LJWorld.com weblogs Loyal Opposition
The great tax scam – are we suckers – or what
Recently the IRS released 2006 data on who amongst us pays what in federal income tax. As usually, it was grouped by quintile (20% increments). It showed what we all know. The 40 percent of us with relative low incomes paid essentially no taxes. The middle paid about 6 % and the top 40% paid most of the bill. The New York Times took the report and editorialized that just increasing the rates for those with incomes above $250,000 will not be enough given the size of the deficit Mr. Obama is creating with his program. They want those at $100,000 and below to contribute more.
What was not discussed is the income tax take by dollar income. I made a chart from the IRS tables. I could not upload it so a description will have to do. I think it is very interesting!
The graph shows that what progressivity there is in our income tax system exists mostly for incomes below $150,000. Remember our federal income tax system is considered by experts to be our most progressive tax. All other taxes fall more heavily on those with lower incomes (particularly egregious here in Kansas). For those with incomes less than $8,000 the federal marginal tax rate is 10% and by the time you get to an income of $100,000 the marginal rate is 28%. For the next gazillion dollars in income, the rate increases by 7%. How come all the progressivity is in the first $100,000 of income - falling heaviest on the middle class? If we had a truly progressive system, the marginal rates should go up by about 15% for every additional $100,000 in income as it does for the first $100,000 in income. As it is the rich pay essentially a flat tax,
This is important, not because changing it would bring in a lot of additional revenue, but because it is unjust. The fact that we have not even whimpered about it suggests just how stupid we all are. The LJW reports how the East side of town is pitted against the West side. Income disparity plays a role in that. So, while we are at each other’s throats the really rich walk away with the prize. This reminds me of our own “Wizard of Oz”. While most of us are caught up in the histrionics, the real wizards sneak off to their private islands.
Sour grapes – you bet. I rather resent paying essentially the same marginal tax rate as Mr. Gates at Microsoft. I sure would love to have the billons he has to give away because in part he does not pay a truly progressive rate on his income. I wonder why the leaders of both parties seem to think this is just great! I would point out that a married couple in New York City, where one spouse is a teacher and the other a police officer, makes more than $100,000 a year – and they really need it to live there. Should we be demanding they pay as much in marginal taxes as Mr. Gates?
By the by, you can see why Mr. Obama is targeting those above $250,000. However, even with his proposed fix their rate would only increase by 3% more – all the way to an income of a gazillion. We have the ability to change this travesty. Not by joining the tax revolt but by demanding a truly progressive tax system (or a truly flat one). You know what to do!