Any Tax Cut To The Poor Or Middle Class Still Benefits The Rich
No matter what the government does to reduce the burden of taxes of the middle class and poor, the rich will still benefit under our current system.
The reason can be found in the way our progressive tax laws are written. The more you make the more you pay. A system like that doesn’t seem like it would help the rich very much.
Let’s break it down.
Tax Brackets Benefit Everyone
In 2016 the Office of Management and Budget reported that the top 20 percent of people who pay income tax in the US pay 94.8 percent of all taxes paid.
If that’s the case, then why are we even talking about Tax Reform or Tax Cuts that most people seem receptive to?
If the remaining tax bill of 5.2 percent is scattered over all the rest of us that seems like a pretty small number.
The rich pay that 94.8 percent because we have tax brackets. And here the current tax brackets.
Currently we have seven brackets shown above.
I apologize that Word Press, our KMMS blogging program, refuses to show the 35 percent bracket or the 36.9 percent bracket in the above illustration which is public information from the IRS.
You can find the missing brackets and numbers Here.
Using information we CAN see in the above chart — If you’re married filing jointly and make less than $75,900 (See the married 25 percent bracket above) your taxes would break down something like this.
We'll take your $75,900 salary, less your personal exemption for 2018 which is ($4,150 x 2 people= $8,300, giving you a taxable income of ($75,900-$8,300) $67,600.
You would pay 10 percent of your first $18,650 or $186.50. Then on every dollar you earned between $18,651 and $67,600 would be taxed at 15 percent or ($67,600 - $18,651 = $48,949) 15 percent of $48,949 is $7,342.
Your taxes would be $7,342(15%) + $186.50(10%) = $7,528, or a tax rate of just under 10 percent of $75,900.
Another tax break parents can claim is the child tax credit. Provided that your income is below $110,000 for married couples filing jointly, $75,000 for a single head of household, or $55,000 for a married person filing separately, you can claim a child tax credit of $1,000 per child in 2017 and 2016.
More than likely taking other expenses or allowable deductions into account you’d probably get a refund.
So Where Do The Rich Fit In?
As mentioned earlier there are seven tax brackets. Beginning with 10 percent, 15 percent, 25, percent, 28 percent, 33 percent 35 percent, and 36.9 percent.
Try the math yourself. Take someone earning a million dollars or more per year. They will pay taxes on every single one of those brackets shown above.
That’s why any reduction in any bracket or the number of brackets will help both rich and poor. Both will either pay more or less depending on how the brackets are arranged.
The fewer the brackets with higher thresholds the more it helps the poor and middle class — but also helps the rich.
If you pay less — so do they.
Some Final Thoughts
If I were you I’d start campaigning for the most tax cuts possible for the rich because you will also benefit.
Keep in mind that the budget office says that the top 20 percent are paying over 94 percent of the current taxes. That means 80 percent of us are making out like bandits — all things considered.
What we should be worried about is how our tax money is being spent — not how much is taken in.
That’s the bracket I’d really like to see.