From: matus [matus@snet.net]
Sent: Thursday, April 18, 2002 12:06 AM
To: matus@snet.net
Subject: MFD List - Wealthy pay majority of taxes

(Contrary to the popular belief that the working class of america shoulder
its tax burden, the reality is that the wealthiest 1% pay 33% of the total
tax intake in the country.  The simple statistic that Bill Gates net value
is equal to the entire lower half of the entire middle class should
emphasize this point a little more.  Interesting article - Mike)

wealthiest 1% - 33% of taxes (income over 300,000 / yr)
Wealthiest 5% - 55% of taxes (combined income of 120,000 /yr or more)
poorest 50% - 4% of taxes

Wealthy pay majority of taxes
----------
NewsOK/AP
   With the deadline for U.S. income taxes looming, it's clear that
   the greater part of the burden represented by April 15 falls on
   higher-income Americans. The wealthiest 5 percent pay more than
   half the taxes, while people in the bottom half pay just 4
   percent. (04/09/02)

http://www.newsok.com/cgi-bin/show_article?ID=846029&pic=none&TP=getbusiness

Tax burden falling on wealthier Americans
2002-04-09
By Curt Anderson
AP Tax Writer


WASHINGTON -- Another way the rich are different: They pay the lion's share
of the nation's income tax bill. The wealthiest 5 percent pay more than half
the taxes, while people in the bottom half pay just 4 percent.
The annual federal tax deadline for most of America is next Monday.

Two-income households are increasing, putting more families in the top slice
of taxpayers. Millions of small businesses and partnerships are up there,
too, paying personal instead of corporate income taxes. Many other people
were boosted by the 1990s stock market boom.

President Bush's big tax cut will prevent the wealthy from paying an even
greater share in coming years. But key provisions, such as the gradual
doubling of the child tax credit, will reduce or eliminate income taxes for
many middle-income people while the rich won't qualify.

"This trend is not going to reverse," said Scott Hodge, executive director
of the Tax Foundation, a nonpartisan tax education and research group. "This
will be the demographic for the 21st-century taxpayer."

For 1999, the most recent year for which complete Internal Revenue Service
statistics are available, 6.3 million taxpayers whose incomes were in the
top 5 percent paid more than 55 percent of all income taxes. They had
incomes of more than $120,846 a year -- meaning two spouses could each earn
a bit more than $60,000 and be considered among the nation's richest.

"It's very easy to move into the top echelon of taxpayers," Hodge said.

The wealthiest 1 percent -- those earning $293,415 and up -- paid more than
a third of the taxes, while their share of the nation's taxable income was
19 percent. They pay income taxes at the top rate, now 38.6 percent,
compared with a maximum rate of 15 percent for the majority of lower-earning
taxpayers.

Taxpayers in the bottom half paid only 4 percent of the income taxes in
1999, according to the IRS. These 63 million taxpayers earned, on average,
less than $26,415 a year.

Going back to 1989, the top 5 percent income group paid about 44 percent of
income taxes, the bottom almost 6 percent. At that time, the top tax rate
paid by high earners was 31 percent.

Looking ahead, the 10-year, $1.35 trillion tax cut enacted last year reduces
income taxes in three steps, with the final step coming in 2006. In that
year, according to the congressional Joint Committee on Taxation, taxpayers
earning more than $100,000 a year will pay almost 59 percent of all income
taxes.

Those with annual incomes of less than $30,000 a year will pay about 4.4
percent in 2006, roughly the same as they do today.

In Congress, this disparity in the tax burden causes perennial political
trouble for Republican tax-cutters because any across- the-board reduction
meets with Democratic criticism that it would mainly benefit the wealthy
while siphoning away money for government programs.

For that reason, many tax breaks contain income cutoff points that leave out
the top income earners.

A prime example is the child tax credit, which is $600 for the tax returns
due April 15 and will gradually rise to $1,000. This year, that credit
begins to phase out for married couples filing jointly who earn more than
$110,000 a year.

The IRS says the rising child credit, which is $100 higher than last year,
is a major factor in the 12 percent increase in average tax refunds this
year. Many lower-earning taxpayers who claim the credit get a refund even if
it effectively eliminates their entire tax liability.

Another program for lower- income Americans is the earned income tax credit,
which is intended to offset the burden of Social Security payroll taxes. In
1999, about 13 million taxpayers claimed about $21 billion in credits, which
also can trigger a refund even for those with no tax liability.

At the higher end of the income spectrum, the IRS now receives more than 24
million individual income tax returns from certain kinds of corporations and
partnerships that don't pay corporate income taxes. Those are frequently
paying at the highest tax rate.

Perhaps the biggest reason the rich are paying a higher share is that they
continue to get richer, said Joel Slemrod, economics professor at the
University of Michigan. Between 1980 and 1999, the share of total taxable
U.S. income earned by the top 5 percent rose from 21 percent to 34 percent.

www.matus1976.com - Article archives