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The top 5% of the Population have substantially more money to be taxed, so with a flat tax or a taxation system that is the reverse of what we have now, where higher income people paid a lower tax rate depending on the delta between the rates for the lower 95% income wise and the top 5%, the wealthy would STILL contribute a higher percentage of the total tax collected than the rest of the country.
For example: If people making over $125k (Threshold for top 5%) paid 15% in taxes and people making less paid 25% -
Someone earning $50k pays $12,500 in taxes and the person making $125k pays $18,750.00.
You've basically stated a basic mathematical fact that has ZERO to do with the difficulty of a particular income group to shoulder their share of the tax burden.
The issue is: "Which income group's standard of living would be improved the most by a tax cut"
Obviously, it's the people in the lower 95% of income earners - really the lower 80%, as anyone in the top 20% of income earners is upper-middle class.
Additionally, many of us "Liberals" are upper-middle class and are basically advocating increasing our own taxes, perhaps we'd rather not pay them, but perhaps we see a need to allocate the burden in a way that's more fair to our lower earning counterparts.
Finally, you need to look at the bigger economic picture:
Our country is propped up by foreign money as other countries keep buying our Bonds to make sure our nation has the money to buy their products. Unfortunately, the twin deficits (Trade & Budget) in addition to the negative savings rate amongst Americans, is pushing down the value of the dollar, hurting the yield on the bonds, thus making them less attractive to other countries as Investments.
Eventually, our Government is going to have to raise Interest rates substantially, balance the budget and raise taxes to keep the foreign money flowing in order to keep the country operating AND protect the dollar.
With rising Medicare Costs, the SS issue (regardless of how you view it) and the coming populations shift - the US is facing multiple economic threats.
Pointing out basic mathematics as far who contributes more of the nation's tax revenue is fatuous, when there are far bigger issues that will require some form of tax increase to solve, as any economic damage from the tax increase is better than the alternative.
Also - if the % of total taxes collected by the top 5% increases, it doesn't necessarily mean that their taxes were raised, you could do that via closing tax loopholes, (Which the State & Federal Govts are doing), cracking down on tax shelters or by shrinking the total tax revenue base in a way where the rich pay the same, or receive a substantially greater reduction then everyone else.
Peace,
M2
The Blog: http://www.analyticalwealth.com/
An assassin’s life is never easy. Still, it beats being an assassin’s target.
Enjoy your money, but live below your means, lest you become a 70-yr old Wal-Mart Greeter.
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