ nice percentage cut .​
in​ addition tax credits were increased.
Anyway,​ the​ issue we have at​ hand is​ that the​ taxes are paid by a​ smaller and smaller part of​ the​ population .​
This results in​ several problems:
· There is​ a​ large part of​ the​ population that is​ no longer contributing,​ even if​ it​ is​ a​ small amount .​
Any tax law changes do not affect them and therefore they don't care.
· The smaller the​ pot from where the​ taxes come from,​ any changes in​ the​ economy or​ the​ behavior of​ people will have a​ much bigger impact on​ the​ amount of​ money received by the​ treasury.
The problem is​ even worse than people not paying any taxes,​ you​ can actually get money back even if​ you​ don't owe any .​
There are two that come to​ mind,​ the​ Child Tax Credit and the​ Earned Income Credit .​
I​ think the​ second one is​ a​ good thing as​ it​ is​ an​ incentive to​ work,​ and the​ more you​ work,​ the​ more you​ get and it​ is​ capped at​ a​ low income and favors people with children .​
There is​ nothing wrong with the​ Child Tax Credit,​ but I​ don't see why someone actually needs to​ get a​ refund beyond their over payment.
The tax laws are also screwed once you​ make too much money in​ the​ government's point of​ view regarding credits and deductions .​
Anyone making more than $100,​000 is​ rich in​ the​ government point of​ view .​
I​ would certainly disagree on​ that,​ ask a​ mom or​ dad with two or​ three kids making in​ the​ low $100s if​ they feel rich .​
Anyway,​ once you​ reach that level,​ many of​ the​ deductions like tuition are being phased out,​ the​ child credit disappears just to​ mention a​ few .​
you​ will not get a​ dollar for dollar deduction anymore for your mortgage,​ charity,​ state taxes etc .​
I​ could go on​ and on​ .​
in​ some circumstances,​ because of​ the​ phase outs,​ the​ effective tax rate for a​ certain income range (like the​ income from $110K to​ $115K,​ which is​ just an​ example as​ it​ depends on​ the​ situation),​ is​ in​ the​ confiscatory category where literately a​ huge chunk of​ extra earned money goes to​ the​ government .​
This is​ offset somewhat by not having to​ pay social security taxes anymore,​ but that is​ story for a​ different day.
I think what we need is​ a​ flatter tax with less deductions .​
All of​ us should pay something,​ because once you​ have some money invested,​ you​ might actually have some interest how it​ is​ spend .​
We need to​ be generous to​ the​ ones in​ need and the​ unfortunate,​ but that is​ not almost half the​ population that pays only 3 percent of​ the​ taxes .​
We should be more generous with families than with single people,​ nevertheless they should all pay the​ same rate,​ just the​ dollar figure when you​ start taxing should be different.
Who Really Pays Income Taxes Who Really Pays Income Taxes Reviewed by Henda Yesti on July 07, 2018 Rating: 5

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