Taxes are a continual topic of debate. The progressive tax code of our country is adorned by some and despised by others. The ambiguous term "fair share" is debated time and time again. The timely arrival of some recent reports only adds fuel to the fire discussing taxes and "fair share."
The continuing discussion over individuals and families paying their "fair share" of taxes got some good analysis recently. BRUCE BARTLETT, a brilliant economist, analyzed the most recent reports and found some interesting contents.
In many cases, the numbers speak for themselves. Today, the top 50% of income earners pay 97.11% of the taxes collected. This does not account for the redistributive effects of tax credits and payouts to the bottom 50%. As discussed in Base-less…Boehner Shows His True Stripes, the top earners pay 106% of the tab and the bottom -9.1% when these factors are also included.Conservatives always point out, correctly, that the share of taxes paid by the wealthy greatly exceeds their share of aggregate income. In 2011, the top 1 percent earned 18.7 of all adjusted gross income and the top 5 percent earned 34 percent.
While the top is paying the bills, the redistributive effect is well documented in the article as well. Notice, in the Share of Income Table, the Income After Taxes and Transfers compared to Market Income. The lowest quintile earns 2.3% of the income, but after taxes and transfers, actually ends up with 9.3% of the income. Meanwhile, the highest and fourth quintiles incomes decrease dramatically when accounting for these same factors. This shows the great redistributive effect of our tax system.
As discussed in The Welfare State: Increasing Government Dependency, government dependency is on the rise in America. Bartlett arrives at the same conclusion.Between the fourth quarter of 2008 and the fourth quarter of 2011, the percentage of Americans participating in transfer programs rose to 49.2 percent from 45.3 percent.
There is one key portion that needs pointing out; previously, the top 1% paid a larger share of the taxes. According to an unsourced expert:
The I.R.S. data are for shares of federal income taxes and income by percentiles and include new figures for 2011. The wealthy pay the vast bulk of federal income taxes. But as one can see, there has been a sharp reduction in the share paid by those in the top 1 percent of taxpayers ranked by adjusted gross income, since 2007.
The continual argument of fair share, really does not make sense. It is a blatant fact that the same, hard-working individuals are carrying the vast majority of the tax burden. It also becomes clear that redistribution of taxes have become excessive. Obamacare, along with numerous other tax law changes will only further this redistributive affect over the coming year. Look for reports in 2014 that will show the further growing effect and burden on American tax payers in the top quintiles.
For more information, visit Bartlett's full article here: Who Pays the Taxes and Gets the Benefits.
