Necessary Roughness

HT: Free Republic

The Tax Foundation reported last week that, according to the IRS, between the years 2000 and 2004 tax liabilities have fallen for every income group.

In addition to lower rates, the Earned Income Tax Credit and the Refundable Child Tax Credit have lowered tax liabilities for even the poor.

The bad news? The middle and upper-middle class are contributing an ever larger percentage of income tax receipts.

For example, in 2000 a taxpayer with an AGI of $35,000 who pays 8.54 percent of his income in federal income taxes would pay $2,989 in federal income taxes after credits. Following the tax cuts that push his effective rate down to 5.12 percent, he would pay $1,792 in taxes—a 40 percent decrease in tax burden.

At the other end of the income spectrum, a taxpayer making $1.75 million would see his effective tax rate fall from 29.35 percent to 25 percent. Before the tax cuts, he would pay $513,625 in federal income taxes after credits. Following the tax cuts, he would pay $437,500. This amounts to a 14.8 percent reduction in tax burden.

Second, even though their effective tax rates have fallen, taxpayers in the $75,000 - $500,000 AGI range are shouldering a larger burden of the total taxes paid. This can be seen, for example, in the $100,000 - $200,000 income group, which paid 19.4 percent of all federal income taxes in 2000, yet in 2004 paid 22.5 percent of all income taxes.

The Bush tax cuts were not simply tax cuts for the rich. If you’re middle to upper-middle class, don’t let anyone tell you you’re not paying your fair share. Check out the table in the article, then vote for FairTax supporters.