So you think that the latest compromise over the fiscal cliff has increased the tax rate on the rich while it kept the rate unchanged for the rest? Well, think again. The following is the latest estimate by the Tax Institute of the expected effect of the new legislation once everything is taken into consideration. The effective tax rates are expected to look as such:
A greater breakdown of the calculations would reveal what many are not aware of:
65% of the Federal Income Taxes are paid by the top 20% of the tax payers while the bottom 20% pay only 2.4% of the Federal Income Taxes. Is such an inequality in income distribution sustainable?
Bottom fifth: 1.9
Second fifth: 9.5
Middle fifth: 15.6
Fourth fifth: 19.0
Top fifth: 28.1
80-90 percentile: 21.5
90-95 percentile: 23.4
95-99 percentile: 26.3
Top 1 percent: 36.9
Top 0.1 percent: 39.6
10 comments:
Is such an inequality in income distribution sustainable?
Yes, I feel that if we decide to change the inequality of income distribution it will effect our economy in two different aspects. With new policies and redistributive programs, the taxes used in pushing these new policies can potentially reduce the funds for public and private investments. Also, the upper portion of income groups save a lot of their income which would turn savings down and effect their investments. Higher taxes should be raised to help distribute their income to the lower classes but not effect the middle class and down. A cap of roughly 90,000 should be put into each individual as "middle class" where taxes will not effect anyone who makes less than that amount.
There is clearly an issue, when their is such a large discrepancy between the "rich" and the "poor". I believe that higher taxes for the upper class is reasonable to an extent. To read that 65% of all income tax is coming from the top 20% while only just over 2% is coming from the bottom 20% blew me away. There must be a way to resolve this issue, but if i had the answer I would not need to take this course. Personally, I am more concerned about taxes implemented on small business. Under President Obama, a small business is considered 49 employees or less. Once an employer passes 50 employees, they are punished with higher taxes. This is ridiculous in my opinion because the addition of employees creates jobs and makes the economy stronger. There should be no punishment employing more people.
I feel as though this inequality in income distribution is indeed sustainable. Although the statistics show that the top 20% will contribute approximately 65% of federal income taxes, the wealth of this top percentile makes up for the amount they put in. All in all, the bottom 20% does not generate nearly as much income as the top 20% does so it only seems fair that the top 20% contributes more. However, making them total nearly 65% of all federal taxes seems a tad extreme. Punishing the successful wealthy folk at the top while giving the people at the bottom leeway is also unfair. The gap between rich and poor needs to slim down in order for the level of inequality to shrink as well.
Just by looking at the numbers and percentages of taxes paid by the top 20% of the taxpayers; it makes me think what will happen next to the whole economy and capitalism as a whole. We can’t “bomb” the top 20% with higher taxes in order to fix our economy, to pay off national debt or because we have poor people in the country. This is not the way to do it. If we really want to fix something we should start with entitlements and then we should move on to grow our economy and put people to work. The more tax issue comes up it makes me feel that the whole society is moving away from capitalism to communism where government is taking more from the wealthy, redistributes it to the poor and tries to make everyone “equal”.
In the next few years inequality in income distribution will continue to grow and we should not be surprised by that. Its due to the fact that so called top 20% are more educated. This means they have college education and better prospects for the future in terms of getting actual jobs and making more than those that are not educated. The best way to shrink the gap between rich and poor is education. The more education people have the greater probability they will not end up in the bottom 20% and the gap will slowly shrink.
Income distribution has been an issue in the United States for a number of years. The questions range from who should pay more taxes to what percent should individuals pay? These answers are dependent upon income, however if a household makes below a certain amount, hypothetically speaking $60,000, there should be a limit on the percent they pay. I do not have enough expertise or information in the field to dissect and analyze tax brackets however I can only see it fit that households below a certain salary be made to pay a lower tax than those that make over $100,000
The inequality of income distribution could be sustainable but it is a very difficult situation. The wealthier the individual the higher tax bracket they are put in. this is incorrect. For people who earn their money they get penalized for it. I disagree with the people who are rich and find loopholes not to pay their correct amount of taxes. Another part is that the less fortunate may not be able to afford their taxes. which had been proven by the fact that the bottom 20% pay only 2.4% of taxes. Maybe if there was a flat tax rate for all and no loopholes the amount of taxes paid would cover the difference that the less fortunate could not afford.
I think that the wealthier you are the higher the taxes should be. The sad part is some of the wealthiest people are the ones who have a say in the tax rates between the different percentiles. The lower and middle classes should have a lower tax rate because taxing them the same as the higher classes doesn’t help our economy because they will have less to spend. The higher classes will still have money to spend even with a higher tax rate.
I am a firm believer that the more income you have and the more money you make no matter how you make it you should be taxed more. In order to help the economy the higher income people should be taxed more than the middle and lower classes. Thats not how it works, some people who are extremely wealthy find flaws in the system so they don't have to pay as much taxes. This is not to say all wealthy people do this, but some very well do.
I believe that they more money a person makes, the higher the taxes they should pay. In some instances, the wealthier people have a say in the tax rate between percentiles. Also some individuals who are in the lower class spend all their earnings on taxes and are not able to spend it on goods to help our economy. This would not also make it more fair for the middle and lower classes but it will also help our economy because it helps put money back in our economy.
There will always be “rich” and “poor” when it comes to income distribution.It this situation a compromise that will please everyone will not be met. Its human nature, some people will feel that they are paying too much or too little and others will feel that people are getting too much and they are getting too little. It is amazing however the differences in percentage that people pay, meaning the difference between 20% and 2.4
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