Who pays taxes & who should
I admit that I am a bit addicted to the National Debt Clock. While the growth of our debt is alarming and our unwillingness to manage it unconscionable, that web page carries quite a bit of useful information. Anyone can access that information
Before I get to that it is also alarming to know that the currently stands at over $22 trillion and is on target to add over another $trillion in the next 12 months. Putting that into perspective the taxpayers’ average potion of this debt is over $180,000!
What this page contains that pertains to this post is a general breakdown of the sources of the tax revenues: 51% comes from taxes reported on personal tax forms, 35% from payroll taxes. 7% from Companies & 7% from misc. other sources. What is interesting to me is that only 7% is being paid by companies. Prior to the recent tax code change the company portion stood at 9%. While there are those that were appalled by that redistribution of income I am not. I will not repeat what is contained in an earlier post which contends that our economy would benefit in the extreme if there were no corporate taxes, since in the long term all costs eventually are reflected in consumer pricing and become, in effect, a regressive tax.
I am much more concerned with the impact of taxation on the middle class. There are numerous financial definitions of income to describe the middle class. In 2013, Congress quoted its own definition of a middle-class income during the fiscal cliff compromise. It said the middle class is anyone making less $400,000 or couples making less than $450,000. This seems too high for me and does not define a range (no lower boundary). I prefer to be a bit more conservative and will use the range of $30,000 to $300,000 annual family income as a definition.
Family incomes above $300,000 represent only 1% of the population. Family incomes below $30,000 represent 50% of the population. By this definition the middle class represents about 49%. Also using this definition, the middle class (the primary consuming class) bears 63% of the tax burden. My contention is the middle class should be paying no more than their fair share (no more than 49%) and the rich should be paying the amount required to make up for the lack of lower and below poverty families to pay tax (currently at about 4%). This bottom group struggles just to survive.
Again, I will not regurgitate how to achieve this since my approach is contained in previous posts.
One more comment related to companies. I do not think that dividends (the reward for capital investment) should be taxed. We should encourage capital investment!