The debate on who pays the most taxes in this country has been going on for eons, and will continue to go on, as politicians continue to use taxes as a sword for political power.
Some politicians would have you believe that the wealthy pay no taxes..So who really pays the majority of the taxes in the United States? The truth might just surprise you..
Here are some stats and facts on U.S. tax payers.
These stats below were taken from Tax Foundation, you can click here to read the full article.
*Internal Revenue Service (IRS) data indicates that the wealthy in America are bearing the heaviest share of the income tax burden than in any time in recent memory. On the other hand, more than 53 million low- and middle-income taxpayers pay no income taxes after benefiting from record amounts of tax credits, and six out of 10 households receive more in direct government benefits than they pay in all federal taxes.
U.S. Tax System Is The Most Business Dependent.
*Meanwhile, the U.S. tax system is one of the most “business dependent” systems anywhere as American businesses pay or remit 93 percent of the nation’s taxes. In 2017, OECD economist Anna Milanez measured the amount of taxes that businesses in 24 countries contributed to the overall tax collection system. Her report determined that the U.S. was one of the most “business dependent” tax systems in the industrialized world.
*The report found that U.S. businesses either pay or remit more than 93 percent of all the taxes collected by governments in the U.S. This includes taxes paid directly by businesses, such as corporate income taxes, property taxes, and excises taxes, as well as the taxes businesses remit on behalf of employees and customers, such as payroll taxes, withholding taxes, and sales taxes.
*Economic studies show that workers bear at least half of the economic burden of corporate taxes through lower wages, with women, the low-skilled, and younger workers impacted the most. And because the corporate income tax is the most harmful tax for economic growth, raising the corporate tax rate would not only slow the economy, it would also make the U.S. an outlier once again against our global trading partners.
Let’s take a look at some more of the facts.
The Rich Bear America’s Tax Burden.
*Most Americans would be surprised to learn that a 2008 study by economists at the Organization for Economic Co-operation and Development (OECD) found that the U.S. had the most progressive income tax system of any industrialized country at the time. Their study showed that the top 10 percent of U.S. taxpayers paid a larger share of the tax burden than their counterparts in other countries and our poorest taxpayers had the lowest income tax burden compared to poor taxpayers in other countries due to refundable tax credits such as the Earned Income Tax Credit and the Child Tax Credit.
*Our income tax code has only gotten more progressive since then because of Washington’s continuing effort to help working class taxpayers through the tax code.
*According to the latest IRS data for 2018—the year following enactment of the Tax Cuts and Jobs Act (TCJA)—the top 1 percent of taxpayers paid $616 billion in income taxes. That amounts to 40 percent of all income taxes paid, the highest share since 1980, and a larger share of the tax burden than is borne by the bottom 90 percent of taxpayers combined (who represent about 130 million taxpayers)
*In case you are thinking, “Well, the rich make more, they should pay more,” the top 1 percent of taxpayers account for 20 percent of all income (AGI). So, their 40 percent share of income taxes is twice their share of the nation’s income.
*Similarly, in 2018, the top 0.1 percent of taxpayers paid $311 billion in income taxes. That amounted to 20 percent of all income taxes paid, the highest level since 2001, as far back as the IRS data allows us to measure. The top 0.1 percent of taxpayers in 2018 paid a greater share of the income tax burden than the bottom 75 percent of taxpayers combined.
Most people do not have a clue how the Tax system works.
And politicians take advantage of this through misdirection to get masses of people to believe things that are just not true.
As an example, several years ago before I went full time into online marketing, I use to work for a furniture franchise and one of my co-workers would always say anytime the topic of money or taxes would come up, “Yep, the rich just keep getting richer and the poor just keep getting poorer.”
He said this phrase a lot, so one day I finally asked him, why do you keep repeating this phrase every time the topic of money or taxes comes up?
He replied “Because the rich do not have to pay any taxes and the poor and middle class have to pay them all.” I then asked him, where did you get this belief from?
He said, “I learned it from watching democrats on TV.”
I asked him, so you really believe this?
His answer “Yep!”
I then asked him, okay so if that is true, then how come you do not pay any taxes?
He said “What do you mean, taxes are taken out of my check every two weeks?”
I explained to him…Yes that maybe true, but at the end of the year you get a BIG tax refund, you actually make money from the tax system, because it is more money than they take out of your checks all year. (I knew him very well as a friend and as his boss at work, so I knew how much he made and his family size)
Well he wanted me to show him, so the next night I went over to his house, and we looked at his w-2 from the end of the prior year, and what taxes were taken out, and at his tax return.
He had claimed 5 all year, because he was married and had 3 kids, so he had only paid in like $2400.00 to federal and state taxes. Yet he got like a $9000 tax refund, because of earned income credit, working family credit, and family size. Well he actually got even more than that back, because he also got a property tax refund.
He was like “Wow, I never ever looked at the actual numbers, I just thought because of what I heard on TV, that it was true.”
So now that he seen in black and white that he made a whopping $6600.00+ profit from the tax system, my next question for him was, who do you think pays for that nice profit you made?
He said “I guess people who have actually paid more in taxes than they get back?
I responded yes, and people like me and my wife, never get any money back, we only pay in the whole year, and sometimes at the end of the year we pay in a big chunk as well.
I then explained to him, the more money you make, the more you will pay in taxes. I made less money once too and lived for those almighty tax refunds, and as my online business grew and me and my wife made more money at our jobs, the more we paid in taxes. We do not qualify for property tax refunds anymore either.
I further explained to him how many taxes a business has to pay for them to be able to have employees- such as corporate income taxes, self employment tax, property taxes, excises taxes, and business license tax as well as the taxes businesses remit on behalf of employees and customers, such as payroll taxes, withholding taxes, and sales taxes, etc. (Not to mention taxes on all of the products and services a business consumes just to exist, every time a business buys something they have to pay a tax on it.)
Over the next several weeks me and my friend had many really great discussions about money and business ownership, and how you did not have to be rich to start a business, as I opened up his eyes, his belief system and thinking changed drastically. He literally believed before this, that there was no way to better himself.
To make a long story shorter, because of this experience my friend had with me explaining how the tax system really worked, his whole money belief system was altered and eventually he started his own business, and changed jobs for a better paying position. His whole life changed financially for the better. He no longer believes something just because a politician says it on TV.
If you have any questions or comments, don’t hesitate to post them in the comments section below or just say hello. I would love to hear from you!
Have a beautiful day, and remember to always be kind and good to others.
Sincerely,
Richard Weberg