Everyone gets frustrated with income taxes and everyone complains that they are paying more than enough, but who really pays more in federal income taxes? Having a progressive tax system; meaning that the more money you earn, the more you will have to pay in taxes; would lead to the rich paying for most of the taxes and not the poor. Unfortunately, many people do not realize some of the problems with the tax system itself that offsets the balance as well as the results when it comes to taxes. There are many unseen things when looking at no more than just the statistics of who pays the most in taxes. Anything from the tax rates, the difference between federal and individual income taxes as well as state taxes can create a problem when …show more content…
“Many taxes are regressive, meaning they take a larger share of income from poor and middle-income families than they do from the rich.” (2015, 3) Along with the federal income taxes, Americans pay for state and local taxes also, seven states are excluded from the state taxes. Federal income taxes take up the majority of what Americans pay in taxes, calculating for two-thirds of all taxes paid by Americans. Altogether, forty - three states levy individual income taxes, forty - one tax wage and salary income, two states specifically tax dividend and investment income while seven states levy no state income taxes.
The seven states that have no state income taxes includes: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. (Fact Check, [3]) Federal income tax and local sales taxes would be the only source of taxes these states would need to pay. Unlike the federal income taxes, the state taxes are regressive meaning that they take more income from low and middle-income families and individuals rather than from the wealthy. Three of the most regressive states for state income taxes are Washington as number one, Florida in second and Texas ranked number three with the low-income families paying twelve and a half percent and the wealthy paying only three percent. Taxes that are truly causing a problem would be the state income taxes, which are
In the United States, the top one percent received about 20 percent of the overall income for 2016. This creates an uneven distribution of income causing Americans to argue about whether or not the wealthy should pay more in federal income taxes. One side of the argument is that the wealthy make a huge portion of the nation’s income; therefore, they should have higher tax rates. The other side argues that wealthy Americans already pay their fair share of taxes by paying nearly 40 percent and should not be forced to pay more. These arguments both use compelling evidence to make their claims; however, a solution could be reached by increasing the tax rate of the top one percent by only 10 to 20 percent.
The top 1 percent of the wealthiest people in the U.S. pay a total of over 40 percent of all federal income taxes, which is more than the entire bottom 95 percent of all tax payers. Government programs are funded through Social Insurance Taxes that are the fastest growing source of federal income though it’s actually counted separately in special trust funds by the Treasury. Both federal and state governments combine these taxes that are used to pay for social programs such as social security, Medicare, and unemployment services. This type of taxation is a regressive tax, since lower income people end up paying more from their income than those with a higher income. Another federal tax is the excise tax, better considered a luxury tax for non-necessities, which include things like liquor, cigarettes, gas, and highways. Taxes that are imposed on imported goods so that there’s less foreign competition on the domestic market are called customs duties.
Secondly, what is an answer? Population! Income tax is only collected on officially recorded income, so what does that have to do with individuals? Whether they work or not. Florida has a population with higher-than-average retirement rate. About 17.3% of Florida’s 18+ million residents are retired, which is 65 years or older, which is generally considered to be the age one quits ‘working’ or employment. This is compared to Oregon with only 13.9% of its 3.4 million citizens being retired. Along with that, the average age of a Floridian is around 2 and a half years older (38.7) than that of an Oregonian (36.3). These states, presented in percentages, may seem insignificant in difference, but presented with raw numbers, they seem much more intimidating. Florida, at 17.3% or 18 million is estimated at being filled with 3.11 million retirees. That’s nearly the population of Oregon. Let’s be glad not everyone in oregon is 65 or older, although it’d be quite a good investment opportunity for retirement centers. Anyways, with nearly 2 in 10 people being retired, and therefore not bringing in income, Florida is already sounding like one smart cookie of a state. Let’s further it buy bringing up some other facts. Florida has an unemployment rate of 11.5%, or around 2.1 million people. Between the unemployed and retirees, Florida has over 5.2 million of its 18 million not bringing in any wages, and therefore not giving the state any income tax. Although
In states without state income tax, higher sales, property and other assorted taxes can exceed the annual cost of a state income tax. Texas is one of seven states that do not levy an individual income tax. The Tax Foundation, a conservative-leaning research group, ranks Texas ninth-best on its State Business Tax Climate Index, largely because of the state’s lack of an income tax. On three of the foundation’s other major rankings — property taxes, sales taxes and corporate taxes — Texas ranks in the bottom 20 states. Texas does not have a statewide property tax, but local property taxes remain a crucial complaint among businesses and homeowners. (Terrence, 2002) The main benefit is that states with no income tax become a beacon for growth. They 're better at creating jobs and keeping a core of young, educated workers from moving to other states. The issue is undoubtedly controversial. Public opinion usually swings with the size of one 's paycheck and the role people think governments should play in shaping society. Texas has an above-average sales taxes, and Texas also has higher-than-average effective property tax rates. Cutting the income tax will boost take-home pay for everyone. It 'll make the state more attractive than its neighbors, creating jobs, drawing new businesses, and sparking an influx of talented workers.
