(National Sentinel)Â Tax Reform: It’s popular among some segments of American society to bash people who are perceived as being “rich,” but over the years Congress has done more than just that: Lawmakers have devised a “progressive” tax system that has transferred the vast majority of the country’s income tax burden top earners.
Office of Management and Budget Director Mick Mulvaney told an audience at George Washington University last week that the top 20 percent of U.S. wage earners now pay an astounding 95 percent ofÂ all income taxes, the highest level ever, theÂ Washington ExaminerÂ reported.
As such, any tax cut for “middle income” earners will also benefit those at the time, Mulvaney explained during a discussion at the university’s Institute of Politics and Public Service at the McCourt School of Public Policy, which was directed by Cathy Koch, a former Senate aide and tax expert.
“The top 20 percent of folks who file a tax return, the top 20 percent, pay 95 percent of the taxes,” Mulvaney told the audience.
That amount is higher than in 2015 whenÂ The Wall Street Journal reportedÂ the top 20 percent paid 84 percent of all income taxes, which is still a very high number.
If you break the income tax universe into what we call quintiles, so equal sized 20 percent columns, the first two columns, the first quintile and the lower quintile, don’t pay any taxes at all. In fact, they net positive. We pay them when they file a tax return.
That middle quintile, which you might describe, some people do, as middle class, pays an effective rate in the low single digits. And all of the taxes are paid by folks in the top two quintiles, and that last quintile pays almost fully, 95 percent I think, of the taxes.
People always ask all the time, â€˜Why do you want to give a tax cut to the rich?’ Here’s the math. We have a progressive tax system, which means that if you make $1 million and I make $50,000, we both pay the exact same rate on the first, let’s say, $20,000. And then, from the next $20,000 up to my $50,000, and her next $20,000 to her next $50,000, we pay the same, I think it’s 12 percent or 15 percent, I can’t remember where the brackets are right now. And then she goes on to pay her higher rate on the stuff that she makes and I stop.
Well, if you want to give me, the middle class, a cut, take my 15 percent rate down to say 10 percent, and that gives the middle class a cut. Guess who else benefits from that, she does. She pays that same rate on the way up the brackets.
Concluding, Mulvaney said, “YouÂ could sit there and do nothing but lower the rates on the middle class, and all other things being equal, you’re giving the rich a tax cut.”
For years advocates of the so-called “fair tax” say their system is superior to the current convoluted — and inherently unfair — system because it eliminates all income, payroll, gift and other taxes and replaces it with a national consumption tax. Everyone, regardless of their political affiliation, pays the same rate when they make certain purchases.
Congress isn’t likely to adopt that system, the Trump administration says it is working to make the current system more equitable to most Americans while cutting the top rates that small businesses and corporations pay.
What are your thoughts?
Advertising disclaimer: Click here