Nov 08 2012

Tax progressivity in the US: Do the rich pay more than their fair share? The evidence indicates NO!

Just How Progressive Is the Tax System? – Economix Blog – NYTimes.com

According to a blog post in the New York Times from April 2009, America’s America’s “progressive” tax system is not as progressive as many may believe it to be:

Research has found that many states and local governments have… regressive tax systems… that might offset the progressiveness of [US] federal tax rates.

The research from Citizens for Tax Justice — a liberal organization that advocates “fair taxes for middle and low-income families” — uses 2008 data for all federal, state and local taxes combined. It found that the average effective tax rate is 29.8 percent, and that including state and local taxes makes the tax curve look much less steep:

In the graph above, the horizontal axis shows the income group. The vertical axis shows the percentage of income that the average member of that group pays in taxes. Taxes include all federal, state and local taxes (personal and corporate income, payroll, property, sales, excise, estate, etc.). Incomes include cash income, employer-paid FICA taxes and corporate profits net of taxable dividends.

The article continues:

The group also finds that in 2008 the share of total federal, state and local taxes paid by each income group was relatively close to the share of income that that group brings in, at least as compared to comparable 2006 numbers for effective federal tax rates:

The horizontal axis shows the income group. Taxes include all federal, state and local taxes (personal and corporate income, payroll, property, sales, excise, estate, etc.). Incomes include cash income, employer-paid FICA taxes and corporate profits net of taxable dividends.

The research discussed above poses several interesting questions about the make-up of a nation’s tax revenues. Despite popular belief, it appears that the rich in America do not pay “more than their fair share”, as many argue is the case. Study the graphs carefully, and answer the questions that follow:

Discussion Questions:

  1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?
  2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?
  3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?
  4. Use the data to construct a Lorenz Curve for the United States. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

127 responses so far

127 Responses to “Tax progressivity in the US: Do the rich pay more than their fair share? The evidence indicates NO!”

  1. raphael.echl.f09on 02 Dec 2009 at 7:58 pm

    1. I think that it is unfair that the top1% pay nearly 25% of the tax income of the government. It is right that the tax is a progressive tax but it is too harsh on the rich people. eventhough they have enough money to live nicely it is unfair that a third of their income is taken away and only a fifth of the poorest.

    2. I think that it is even unfairer for the 10-5% richest american to pay that much in theory it should be the richest paying the biggest percentage. But as the government makes the most money from the 5% richest americans, and nearly nothing from the 10-5% richest, they have to pay more of their income.

    3. It does not destroy the progressive tax system because this is what it is aiming to do. But i think that it is unfair that 1% makes about 7 times more income than 20%. This is why i think it is unfair for the richest but the poorest need this money.

    4. I think that the tax system does what it is supposed to do but I think that it is too harsh on the rich people. it could do that better by lowering the tax on the richest people and be more fair. And the gap does not suprise me as some people do not earn a lot but the ones who earn a lot do earn very very much.

  2. Leyre.ecslb.f09on 02 Dec 2009 at 11:27 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    I think that there is clearly not a good balance in assigning the amount of tax money that each group pays in society, meaning that the poorest have to pay practically 20%, and the rich have to pay a lot of the money they earn, even if this is a lot. There needs to be a balance between the amount of money a citizen earns and the amount of taxes he or she has to pay. In this particular case, I do think that the rich pay too much tax money according to the money they make.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The government makes more money out of the richest 5 % then the one below them. Plus, it is also a question of philanthropy that this group does, and this philanthropy saves them from paying as much tax money, I think.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    I would say that the richer citizens pay around 21% more taxes than the poorer 20% of citizens. As well as I would say that this tax system would not destroy the want of the citizens to become rich, as this tax money is also a cycle for the population to earn more money in a way.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap between the economic situation in rich and poor people is quite strong, and as I said before that tax money can also be a cycle and generate more money for society, indeed the Americans are not following this system correctly, when it comes to re-distributing the nation’s income. It does, for the rich, but it should lower the amount of taxes the poor have to pay.

  3. Leyre.ecslb.f09on 02 Dec 2009 at 11:30 pm

    Comment for Raphael.echl.f09:

    It is true that the government should lower the tax on rich people perhaps, but what about the poorer people that have to pay an unbalanced amount of taxes according to what they pay. I agree with what you have to answer overall, but you should think about the economically week as well. ?

  4. Kenneth.ecsla.f09on 03 Dec 2009 at 2:09 am

    1. Based on the graphs above, it seems that rich people are not paying an unfair portion, it is more than the less wealthy, but in graph two it shows that it is almost proportial to the amount of income they recive.

    2. Because there is less people in the richest 5% of america, their shared total income is less then that of the less richer people, there for the percent they pay should be lessened.

    3. The shared income of the richest 1% is much larger than the shared income of the poorest 20%, about 4 times larger. america has a progressive tax system, however it does not destory the incentive for americans to work harder and earn more money, since overall they will be receving more money.

    4. Yes, i did not think that such a small portion of people could make 4 times more than a much lager group of people. i think that americas system is fairly effective since no group is paying a large percent of taxes over their percent of income. it could tax the poorer slitly more and the rich not as much, but seeing that the poor people dont have the money needed to pay for then, i belive that it is doing a fairly sufficant job.

  5. Kenneth.ecsla.f09on 03 Dec 2009 at 2:13 am

    to Leyre.ecslb.f09

    i belive that the poor should have to pay a fair share for the taxes, so i dont think the poor should pay less, perhapes even more inorder for a more balanced proportion between the share income and share taxes paid

  6. John Lyons-Harrisonon 03 Dec 2009 at 2:22 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    1. The graphs show that the wealthy are paying more of the taxes, but not without reason. If they're earning more money, they can afford to be taxed more. Additionally, it loks like they're paying the same proportion of their income in taxes as the poorer people do.

    2. Because a smaller percentage of the richer people's income is worth more then a larger percentage of a poorer person's income.

    3. America's total income recieved by the richest 1% is far more then the lower 20%. The progressive tax system doesn't discourage working hard and getting wealthy because their income will still be very large despite the increased level of taxes.

    4. The gap doesn't surprise me because the richest people in America are appalingly wealthy and the extremely poverty-stricken people are very poor. The progressive tax system is effective in the way it redistributes the wealth, and it's fair because people who are that rich can afford to be taxed a little more. No tax system is going to be 100% approved by the people because the fact is that no one likes getting taxed, so this taxation system is like democracy, the worst one except all the others.

  7. John Lyons-Harrisonon 03 Dec 2009 at 2:25 am

    Response to Raphael:

    No tax system will ever be called "fair" by everybody. Under the current system, rich people believe that its unfair because they pay more taxes then the rich people. If everybody was taxed the same, then the poor people would say the system is unfair because they're paying the same amount of taxes as the rich even though the rich have way more money then they do.

  8. Jack.ecslb.f09on 03 Dec 2009 at 3:11 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    a. Based on the data above it would seem that the top percentile do have an unfair tax burden. However the press secretary of the Bush Administration –one that spent its time cutting taxes for high end corporations and earners- would obviously want to show it in this light. I do not believe that the rich Americans have too high a taxation rate, in fact I believe if anything it should be increased. One may fail to realize that even receiving 70% of your 7 figure salary, is still a 7 figure salary. Even receiving 85% of a low end salary only makes it that much smaller.

    One argument that must be made is that it is, in general, the low end salaries that are most dependent on the government taxation. Tax money is used to fund government transport, healthcare, welfare and police, all of which could be considered as more important in the lives of the low income persons.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    a. The amount of income that is required to be in the top 1% means that even a lightly lower taxation rate will still amount for far more money than the lower categories.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    a. Based from the graph, the top 1% earns 22.5% of the total income, compared to the bottom 20’s 3% share. This is surprising due to the massive difference in the number of people that comprise the top 1% compared to that of the bottom 20. It cannot be said of the American tax system that it destroys the incentive for Americans to work hard and become rich, after all that is the essence of the ‘American dream’. However the supporting argument would be that if one does break into another income category, one would have to pay more taxes. The reason that this is invalid although true is that the net or real income would be greater.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    a. The gap between the rich and the poor Americans does not surprise me. Much has been done over the last decade – especially with the Bush Administration’s ‘trickle down policy’ – to make it this way. I do not believe the trickle down policy does work, so therefore America does not do a good job at re-distributing the nation’s income.

  9. Jack.ecslb.f09on 03 Dec 2009 at 3:16 am

    To Kenneth.ecsla.f09

    I completely disagree that the rich should pay slightly less taxes, already the smallest group of people have the largest part of the income, I believe it should be the complete opposite and the level of tax should be far higher than the top 1%'s share of the income.

  10. jiyoon.ecslb.f09on 03 Dec 2009 at 5:01 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    – In my opinion and after observing the graph above in the data is little biased. The reason why is that, the top 1 % of total taxes is 30.9% and the other graph shown of share of income and taxes paid is nearly reaching 25.0%. Therefore, it is unfair that the money is taken away from the both rich and the poor people. Which means, more wealthy people are paying more

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    – I think it is because there are less people in the richest 5% in America. Less percentages of wealthier people’s income is much more than a larger percentage of a poorer people’s income.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    – America’s total income obtained though the richest 1% is way more than the lower 20%. Which means the progressive tax system does not depress to be industrious and become wealthy because of the reason why their income will still be very large notwithstanding the increased level of taxes.

