I came across this info again today so I thought I’d post it out there again. People need to realize what the “tax cuts for the rich” that are about to expire under the Democratic congress entail:
- Reducing the lowest tax bracket from 15% to 10%
- Eliminated the tax penalty for married people filing jointly
- $400 child tax credit
- Reduced capital gains rates (55% of Americans own some stock)
Married? Kids? Have a 401k? Actually pay taxes? Congrats, welcome to the ranks of the rich. Your taxes need to go up to help support all those people that don’t pay taxes.
BUT WAIT! If its a money issue, what about the all time record for taxs collected in April? Some may wonder, how can you collect more taxes after reducing the tax rates? Its simple economics that can be simplified into a parallel involving burgers. If you started a restaurant that sold $100 burgers – well you’d probably have a lot of free tables. Meanwhile, McDonalds has proven you can sell a crap load of burgers for a buck. The point is that just like with selling something: raising the price/rate doesn’t always generate more total profit. Sure that one $100 burger has a great profit margin but selling 2 verses 2 billion changes which business model wins. (Now to be fair you could sell even more burgers for a penny, but your margins at that point would be negative. So the same arguement can be made that you a certain minimum tax rate to generate significant revenues — which is true. The point here however is that raising the rate does not always raise the revenues.)
Still don’t believe me that you are “RICH”? Check out the numbers below and you’ll discover that if you make at least $30k – you’re rich.
This is the data for calendar year 2003 just released in October 2005 by the Internal Revenue Service. Here are the wage earners in each category and the percentages they pay:
- The top 1% pay 34.27% of all income taxes.
- The top 5% pay 54.36% of all income taxes.
- The top 10% pay 65.84% of all income taxes.
- The top 25% pay 83.88% of all income taxes.
- The top 50% pay 96.54% of all income taxes.
- The bottom 50% pay a paltry 3.46% of all income taxes
Think of it this way: less than 3.5% of income taxes in the United States is paid by someone in the bottom 50% of wage earners. I need to repeat that: the bottom 50%. We’re not talking about the bottom 10% poorest of the poor here, or even the bottom quartile of the country. We’re talking HALF THE COUNTRY. Are the top half millionaires? Noooo, more like “thousandaires.” The top 50% were those individuals or couples filing jointly who earned $29,019 and up in 2003. (The top 1% earned $295,495+)
So I say again: Fair Tax anyone?