For example, if the tax rate is seven percent and one person makes one thousand dollars they would pay seventy dollars to the government. While someone that only made one hundred dollars would pay seven dollars to the government; this they may deem unfair.
Within the United States, there is an unequal collection and distribution of resources. The current unequal or socially unjust tax system is a direct contrast to the social justice theories of John Rawls. The taxation discrepancy has ramifications on many important aspects of our society, such as health care, employment, old age security, and education. These issues affect everyone in our society, regardless of age, race, gender, or sexual orientation. Thorough more equal taxation, we have the potential to create a more society as a whole.
The United States of America is a federal republic with autonomous state and local governments. Taxes are imposed in the United States at each of these levels. These include taxes on income, payroll, property, sales, imports, estates and gifts, as well as various fees. Taxes are imposed on net income of individuals and corporations by the federal, most state, and some local governments. Citizens and residents are taxed on worldwide income and allowed a credit for foreign taxes.
If the government starts doing that it would be fairer because everyone is getting the right amount of tax based on their income. But right now the rich and poor have to pay the same amount of money and it doesn’t matter about their income. Right now the rich should not really care about the taxes because they are rich and it doesn’t matter to them. But the taxes do matter to the poor people because they have really less amount of income and a large amount of taxes will affect them. The government has all records of people’s incomes and other information, so if the government makes a rule that the people with more income pay more taxes and the people with less income pay fewer taxes, it would be much better. But the taxes go to the government and the government makes the America better by making newer roads, better environment, and
Currently, the United States ' taxation system is progressive, which means the more money a person makes, the more that person is taxed. According to the Congressional Budget Office 's website,
There are three different types of tax systems presented in this article: Progressive income tax, Flat tax, and the Fair Tax. The progressive tax system is what we have in the US and is common in countries across the world. It bases the percentage of income tax you should pay by the amount of income you receive. Basically, if you have a large income then the rate of tax you will pay is larger and, furthermore, if you have a low income you will have a lower rate to pay. Many conservatives dislike this system because it forces the top percentage of taxpayers to pay a majority of the tax revenue. “According to the Tax Foundation, the top 1% of taxpayers have consistently paid more in federal income taxes than the bottom 90% since 2003…” It treats people differently and it allows for
Meaning that taxpayers pay more in taxes if they earn more in income. For example, taxpayers may pay 25% of their income in taxes up to a certain amount, and 35% of everything earned over that amount.
A Health Savings Account (HSA) plan requires a high-deductible medical insurance policy, which means that the premiums on the policy will be less than for a low-deductible policy. The contributions to the HSA are deductible for AGI, which reduces the nondeductible amount of itemized deductions subject to certain limitations, and the taxpayer does not have to itemize to obtain the deduction. The HSA distributions pay for the deductible medical expenses and they are not included in gross income. Also, the income earned on the HSA is not included in gross income if it is used to pay medical expenses not covered by the high-deductible plan.
In my opinion as to whether or not the current federal income tax structure is fair for most Americans is that it is not fair. The following information will provide support for my decision. The main federal tax brackets are for single individuals, married individuals filing separately, married individuals filing as a couple and individuals filing as a head of household. In the financial year 2014, the lowest tax bracket paid a rate of 10% on income up to $9,075 while the highest bracket paid an average rate of 36.4% ($406,751 and above). Most individuals pay taxes across several tax brackets, and as a result, they end up with the progressive tax structure. In the current progressive federal income structure, individuals with a lower
Alaska has a long history with state taxation; in 1949, the first state income tax became law, ten years before they officially became a U.S. state on January 3, 1959. The first income tax regulations were simple, but still heavily taxing on a state already burdened by the high costs of living. Residents
Florida is one of the seven state that doesn’t has Income Tax. Alaska, Nevada, South Dakota, Texas, Washington and Wyoming are the other six states. Even thou Florida doesn’t has an income tax, there are many others taxes influencing our economy. The state has to pay their bills too! Mayor’s taxes that are collected in Florida are: sales tax, use tax, intangible tax and corporate income tax.