    4.Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    – The gap between the economic and the rich side in America are awfully rich and the very poor people are much poorer. The liberal tax system is effective in the way it reallocates the wealth, and it is somehow reasonable and fair because people, who are rich that have been mentioned in the data, can afford to be taxed a little more. The tax system is definitely not going to be completely approved by the people since anyone likes getting taxed therefore this taxation system is just like democracy, except of all the others.

  11. jiyoon.ecslb.f09on 03 Dec 2009 at 5:12 am

    Raphael.echl.f09,

    Raphael, I strongly agree with you of what you have stated in your answer. So do I think it is a clever thought that although wealthier people have enough money to live and afford anything for rest of their life than poor people, it is not fair that the rich people pay more than the poor people. On the other hand, I will also have thought like if the poor people had to pay more than rich people, then I would have said it is unfair as well. So, as a result, for, and in our economy, I think everyone has to be equal. This contrasting second idea came up after looking at both sides of what Leyre also has put; it is right, ‘it is true that the government should/necessary to lower the tax on rich people’

  12. Celine.ecslb.f09on 03 Dec 2009 at 10:19 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    This is a very controversial question, one that is a serious debate amongst the entire US. Honestly, I don’t think that this is unfair. The government needs money, that’s a fact, often to spend it on things that benefit everybody. So, I think it is fairest if they take the most money from the people that can afford to pay this, instead of burdening those that already have a scarce income.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    This question is also related to much controversy. The richest 5% in America pay much more taxes than the poorest 5%, however, they pay slightly less tax than the 5% before them because of the protection that they have to protect their wealth.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    About 22-23% of America’s total income is earned by the richest 1%, as apposed to the approximate 3-4% that is received from poorest 20%. I don’t think that the progressive tax system destroys the incentive to word hard and become rich because even though these people need to pay the most amounts of taxes, they are still left with the most money to live. After all taxes have been paid, by both the poorest and richest, the richest are still left with a higher amount of money.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap doesn’t surprise me, I think that it is a fair distribution of income. The government’s job is to create a tax system that will fulfill their needs by collecting money, but also by doing this is a manner that will burden the people the fairest. I think it is succeeding in taxing the rich the most, and the poor the least, however, I think that they could improve the system by increasing the tax burden in proportion to the peoples’ income (so, I think that the richest should be paying more tax than the 5% below them).

  13. Celine.ecslb.f09on 03 Dec 2009 at 10:31 am

    To: raphael.echl.f09

    Like I noted in my response, these are all very controversial questions, and so it comes as no surprise that we have different opinions.

    I personally think that it is fair the way that this tax system is created. In your response you said that it isn't fair that 1/3 of the income of the rich is taken but "only" 1/5 of the poor. I think that this should be looked at from another view. This top 5% that is paying almost 1/3, has such a high income level that they can easily give this money away, but that 5% of the income that is being given away from the poor, is a LARGE amount for them, causing them to suffer more greatly than the rich.

  14. Alison.ecslb.f09on 03 Dec 2009 at 11:30 pm

    1.Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Based on the data in the article above, it would seem that the richest 20% of Americans have an unfair tax burden. In fact, those in the top 10% of income levels have to pay proportionally nearly twice as much as those in the lowest 20% of income levels. However, even though proportionally this may be a significant change, and the actual amount of money they pay in total taxes is very uneven, this organization of tax levels and percents can be seen as fair. Even though the richest 10% of Americans have to pay a very high level of taxes, their level of disposable income remains much much higher than the poorest of the Americans.

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The gap between the share of the total level of income and the share of total taxes paid of the most affluent 5% of Americans is larger than that of the next 5%. Also, a smaller percent from the richest 5% of Americans can be equal to, or even higher than, a larger percent of the income of the next 5%.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% of Americans earn roughly 22% of the total income of the United States, in comparison to the 3% that the poorest 20% of Americans earn collectively. This is particularly astonishing because it means that the poorest 20% of Americans collectively earn 3% of America's income, while the top 1% earns over 7 times that much. However, it cannot be said that America's progressive tax system destroys the incentive for Americans to work hard and become rich because the level of disposable income of the richest 1% is so much higher than that of the poorest 20% that the percentage of taxes that they have to pay makes much less of a difference.

    4.Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap between the richest and the poorest of Americans does not surprise me, and I feel that the American tax system is effective in the re-distribution of the US income. The government has been able to come up with a system of taxes which will give the government the money that it needs while still fulfilling the needs of the differing classes in the American society. However, this tax system could be better by increasing the percentage of taxes paid in proportion the the income that they earn – the top 5% should have to pay a higher percentage of their income as taxes than the next 5%.

  15. Alison.ecslb.f09on 03 Dec 2009 at 11:35 pm

    to John Lyons-Harrison:

    I think you made a good point in that no tax will be universally approved. This is simply because nobody actually likes to pay taxes, and thus every tax will be criticized by a certain sector of the society. In my opinion, the role of the government is to choose the tax which will raise the least controversy, and still give the government the money it needs in order to do what it is supposed to accomplish.

  16. raphael.echl.f09on 04 Dec 2009 at 7:00 pm

    to Alison.ecslb.f09

    I agree for the first three answers and partially your last one. But you say that the richest 5% should pay more than the next 5%, but in the second graph it is seen that the richest 5% pay nearly 40% of all taxes paid. So to show that it is not only them that pay so much the government probably put higher % of what the next 5% have to pay. Like that the government income is higher from th next 5%.

  17. theresa.ecslb.f09on 07 Dec 2009 at 2:59 am

    Based on the data presented, the rich in America pay an unfair proportion of the total taxes the United States government collects. The top 5 percent of income groups in the United States pay the highest level of percentage of income to taxes. 32.3 percent of their income is devoted to and taken away by taxation, compared with the lowest 40 percent of income groups who on average pay around 20 percent of their income. Comparably, the difference between paying one third to paying one fourth, with such drastic differences in the amount of figures of income, is significant and unfair.

    The richest 5 percent in America pay a lower level of tax on average than the 5 percent below them because considering the amount of their income it makes sense. In order for the government to make a similar amount of revenue from the richest 5 percent to the lower 5 percent, the richest mathematically needs to be taxed less. The difference in income group makes up for the lessened taxes, nearly equivocating

    The top 1 percent of income groups in America pays around 23 percent of all taxes paid in America, compared to the 3 or 4 percent paid by the lowest income group. This progressive tax system does destroy some of the incentives for working hard in America and become rich. The mentality created by this system is why work hard when I just have to pay one third of my income, which in some cases just goes to the lowest 20 percent, who only pay 3 percent of all taxes? It seems like while though the lower class has to live day to day generating the least income, they get the better end of the deal, not having to pay nearly enough taxes and then receiving what others do pay.

    I thought that the gap between the richest and poorest Americans would not surprise, but in fact I am shocked. Just thinking about the difference between paying one third of the money you make to paying less than one fifth of your income. Before I thought that when I heard the richest income groups complain about their taxes, they were just being greedy, but now that the difference was quantified for me, it is unfair and unproportionate. If the top group still paid one fourth instead of one third, the amount of revenue the government would make on revenue would still be higher than the lower groups, so they still would be paying for what they have, because the top group clearly does have more things to be taxed so their amount of taxes should be higher. But the difference in percents is what is alarming, there should be a flat rate, all income groups should be paying one- fifth to one- fourth of their income, that way the income groups are actually proportionate.

  18. theresa.ecslb.f09on 07 Dec 2009 at 3:24 am

    Alison,

    I disagree with your last statement about how the top percent of income groups should be taxed more. The rates right now are not proportionate, the top income groups percentage is significantly higher already than the lower twenty. That, to me, doesn't make sense, if the rates were flat then the higher group would still pay more money, but in this way it would be fair. Consider, if an income was 20,000 and had to pay 18% of their income, they would pay 3,600 annually. At the way things are now, if an income were 1,000,000 they would have to pay nearly one third of their income, at about 330,000 dollars. Which is drastically different. However, if it were a flat rate, the 1,000,000 income would pay 18 percent at 180,000 dollars, which is fair.

  19. carolines.ecsla.f09on 07 Dec 2009 at 8:43 am

    1.Based on the data above, I believe that the rich in America pay an unfair proportion of the total taxes the US government collects. The graphs reveal that the top 1% or total taxes is 30.9%, and the graph showing Shares of Income and Taxes Paid reveals that that 1% pays approximately 24% of total taxes. However, this is, as a matter of fact, progressive tax; therefore it is supposed to aid the less well-off.

    2.The richest 5% in America actually pay a lower level of tax on average than the 5% below them because a smaller percent from those receiving more income may be the equivalent to those below them.

    3.The richest 1% of Americans earns approximately 23% of the total income in the US, whereas the poorest 20% earns about 3% of the total income. I do not believe that America’s progressive tax system destroys the incentive for American’s to work hard, because the disposable income of the richest 1% still remains higher than that of the less well-off. Therefore, the taxes the richest must give up still don’t make a large difference in comparison with the amount they make and receive.

    4.The gap between the richest and the poorest does not surprise me, for there is also a large gap between the salaries of the richest and the poorest, therefore, it is not entirely unfair. I feel that the tax system in America is effective at redistributing the nation’s income because it is able to gain a fair amount of money to utilize while also putting the different classes into consideration. However, I believe if a progressive tax system is used, then it should be done in a proper way. The top 5% should have a higher income tax than that of the lower classes, for they make a higher income.

