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December 10, 2005

Comments

Nancy Wilbourne

Hi Dick,
On this chart, why is it that when percentages are combined, the tax rate is lower than the top or bottom end of the tax rate for that income level? An example is the 16.58% in the 2-5% income bracket.

Dick Lepre

The top 1% pay an average tax rate of 24.31%. The 2-5% pay an average rate of 16.58%. When these 2 sets are added together, the top 5% pay (on the average) 20.74%. The average (20.74%) is lower than the top (24.31%).

Mike Sacauskis

Lets put some perspective on percentages. A person who makes $1,000,000 and pays 25% in Taxes, keeps, $750,000. A person Making $50,000, which is about what the average AGI is, and pay's 14% keeps $43000.

Our tax system is progressive for a reason, those at the higher end of the income specturm have more dollars than those at the lower and therefore can afford to pay more taxes. The amount of money the actually keep is an order of magnitude greater than those at the lower end.

Using percentages to imply anything is just a red herring.

Dick lepre

Mike,

I certainly agree that the progressive income tax model is appropriate and that those with higher incomes should pay a greater percentage of their income to taxes. The reason why I first created this table was to dispel the myth that "the wealthy do not pay their share of taxes." I find the most interesting number in this table to be the one saying that the top 1% of income earners pay 34.27% of the total personal FIT - but that is subjective.

Mike Sacauskis

Hi Dick

Yes, whether one is paying their "share" of the tax burden is subjective. Technically we are all paying a share of the tax burden, what ones "fair share" is really what's in debate. I'm not sure what an objective metric would be, but I think real dollars have to be factored in. Percentages are misleading. Percentages dehumanize the issue. 100% of people who ever drank water die, but that doesn't mean that water was the cause.

If you consider the fact that the government is running at a deficit one can make the argument that no one is paying thier share.

Mike

Dick Lepre

Mike,

I don't see percentages as dehumanizing. I mean I am not representing wealth or income or tax receipts as a surrogate for one's humanity or inherent worth. I was only commenting that the top 1% of income earners pay 34.27% of the FIT. As for everyone paying their share, I just co-authored an extensive piece on that suggesting a major change to fiscal policy. I just sent it to some big newspapers for publication. This will be dealt with here and in my newsletters after I find someone to publish it.

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