Friday, January 11, 2013

Who's Not Fair?

Estimated  Effective Federal Tax Rates for 2013:

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%

And this isn't fair share, why?    The middle class - which by definition would be the middle fifth - pay 15.6% of income to the federal government.  The top fifth pays almost double.   The top 1% pays almost 2.5x.

If you make $92k a year or better, you are in the top fifth.   To make the top 1%, you would need to make $350,000 or more.   Therefore, if you make $100k, your additional federal tax over the middle fifth is $6,000 per year.    And that is not considering any impact of the Alternative Minimum Tax (AMT) which limits deductions and creates a minimum tax rate, and was originally created in 1969 in an Congressional attempt to nab a handful of millionaires (155 people) that "weren't paying their share," because they were not paying any income tax at all.  Sound familiar??  For years since then, Congress has passed one-year "patches" aimed at minimizing the impact of the tax.   Nevertheless, despite its attempt to be a "millionaire tax" on just 155 people, the tax has creeped to nabbing 3.9 million people in 2008 (and going higher), and hits some with incomes as low as $75,000 per year.  

#LawofUnintendedConsequences

No comments: