A half century of Federal income tax changes for individuals
Federal income tax changes for individuals are linked to the first five income quintiles over the last half century and there are many things to observe from it. First, we have noticed that everyone loves the income tax cutting. Most of the changes are tax cuts, which are mostly for the bottom 80% of the population based on income.
Key point to note is that tax cuts are always good news for top income earning groups, because they pay more from their earnings and federal income tax cuts pay more in return. In 2009 and 2010, the top 10 percent income earners paid roughly 70 percent of federal income tax, a major cause of income inequality in United States. Some tax cuts are more broad-based as compared to others, like major federal income tax cuts in 1964 and 2001. If we compare them to 1982 and 2003 tax cuts, the prior tax cuts were broad based.
Former President Bill Clinton raised federal income tax from 36 percent to 39.6 percent for top earning groups in 1993 and decreased the percentage of tax to be paid by lower earning groups. The economic growth, more job opportunities, substantial growth, recessive quarters and no empirical support also affected the federal income tax percentage. Currently a summary was published by New York Times Economix, in which there is a long detail of half century individual federal income tax changes.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags: federal income tax, federal tax, income tax, tax code, tax law, tax reform
79 percent say all Americans should pay federal income taxes
Fox news reported that majority of Americans agree to pay federal income tax, though it may be as little as 2 percent of their earnings. According to a Fox news poll released on Thursday, 19 percent of Americans have agreed that they should pay something for federal income tax. Among these voters who favored the federal income tax, 71 percent are Democrats, 83 percent are Independents and 85 percent are Republicans.
IRS announced that 41 percent of the tax fliers didn’t pay the federal income tax last year. It was estimated by Tax Policy Center that non-payers percentage will be increased to 46 percent next year. Most of the voters are those who have come across Republican nominee Mitt Romney’s broadcast video where he remarked that about “47 percent of Americans” don’t pay federal income tax. During presidential campaigns, Mitt Romney also commented that USA is becoming an entitled society and most are dependent on the government. Still 63 percent of Americans think that what Mr Romney said has certain truth in it.
On average, three out of four voters believe that Americans are somewhat dependent on the government. About 46 percent of the voters think that federal government is doing too much nowadays. Only 22 percent of Americans thinks that federal government is doing only a little. The online poll has divided the citizens between federal income tax payers. These voters were all registered voters who also voted for the U.S presidential election.
Categories: Federal Tax, Income Tax, State Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, tax pledge, tax reform, tax the rich
The Fairness of Taxes and the Wealthy
At the center of the confrontation between leaders over the fiscal cliff lies one particular question, is the federal income tax system fair? And in particular are those in the wealthiest income brackets paying their fair share. And while there seems to be consensus, at least to some degree, between President Obama and Speaker of the House John Boehner that federal income taxes should be raised for the wealthy, there is still debate over the amount the increase should be. There are many who would argue that the wealthy currently pay a disproportionate portion of federal income taxes, which is supported by recent data from the IRS. What seems to be missing, however, is an understanding of how the data does not accurately depict what the wealthiest Americans truly make.
Recently an analysis of the 2010 federal tax returns was released by the IRS, showing the different income groups allocation of federal income taxes. According to the analysis, the highest earners (individuals with an adjusted gross income of at least $369,691) were paying approximately 37% of all federal income taxes, even though they accounted for less than 19% of total income. When looking at this statistic alone, it would seem that there is validity in saying that the wealthy do pay a disproportionate amount of federal income taxes.
While statistics are best for interpretation of data, they are only as good as the information they are based on, and in this case the data is inherently misleading. The amount individuals pay for federal income tax are based only on what the federal government defines as income. In the case of the richest Americans many other sources of income are not included (e.g. inheritances, distribution of trusts, ect.). This shows that while the richest of Americans pay a disproportionate amount of the federal income taxes, much of their income goes tax-free.
Categories: Federal Tax, Income Tax, Tax Law Tags: federal income tax, federal tax, fiscal cliff, income tax, tax hikes, tax pledge, tax reform, tax the rich, tax the wealthy