An article recently surface claiming that the rich pay “all of the taxes.” The reasoning behind the claim: The top 40% pay 109% of the federal income tax (lower income earners actually receive tax credits—hence why the seemingly impossible math, is in fact possible). The obvious problems here:
- The bottom 60% (actually, the bottom 80% or so) continue to make less money relative to rising costs of living
- A greater portion of the wealth continues to coagulate at the top income levels
- Merely being in the top 40% does not make one “rich”
- Focusing on the federal income tax rate ignores taxes on capital gains, payroll, and state/municipal taxes
- The actual rich generally make their wealth from capital gains (which are taxed at a lower rate than income)
- Payroll taxes eat up a much larger portion of the lower income earners’ paychecks
The bottom 60% (actually, the bottom 80% or so) continue to make less money relative to rising costs of living
Over the last 40 years, middle and lower income earners have seen their wages drop relative to rising costs of living, while an ever-increasing percentage of their labor is paid at the top. The disparity in income tax payments largely reflects the disparity in income itself.
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