  20. carolines.ecsla.f09on 07 Dec 2009 at 8:53 am

    To John Lyons-Harrison:

    I agree with many of your statements, especially when you responded that no tax will ever be considered fair, however, you said that the amount being taxed on them seems to proportionate, but if that were so, the top 5% would not be paying less income tax then those receiving a smaller income than them.

  21. Olajumoke.ecslb.f09on 07 Dec 2009 at 9:44 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No, I do not believe the rich in America pay an unfair proportion of the total taxes the US government collects. This is because most of these people have money invested which allows them to collect much more money than usual. Also, many of these people, due to their economically superior position, have the means to spend more time doing charity work and such, all of which is tax deductible.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% in America pay a lower tax because they are in a situation of immense power, and there wealth no longer comes from income. For example, Steve Jobs, CEO of Apple, only earns $1 a year but he owns the controlling share of this and many other companies which allows him to live the lavish lifestyle he does. Also, many of the richest people control major markets and the government does not want them to reduce their investment in those markets due to their taxes being too high. For example, if Ted Turner were overly taxed, he may stop investing so much money in CNN and the station may fail due to a lack of funds. This would be very detrimental to the American televised news market.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    the Richest 1% has a total of over 20% of America's income compared to the less than 5% earned by the poorest 20%. I do not believe the progressive tax system destroys the incentive for Americans to work hard and become rich. This is because most of the poorer people do not know that the richer people pay a larger tax percentage. Also, it is not the progressive tax system, but the welfare system which destroys the incentive to work. Most people in the poorer 20% will not work if they know they'll be getting money from the government anyways.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    No, the gap does not surprise me at all. I believe that in its objective, the American tax system is effective at re-distributing the nation's income. The real problem is the objective. The nation's objective and methods do not promote an incentive to work harder. If this were to happen, then the gap would actually shrink and the American country would be richer than ever

  22. Olajumoke.ecslb.f09on 07 Dec 2009 at 10:03 am

    In response to Theresa:

    Though I understand your opinion, I must say that we must remember that though the richer people pay a larger percentage of the tax, they also make a larger percentage of income, and this does not include the money they have invested already.

    Why would the government want the same revenue from this group? And if they wanted the same revenue from a smaller group, why wouldn't they increase the taxes?

    Don't forget that most Americans are not aware of this taxation style, it is actually the prospect of welfare for the poorest Americans which destroys their incentive to work.

    Remember that even though the rich pay 1/3 of their income, they make it all back in investment, plus they stay rich. If the poor lost 1/3 of their income, that would mean choosing between food and clothing for the month for their families. We must remember that it is not just the numbers, but also the human factors which affect the taxation decisions.

  23. derek.ecslb.f09on 08 Dec 2009 at 10:13 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    The data above shows an unfair proportion of the total taxes collected from the rich Americans. This is because their proportion of tax paid is relatively higher than their income.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    This shows that the richest 5% in America is a lot richer than the 5% below them and hence they pay a lower level of tax. This shows that the income distribution in American is uneven.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% is gained 20% more of the total national income compares to the poorest 20%. Although there is wide difference between the rich and the poor, the American tax system ruins the incentive for Americans to work hard. This is because there is an unfair tax rate, which the poor has a low tax rate and the rich has a really high tax rate.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The tax system is effective at re-distributing income, as more tax is collected from the rich (a progressive tax rate). However, it could be better by encouraging the people to work at the same time, such as cut down unemployment benefit.

  24. derek.ecslb.f09on 08 Dec 2009 at 10:18 am

    To Olajumoke

    In question 2, you gave to example of Steven Jobs and explains that he can have a no-tax income. However, don't government collect profit tax from profits?

  25. christopher.ecsla.f0on 08 Dec 2009 at 10:58 am

    1.Based on the data, the rich in America do, in fact, pay an unfair proportion of the total amount of taxes collected by the United States government. The top 5% of income groups in the U.S. have to devote 32% of their gross income to taxes while the lowest 40% of the citizens only have to pay 20% of their income. One third of a high income compared to one fifth of a relatively low income is highly unfair to those in the country who make more money.

    2. The richest 5% of people in America pay a lower level pay, on average, a lower level of income tax than the 5% below them. Consdering their gross income, this makes a lot of sense. For the government to make an equal revenue from both income groups, they must increase the tax for the groups who make less money. By making them pay a higher percentage on their income, they mathematically pay the same amount as those with higher incomes who pay a slightly lower percentage.

    3. The top percent of income groups in America pays roughly 23% of all American taxes, while the lowest income group contributes to roughly 3% of these taxes. This tax system, however progressive it may be, destroys the incentive for Americans to work hard and become rich. If, by becoming rich, a person has to give up almost one third of their entire income, they may be tempted not to work so hard, which could contribute to a higher profit resulting from a lower income as well as a lower tax rate. This money, then, goes to the lowest 20% of the income groups, who contribute minimally to the tax revenue of the country. The poorer work day by day, generating little income, but also paying little in taxes, while receiving some of what the rich pay in their taxes. Why should the rich have to pay for the poor when they worked as hard as they could to become rich in the first place? This is the mentality created by the progressive tax system.

    4. The gap between the richest and the poorest in did surprise me. There is such a big difference between one third and one fifth of one's income. Also, thinking about it in terms of the income difference, one third of a high income is a lot more money than one fifth of a skimpy income. It is shocking just how much the rich in this country have to pay, just for making more money. It is highly unfair to those individuals who worked hard to make the money in the first place. I think the percentage should be changed to roughly 25% rather than almost 33% for the rich in America. If this happened, the rich would still be paying a higher income and the government's revenue on this income would still be high, but they would not be paying an exorbitant amount of their income. This way, they would keep some of what they make and the percent change in income tax between income groups would actually be proportionate.

  26. christopher.ecsla.f0on 08 Dec 2009 at 11:07 am

    Theresa,

    I agree with what you said about the flat rate income tax (or at least almost flat rate). This would be a good way for the government to make sure they keep everything fair for everyone, rich as well as poor. As the level of income rises, the proportioin of income taxed should not. Why is it fair to take more money, just because a person makes more money? If you give them the same tax percentage as those of lower income levels, they are still going to pay more and the government will make more in revenue. It's like you said with your 18% example, if a person making $20,000 a year has to pay 18% in taxes, they are paying $3600. However, if a person making $1,000,000 per year has to pay the same rate, they are paying $180,000 to the government. This is fair. Both parties get to keep the same percentage of their income, therefore the rich are not punished because they are rich.

  27. Pedro.ecsla.f09on 08 Dec 2009 at 8:18 pm

    1 I think that the USA’s rich people don’t pay an unfair quantity of taxes. In Spain the government employee pay a 30% of their income as a tax, and they relatively good (and they have a lot less money than the rich people of the USA). I think that this system of pay could be considered unfair, not because the rich people pay too much but they pay so few. It doesn’t make any sense to say that the riches should pay less and the people that don’t have money enough to pay a health insurance have to pay more.

    2 This could be provoked by a range of different things: they have better accountants, they do several thing s to have tax exemption, they defraud to the state but they have better lawyers to defend them …

    3 The riches pay around a 25% more than the pores. This tax system doesn’t destroy the initiative even it helps to create more initiative because it allow poor people to have more opportunities to reach the rich people

    4 It doesn’t surprise me, is it something that is always in the news in my country. I think that this policy is doing OK I think that the thing that should change is the way that the money obtained by this system is use I think that if he USA want to decrease the difference between the riches and the pores the should create public health and public education.

  28. Pedro.ecsla.f09on 08 Dec 2009 at 8:22 pm

    raphael.echl.f09

    I don’t think show I think that the reach people should pay more is the poor people the one that should pay less. If the USA people didn’t increase the tax to the reach people, they would not be able to obtain the equality in the society the want.

  29. Courtnei.ecslb.f09on 09 Dec 2009 at 1:48 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    — Clearly answers to this question are going to vary widely based on perspective and opinion, but as far as I'm concerned, the rich in America do not pay an unfair proportion of total taxes collected. No, taxes are obviously not even for all income levels, but for good reason. In order to keep our public schools open, to employ adequate police, fire fighting and emergency medical services and to keep our roads safe and clean, the government needs money and its only source is the American citizens. It only makes sense to tax the richer more because they have more disposable income. If tax rates rose evenly across all income levels, eventually taxes on the lowest levels would begin to dip into the standard cost of living. The government can't reasonably take a person's grocery money or the money allotted to pay the electric bill. And as it stands, the rich remain rich even though they pay more taxes. This isn't a new idea either. Going back to Adam Smith's canons of taxation, taxes should be levied based on ability to pay.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    — The sum the government takes in from the taxes of an income level is roughly equivalent to the share of the total income in America that level brings in. To keep this balance, the government must charge the next 5% slightly higher taxes than the richest 5%. I would go along with the idea that the government does it to bring in equal amounts from each level, but the second graph clearly contradicts this.

    3. How much of America's total income is earned by the richest 1% compared to the poorest 20%? Does America's progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    — About 23% of America's total income is earned by the richest 1% while about 3% of America's total income is earned by the poorest 20%. As for the second question, it's my opinion that no, America's progressive tax system does in no way destroy the incentive for Americans to work hard and become rich. Highest tax levels obviously claim a significant amount of their incomes, but it only pulls from their huge sums of disposable income. For the America's richest, basic needs absorb a minute fraction of their annual income, while they absorb the vast majority of the income for the poorest 20%. In my opinion, saying our progressive tax system destroys the incentive to work hard seriously underestimates the gap that remains between the rich and the poor.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America's tax system is effective at re-distributing the nation's income? How does it succeed? How could it do better?

