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
What Happens After the Fiscal Cliff?
As the fiscal cliff looms, efforts are being made to avert the cliff, but little progress is being made. Some lawmakers are predicting that increases in federal income taxes and federal spending cuts will begin to take hold this coming January, unless there are strides made to complete the deal.
With the possibility of such changes happening, the economy stands to be hit by a great jolt. In some predictions economists predict that another recession could be veryconceivable. If the nation were to fall over the so called “cliff”, consumer spending power will greatly decrease and the federal government will see an annual tax increase of about 500 billion dollars. While this will cut the federal budget deficit by a considerable amount, it will be at a great economic price.
According to the Tax Policy Center, on average the federal income tax bill will increase by $3,500. And the average middle income home will see an increase of about $2,000.
If the fiscal cliff actually becomes a reality, federal income taxes will be greatly affected. On December 31, the low ordinary federal income tax, put in place by former president George W. Bush, will expire. An extension by President Obama and Congress was agreed upon in the end of 2010, but this extension will only have a few days remaining. Along with this lapse in the low ordinary federal income tax, Americans will see rates increase up to 15, 28, 31, 36, and 39.6% from the current 10, 15, 25, 28, 33, and 35%.
There is an effort being made by President Obama and his fellow Democrats to extend the Bush era tax rates, but this would only be for those who make less than $200,000 or for a family making less than $250,000. For the rest of those who don’t fall into this category federal income tax rates would increase to the higher pre-Bush era.
Categories: Federal Tax, Income Tax, Tax Law Tags: federal income tax, federal tax, income tax, payroll tax, tax code, tax law, tax reform