The Wealthy Already Paying High Taxes

Posted on March 4, 2022

The Wealthy Already Paying High Taxes

Since there has been talk of increasing taxes for the mega-wealthy, majority of the public agrees that the rich must pay additional taxes to help the economy recover. President Barack Obama and Democrats in Congress have also pushed for increased taxes for the rich. Even though all taxpayers have been hit with higher taxes because of the increase in payroll taxes, the rich are already facing 30-year high tax rates. The Republic explains further:

“. . . average tax bills for high-income families rarely have been higher since the Congressional Budget Office began tracking the data in 1979. Middle- and low-income families aren’t paying as much as they used to.

For 2013, families with incomes in the top 20 percent of the nation will pay an average of 27.2 percent of their income in federal taxes, according to projections by the Tax Policy Center, a research organization based in Washington. The top 1 percent of households, those with incomes averaging $1.4 million, will pay an average of 35.5 percent.

Those tax rates, which include income, payroll, corporate and estate taxes, are among the highest since 1979.

The average family in the bottom 20 percent of households won’t pay any federal taxes. Instead, many families in this group will get payments from the federal government by claiming more in credits than they owe in taxes, including payroll taxes. That will give them a negative tax rate.”

High-income families are also hit with more taxes on investments. Why they are asked to pay more in taxes is important to know. The reason many vote for tax hikes for the rich is because the incomes of the rich grows at a much higher rate than the incomes of middle and lower-income groups.

“You’ve got to think about the context,” said Chuck Marr, director of federal tax policy for the Center on Budget and Policy Priorities, a liberal think tank. “We just had three decades in the United States where we had a tremendous increase in inequality.”

The Republic uses two sets of data to compare the tax history of the rich and average taxpayers:

“The CBO produces data from 1979 to 2009; the center has overlapping data from 2004 through 2013. Both get tax data from the IRS, but they use slightly different methodologies to calculate federal tax burdens.

Still, their numbers track closely enough to make some general observations. For example, it is clear that for 2013, average tax bills for the wealthy will be among the highest since 1979. It also is clear that federal taxes for middle- and low-income households will stay well below their averages for the same period.

Average after-tax incomes for the top 1 percent of households more than doubled from 1979 to 2009, increasing by 155 percent, according to the CBO. Average incomes for those in the middle increased by just 32 percent during the same period while those at the bottom saw their incomes go up by 45 percent.”

The simple logic that the more you earn, the more you pay in taxes seem to be fair, but the source from which the income is earned is also vital. An increase in payroll, income, or capital gains taxes will have a ripple effect on the rest of American taxpayers and the general economy.