    — I'm not surprised by the gap between the richest and the poorest, and I think overall America's tax system does a decent job at re-distributing the nation's income. It acquires the money it needs and mostly manages to fulfill its obligations to people of all income levels. However, I don't believe the richest 1% should pay lower taxes then the next 4%, next 5% and next 10%. Something needs to be adjusted there.

  30. Courtnei.ecslb.f09on 09 Dec 2009 at 1:55 am

    To Olajumoke.ecslb.:

    I think your answer to the second question was really, really interesting and much more conclusive than any of the other answers given. This is something I hadn't ever considered, but I think you make a good point. The richest Americans often have investments in corporations that have a great amount of sway over the American economy as a whole. The government might very well keep their interest rates a bit lower to encourage them to continue such investments.

  31. michael.ecsla.f09on 09 Dec 2009 at 3:52 am

    1. Yes, the rich pay too much tax to the government. It's true that they should pay more than the poor, but this disparity is too large to be fair. The government should try to get more revenue by alternate means instead.

    2. It's a lower level because the rich can afford to influence lawmakers, while the poor cannot.

    3. About 23-25% of America's income is earned by the richest people, compared to about 3% by the poorest people. The tax dos not destroy the incentive to work harder, as while the rich lose more money they make enough money to balance it out.

    4. The gap does not surprise me at all. There will always be rich people and poor people. The money should not be redistributed, as the rich earned it and should get to keep it, rather than having to give it to those who happen to have a bit less. The system is rather ineffective, as while it tries with the benefits, they are too small to make any real impact.

  32. michael.ecsla.f09on 09 Dec 2009 at 3:54 am

    Courtnei.esclb.f09,

    The rich worked for their money, so they should be allowed to keep it. If they have to give it away, there's no incentive to ever work for anything. After all, why work when you can just get a handout for free and no effort on your part?

  33. Katharine.ecsla.f09on 09 Dec 2009 at 7:03 am

    The balance is clearly unfair. However, it is unfair to all levels of income. The balance between the amount of money earned by an individual and the amount of taxes they pay should be proportionately well distributed. It, however, is not. The rich in America do not pay an unfair proportion of the total taxes that the government collects because they do have the most income, and therefore should be paying the most out of their income. A rich individual can pay in taxes what a poor individual receives as their total income without taxes being subtracted. It wouldn't be fair for that poor individual to have to pay that amount, because they would be left with nothing for their necessities. Almost all socioeconomic groupings pay a proportionate amount, as shown by the above graphs, however, the rich pay the largest share of taxes because they can afford to pay that amount. The lower income groups cannot afford so much more to be taken out of their paychecks as some cannot afford it already.

    The richest 5% in America actually pay a lower level of tax on average than the 5% below them because they are in control. Those who have the money make the rules, means that they have the most influence on the government. Through their funding, they support the economy and the government, so the government gives them an incentive to keep funding the economy and the nation. The next 5% to 10% shouldn't be paying more than the top 5%, but they are.

    Around 22% of America's total income is earned by the richest 1%, while around 3.5% is earned by the poorest 20%. That's around 6 times more of America's total income. America's progressive tax system does not destroy the incentive for Americans to work hard and become rich, because even though the rich are taxed more, they still earn so much more money, that a couple more percent of their income compared to that of the poorest is not that crucial to them. People want to be successful and earn a large income, and America does its best to encourage that.

    The gap between the richest and the poorest Americans does not surprise me, however it is appalling that the gap is so large. America's tax system is not very effective at redistributing most of the nation's income, however it does redistribute a little bit of the income well. It succeeds in redistributing a little bit through the poor not having to pay quite as much in their taxes, however, the rich still do not pay enough to cover for the poor's deficient. It is hard to judge what is fair in taxation. It could do better in balancing, however it does a decent job.

  34. Katharine.ecsla.f09on 09 Dec 2009 at 7:03 am

    Response to John Lyons-Harrison

    I agree that the wealthy are rightfully paying their share of taxes, because they do earn more and can afford to pay more. They do also pay almost the same proportion, which is fair, yet I almost believe that they should pay a little more, because they can afford it. I agree with you when you also said that “because a smaller percentage of the richer people's income is worth more than a larger percentage of a poorer person's income.” It is very true and I totally agree. It is very true that America's richest 1% earns far more than the poorest 20%, and the progressive system doesn't discourage them from earning as much as they can. Americans are appallingly rich and extremely poor, and the progressive tax system tries to redistribute the wealth.

  35. diana.ecsl1.f09on 10 Dec 2009 at 8:56 am

    1) Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No absolutely not. Taxes should be progressive anyway, thus the higher your income the greater the tax. The rich deserve to pay higher taxes as they are obviously more capable of doing so. What would be unfair is if the poor or middle-class were paying the majority of the tax burden. They share more than 20% of the total income so why not pay about the same for taxes?

    ——-

    2) Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    I’m not sure why this is so but it is probably because of tax evasion. Some rich people do not feel obliged to pay taxes and thus try to avoid doing so. This shouldn’t be as the richer you are, the higher your taxes should be.

    ——-

    3) How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% earns approximately 22% of the total income while the poorest 20% earns about 3% a year. That’s almost a whopping 20% difference. America’s progressive tax does not destroy the incentive for Americans to work hard and become rich. I’m sure they would rather be rich and pay higher taxes than poor and pay very low taxes. The rich pay high taxes with ease and they still maintain their status of wealth. Instead, having a regressive tax would simply demoralize the poor and that will lower the incentive of lower-earning families to work because they will have no hope. No one wants to remain poor, regardless of progressive taxes.

    ——-

    4) Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Sadly it really doesn’t. The rich just get richer while the poor get poorer. And, as this gap increases so does the animosity towards those of a higher status. The fact that America is in a recession doesn’t help that case either. I do think America’s tax system is effective at re-distributing the nation’s income, though President Obama is trying to improve upon it. Nothing is better than having a progressive tax. Furthermore, the tax is about the same as the income so that works out well. The poor should probably have lower taxes as they need to retain their money much more than the rich need to.

  36. diana.ecsl1.f09on 10 Dec 2009 at 8:59 am

    Michael you say the government should try to gain revenue by alternate means but what alternatives are there? Taxes are the most effective way to increase revenue. It's not like the rich are struggling to pay the tax. The reason why they pay so much more is because thy make so much more. Just look at the difference in income– it correlates with the disparity in tax.

  37. diana.ecsl1.f09on 10 Dec 2009 at 9:01 am

    Courtnei, excellent and very well thought out answers especially for #1 and 2. I like how you explained why the next 5% pays more than the top 5%. I never looked at it that way.

  38. Robbie.ecslb.f09on 10 Dec 2009 at 12:36 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    The rich Americans do not pay an unfair proportion of the total taxes collected by the US government. The explanation for this is quite simple. The rich in America are more able to pay taxes than the poor, so they should, as dutiful citizens of the nation, pay more.

    _____

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% of Americans pay a lower level of tax than the 5% below them because of the regressive tax systems put in place by local and state governments. At high income levels, these tax systems are able to offset the progressive federal income tax. This results in the top 5% paying a lower average rate than the next 5%.

    ____

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The progressive tax system does not destroy the incentive for Americans to work hard to become rich. While the top 1% pay about 12.2% more income tax than the lowest 20%, they make more than 1,000% more money. It is foolish to think that the progressive tax would make people suddenly not want to have more money in their pockets.

    ____

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    It is quite shocking that the top 1% of the population of America account for about 22% of the national income, while the lowest 20% account for just 3% of the national income. I feel the government does the best it can to redistribute this income to those in need, namely the lower income groups. Because the wealthy have so much, they can afford to pay a larger percentage than the lower income groups. One of the 4 canons of taxation is taxes must be levied based on ability to pay. This system I believe is effective in achieving this goal.

  39. Robbie.ecslb.f09on 10 Dec 2009 at 12:46 pm

    Jack.ecslb.f09

    I definitely agree with your point on the rich paying a larger proportion of the total tax. When a person is pulling in $10,000,000 a year, they can definitely afford to live on $6,000,000-$7,000,000 of that, or even less. However, a person who is making just $20,000 a year cannot afford to keep just $14,000. Taxation should be based on ability to pay.

  40. ben.ecsla.f09on 10 Dec 2009 at 1:30 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    This question is likely to have different answers for different people, as it is mainly one of opinion. For me, I do not believe the rich in America pay an unfair proportion of the total taxes the US government collects. The question requires a definition of fair, because it is not the same for all people. Some might say that the rich pay more than is fair based on the greater percentage for their income, but some might say that the rich are able to give up a greater percentage of their income to taxes and still be able to live quite comfortably.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The amount of income that is required to be in the top 1% means that even a lightly lower taxation rate will still amount for far more money than the lower categories. This means that while there may be more people in the 5% below the top 5, the amount of money present in the top 5% is still far greater.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% of Americans earn roughly 22% of the total income of the United States, in comparison to the 3% that the poorest 20% of Americans earn collectively. This is particularly astonishing because it means that the poorest 20% of Americans collectively earn 3% of America’s income, while the top 1% earns over 7 times that much. However, it cannot be said that America’s progressive tax system destroys the incentive for Americans to work hard and become rich because the level of disposable income of the richest 1% is so much higher than that of the poorest 20% that the percentage of taxes that they have to pay makes much less of a difference.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Overall the gap between the classes does not surprise me that much. I think that Americas tax system is fairy efficient at retribution the nations income, its success can be seen through all of the government programs being funded by taxes. One discrepancy is the slight downward turn of the tax percentages when they reach the highest 5%. I think that this is one issue that needs to be addresses.

