October 12, 2017

DON'T CUT THEM, REDIRECT THEM:

No tax cut for the wealthy? Easier said than done (BRIAN FALER 10/11/2017, Politico)

They are confronting a tax system where the tax burden is increasingly bunched up at the top of the income spectrum, thanks to huge earnings gains by the rich and the fact that the U.S. has one of the most progressive income tax systems in the world.

The top 0.1 percent of earners projected to pay more to the IRS than the bottom 80 percent combined. This year, official government data show, the top 20 percent will pay 95 percent of all income taxes.

The top 1 percent -- about 1 million families earning at least $379,000 -- will pay 45 percent of all individual income taxes collected this year, and almost one-third of taxes overall, including corporate, payroll, estate and excise taxes.

Meanwhile, more modest income gains among average Americans, as well as repeated efforts by Congress to cut taxes on low- and middle-income people, mean those groups are shouldering a declining share of the tax burden.

The average federal tax rate for people whose earnings put them in the 21st to 80th percentile of incomes has fallen by 30 percent since 1979 to 13.8 percent, according to the nonpartisan Congressional Budget Office. Rates on low-income people have declined even further, by 57 percent, to 3.3 percent.

"The fact that they don't pay very much in taxes means that it's very hard to provide them with a large tax cut," said Looney, now a fellow at the Brookings Institution.

We need tax reform, not cuts. Instead of taxing income, profits and investments--which we want--we should be taxing consumption.

Posted by at October 12, 2017 8:10 AM

  

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