Do most people feel that they are taxed fairly? That they pay the right amount based on their income?
Seems to me if you are a household that doesn't pay any taxes you probably feel you pay the right amount.
Roughly 47 percent of households in America paid no income tax in 2009, by the way. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate what they owed. Credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 owed no federal income tax for 2009, as long as there are two children younger than 17. That's according to an analysis by Deloitte Tax.
And I suppose the more you make the more unfair you think the tax system is.
For example, IRS data shows that in 2009 the top 1 percent of taxpayers paid 40.4 percent of the total income taxes collected by the federal government.
The share of the tax burden borne by the top 1 percent now exceeds the share paid by the bottom 95 percent of taxpayers combined.
There are 1.4 million taxpayers in the top 1 percent. They pay a larger share of the total income tax burden than the bottom 134 million taxpayers combined - the largest disparity in history.
But trust me, people. Regardless of how much you pay now, like it or not, you're going to be paying more in the not-so-distant future.
Investors.com just published a piece on the likely tax changes that are on the horizon.The inheritance tax will likely be reinstated at a rate of 55 percent of estates more than $1 million after Dec. 31. It's at zero now.
Lots of other cuts Bush-era tax policies are set to disappear.
The lowest bracket, now at 10 percent, will go up 50 percent to 15 percent, 25 percent goes to 28 percent, 28 percent to 31 percent, 33 percent to 36 percent and 35 percent to 36.9 percent.
Capital gains tax goes from 15 percent to 20 percent - a 33 percent increase.
Dividend tax goes from 15 percent to 39.6 percent - an increase of 164 percent.
Both those taxes will go up even more in 2013 as the health care reform adds a 3.8 percent Medicare tax for individuals above $200K and joint filers above $350K.
Oh, and the child tax credit gets cut in half from $1,000 to $500 and the standard deduction for couples will be the same as for an individual.
Investors.com says allowing the Bush tax policies to expire will cost taxpayers $115 billion next year.
But it gets worse.
Americans for Tax Reform says taxes designed to pay for ObamaCare are coming, too.
ATR says taxpayers won't be able to use health savings accounts, flex spending accounts or health reimbursement pretax dollars to buy over-the-counter medications.
The HSA Withdrawal Tax Hike provision of ObamaCare increases additional tax on non-medical early withdrawals from an HSA from 10 percent to 20 percent, ATR says.
The Brand Name Drug Tax hits makers and importers of brand-name drugs. They'll be liable for a tax of $2.5 billion in 2011, $3 billion a year from 2012 to 2016, $3.5 billion in 2017 and $4.2 billion in 2018. Beginning in 2019 it falls to $2.8 billion and stays there. (Who do you suppose will really pay those taxes? You know. The drug companies will pass the taxes along to consumers by raising prices.)
ATR also says: "The IRS is now empowered to disallow perfectly legal tax deductions and maneuvers merely because it judges that the deduction or action lacks 'economic substance'." It's known as the Economic Substance Doctrine.
There's more.
Failure to index the alternative minimum tax will subject 28.5 million families to the tax when they file next year, up form 4 million this year.
And this:
"There are literally scores of tax hikes on business that will take place," plus the loss of some tax credits, ATR says. The research and experimentation tax credit will be the biggest loss, but ATR says there are many, many others. Combining high marginal tax rates with the loss of tax relief will cost jobs.
Plus:
The deduction for tuition and fees will no longer be available and there will be limits placed on education tax credits. Teachers won't be able to deduct their classroom expenses and employer-provided educational aid will be restricted. Thousands of families will no longer be allowed to deduct student loan interest.
Then there's the tax on Americans who decline to buy health care insurance (the tax the administration initially said wasn't a tax but now argues in court that it is) plus a 3.8 percent Medicare tax beginning in 2013 on profits made in real estate transactions by wealthier Americans.
Now, for purposes of full disclosure it's only fair to say that ATR is a decidedly conservative outfit.
That doesn't mean their research is bunk, but it's only fair for readers to know the prism through which they view tax policy.
Even if ATR is only 80 percent accurate, the impending tax storm will kill the economy.
Even Democrats are starting to waffle on the rollback of Bush policies and new tax policies of he Obama administration. I think they realize that big tax hikes right now could be the worst thing they could do to the economy.
The administration talks about taxing people whose incomes are above $250K, but the whole idea of taxing the rich never really works.
People at that income level know how to shelter income and how to avoid taxes. They stop doing things like investing in their businesses, inventories and capital improvements. They curb their spending. They pull in their horns, so to speak.
When that happens, revenue to the treasury decreases, despite the fact that taxes were increased.
The converse also rings true. Cutting taxes can increase revenue to the treasury as people invest and spend.
After the Bush tax cuts went into effect in 2005, year-over-year revenue reached record levels for the next four years, despite a slow economy.
Unfortunately, by enacting huge new government programs like the prescription drug benefit and No Child Left Behind, Congress spent it all and then some, creating deficits.
It's simple.
Government should be incentivizing business owners to expand, not punishing them for it.
Government should be leaving more money to churn in the economy, not collecting it, devaluing it by running it through a massive bureaucracy and then spending it on some inefficient, ineffective government program.
Instead of rolling back the Bush tax cuts, Congress should make them permanent.
