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.
Individual Income Tax Rate
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?