by Robert Carbery
As we turn the page on yet another inspiring tax day, let’s look into who is really bearing the burden of the individual taxes in the United States.
In 2014’s tax year, the federal government took in a then-record $1.377 trillion in income taxes from individuals, according to a report published by the Internal Revenue Service.
And of the 148,606,578 individual tax returns filed that year, 52,062,499 of them (35 percent) filed “nontaxable returns,” which means they paid no net individual income taxes. The rest of us, the 65 percent who did pay income taxes, paid an average of $14,271, according to the same IRS report.
In addition, 36.5 percent of all filers filed returns with incomes of over $50,000 in 2014. These taxpayers paid a total of more than $1.3 trillion in income taxes, or 94.4 percent of all income tax paid that year.
While many Americans on the right and left would call this a justified “progressive” tax system, my libertarian brothers and sisters would label it outright theft. As the government grows larger and larger, more and more taxes are required from the citizenry to bankroll the growth of countless federal programs and initiatives. All the while, politicians and former politicians in and around Washington D.C. profit mightily from “public service.”
Amazingly, many Americans don’t owe a dime to the government. More than four in ten Americans, around 76 million people, did not pay any income tax to the federal government in 2015, according to data for 2016 from the Tax Policy Center. In other words, 44 percent of Americans enjoy the receiving the “benefits” from the government, while the rest are forced to cough up what they can to Uncle Sam or else it’s theirs.
That number of non-tax-paying Americans is expected to be about the same this year.
So, when Mitt Romney stated during the 2012 campaign against Barack Hussein Obama that about half of Americans don’t pay any income tax (and he caught a lot of flak for that), he was absolutely right!
Is it fair that those who make over $250,000 a year pay over half (51.6 percent) of all individual income taxes? Does it make sense for these same “one-percenters” to have an average tax rate of almost 26 percent? And if you don’t think that’s high enough, then how high should it be? 40 percent? 50 percent?
What about people with incomes of less than $50,000? These on the lower rung of the income ladder accounted for 62 percent of all tax returns filed in 2014, yet they paid just 5.7 percent of total income taxes collected with an average tax rate of 4.3 percent.
My friends on the left would say that this is a fair and progressive tax system that forces the rich to “pay their fair share,” despite the fact that a majority of poorer residents are receiving the federal benefits that much of the upper class is paying for. Still, the top 0.1 percent in America is forced to pay the equivalent of 39.2 percent of taxes while the bottom 20 percent actually have negative tax rates.
Unfortunately, the way we do taxes will not change and things will not get any easier.
It’s pretty simple in Sweden. Despite being a socialist utopia with a far smaller population than the U.S., the Nordic nation lessens the headache for its taxpayers. Sweden’s government fills out the tax forms for its citizens, with some even receiving a text message to which the recipient can respond, ‘yes’ or ‘no,’ to complete their taxes.
In the U.S., we want things simplified, but the entrenched and powerful tax preparation class, including accountants from coast to coast and now the likes of Turbo Tax and H&R Block, will do everything they can to keep the status quo in place. Complexity and confusion force Americans to use others to prepare their taxes for them.
Taxes should be able to be filled out on an index card. Let’s get President Trump and Republicans to actually do something on taxes soon before they get obsessed and distracted over the next election.
We’ve got about six months. Max.
by Robert Carbery