  41. Luca.ecslb.f09on 10 Dec 2009 at 11:38 pm

    1.Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    – The rich in America do not pay an unfair proportion of the total taxes the US government collects. I very much agree with Jack on this point. Although the rich pay a larger amount of money in taxes, they also have a far greater income than others. In fact, I would say the taxes could actually be raised on the rich. Their net income is still astronomical and the strain can be lifted from the lower income groups.

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    – The richest 5% in America pay a lower level of tax on average than the 5% below them because their income is so much greater that they are still paying more money but are taxed a lower percentage.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    – The richest 1% earn 22.5% of America's total income while the poorest 20% only earn 3%. I don't the progressive tax system destroys the incentive to work hard and become rich because although the rich pay more, they are still rich. By breaking into the higher grouping, a person is still maing far greater net income.

    4.Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    – The gap between the richest and the poorest Americans does not surprise me. This is the product of a nation which feels such a great pride in its capitalist system. The current tax system does not effectively re-distribute the naton's income and in my opinion there is a lot of room for the taxes on the rich to be raised and perhaps even lighten the taxes on the lower income people.

  42. Luca.ecslb.f09on 10 Dec 2009 at 11:42 pm

    Robbie.ecslb.f09

    I like your answer to number 3. When you break it down with peercentages like that and show the great imbalance in net income it really becomes absurd to think people would reject making more money.

  43. kerstin.ecslb.f09on 22 Dec 2009 at 2:35 am

    1) In my opinion, only the top 1% of the country pay an unfair proportion of the total taxes the US collects. However, when comparing the “next 10%”, “next 5%” and “next 4%”, to the “middle 20%” and “fourth 20%”, we can see that they all pay roughly the same proportion of tax, showing that their amount of tax is fair. However, when looking at the top 1%, we can see a significant increase in the proportion of taxes paid. Especially considering that this is only 1% of the country paying, I don’t think that their proportion is fair; instead it is too high in my opinion.

    2) It appears as though the richest 5% of America pay lower taxes than the 5% below them, however, we must not forget that they are the 5% of America’s richest people, so ever though their percentage of income is lower, the actual value of how much they tax they pay is still higher. I think of they would have continued to raise the tax level for the richer, then the distribution of tax paying would have become even more uneven. Rich tax payers might have lost incentive to work in America and decided to work or live in other places where taxes are cheaper if America’s “rich taxes” were even higher.

    3) The richtest 1% add to around 20% more income than the poorest 20%. However, I don’t think that the progressive tax system destroys the incentive for Americans to work hard and become rich. This is because if they work hard, their total tax might increase, but so will their income. In total, their income with higher taxes will still be higher than the lower income with lower taxes. Also, when getting to the top of America’s richest people, the percentage of income to pay as tax also decreases, as mentioned earlier. This again gives incentive to work hard, knowing that taxes will be lower if income increases.

    4) This massive gap really surprised me, especially the fact that 1% adds to 20% more income than 20% other percent of the country, is especially shocking. I think that the tax system is slowly effective at redistributing income, because the poor have to pay less, allowing them to spend more money on their living, while the rich have to pay more. In that way it succeeds. However, I think it could do better in the division of the total taxes paid. I think the fourth 20% should be paying a smaller amount, as well as the top 1%, while the Next5% and Next 4% should be paying slightly more to make the graph a nice line to fit balance the fairness of the total taxes paid.

  44. kerstin.ecslb.f09on 22 Dec 2009 at 2:45 am

    To Celine,

    It was nice to read your answers. I especially agree with you on the point you made in number 3, I wrote the exact same thing. However, I disagreed with your point number 2. I think that rather than protecting their wealth, the richest 1% have to pay a smaller percentage of their income to balance out their share of the total income. Let’s say the top 1% would have to pay 34% of their income to taxation. This would mean that they would pay for an even larger portion of the government’s income, making the distribution unfair. If distribution is unfair, the rich might decide to live somewhere, where taxes are lower. This is also the exact reason for why I disagree with your point 4, where you mentioned that the top 1% should pay a larger percentage of their income to tax. I think there is a very fine balance between what is acceptable for everybody. If things are not acceptable, people will start looking for other solutions for themselves, and the government will make a loss or at least have a smaller income. Therefore I don’t think taxes should be increased for the top 1%.

  45. Laura Yilmazon 29 Apr 2010 at 1:32 am

    1. The rich Americans do not pay an unfair proportion of the total taxes collected by the US government. The explanation for this is quite simple. The rich in America are more able to pay taxes than the poor, so they should, as dutiful citizens of the nation, pay more.

    2. I think that it is even unfairer for the 10-5% richest american to pay that much in theory it should be the richest paying the biggest percentage. But as the government makes the most money from the 5% richest americans, and nearly nothing from the 10-5% richest, they have to pay more of their income.

    3. About 23-25% of America’s income is earned by the richest people, compared to about 3% by the poorest people. The tax dos not destroy the incentive to work harder, as while the rich lose more money they make enough money to balance it out.

    4. Overall the gap between the classes does not surprise me that much. I think that Americas tax system is fairy efficient at retribution the nations income, its success can be seen through all of the government programs being funded by taxes. One discrepancy is the slight downward turn of the tax percentages when they reach the highest 5%. I think that this is one issue that needs to be addresses.

  46. Laura Yilmazon 29 Apr 2010 at 1:34 am

    kerstin,

    how can you say that gap surprises you? it is kind of obvious it was going to end like that…

  47. Trevor.echl.f09on 29 Apr 2010 at 8:11 pm

    1. Based on the data, the rich do not pay an unfair proportion of the total taxes that the U.S. government collects. This is clearly discernable by the first graph. Many would think that with our progressive tax system that the graph would surely increase steadily. But it does level off and even decrease for the highest tax bracket. The second graph also shows that the system is mostly fair as is.

    2. This is due to the numerous regressive taxes put into place by other institutions such as state and local governments. Living in Florida, one of the two(?) states without an income tax, I can say that all of our revenue comes from these indirect taxes which are less of a burden to the rich.

    3. 22% of income is earned by the top 1%. 3% of income is earned by the bottom 20%. No, the progressive tax system does not destroy this incentive to work. It is simply the most effective means by which government revenue can be raised in order to maintain a functioning government and society. I don’t think we need to worry too much that the rich are being incredibly burdened by the current system in place, as can be seen from the statistics from the beginning of the response to this question.

    4. No, it does not surprise me. I think that the system in general is effective, however, changes could be made such as continuing to roll back the Bush tax cuts of 2001 and 2003 which were slanted in favor of the rich. They seemed to do little for the health of the economy and should be replaced instead with tax breaks for the lower income brackets.

    – Trevor Tezel

  48. Trevor.echl.f09on 29 Apr 2010 at 8:17 pm

    Luca,

    It looks like we have nearly the same position on the tax situation in the U.S. right now. You do note that Americans take pride in their capitalist system in your analysis of our tax system and I do see, to a certain extent, how these two are related. At the same time, however, I think we need to recognize that a strong, vibrant system of capitalism can exist with economic checks in place to ensure that there is not such a great income disparity. In America, I feel that we are very close to hitting this healthy medium. But there are still reforms that need to take place and, as with any democracy, competing ideologies will battle it out for control over how these graphs look.

    – Trevor Tezel

  49. Mattea.echl.f09on 02 May 2010 at 4:50 am

    1.Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No, they don't. The top 1% pay only about 3% more than the middle, when including all state, local, and federal taxes. The proportion of taxes they pay is about equal to their share of national income.

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Many states employ regressive taxation through sales tax, which takes a smaller percentage of one's income as the income increases. This offsets the increased income tax that the richest 5% have from the next richest.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    22% of the income is earned by the top 1%, while 3% of income is earned by the bottom 20%. The progressive tax system does not provide disincentive for Americans to work harder, however, because the share of taxes that the rich pay is about equal to their share of the national income.

    4.Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    I had anticipated the large disparity between the richest and poorest Americans, as the US is well-known for income inequality. The tax system is generally effective, as the rich do not pay more in taxes than they earn as a percentage of national income, and the poor pay less. It could do better by reducing the tax rate for middle income levels, as the addition of sales tax brings their rates almost to the level of the rich.

  50. Mattea.echl.f09on 02 May 2010 at 4:54 am

    Trevor,

    You mentioned the numerous sales taxes already in place at the state level. This is a form of regressive taxation, where the tax takes a smaller share of income as income grows. Many countries in Europe have a high sales tax, such as the VAT. Some have advocated adopting a federal sales tax to raise revenue that would decrease the deficit. However, as the graphs indicate, regressive taxation causes unfairness. It can also discourage consumption, which will harm economic growth.

  51. sara.echl.f09on 03 May 2010 at 2:58 am

    1.Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    I don’t think it is unfair to give the rich a higher tax, but maybe the difference is too large. Although the rich will still have plenty of money to live their life well, but it might be unfair to take away a third of their income.

