The Real Tax Unfairness

The individual income tax is the largest source of revenue to the largest operation on Earth: the U.S. federal government. In fiscal 2015, the individual income tax alone brought in $1,540,802 million, or just over $1.54T, to the feds. To confirm that, see “Table 2.1 -- Receipts by Source” on page 37 of Historical Trends at the St. Louis Federal Reserve Bank. The federal individual income tax (also called the “personal” income tax) has always been highly progressive; those who earn more income have higher tax rates. It’s been the case for years now that the top 5 percent of income taxpayers provide more than 50 percent of individual income tax revenue, while the bottom 40 percent, due to refundable tax credits like the EITC, provide less than nothing. It was recently reported that the Middle Quintile of federal income taxpayers had an average effective tax rate of 2.6 percent in 2013. Even so, we hear calls for middle class tax cuts. So let’s...(Read Full Article)