Originally posted by Frank
Nobody who earns less than an average salary should argue that their taxes are too high. The top 1% is paying more than thirteen times the federal income taxes than the bottom 50%.
I used the IRS statistics at
www.irs.gov/pub/irs-soi/00inprel.pdf. They're not detailed enough that I can reproduce Frank's top 1%, 5%, 10%, etc cuts. But they're consistent with his figures. So...
Using them I can make a roughly similar assertion to what Frank said above:
The top 2% are paying more than 40 times the federal income taxes that the bottom 30% are. Of course, on average, the top 2% make 99 times more than the bottom 30%, so maybe that's not so upsetting after all.*
Here's a more complete set of statistics:
Those making ___ represent ___% of the returns, make ___% of the total money and pay __% of the taxes:
less than $15k; 30%; 4%; 1%
$15k - $30k; 23%; 10%; 4%
$30k - $50k; 19%; 15%; 9%
$50k - 100k; 20%; 28%; 22%
100k - 200k; 6%; 17%; 19%
greater than $200k; 2%; 26%; 44%
MGKrebs is wrong in his assertion that "if the top 1% pay 54% of the taxes, but earn 98% of the money, they're already getting their tax break. " According to the IRS stats, the top 2% make 26% of the money--not 98%.
Now - what WOULD be fair, IF you are going to give a tax cut?
Good question. I've always thought a flat tax would be fair. Using the same numbers from the source cited above, we can ask what percent flat tax would have to be charged for the government to collect the same amount of taxes it's receiving now. The answer is 16.1%. What effect would that have? Again, according to the report:
For those making ____ their average tax now is ___ and would become ___ under a flat tax scheme.**
less than $15k; $291; $969
$15k - $30k; $1502; $3516
$30k - $50k; $3810; $6275
$50k - 100k; $8800; $11150
100k - 200k; $23,729; $21,195
greater than $200k; $162,517; $95,477
So under a flat tax, the top two income tiers (representing 8% of taxpayers) get a cut. Everyone else gets a tax increase. Is that fair? Guess it depends on where you fall in the spectrum.
None of this answers your questions, but it does help shed some light perhaps on why there's different tax brackets.
*The top 2% are 2.8 million returns with total AGI of $1.6 trillion. Average AGI is thus $595,000. The bottom 30% are 38.6 million tax returns with total AGI of $233 billion. Average AGI is thus $6,000. And 595,000/6000 = 99. Yeah it's a rough approximation.
**Figure the average tax and average AGI in each of the 6 tiers, since the IRS stats give us the total AGI, total tax paid, and the number of tax returns per tier. To get the flat tax, solve for the percentage that when multiplied by the average AGI times the number of returns in each tier gives the same value of taxes as currently collected.