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Because there is less people in the richest 5% of America, their shared total income is less than that of the 5% below them, therefore, the percent they pay diminishes.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richer citizens pay around 21% more taxes than the poorer 20% of citizens. However, I don’t think the progressive tax ruins the incentive for Americans to work hard and become rich because, even though they pay a lot more tax, they also have enough money left afterwards to live luxuriously, the amount of tax doesn’t necessarily affect their lifestyle that much.

    4.Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap doesn’t surprise me because the richest people in America are filthily wealthy and the poor people are extremely poor and it is hard for them to get themselves out of that situation thanks to the welfare system that the US has. The progressive tax system is effective in the way it redistributes the wealth, and I think it is fair because the richer people can afford to have higher taxes than poorer people who need as much money as they can get to survive.

  52. sara.echl.f09on 03 May 2010 at 3:12 am

    Mattea,

    Progressive taxatin does cause unfairness, but I think it balances out the unfairness between the classes that exist in the United states.

    Sara

  53. Chamonix.echl.f09on 03 May 2010 at 8:39 am

    1. Based on the data above, the United States does not tax the rich unfairly. The richest 1% of taxpayers in the nation pay only 3.9% more taxes than the middle 20%. When one considers the extremely high wages earned by some of the richest people in the United States (According to Wikipedia, Bill Gates is worth $53 Billion) then this is a tax rate that in fact is very kind to its richest citizens.

    2. The richest 5% pay a lower tax rate than the 5% below them because of a regressive tax system that lowers tax rate as wage increases. The richest 5% in the nation have a great deal of political power, which may have something to do with this…

    3. The richest 1% earns around 22% of the nation's income, while the poorest 20% earns about 3%. I do not think that the progressive tax system discourages the poor from working hard as the rich pay a pretty similar amount of tax relative to their weath.

    4. I am not surprised by the gap between the rich and the poor in the United States. As the rich have money, they also have a great deal of power. This is of course manipulated in their favor as a way of furhter opressing the poor. I am not so much surprised as saddened. I do not think that America's tax system effectively redistributes the income. The very rich are treated regressively and do not pay taxes that much higher than those of the poor. It does succeed because the system is progressive, and the very poor do pay lower taxes, which helps them to gain wealth. It fails in effective action against the power of the rich and their escape from higher taxes.

    Chamonix

  54. Chamonix.echl.f09on 03 May 2010 at 8:56 am

    Mattea,

    I really liked what you said about reducing tax levels for the middle class. These taxes are difficult for the middle classes, who are often expected to pay the tax rates of the rich although they do not necessarily have much more means to pay these taxes than the poor. I think that this group was very overlooked under Bush. I know that they were a big part of Obama's election and are being pretty well-represented in his policies, although these taxes are still in place. As they are the largest part of the economy, they are a vital group to represent well.

    Thanks for the great comment!

    Chamonix

  55. Jacob.echl.f09on 04 May 2010 at 4:25 am

    1. Yes, very much yes. The top 1%, not 10% or 50%, pay more taxes than anyone else in America. They make more money, but they are making less and less as the tax rates keep going up. They are rich for their hard work and determination, as well as the skills they were born with. Some say this is an unfair example but people are different, it’s a fact of our biology, so they should be treated accordingly.

    2. Possibly because, since the richest 5% make more money, the government gets more money out of them and thus do not have to take more from them. For example, if the top 5% make 500,000, and the tax rate is (for simplicity’s sake) 50%, for them, the government makes 250,000 off of them. Then the 5% below them make 100,000, 50% of that is only 50,000…and the government likes money so they tax them more so that they can make more money, since they already make a whole lot from the top 5%.

    3. The top 5% make up 19% more income than the bottom 20%. It really doesn’t hurt the incentive to work because despite more taxes, there is more security when you make a lot of money and you are much better off making money.

    4. It did not surprise me, but I do not think it is re-distributing the nation’s income at all. It only takes away from the rich, but that money does not go to the poor because the government uses that money for other things, not just welfare and such. The government could just go communist and no one makes money, but everyone has the same thing. That’s the only way the wealth can be distributed.

  56. Jacob.echl.f09on 04 May 2010 at 4:29 am

    Chamonix,

    I see your point but overtaxing top people doesn't help poor people, it helps the government, who uses that money to help rich people more, so raising rich taxes does nothing. That is inadequate strategy for redistribution. Really, nothing short of communism will do this, but then you think, do we really have to all be equal? Maybe some people are more skilled than others and should not be punished for this. We do not want another Harrison Bergeron situation.

  57. masayaechlf09on 04 May 2010 at 6:05 pm

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    In my personal opinion, the progressive tax in United State is trying to promote equity between the rich and poor, but it is in fact, bringing inequity for the riches because they are the ones who must carry the burdens for the society. Although the controversy of this tax system is that the more a country has a clear diversity between rich and poor, the rich would have to carry all the burden for the poor. So, although it may seem fair looking at the big picture, if take a closer look at it,

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% of American actually pay lower level of tax on average than 5% below them because simply, their total income is smaller than the rest of the 5%. Because taxes are levied to the level of income, there is a legitimate reason for this phenomenon.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    about 23% of America's total income is earned by the richest 1%, whereas the poorest 20% only comprise 3% of the total. The "American Dream" has been built throughout history by the American's strong sense of individualism and creativity. In this approach, the poor's need of assistance is hindering the American individualism and it is creating an unnecessary environment for riches to carry their burden too.

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    To be real critical about this issue, I seriously believe that the poor are not trying hard enough to fulfill their needs and wants despite all the assistance they are receiving. Although I'm not in their position because I've never experienced what they've gone through at first-hand experience, I still think American tax system is redistributing the income and it is only up to the poor to decide what they want to do with their future with the assistance provided

  58. masayaechlf09on 04 May 2010 at 6:34 pm

    @Jacob

    Haha! "The government should just go communist"

    But that just opposes the entire ideology that exists in America. Individualism and free-market is what created America in the first place, and have been driven by that force. Those billionaires in the top 5% has basically earned that money with their individual effort. I think the American economy revolves around the "survival the fittest" and the current tax system in progressive form is, I think, disrespecting the efforts the riches made to get up there and making an extra burden for them

  59. marcelo.echl.f09on 05 May 2010 at 5:43 am

    1.Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Well, not really, since the difference in taxes is only of 3% between upper class and middle class. The rich have nothing to complain about, but rather the poor do.

    2.Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Because regressive taxes allows the richer to pay a lower proportion than the ones a bit less rich.

    3.How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    22% of the income is earned by the top 1%, while 3% of income is earned by the bottom 20%. The progressive tax system is not a disincentive for Americans to work harder, however, because the share of taxes that the rich pay is about equal to their share of the national income.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Well no, I always knew that life was unfair. And no, not really, taxes in the US are not really effective at re-distributing income. By lowering a bit more the lower classes' tax and augmenting the upper classes'.

  60. marcelo.echl.f09on 05 May 2010 at 5:46 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Well, not really, since the difference in taxes is only of 3% between upper class and middle class. The rich have nothing to complain about, but rather the poor do.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Because regressive taxes allows the richer to pay a lower proportion than the ones a bit less rich.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    22% of the income is earned by the top 1%, while 3% of income is earned by the bottom 20%. The progressive tax system is not a disincentive for Americans to work harder, however, because the share of taxes that the rich pay is about equal to their share of the national income.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Well no, I always knew that life was unfair. And no, not really, taxes in the US are not really effective at re-distributing income. By lowering a bit more the lower classes' tax and augmenting the upper classes'.

  61. marcelo.echl.f09on 05 May 2010 at 6:27 am

    Jacob and Masaya

    Jacob, I finally find someone who understands me. Yes, they should go communist and you know why? Because we're all people and there is no reason why one should be dying of hunger while the other is living with diets.

    Masaya, I have to disagree with your rather naive view of the way social classes develop, as most of the time the ones in the lower classes find a glass ceiling which does not allow them to climb up, even if they are smarter and hard-working than the richer. In addition, a great percentage of the ones in the upper classes were borned there, and others reached there through unorthodox methods.

  62. Dennis.echl.f09on 06 May 2010 at 7:11 am

    1. No, they don’t. The top 1% pay only about 3% more than the middle, when including all state, local, and federal taxes. The proportion of taxes the top 1% pays is about equal to their share of national income. Therefore we can conclude that there is no/not much of a discrepancy in tax levels between the rich and poor according to their national income.

    2.The richest 5% actually pay a lower level of tax on average than the 5% below them because they are so much more exponentially wealthy that a lower tax level can cover fairly their share of the national income.

    3. 22% of the income is earned by the top 1%, while 3% of income is earned by the bottom 20%. The progressive tax system does not provide disincentive for Americans to work harder because the share of taxes that the rich pay is about equal to their share of the national income.

    4. I'm not surprised by the difference in taxes between the richest and poorest Americans, as the US is well-known for income inequality. The tax system is generally effective, as the rich do not pay more in taxes than they earn as a percentage of national income, and the poor pay less. The fact that the rich pay slightly more than their share of total income is okay because we are in tough economic times and the rich need to help the poor out a little bit. It could do better by reducing the tax rate for middle income levels, as the addition of sales tax brings their rates almost to the level of the rich.

  63. Dennis.echl.f09on 06 May 2010 at 7:14 am

    Marcelo,

    You mention jokingly that the poor have something to complain about since they are being taxed only slightly differently than the rich, how come? I personally think that every member of an economy should contribute fairly, regardless of their income. Nobody should be complaining as long as the taxes are fairly based on the groups' contribution to national income.

