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HOW THE AMERICAN TAX CODE FAVORS THE RICH

August 25, 2019

The American tax system favors the rich. Truly. According to massive economic
experiments and studies on the impact of taxation, the general theory that
guides tax-rate decisions is that ‘lower taxes attract more investment’, leading
to more jobs and increased prosperity. As you file your next annual taxes, this
article shows you exactly why the system is hijacked to favor the rich and super
rich!


A)      POOR AMERICANS DO PAY TAXES

There’s been a lot of media myth speculating that poor Americans don’t pay
taxes. For instance, Fox News host Gretchen Carlson once said that ‘47% of
Americans don’t pay any taxes’. Based on a fact-check ¬¬¬¬though, this is wrong.
Indeed, poor Americans pay lots of taxes! Data obtained from the Tax Foundation
reveals that back in 2008, the bottom half of taxpayers had an average income of
$15,300. This amount was below the tax exemption threshold of about $9,000 for
singles and $18,000 for married couples. Effectively, that means that this group
didn’t pay any INCOME taxes. But they still paid a lot of other taxes, including
sales taxes, gas taxes, utility taxes, federal payroll taxes, etc. Apparently,
no American is tax-free.


B)     THE WEALTHIEST GROUP HAS A LESSER BURDEN

It’s true that the wealthiest 1% of wage earners pay about 40% of all federal
income taxes. But people often forget that income tax is just a small fraction
of the entire total taxation picture. The bottom 90% of wage earners are taking
care of social security, unemployment insurance, and Medicare taxes. People who
hit the $107,000 (roughly) tax mark are no longer required to pay more for
social security. That means if you’re earning rounds off at this figure, you’ll
be paying the same social security tax as Warren Buffet, Bill Gates, Mark
Zuckerberg, and some other big-shot billionaires.


C)      THE WEALTHIER YOU ARE, THE LESSER TAXES

The richest 400 Americans pay less in taxes, despite massive incomes. This is so
thanks to a number of loopholes in the system, allowable deductions and other
instruments of exemption. According to the Internal Revenue Service, the actual
share of their income, that’s paid in taxes is just 16.6%. The majority of
not-so-rich Americans have a federal tax burden that’s more than 20%.


D)     A GOOD PROPORTION OF THE RICHEST DO NOT PAY ANY TAXES AT ALL

Lots of the wealthiest people do live tax-free in America. Donald Trump’s tax
records during his earlier career days suggest that he didn’t pay taxes for a
couple of years. That’s because huge real-estate investors enjoy tax-free
benefits following a 1993 law that was signed by President Clinton.


E)      THE STORY IS THE SAME FOR CORPORATIONS

The biggest corporations have a lesser tax burden, as compared to small,
upcoming firms. This appears to be an increasingly common trend depicting the
national tax picture!

Although a recent study revealed American taxpayer sentiment about this system
that appears to favor the rich, it’s always the same story. Lower taxes for big
earners! It’ll be interesting to see how the tax debate unfolds during the 2016
presidential election campaigns.



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