Where the tax burden falls
In Doug StIveS’ reSponSe (“Another
response to Bose,” Aug. 16-Sept. 12, 2010) to
my letter to the editor (“Obama editorial demands response,” June 7-20, 2010, page 9), he
contends that the wealthy are overtaxed, but
in support of his position offers only an article
from The Wall St. Journal.
According to Mr. Stives: “The Wall St. Jour-
nal told us that the top 1 percent of u.S. earn-
ers pay 40 percent of total tax collections and
the top 5 percent account for more than 60
percent of tax revenues.”
The source for this article is a news release
from the tax Foundation, Fiscal Fact no. 183,
published in July 2009. It examines individ-
ual income tax data released by the IrS for
the 2007 calendar year. According to the tax
Foundation, the top 1 percent of individual
income tax filers paid 40.42 percent of all
federal individual income tax, and the top 5
percent paid 60.63 percent.
There has been a paradigm shift in the last
decade in how we talk about the tax burden
in this country. We used to talk about what
percentage of our personal income went for
taxes. now we use total dollars, or percentages
of total dollars paid, to discuss who pays what.
What this shift means is that our understanding of the tax burden has been refocused, or
maybe soft-focused is a better term.
I am reminded of our office administrator’s
first tax season. one of her responsibilities is
to help our older clients write checks to the
Internal revenue Service. Late in the filing
season she helped an elderly gentleman write
a check to the IrS for $82,000. After the client
left, she went to see a partner to express her
distress that this charming older client had
to pay so much tax. The partner explained
that because of how his business investments
were structured and also because he owned
a large municipal bond portfolio, he actually
paid a lower percentage of his income in taxes
than most of the other clients she had helped
that tax season. that check represented a
small percentage of his total income.
According to the Federal reserve, the top
400 families in this country control more
wealth than the bottom 50 percent of the
population. In these circumstances, wealthy
taxpayers will naturally pay large amounts of
federal income tax on an absolute basis, and
large percentages of total federal individual
income tax collections, because their income
is so much higher than everybody else’s.
“Hunting and gathering doesn’t sound very interesting, so I’ve decided to become a consultant.”
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