    -Dennis-

  64. Armando.echl.f09on 12 May 2010 at 11:59 am

    1. I don’t is unfair to give the rich a higher tax, since they are only giving off 3% more than middle class. However I still belief there should be a gap of difference but not a severe difference

    2. Since there is less people in the richest 5% of America, the income is less than the 5% below them, therefore, the percent they pay diminishes, meaning regressive taxes, which allows richer to pay less than less rich ones

    3. Richer classes pay 21% more taxes than the poorer 20%. Therefore, the progressive tax system is not a discouragement for Americans to work harder, but because the share of taxes that the rich pay is about equal to their share of the national income.

    4. The gap is very normal as the richest are the extremely wealthy, while poor are the moneyless people who struggle to survive due to the welfare system that the US has. The progressive tax system is effective as it distributes the wealth, so that richer people can afford to have higher taxes than poorer people who need as much money as they can get to survive.

  65. Armando.echl.f09on 12 May 2010 at 12:08 pm

    Hi Marcelo,

    Well I believe that the gap of difference between that rich and poor is massive, therefore I dont think that it would be fair that everyone paid the same taxes as everyone recieves different incomes. However, I think that everyone must payfor taxes depending on their wealth, income and social status. Instead of making rich pay a bit more and poor a bit less. For instance, everyone must pay 10% of their total income, so for the rich 10% of their income and for the poor 10% of theirs.

    Armando

  66. Eline.echl.f09on 16 May 2010 at 10:31 am

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Though the rich are more heavily taxed than the poor and their share in the total taxes paid even exceeds their share of the total income and this might seem unfair, it must also be taken into consideration that the rich have very high incomes and have no problem surviving with a substantial portion of their income going to tax, something that cannot be said of those earning the lowest incomes.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    As can be seen in the second graph, the share of income this richest 5% brings in is almost 40% – in other words, they are the ones that inject most in the economy and they are most needed. By making them pay a lower tax rate than the 5% below them, they are investing their money into the U.S. economy rather than expatriating themselves to avoid taxes and invest their money elsewhere.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    Almost 24% of America's total income is earned by the richest 1%. Therefore, America's progressive tax system does not destroy the incentive for Americans to work hard and become rich as the rich earn more or less the same as they lose to taxes. On top of this, America is a very capitalist country and this will encourage people to earn more to buy the many things they want.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    No, the gap between the richest and the poorest Americans does not surprise me. America's tax system is not that effective at re-distributing the nation's income as not all tax money benefits the poor (see the Iraq war) and the tax system is apparently even slightly regressive so that the rich may invest more in the economy and will benefit from this while the poor receive nothing of this money invested into the economy and the income gap will widen. Furthermore, America's most wealthy have the tendency to evade taxes, moving out to other countries at the time income tax is due. The tax rate for people of lowest income is 18.7%, comparing this to other countries this is still relatively high and should be lowered, while taxes for the highest 5% should be increased in order for the tax system not to be regressive- then the tax system could be more effective in re-destributing the nation's income.

  67. Eline.echl.f09on 16 May 2010 at 1:24 pm

    Jacob,

    You mention in your answer that you believe the wealthy are taxed unfairly as they are rich as a result of their hard work and determination. I can see your point, and in a free market you will always have unequal income. But I can also see that America's rich are becoming even more rich while the poor are finding it hard to break out of their condition, especially when they are faced with economic problems such as inflation and recessions. Nowadays it is almost impossible for the poorest American to become as wealthy as the richest American. Don't you think that if everyone were to be taxed equally this would only widen this gap even more?

    However, as you say, the government still chooses what to do with tax revenues and this does not always go into income redistribution – in some rich areas you will, for example, find more police to keep the neighborhoods safe than you would in the more destitute areas.

    Your response really made me think, so thank you for that!

    Eline

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  71. Sebastiaan Ploos vanon 27 Sep 2010 at 8:44 pm

    There will never be a fair tax system.

    Either the rich will benefit or the poor will get an advantage.

    Rich pay too much or the poor pay to little. The taxes from the richer shouldn't just benefit the poorer they should also help the rich with school systems.

  72. bobon 29 Sep 2010 at 6:02 am

    Do the numbers for the lowest two quintiles account for the tax credits, food stamps, childcare, rent assistance and other monies they receive from the government? If not it should be deducted from the percentage they pay in.

  73. Garnet Arneton 09 May 2011 at 8:46 am

    Okay, it really is a nice beginning however i'll have to take a look at that a touch more. Will show you exactly what more i have found.

  74. Sondos2on 09 May 2011 at 8:47 pm

    • Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Based on the data, the rich in America do not pay an unfair share or proportion of the total taxes the US government collects since, according to the first graph, the fact that the tax curve is less steep when all forms of taxation on total income are combined and calculated, indicates that there is not any significant disparities between the respective proportion of taxes paid by each income group. In fact, according to that graph, the top 1% income group pay less percentage taxes of their income in comparison to the few income groups which precede it. Furthermore, it’s been noted that “research has found that many states and local governments have more regressive tax systems, though, that might offset the progressiveness of federal tax rates.” The combination of these observations and research results strongly suggest that the rich in America do not pay an unfair proportion of the total taxes the US government collects.

    • Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    This can be explained in many ways. The 5 percent below the richest five percent may have incomes which fall into the tax bracket where the optimum tax level in America is attained, and so the government will receive the greatest tax revenue from them. Another explanation may be that if the government wanted to collect the same tax revenue for the second richest 5% as from the richest 5%, then their percentage progressive income taxes will naturally be higher.

    • How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    I would estimate that the richest 1% of the population have an approximate 20% greater share of total taxes paid and therefore contribute 20% more to America’s total income the the poorest 20% of the population.

    Yes, there is a possibility that the progressive tax system does indeed destroy the incentive for Americans to work hard and become rich because the more they earn, the higher the taxes they’re likely to pay, meaning that they won’t be able to entirely benefit from their increasing wealth. There’s also the very expectation of higher taxes associated with higher incomes despite the fact that they still have greater after-tax revenue which may reduce the incentive for Americans to work hard to become wealthier.

    • Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap between the richest and poorest American does not all surprise me that much since I was generally under the impression that although America is a mixed economy, it was more inclined to a market economy system which innately generates unequal distributions of income. I think that the tax system is relatively effective at redistributing the nation’s income: the richer pay higher percentage taxes from their income whilst the poorer pay lower percentage taxes of their income. The weakness lies in the fact that this does not apply to the second richest 5% of the American population; this is where the inconsistency of the progressive tax lies, and where I think the richer you are, the progressively greater overall taxes you should pay, keeping in mind that income re-distribution is the primary goal. Another weakness also lies in the fact that these progressive taxes reduce the incentive to work harder and to become wealthier. The government may intervene in order to increase the incentive to work by other means.

  75. Sondos2on 09 May 2011 at 8:47 pm

    Comment to: diana.ecsl1.f09

    I agree with you on the account that if the richest of the rich share about 20% of America’s income, then they should at the very least have to pay just as much in taxes. The fairly efficient re-distribution of income can also be outlined by the less steep tax curve, and the fact that the more you spend on luxury goods which generally have higher indirect taxes imposed upon them, the naturally higher overall tax percentage you would be paying…

  76. Fabian_MontoyaFendton 11 May 2011 at 6:29 pm

    1. I think that it is unfair that the top1% pay nearly 25% of the tax income of the government. It is right that the tax is a progressive tax but it is too harsh on the rich people. eventhough they have enough money to live nicely it is unfair that a third of their income is taken away and only a fifth of the poorest.

    2. I think that it is even unfairer for the 10-5% richest american to pay that much in theory it should be the richest paying the biggest percentage. But as the government makes the most money from the 5% richest americans, and nearly nothing from the 10-5% richest, they have to pay more of their income.

    3. It does not destroy the progressive tax system because this is what it is aiming to do. But i think that it is unfair that 1% makes about 7 times more income than 20%. This is why i think it is unfair for the richest but the poorest need this money.

    4. I think that the tax system does what it is supposed to do but I think that it is too harsh on the rich people. it could do that better by lowering the tax on the richest people and be more fair. And the gap does not suprise me as some people do not earn a lot but the ones who earn a lot do earn very very much.

  77. KangSan Keumon 11 May 2011 at 6:38 pm

    1. I don’t is unfair to give the rich a higher tax, since they are only giving off 3% more than middle class. However I still belief there should be a gap of difference but not a severe difference

    2. Since there is less people in the richest 5% of America, the income is less than the 5% below them, therefore, the percent they pay diminishes, meaning regressive taxes, which allows richer to pay less than less rich ones

    3. Richer classes pay 21% more taxes than the poorer 20%. Therefore, the progressive tax system is not a discouragement for Americans to work harder, but because the share of taxes that the rich pay is about equal to their share of the national income.

    4. The gap is very normal as the richest are the extremely wealthy, while poor are the moneyless people who struggle to survive due to the welfare system that the US has. The progressive tax system is effective as it distributes the wealth, so that richer people can afford to have higher taxes than poorer people who need as much money as they can get to survive.

