President Obama campaigned on making the rich pay more in taxes and he has kept THAT promise. The top earning households will have to pay an even bigger burden after passage of the fiscal cliff deal in January. Prior to the changes the top ten percent of taxpayers already paid 70.47% of the income taxes according to the National Taxpayers Union and the bottom 50% of American paid just 2.25% of income taxes. In 2009, the top 1% of income earners in this country made $343,927 or more, but they paid over 36% of the income taxes in this country totaling over $400 billion a year.
Almost half of Americans paid no income tax at all and millions actually collected checks due to the earned income tax credit and other federal wealth redistribution schemes.
High-income families also have been targeted by tax increases this year.
In addition to the fiscal cliff deal passed by Congress on Jan. 1 the top 1% are being his with tax increases in the president’s health care law.
The new tax law raised the top tax rate from 35% to 39.6%, on taxable income above $400,000 for individuals and $450,000 for married couples filing jointly. Lower tax rates passed early in the Bush Administration on lower-income brackets were made permanent. The higher FICA tax however means that 77.2% of American households will pay higher taxes in 2013 than they did in 2012.
The top earning families have not paid tax rates this high since at least 1979, but prior to tax reform in 1986 many higher income earners had legal tax shelters which have since been outlawed. According to the Tax Policy Center, the top 1% of households in this country average an income of $1.4 million. They will pay 35.5% of their income in taxes. For 2013, families with incomes in the top 20% of the nation will pay an average of 27.2% of their income in federal taxes.
Families in the bottom 20% of households will receive more in federal tax credits than they pay in taxes.
Many Democrats are calling for even more tax increases on the wealthy.
President Barack H. Obama was recently quoted saying, “I am prepared to do hard things and to push my Democratic friends to do hard things. But what I can’t do is ask middle-class families, ask seniors, ask students to bear the entire burden of deficit reduction when we know we’ve got a bunch of tax loopholes that are benefiting the well-off and the well-connected, aren’t contributing to growth, aren’t contributing to our economy. It’s not fair. It’s not right.”
Many liberals are not satisfied with just raising income taxes. Ronald I.
McKinnon wrote an op-ed in The Wall Street Journal calling for a wealth tax in addition to the income tax. Professor McKinnon’s plan would require households to list all domestic and foreign assets annually. There would be a $3 million wealth exemption, which, in his estimation, would exclude more than 95 percent of the population. The remainder would be subject to a flat tax of about 3 percent of household wealth. Canada and much of Europe already have a wealth tax.
Republicans are less eager to see more tax increases. Speaker of the House John Boehner (R) from Ohio said recently, “Let’s make it clear that the president got his tax hikes on Jan. 1. This discussion about revenue, in my view, is over.”