| Posted: 04 July 2024 at 7:53am | IP Logged | 12
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The ultra-wealthy don't derive most of their money from earned income. Other income sources, such as capital gains, are taxed at a different rate. That is why many argue the rich are taxed at a lower rate than other Americans.
"Income tax is a drag and it currently falls with the heaviest burden on the middle class"
That's a very vague statement. Do you mean the middle class pays a larger percentage of their income than other groups pay, or that they pay a bigger percentage of overall tax revenues? And how do you define middle class?
In 2021 (the most recent year for which tax statistics are available), the top 50% of tax payers earned at least $46, 637, and paid an average income tax rate of 16.2%, which is $7,555.19. If that looks high, its because the IRS statistics don't include refundable credits, ie the child tax credit, and many other deductions claimed by most tax payers.
The top 25% of tax payers earned at least $94,440, with an income tax rate of 18.4% (again, before deductions for refundable tax credits).
Tax payers who fall between these two thresholds paid 8.2% of the total revenues raised through income tax. Tax payers who earned more than $94,440 paid 89.2% of all income tax revenue, as opposed to tax payers who made less than $46,637 who paid 2.3% of all income tax revenue.
The richest 1% of Americans (those who made at least $682,577) paid 25.9% of their income in income taxes, and paid 45.8% of all income tax revenue.
Fair? I think that's subjective. Everyone will have their own opinion. A national sales tax seems like a fair system on its face, but as Casey mentioned, to capture the same amount of revenue, the tax rate would be pretty high. I think eventually what would happen is the government would seek to even the playing field by making it a progressive sales tax and that, in effect, takes us right back to where we are now.
Edited by John Wickett on 04 July 2024 at 7:55am
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