Are You Paying Your Share?
A lot has been written and debated about who is or isn't paying their fair share of income taxes. Many times, the wealthy are accused of using tax loopholes to avoid taxes, thus shifting the burden to the middle class. Is that accurate? The reality is that "fair" is in the eyes of the beholder. However, a few facts should be taken into account when forming one's perspective.
According to 2012 tax data provided by the IRS:
- The top 50 percent of taxpayers paid just over 97 percent of taxes , while the bottom 50 percent paid less than three percent.
- The despised "One Percent" paid an effective income tax rate of 22.8 percent, almost seven times more than the 3.28 percent rate paid by taxpayers in the bottom 50 percent.
- The top one percent paid $451 billion in taxes, while the bottom 90 percent paid $353 billion.
There is a lot more data that one could examine. The three bullet points above are unlikely to change most people's minds about what is or isn't fair. Although the "One Percent" could pay more without altering their lifestyles, it is somewhere in the 2-to-50 percent group where you can find people feeling over-burdened by income taxes. When people argue that our tax system is regressive, they are not looking at the data from the IRS. It indicates a progressive tax system.
What is fair?
In my opinion, it is fair to position one's assets to minimize taxes according to current tax laws. Why should one pay more than he or she is legally obligated? You may choose to disagree. That's your right. But, if you don't like the tax laws, get your elected officials to change them.
“...there is nothing sinister in so arranging affairs as to keep taxes as low as possible...for nobody owes any public duty to pay more than the law demands.”Judge Learned Hand, New York Supreme Court
Tax Freedom Day
The point of today's post really isn't to argue who is or isn't paying their fair share. It is to point out that today (April 24, 2-15) is Tax Freedom Day.