As we’ve all heard, the United States has a long history of tax rates increasing and tax revenues falling. It is generally accepted that the problem stems from tax rates on capital gains and dividends. Capital gains are taxed at a very low rate, and dividends are taxed at a much higher rate. This gives the wealthy a significant advantage over the middle and lower classes.
What is generally accepted is that the high tax rate on capital gains is due to the fact that the wealthy own businesses (the “carried interest” loophole has been closed). This means that the richest people in America pay a much higher percentage of their income in taxes to the government than the less wealthy do. Another reason is that Congress decided to raise the tax rate on dividends in 1980, thus giving the wealthy an even more significant advantage over the middle and lower classes.
This is a bit of a red herring. The richest people in America pay a lot in taxes because they choose to. That doesn’t mean that the middle and lower class pay less than they do. A lot of the money that the wealthy have comes from investments made into real estate. These investments have to pay taxes, but we don’t often hear about the taxes the middle and lower classes have to pay on these investments.
Actually, we do hear about it. The top 10% of American households in the US pay a much higher percentage of their income in federal taxes than the rest of the nation, with the top 10% paying a whopping 72.8% of their income in taxes in 2014. Thats a lot of money, even for those with a lot of money. The fact that they pay a much higher percentage of their income in taxes is largely because they choose to.
The reason your income tax is so high, is because you are paying an amount for the privilege of being taxed on it. This is a very common concept in the US, but it’s important to understand. Tax rates are calculated based on the income of the tax payer. This means that if a high earner pays a lot of money in taxes, they are taxed much more on that income than someone who is actually a lower earner who pays less.
As a result, one study found that the amount a person pays in taxes per dollar earned is very closely related to their income. This is why taxes are often a major factor in determining your income. Another study found that the same amount of taxes paid by a lower income earner is more than twice the amount paid by someone with a higher income.
This isn’t always the case. Some studies found that the amount a lower earner pays in taxes is a little bit lower than the amount they earn, thus making low earners less likely to be taxed. Conversely, other studies found that taxes paid by a higher earner are more than twice as much as those paid by someone with a lower income, so that they are more likely to be taxed.
This is the argument I have with a lot of people when they talk about the government’s burden on low income earners. It is a bit simplistic to think that just because someone is in a lower tax bracket, they should have the same burden as someone with a higher income. I think we need to think about this from two different angles. The first is the tax that is paid by someone with a higher income than someone who has a higher-than-average income.
The second is the tax that is paid by someone with a lower income than someone who has a lower-than-average income. When you take out the basic tax rate, people with lower incomes pay the same amount of tax as someone with a higher income.
Although there are some exceptions to this rule, most people with a higher income than someone with a lower income pay a higher amount of tax. For example, a person with a higher income pays 15% of their income, and someone with a lower income pays 8.2%.