Tuesday, November 27, 2007

Who pays taxes?

First of all, the top 50% of wage earners in the United States pay 96.54% of all income taxes, according to 2003 data from the Internal Revenue Service released in 2005. The top 1% of wage earners pays 34.27%.

Are the top half millionaires? Not really, the top 50% were those individuals or couples filing jointly who earned $29,019 and up in 2003. (The top 1% earned $295,495-plus.) Here are the wage earners in each category and the percentages they pay:

The top 1% pays over a third, 34.27% of all income taxes. The top 5% pay 54.36% of all income taxes. The top 10% pay 65.84%. The top 25% pay 83.88%. The top 50% pay 96.54%.

Since the bottom 50% is paying only a small portion of the taxes, they can't get much of a tax cut when taxes are reduced for everyone. Nonetheless, these are the people to whom the Democrats claim to want to give tax cuts.

It should also be noted that when there is talk of a tax increase, the bottom 50% are not worried and will likely support the increase. After all, its taxes paid by ‘other people’ that keep the government hand outs coming in to them.

The Alternative Minimum Tax (AMT) was created to make sure the ‘rich’ did not avoid paying taxes. AMT was "designed in 1969 to ensure 155 wealthy people paid some tax”. Now, however, the AMT will apply to about 26 million tax payers this year and 36 million by 2010.

Getting rid of AMT is a good idea but Democrat plans so far, like the Charlie Rangel plan, are loaded with other unfair ‘readjustments’ to the tax code. Basically, Democrats don’t want to reduce the amount of money coming into the government, they just want to make it appear that they are giving the ‘middle class’ a tax break – but what is the middle class? Check the blog archive for a discussion about who are the ‘middle class’, you may be surprised to learn there is no recognized definition and the so-called middle class income range is very broad.

In any case, as you can see a comparatively small percentage of wage earners are paying most of the taxes, and that’s the way Democrats like it so they can get elected by playing the ‘soak it to the rich’ card; the majority of the electorate will agree with them since they pay little or no taxes.

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