The American Federal Tax System: Fair?
Posted: Wed Mar 25, 2015 6:37 pm
In honor of my 2015th post, I post this topic for the discussion of something that income-earning Americans will be focused on right about this time of year in 2015 — income taxes!
Yesterday, Pew Research Center posted an article referencing a report about how Americans view the amount they and others pay in federal taxes. It also presented a visualization of how the federal government is funded, which is as follows:
Herein, it can be seen that the majority of tax revenue (nearly half of the total) comes from individual income taxes, which as a whole have remained relatively constant percentage-wise since the WWII era. On the other hand, it can also be clearly seen that corporate income taxes have gone down significantly over that same span of time and payroll taxes (trust funds mainly meant to pay for programs like Social Security and Medicare) have increased as a sort of compensation.
In their analysis, interestingly enough, it turns out that more than six out of ten Americans are heavily bothered by the feeling that “some wealthy people” and “some corporations” do not pay their “fair share” of taxes.
The latter part sure seems to be corroborated in the report, given that corporate income taxes as a percentage of total tax revenue have decreased from around 30% to nearly 10% since the 1950s, and that corporate income tax rates haven’t remained proportional to the growth of the US economy since 1980.
Unfortunately, the analysis about the individual tax rates for wealthy people is somewhat lacking in their report, because it does not take into account the percentage of total taxable income; rather, it just factors in the number of returns filed and the percentage of the overall income tax paid. Nonetheless, it is kind of a foregone conclusion that this is the case.
Fortunately, it does indicate that there is a gray zone between determining whether or not something falls under the category of a corporation or an individual, like for example sole proprietorships, partnerships, and “S corporations”, which end up under the individual income tax code. The system is really complex and hard for the common person to really understand fully.
These are the results of the survey of Americans:
Based on this article and the above analysis, do you believe that some corporations and wealthy individuals do not pay their “fair share” in taxes? Why or why not? If so, what should be done about it?
Personally, I am in agreement with the 64% and the 61% who, respectively, feel that some corporations and wealthy individuals do not pay a “fair share,” whatever the hell you interpret that as. There are more than 200 deductions and loopholes in the American tax code, which of course benefits the top earners. According to the National Priorities Project, up to $1.2 trillion of tax revenue will be “siphoned off” via these deductions and loopholes just in 2015, which is an inordinate amount. Other sources have it in the hundreds of billions, which is still quite high. It should be quite apparent to any observer that this is the real problem with the tax system, and those who say otherwise must either have blinders on, or are intentionally refusing to acknowledge this issue in favor of a certain political narrative or a paycheck that is waiting for them.
Thoughts?
Sources:
Pew Research: How the government is funded
Pew Research: Public opinion about federal tax system
National Priorities Project: Source of federal revenue explained
Yesterday, Pew Research Center posted an article referencing a report about how Americans view the amount they and others pay in federal taxes. It also presented a visualization of how the federal government is funded, which is as follows:
Herein, it can be seen that the majority of tax revenue (nearly half of the total) comes from individual income taxes, which as a whole have remained relatively constant percentage-wise since the WWII era. On the other hand, it can also be clearly seen that corporate income taxes have gone down significantly over that same span of time and payroll taxes (trust funds mainly meant to pay for programs like Social Security and Medicare) have increased as a sort of compensation.
In their analysis, interestingly enough, it turns out that more than six out of ten Americans are heavily bothered by the feeling that “some wealthy people” and “some corporations” do not pay their “fair share” of taxes.
The latter part sure seems to be corroborated in the report, given that corporate income taxes as a percentage of total tax revenue have decreased from around 30% to nearly 10% since the 1950s, and that corporate income tax rates haven’t remained proportional to the growth of the US economy since 1980.
Unfortunately, the analysis about the individual tax rates for wealthy people is somewhat lacking in their report, because it does not take into account the percentage of total taxable income; rather, it just factors in the number of returns filed and the percentage of the overall income tax paid. Nonetheless, it is kind of a foregone conclusion that this is the case.
Fortunately, it does indicate that there is a gray zone between determining whether or not something falls under the category of a corporation or an individual, like for example sole proprietorships, partnerships, and “S corporations”, which end up under the individual income tax code. The system is really complex and hard for the common person to really understand fully.
These are the results of the survey of Americans:
Based on this article and the above analysis, do you believe that some corporations and wealthy individuals do not pay their “fair share” in taxes? Why or why not? If so, what should be done about it?
Personally, I am in agreement with the 64% and the 61% who, respectively, feel that some corporations and wealthy individuals do not pay a “fair share,” whatever the hell you interpret that as. There are more than 200 deductions and loopholes in the American tax code, which of course benefits the top earners. According to the National Priorities Project, up to $1.2 trillion of tax revenue will be “siphoned off” via these deductions and loopholes just in 2015, which is an inordinate amount. Other sources have it in the hundreds of billions, which is still quite high. It should be quite apparent to any observer that this is the real problem with the tax system, and those who say otherwise must either have blinders on, or are intentionally refusing to acknowledge this issue in favor of a certain political narrative or a paycheck that is waiting for them.
Thoughts?
Sources:
Pew Research: How the government is funded
Pew Research: Public opinion about federal tax system
National Priorities Project: Source of federal revenue explained