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The Real Numbers In A Hot Topic Issue

 This years’ election debate hot topic issue was one that plagued this country since income tax was born 100 years ago. Should the wealthy pay more in taxes?

Just to give some background information from the recent election President Barack Obama believed that the rich need to pay more taxes to aid the budget deficit and to provide the government with the help it needs. Meanwhile, his opponent, Mitt Romney counterd that deficit can be lowered without raising taxes on the wealthy. He thought this to be unfair and unwise to this bracket of people.

“Who is right Obama or Romney? Both.. Or neither,” says Joseph Thorndike, a tax historian. This is a debate that has gone on in our country for over a hundred years.

The best measurement is the top marginal income-tax rate. It has gone from 7% in 1913 to 92% in the 1950’s, back to 28% with the Tax Reform Act of 1986, to 39.6% during the Clinton era and now today it is 35%. Mr. Obama plans on raising the rate meanwhile Romney wanted to lower it

For the past thirty years many Americans, mostly the wealthy, have paid less of their incomes to Washington. The rich have received more of the income and paid more of the taxes; an increasing percentage at the bottom have paid less or even nothing.

Is this fair? Here are some strong facts to aid this debate. Let’s take a look at some concrete numbers behind this hot topic debate:

The wealthiest 5%, 1% and 0.1%of Americans have been receiving more income and paying an increasing share of federal taxes.

For example in the 1990’s the wealthiest 5% averaged 25.3% of income and paid 28.5% of taxes.

During the 2000’s the wealthiest 5% averaged 28.4% of income and paid 40.3% of taxes.

The taxes paid by the lower 40% of the Americans have been decreasing along with their portion of income.

An increasing number of Americans are not paying any income tax. These people are living on social security, may be getting tax breaks for lower wage workers or simply do not make enough.

For example, in 2007 the lower 40% received 14.9% of the income and paid 5.9% of federal taxes.

The standard tax rates have lowered for everyone. The rich do pay a bit more, except for those whose overall income is from dividends and capital gains.

From the earning scale, Americans range of income that went to taxes was lowered in the 1980’s, increased in the 90’s and then fell in the 2000’s.

Overall most Americans have seen the part of their income that goes to taxes has steadily decreased.

The tax system structure strengthens the divide between economic winners and losers, but not enough to keep the divide from increasing.

Due to the fact that the tax act takes more from the top percentage then from the bottom percentage it greatly lowers inequality.

Mr. Thorndike believes, “Fairness cannot be solved scientifically, but by a show of hands.”

If you have tax debt you are unable to pay or any other questions our tax settlement professionals are happy to discuss your tax resolutions free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

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