XPost: misc.taxes, alt.politics.economics, talk.politics.guns
XPost: sac.politics, alt.politics.republicans

If you’ve just filed your income taxes, it might interest you that the
U.S. tax code is incredibly progressive. That’s meant in a mathematical
sense, not a pejorative one. It’s progressive because it collects far more taxes from you when you make more income. As a household’s income
approaches a modest amount, the tax burden can zero out entirely or even
turn negative.

This isn’t the message we usually hear from today’s left. They claim “the
rich” should pay “their fair share.” We also hear this in recent times
from liberal wolves in sheep’s clothing on the “New Right,” people like
Oren Cass. What we’ve never heard liberals do is define in numerical terms
how much is “fair.” Still, we do know their definition of “rich” tends to include more everyday Americans than they let on.

How progressive is our tax code? According to the nonpartisan
Congressional Budget Office, the average federal tax rate (all federal
taxes of all kinds divided by income) for the top 0.01 percent of
households — the 12,000 wealthiest families in America — was more than 30 percent. These households give the federal government 30 cents of every
dollar they earn.

Given the rhetoric, that might be surprising. Let’s keep going down the
income ladder. The highest “quintile” (one-fifth) of earners, those making $350,000 annually, paid 22 percent of their income in federal taxes. The
middle quintile, those making $80,000 yearly, paid 13 percent of their
income. And the lowest quintile, those making $20,000, paid 1 percent of
their income in federal taxes.

Remember, this isn’t just the federal income tax — it’s also the Social Security and Medicare payroll tax, the corporate income tax, the
inheritance tax, and all federal excise taxes. So, it’s a comprehensive
look at the country’s federal tax burden. And it shows a very steep and
very progressive tax system. If you’re working a minimum wage job, you
hardly pay anything. If you’re in the middle class, you’re paying a
respectable but modest amount. And if you’re a millionaire, you’re paying
out your ears more than twice what the middle class pays as a percentage
of income.

Congress is scheduled to vote on making President Trump’s “Tax Cuts and
Jobs Act” law, which is about to expire, permanent. This will ensure that
taxes don’t increase in January 2026 on middle-class families and small businesses. Unless Congress acts, income tax rates will rise across the
board. The child tax credit will be cut from $2,000 to $1,000 per child.
The standard deduction and inheritance tax exemptions will be cut in half.
The dreaded “alternative minimum tax” will return. The tax rate paid by
most family-owned small businesses will rise 25 percent on top of the
income tax rate hikes.

In a misguided attempt at frugality, Congress is considering “paying for”
this avoidance of a tax hike with higher taxes, which is itself a fairly
insane thing to do that only makes sense to some in Washington. The form
of this tax hike is particularly painful given what Trump’s tariff
experiment is putting Main Street employers through. Congress is
considering removing the ability of businesses large and small to deduct
their state and local income taxes paid on their profits. Doing so would increase businesses’ average federal tax rate from anywhere between 2 and
5 percentage points, depending on the business and their state tax rates.

Why on Earth, on the front end of what most economists now say is an unavoidable recession, would Congress consider raising taxes on anyone,
let alone the businesses that must pay the gargantuan tariffs imposed by
Trump? In fact, Congress should be talking about how it is cutting taxes
for businesses to help them counteract the higher costs they are paying
when they import goods from abroad. Congress should look to lower tax
rates, not raise taxes by denying deductions for ordinary and necessary business expenses like state business taxes.

Our tax system is already plenty progressive and needs Congress to focus
on growth, not liberal talking points about greedy rich business owners.

https://dcjournal.com/the-rich-pay-the-most-in-taxes/

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