Who Supports our Country? The Wealthy Pay Provide Most of Income Taxes

Who Supports our Country? The Wealthy Pay Provide Most of Income Taxes

I know the title may be a tad dramatic, but I read an article from The Economist where the Author makes note that the deficit had been reduced (from 2004 to 2007) by, at least in part, due to the increase in income taxes from the wealthy getting wealthier in this country.  Take a moment to really think about how profound that statement is! As the rich got richer, they paid income taxes at a marginal rate of 35% (or close to it).

As such, if we are to follow Obama’s plan through the logical end – when we take those paying taxes at 35% then give it to someone whose marginal rate at 15%, the IRS will collect less taxes – while congress is spending more.

I never even thought about this aspect of domestic taxing/spending, and kind of got excited (in a geeky ecnomics kind of way) when I read it, but this is not the point of this post.  I thought it would be interesting (in that same sort of geeky economics way) in looking up whose income taxes actually supports our country for no other reason then I find it interesting.

 

Returns Filed

Individual Income Tax Rate

Lowest Quintile

26.1

-8.1

Second Quintile

21.9

-3.1

Middle Quintile

20.0

3.3

Fourth Quintile

16.7

6.6

Top Quintile

14.8

15.0


 

Info derived from Tax Policy Center’s Table 08-0079

Isn’t that amazing! The two lowest fifths of all Americans actually have a negative tax rate probably due to the Earned Income Tax Credit (a vast subject for another day).

While I understand that a progressive tax system is necessary, but wow – our system is only going to get MORE progressive.  What do you think? Should we have a more progressive system? Should we tax the rich more? Get rid of the negative tax rates?

3 Responses to Who Supports our Country? The Wealthy Pay Provide Most of Income Taxes

  1. Personally I prefer progressive taxation to things like welfare programs. It helps people who work offset the cost of working so that they have the opportunity to support their families and improve themselves. Whether they take advantage of it is their problem but at least we give them the opportunity.

    Yes the system could be changed in a lot of ways, starting with not paying people to have kids. (Yes I’m talking about your dependent deduction too.) And by making these credits available to individuals without families. You know the people who are behaving responsibly by working hard, going to school, not having kids they can’t afford, saving, etc. So that one day they can have an income with a positive tax rate.

  2. @ Kevin,

    I was all about the Fair Tax when Huckabee was in the primary.

    It is a miserable truth, but there are too many people making too much money to ever get rid of our current system with such a radical measure.

    Any changes in the tax system can’t be a revolution they need to be slow initiatives. Just my humble opinion.

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