Mar

26

Progressive Taxation is Gaining Ground

March 26, 2007 |

For as much as President Bush is touting his tax cuts I think they are only doing a small improvement on flattening the tax responsibilities of the nation. The Democratic party should be very proud of their success in making the upper class increase the percentage of the federal for which they are responsible for. Take these numbers for example:

Top % By Income Level
 Percentage of Tax Burden in 1986 1996 2003
Top 1% 25.39% 31.62% 33.18%
Top 5% 42.41% 50.36% 53.52%
Top 25% 75.68% 80.96% 83.45%

source: IRSWhy does it happens?
Statistics can be correctly used and sometimes mis-used to prove theories. I will not attempt to prove anything with them right now. I will offer an educated, non exhaustive guess of some things may have influenced this phenomenon of increasing the upper class burden of the overall government spending. Some things that may have increased it are:

  • Increased allowed deductions and credits for the lower income people: education credits, child credtits, etc.
  • Increased access to home ownership: a home is one of the biggest deductions families get.
  • New tax bracket of 10%.
  • New retirement plan deductions (higher income people benefit less from these as the retirement deductions are smaller compared to their income).
  • There may be a widening income gap, albeit slightly. (Top 1% have increased their share of the income from 15.25% of the national personal income in 1986 to 17.46% of the national personal income in 2003: a case of rich getting richer, poor getting poorer.)

Comments

1 Comment so far

  1. Alternative Minimum Tax Issue : Money And Investing on March 26, 2007 6:41 pm

    [...] The middle class families are now complaining about the Alternative Minimum Tax. They are complaining that soon, even families earning $75,000/year will be hit by it. I do complaint about the unfair tax, and I consider myself middle class. However, I have to say this is a case where the middle class is a victim of their own ignorant creation.See, some people in the so called “middle class” keep arguing that the “rich” should pay the bulk of the cost of supporting this great nation. (In a different article, they already do!) The problem is that the Alternative Minimum Tax catched up with the people who asked the upper class to pay and now they don’t like it. [...]

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