Does rich people (affluent) pay more taxes than poor people (minority's) the working class?
I argued with my brother in law about this, he said rich people pay more taxes than poor people. I took social welfare, they said that rich people get lots of tax breaks and writeoffs and take advantage of the loop holes in the system that protect their assets? So what is it?
Tags: assets, brother, loop holes, social welfare, tax breaks
Even with the supposed tax breaks and writeoffs, rich people pay more taxes than poor people.
The poorest 45% don’t even pay federal taxes. With things like child tax credit and earned income credit, they get back more than they paid in.
Rich people who are able to take advantage of the "loopholes" then get caught paying AMT, or alternative minimum tax, which pushes the amount of tax they owe even higher.
And the richest 1% pay 95% of all taxes.
Rich people pay way more in taxes than the working class. In fact, the majority of the taxes collected in this country come from those in the upper tax brackets even though the represent a small minority of tax payers. Rich people may get more tax breaks but just look at a tax rate schedule and its pretty easy to figure out that a person making enough to be in the 33% bracket is going to pay a ton more than the average Joe paying 15%. I found this chart on Wiki. The average person making 200k pays 11.5 times more in taxes than someone making 40k (while making 5 times as much). The top 0.1% of taxpayers by income pay an astonishing 17.4% of federal income taxes and the top 5% (with gross income of $137,056 or more) pay 57.1%. So the richest 5% pay much more than the remaining 95% of taxpayers combined.
http://en.wikipedia.org/wiki/Taxation_in_the_United_States
On April 15th, one’s personal federal taxes are dependent on Adjusted Gross Income (AGI). AGI is gross income less deductions. Deductions are expenses that the law allows the taxpayer to decrease income. Your brother is referring to these as loopholes. Some examples of these deductions are:
1. Retirement savings
2. Gains/Losses on Investment sold
3. Mortgage interest expense
4. College funds
5. Health care costs
The Federal Tax rates are incremental or for every dollar earned more of it is given to the Govt.
When you and your brother debate ask yourselves
1. Do the rich pay more taxes in dollars than the poor?
2. Do they pay a higher percentage of their gross income than the poor?
Further, if you were to add the total tax base paid by individuals,
which classes pay more in total to Uncle Sam?
For example 130,000,000 people making less than $100,000 AGI each
or 25,000 people making more than $1,000,000 AGI
I agree it is not a simple answer. Before you ask a question, or do your research; be sure you know what you are asking or researching. You’ll get a more complete answer. This applies to anything in life.
It’s a common misconception that the "wealthy" get lots of tax breaks that result in their paying lower taxes than the average person. There are a VERY few cases where someone with substantial unearned income may pay a lower RATE than a typical working individual however that’s the exception. And even though the RATE may be lower, the total TAX that they pay will be MUCH larger.
The truth is that the top 10% of all earners in the country pay over 80% of all taxes. The lowest 35% to 40% pay nearly no income taxes at all. In fact, many of them benefit from NEGATIVE income taxes. A single parent supporting 2 kids on a dead-end $8.50 an hour job is a good example. They pay $0 in income taxes and collect close to $5,000 in Earned Income Credit. (Some seem to think that that’s some sort of bonus but the reality is that even with that extra money they are still well below the poverty level today.)
Your brother is right. Close to half of the people, mostly low income people, pay no income taxes, and many end up getting money back through EIC even though they don’t pay anything in. The top 50% of earners pay over half of all income taxes paid. The top 1% of earners pay over 1/3 of income taxes paid.
i agree with you.
Many of the poor people not only don’t pay any taxes, they get refundable credits like Earned Income Credit.
Now many rich people end up paying a smaller percentage of their income in taxes than the middle class earners due to loopholes, Bush’s efforts to abolish/reduce capital gains taxes, etc.
Your brother in law would be the winner of this argument.
Where do you think welfare comes from? Poor people don’t pay for it and neither does the government. The rich pay for the poor, the needy, the unemployed, the illegal aliens and everyone that has never paid a DIME into our tax system. Seem fair to you? People complain about the rich just getting richer, but it is the RICH that support this entire country! For once I think that they should get some recognition for all that they do for this country!
It pays to "Have people". The majority of people can’t afford to "Have People" to take care of their financial future. Thank God for the Lottery!