Taxes in the USA take many different forms. While working and making money, one has to pay income taxes. While buying things at stores, one has to pay sales taxes. If one owns property, he/she pays property taxes. And so on… It is believed that paying taxes is a civil duty and the requirement of the law. But in real life by giving the earned money to the local, state or federal government, you deprive yourself of chances and possibilities for a better life. And, frankly speaking, not everyone pays.
Not everyone pays federal income taxes, they say. Let’s try to make things clear. When the low income earner has children, there are deductions allowed on the filing. In other words, if you are a low income earner, you may pay less or not pay at all. Today there are around 7.9% of all tax filers, who zero out their taxes:
- people on disability
- unemployed people
- school students, who’ve just started their career
However, the income tax is only one of the taxes. There are many other tax types that come out of checks:
- social security
- local and state taxes
- school taxes
- real estate taxes
- gas taxes, etc.
Working poor pay very high rates on every dollar earned. They don’t even get an extra penny from working additional hours. The current text code creates perverse incentives and has perverse effects. One can hardly call it a rational policy and the government is not likely to do a thing about that. Most workers have to bear the burden of employer-paid payroll taxes and the burden of corporate income taxes or at least their part. What about the rich ones?
They pay much more taxes than poor ones, in terms of the percentage of income and absolute terms. However, there is a different side that only a few people know about: the rich ones do not pay all the taxes. Many people agree that rich Americans have to have a moral obligation to pay much higher taxes as a sign of a ‘fair share’. There is an idea that as rich people get much more from the society, they should give more for the public welfare. But will it really help the society increase?
Perhaps there is no point in arguing what is right or wrong. The only clear thing is that the taxes shouldn’t be the same for everyone. They are to differ depending on the income. Only when each society member gives a fair part of the income, he/she can contribute to the development of his/her country. But if this ‘fair share’ becomes a burden that deprives of most necessary things, the society will hardly ever become a model to follow.
References
- Donaldson, S. A. (2007). Federal Income Taxation of Individuals: Cases, Problems and Materials. 28-32.
- Gruber, J., Saez, E. (2002). The Elasticity of Taxable Income: Evidence and Implications. Journal of Public Economics. 1–32.
- Haider, S. J., and David S. L. (2008). The Effect of the Social Security Earnings Test on Male Labor Supply: New Evidence from Survey and Administrative Data. Journal of Human Resources. 43.
- Lehmann, E., Marical, F., Rioux, L. (2013). Labor Income Responds Differently to Income-Tax and Payroll-Tax Reforms. Journal of Public Economics. 66–84.
- Reynolds, A. (2014). The Increasing Progressivity of U.S. Taxes: And the Shrinking Tax Base. 254.
- Saez, E. (2010). Do Taxpayers Bunch at Kink Points?” American Economic Journal: Economic Policy. 180–212.
- Stroup, M.D., Hubbard, K. (2013). An Improved Index and Estimation Method for Assessing Tax Progressivity. 22.