I have never been a fan of the “progressive” income tax system - where the more you earn the greater the percentage of your earnings that are taxed. I favor a more flat tax system.
Is it fair that an individual with a higher level of income must pay a higher percentage of that income in tax? Obviously a person with an income of $1 Million should pay more taxes than one making only $50,000. But a taxpayer earning $1 Million who would pay a flat 20% tax would certainly be paying more tax than a taxpayer paying that flat 20% on $50,000 of earnings, although not proportionately so.
Is it fair that a large, and growing, segment of the American population are “non-taxpayers” – individuals who pay absolutely no federal income tax, although beneficiaries, perhaps even at a greater level, of government protections and programs?
The Tax Foundation has produced a “Fiscal Fact” report that shows just who pays what.
Foundation President Scott Hodge, responding to a recent joint appearance by Buffett and Hillary Clinton, has pointed out –
“A new report by the Congressional Budget Office shows that Buffett and Clinton have their facts quite wrong. Indeed, the 'super-rich', the top 1 percent of households, are now paying a record 27.6 percent of federal taxes (those taxes measured by CBO) and a record 38.8 percent of income taxes. By contrast, the bottom 80 percent of households—representing 90 million households—pay 31.1 percent of federal taxes and just 13.7 percent of income taxes.
In other words, the top 1.1 million American households pay a greater share of the income tax burden than the bottom 90 million combined.”
A posting by TAX PROF Paul Caron led me to Greg Mankiw's Blog (Random Observations for Students of Economics), which discusses the same Congessional Budget Office report used as a source by the Tax Foundation Fiscal Fact in the post “Tax Rates: Current vs Historical Averages”. Greg comments –
“Notice that all groups are paying lower tax rates than the historical average. But in contrast to some popular perceptions, the change is not concentrated among the upper income groups. In fact, the opposite is true.”
As a fellow blogger (I can’t recall whom) pointed out – if Warren Buffett thinks he should be paying more to the federal government he can always make a donation to the federal treasury!