"During 2008, more than a third of all [U.S. Federal Income Tax] returns resulted in complete nonpayment; that is, people got back every dollar that was withheld from their paychecks during the year. Many got quite a bit more, turning Tax Day into a payday," writes the Tax Foundation in this report.
Though it's good news in millions of homes, the Foundation is upset that more and more Americans of modest means are now escaping the income tax: "The income level at which a typical family of four will owe no income taxes has risen rapidly, now topping $51,000... As a result, recently released IRS data for the 2008 tax year show that a record 51.6 million filers had no income tax obligation That means more than 36 percent of all Americans who filed a tax return for 2008 were nonpayers...
"Lawmakers have increasingly used the tax code instead of government spending programs to funnel money to groups of people they want to reward. Credits have been enacted to subsidize families with children, college students, and purchasers of hybrid cars... The most significant of these socially targeted credits was the $500 per-child tax credit enacted in 1997. The 2001 and 2003 tax bills doubled the value of the credit to $1,000 and added a refundable component...
"The [Earned Income Tax Credit] and the [Bush-enhanced] child tax credit are also refundable, meaning that taxpayers are eligible to receive a check even if they have paid no income tax during the year. Those tax returns have become, in effect, a claim form for a subsidy delivered through the tax system in much the same way that a traditional government program sends out a welfare check or a farm support check."
Actually it's not as bad as all that; poor and middle-income workers still pay a disproportionate part of the 7.65% Federal Insurance Contributions Act (FICA) tax. FICA's supposed to fund Social Security and Medicare, but we all know it all goes into the same place as the Federal Income Tax, right?
Remove the FICA cap.— Politburo- Don't remove the fica cap! If you remove it, those in the top tax bracket will be paying in excess of 60% taxes when it is all added up, there will eventually be a revolt by those who can only take home 40% of their income. Those taxpayers will take their millions and stop employing people like me by just retiring because working is no longer worth it if you are only netting 40%— tom1177
Businesses could receive a break in payroll taxes by lowering their rates if the FICA was lifted and included all forms of income, including rents, dividends and capital gains. Most of the wealthy do not get paychecks. Hedge fund managers, 3 of whom made over $1billion each in 2007, avoid any contribution to social security on the vast annual incomes they personally derive. Similarly, stock options and other non cash bonus incentives avoid payroll taxes. It would help small businesses tremendously if they had their rate lowered as the true income produced in this country, outside of the salary and hour wage category, were assisted in the shouldering the burden of financing social security and medicare. These programs are no more bankrupt than the tax dodges allowed by lobbyist and special interests and protected by Congress.- if they retire, then someone else moves in...big deal
Would you also remove the cap on how much Social Security that is paid out? Redistribution of wealth is un-American!- SafetyDan makes a great point, if you remove the cap, then remove the cap on what is paid out— tom1177
- Employees pay half the FICA and Employers pay the other half...it is split, so on 3.8+% is from the employee.— TheLlama
- "You have cried that man's sins are destroying the world and youhave cursed human nature for its unwillingness to practice thevirtues you demanded. Since virtue, to you, consists of sacrifice,you have demanded more sacrifices at every successive disaster. Inthe name of a return to morality, you have sacrificed all those evilswhich you held as the cause of your plight. You have sacrificedjustice to mercy. You have sacrificed independence to unity. Youhave sacrificed reason to faith. You have sacrificed wealth to need.You have sacrificed self-esteem to self-denial. You have sacrificedhappiness to duty. "You have destroyed all that which you held to be evil and achievedall that which you held to be good. Why, then, do you shrink inhorror from the sight of the world around you? That world is notthe product of your sins, it is the product and the image of yourvirtues. It is your moral ideal brought into reality in its full andfinal perfection."— John_Galt
- TheLLama is wrong, the employee and the employer both pay 6.2% each, look it up— tom1177
- Why don't you show the picture of the pie chart from the IRS that shows the top 25% wage earners pay 75% or better of all income tax? It's what you pau out of your pocket that counts. Ypo say poor and middle class pay disproportionate amount by %.It may be but doesn't discount who pays the most in dollars.— tomc2nj
- Joe, how dare you point out such information. Yeah, it's true, but so what, because you are exposing the fact that the number of people who are basically on welfare is rising and the rest of us are paying for them. (Actually, the top 10%, which I'm not in, are the ones paying most of the that bill). As to your claim that the FICA tax is disporportionate on the lower income brackets, keep in mind that the proportional share that they get out of it when they go on SS and Medicare is far greater than what they paid in. And TheLLama - are you really that ignorant to think that the employee share of SS and Medicare is only 3.8%? If so, I won't even try to explain to you that in reality, the employee pays the entire 15.3% FICA contribution, because the employer bases your salary on what they have to contribute for FICA, so indirectly you are paying the employers share of the 7.65% contribution in the form of lower wages/benefits.— erformc1
Comment removed.- Re distribution of wealth was what America was founded on. For instance, the adoption of the patent laws puts the power of the state behind property rights for the ownership of the rights and profits from an invention. This deliberately takes money and funnels it to one person to the exclusion of others. Previously, you would have to personally protect your skills and ideas behind the veil of guilds which guarded against the dissemination of information through secrecy and intimidation. Others would resort to outright violence. People are share 24 hours in a day and 365 days in a year. No one can work any more than anyone else. The uniform work week of 40 hours finds the vast majority of people with depressed paychecks and increasing prices for gas, insurance, education, food. The wealth is transferred by price increases by monopolistic big businesses and commodity cartels. Speculators operating out of global electronic trading networks bet for prices to go up, bet for prices to go down and bet in any way that will produce profits, even at the cost of driving entire nations into economic chaos and insolvency. Far from taxes taking money from people, it is private trading that confiscates the meager savings of the average person around the world and being at the mercy of structure of modern employment to derive a living. The only control people have, the only say we have is through the ballot. Businesses continually lobby, cheat and criminally force their interests over anyone else and also attack the sovereign power of our republic and by virtue of those attacks limit the individual citizen to being little more than a labor cost of another person's business empire.
- Comment removed.
- Everyone should be paid the same then we could all pay the same tax rate. How can you run a factory all by yourself, especially when you are driving the truck to supply yourself and building the roads the truck drove on to get it into your store, that you run, all by yourself. The Flash is the MAN!!
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