Recent data that has received much publicity is that nearly half of all Americans end up paying no federal income tax, and that only a slightly higher percentage pay any state or local income taxes either.
So, who actually pays? Contrary to popular belief, the very rich do not pay huge percentages of taxes either.
It appears that the top five to ten percent of the richest Americans only pay Federal income taxes that amount to between 16.
5% and 20%.
This is because many of the wealthiest Americans receive most of their income from investment income, much of it from hedge or hedge- type funds.
Because of special tax treatment that the recipients of income from these funds receive, this income is taxed at a very low rate compared to what appears on the tax tables.
While some of the wealthiest pay high taxes, as a percentage of income, they often pay a lower (often far lower) rate than other Americans.
The United States tax code is so loaded down with idiosyncrasies, exceptions, credits, deductions, etc.
, that the effective tax rate of many of America's wealthiest is far lower than one is led to believe.
It should come as no surprise then, that the unfairest burden for Federal income tax remains on the shoulders of the middle class.
However, in today's America, with inflation and extraordinary costs (for example, many years ago no one forecast the high energy costs level, or the spiraling real estate tax and school tax scenario that exists today), the middle class in most major cities in the United States, those earning between $100,000 and $250,000.
In some areas of the country, such as in parts of the New York metropolitan area (which includes Manhattan, parts of Brooklyn and Queens, Westchester, and Long Island), those earning even more than these amounts, should still be considered middle class.
However, these are precisely the individuals, who are not eligible for many of the credits and deductions offered to those earning a little less, and cannot afford to take advantage of many of the credits and deductions that wealthier Americans take advantage of, that end up paying most of the Federal taxes.
Much is being discussed about the "Bush Tax Cuts" and the extension of these cuts, and certain politicians have stated that only couples earning under $250,000 should be eligible.
However, in many areas, especially big cities such as New York, Boston, Chicago, and Los Angeles, a couple earning $250,000 is certainly not wealthy.
For this "new middle class," the higher taxes are particularly onerous because they receive far less of the benefits that either wealthier or less well-off individuals receive.
Married individuals in theUnited States receive a tremendous marriage penalty, as well.
For example, many of the tax deductions or tax credits recently enacted or currently law, have limitations in many cases of $200,000 per individual, but only $250,000 per family.
In today's predominantly two-income family society, one can easily see how a married couple suffers with these rules.
To make matters worse, many married couples also have children, yet they receive these marriage penalties when it comes to taxes.
Some of these benefits impacted by the marriage penalty include receiving tuition-based tuition credits for those with children in college.
One can easily understand why an organization which bases its existence almost solely on the tax issue, such as the Tea Party, has gained popularity with many who otherwise would not belong to what appears to be a "conservative" organization.
People from all over the political spectrum have been adversely impacted by a combination of the economy and taxes, and many Americans have become very angry.
Most observers believe that the tax system could easily be improved and simplified, but savvy political observers doubt that politicians who agree about very little, and accomplish even less of any type of importance, will make any meaningful changes.
Hopefully, the system will change before 'middle class" taxpayers decide they are tired of carrying everyone else, and organize and revolt.
Let's hope we get some meaningful tax change!