  78. tomoya_sekineon 11 May 2011 at 7:12 pm

    2. To some extent I believe that the rich in America pay an unfair proportion of the total taxes the US government collects, because the rich Americans have the money to pay for taxes, while being able to afford basic necessities and other luxury items. Whereas the poor or the lowest income group generally have trouble being able to afford these things, and yet they are practically paying as high as 20% of their income. However, at the same time I think that this is a balanced amount when I think about this in terms of keeping the economy stable (for inflations especially).

    3. The richest 5% in America pay a lower level of tax on average than the 5% below them because of regressive tax (a type of tax that takes a smaller proportion of a person’s income as their income increases). It is stated in the article above that many states and local governments have more regressive tax systems, and when these data are collected from these places that have more regressive tax systems, it would probably mean that the rich are paying less (on average) than the poorer.

    4. More than 20% of the total income is earned by the richest 1%, while less than 5% of total income is earned by the poorest 20%. Yes, America’s progressive tax system would definitely destroy the incentives for Americans to work hard and become rich, simply because they don’t earn enough income. As well as the fact that a large proportion of their income is spent on taxes and as income rises, the tax payment will also increase. Therefore most Americans would feel that they are not able to become “rich” as they have all these payments to cover.

    5. The gap between the poor and the rich does not really surprise me; it’s almost like this everywhere in the world today. The rich will stay rich (and even get richer), while the poor will stay poor (unless in many cases in the United States, you get lucky enough to get into the entertainment industry via internet and such). This situation is a very hard thing to ‘fix’ or to improve, as reducing the overall tax could lead to high inflation rates (people will receive more and more income). However if we think about just reducing the gap between the poor, middle-class, and the rich, I would think that changing the tax level of one income group would be the best. For example if the rich paid more for taxes, their income would likely decrease (taxes in proportion to their income).

  79. tomoya_sekineon 11 May 2011 at 7:22 pm

    To: Christopher.ecsla.f09

    For your fourth question…

    You say it is “highly unfair” to the individuals that worked hard to make the money that they are making and you said that the tax rates should be decreased from 33% to 25%. However my question is, who is to determine who worked “hard” or not? As much as I believe the hard work put into becoming ‘rich’ and successful, I would imagine that there are many* millionaires and rich people in the world who are given their position by birth and inheritance. At the same time, I wouldn’t think that 30% of a rich person’s income would affect them to a great extent. Sooner or later, they will voluntarily quit their jobs, which would automatically reduce the amount of tax they must pay (as tax payment is proportionate to income).

  80. Nabil Elbehrion 11 May 2011 at 11:10 pm

    • Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    According to this data I believe that the richest Americans do not have to pay an excessive proportion of tax. In fact it is only a few percentage points away from the middle tax bracket, and although this may actually be more money it is proportional and that is the only criteria that should be acknowledged. These tax levels may seem fair to me because I believe that if you make more money you should pay more taxes, this is a liberal perspective and may not seem fair to a conservative. A conservative would say that we should all pay the same or that at least taxes should be low in accordance with ‘small government’ ideology, (except military and security ironically don’t seem to need to have small budgets.)

    • Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    30% from the top 1% and 32% from the top 4% essentially the same thing. This is because the richest of the rich will be paying the most anyway even if the proportion is slightly smaller.

    • How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    • Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Based on the graphs the top 1% make 22.5% of the income while the bottom 20% make only 3%. I don’t believe that this tax system encourages people to not work hard or be lazy but increasingly creates a disparity between those at the top from those at the bottom. This disparity is not good for any economy and is mostly seen in developing countries. IN this case the rich should be taxed more and the poor taxed less creating a more balanced and stronger economy. The Gap does not surprise me infact it is rather predictable according to some progressive intellectuals and economists. The necessary next step in effectively re-distributing the nation’s wealth is to increase the tax rate for the wealthy and spend on the poorer peoples to build a strong foundation for the country.

  81. Nabil Elbehrion 11 May 2011 at 11:21 pm

    @Jacob.echl.f09

    Altough many rich people have acheived their wealth through hard work and determination, it was not earned by them alone. Society plays a hug role in this, for example being born into a developed nation with a functioning or even advanced education system already puts a person ahead in acheiving material succes. The lack of poverty, hunger, conflict and the myriad of choices available make a person born into a developed society much more likely to become wealthy then in other places.

    Regardless of hard work or determination taxation is not a punishment for those who have money but a duty that is carriedout by every citizen on a relatively equal bases. The rich are paying more but they have more to start with so it is in fact more fair to them then the poor who pay proportioanlly less.

    Governments tax not to perserve the richest citizens wealth but to provide fair and equal oppurtunity to ALL citizens.

    Those who have more should give more, those who are poor should be helped. This is the only path to a succesful nation, one that works for all not the few, for this is the purpose of government and taxation.

  82. Nicole_Sonderegger_Non 12 May 2011 at 6:27 pm

    1. It does seem that the rich have pay an unfair proportion of the total taxes, as their share of total taxes is greater than their share of income. However, when comparing the proportion the rich have to pay to that that the poor have to pay, one can see that the proportions are very similar.

    2. The richest 5% in America pay a lower level of tax on average than the 5% below them because their income is greater, and so if their tax percentage is as high as the one slightly “less rich” people have to pay, then they would be paying humungous sums of money. A smaller percentage of a rich person’s income is a lot greater than a large percentage of a poor person’s income.

    3. The richest 1% earn about 23% of total income, while the poorest 20% earn about 3% of total income. I do not think that America’s progressive tax system destroys the incentive to work hard to become rich because income levels and taxes seem to rise proportionately. It would obviously be more encouraging if the percent increase in taxes was less than the percent increase in income, but the government needs to increase taxes as people’s income rises in order to help those whose income remains very low.

    4. No, I am not surprised by this gap. As one of the richest nations in the world, there is bound to be an unequal distribution of wealth, as the people who rise to the top and are very successful in their fields are the ones who take the largest proportion of the nation’s income. America’s tax system does a decent job of distributing income, but it could do better. Taxes on the poor should be diminished, and taxes on the rich should be slightly increased.

  83. Nicole_Sonderegger_Non 12 May 2011 at 6:39 pm

    @Sondos2

    I do not understand why you say that the second richest 5% are not being charged sufficiently high taxes as compared to the richest 1%, because it is actually this very income group who pays the largest percentage of tax. If their taxes were raised much more, they would end up losing a lot of money, which would contribute to discouraging people to work hard to become rich because they would be forced to pay very high taxes.

  84. AbhinavSahon 14 May 2011 at 9:32 am

    Rich Americans pay a roughly equal share of tax compared to the share of income they generate. However, if local and state taxes are taken into account, the richest Americans (top 1 %) bear a tax rate of 30.9%, which is lower than the 32.2% for the richest 5- 10 %. On average, however, the richest 10 % do pay a higher rate of tax than the rest of the 90 %.

    The richest 5 % of Americans pay a lower level of tax because of state and local taxes which are often regressive in nature. These blur the progressive nature of the federal tax system.

    Approximately 22 % of income is generated by the richest 1 %, compared by roughly 3 % for the lowest 20 %. This statistic contradicts the notion that high tax rates destroy incentives to work hard and get rich (if this were the case then the top 1 % would not be generating as much income). Nevertheless, the fourth 20 % generates roughly 18 %, compared with 10 % for the richest 5 – 10 %. Noting that the richest 5 – 10 % pay the highest rate of tax, this statistic does suggest that high tax rates destroy the incentive to get rich. However, once beyond this threshold, the incentive is present once again.

    The federal tax system, being progressive in nature, does redistribute income and wealth. However, local and state tax systems, if regressive in nature, overwhelm this progressive nature and destroy the re-distribution of income. The large differences in the share of wealth between the rich and poor are not surprising; this iniquity is characteristic of most economies. Nevertheless, the federal tax system should be enforced over and above the local and state systems (or perhaps they should not exist at all and the federal government should be responsible for generating funds for local/state governments).

  85. AbhinavSahon 14 May 2011 at 9:36 am

    Response to Nicole:

    Nicole, you stated that the tax system does not destroy the incentive to work. I thought that too, initially, however the richest 5 – 10 % of Americans (who are burdened with the highest tax rates due to the regressive nature of local and state systems) contribute less than the next 30 %. I believe this does indeed show that very high levels of tax do reduce the incentive to work, at least for some thresholds.

  86. Daniella_Majlufon 15 May 2011 at 5:36 pm

    2. Rich in America do not pay an unfair proportion of the total taxes that the US collects, in my opinion, since the percentage that they pay in taxes is only 3% higher than the people that are not rich.

    3. The richest 5% in America actually pay a lower level of tax on average than the 5% below them because there is less people in the richest 5% of America, therefore the income is less than the 5% below them. The percent that they pay diminishes because of this (regressive taxes). This causes the rich people to pay less than the poor ones.

    4. The richer classes pay 21% more compared to the poorest 20%. The progressive tax system doesn’t discourage Americans to work harder. The taxes that rich people pay are similar to their share of the national income.

    5. The gap between the richest and the poorest Americans doesn’t surprise me since it looks very normal. So the progressive tax system does work since the wealth is well distributed. Rich people can pay higher taxes than poor people.

  87. Daniella_Majlufon 15 May 2011 at 5:38 pm

    @ Nicole_Sonderegger_Norris

    I agree with your answers except for number 1 in which you say that the rich pay an unfair proportion of the total taxes that the US collects. But you do have a great point.

  88. Mehmet_Mert_Sumaon 15 May 2011 at 7:01 pm

    1. The rich in America absolutely does not pay an unfair proportion of the total taxes. In the first chart, we see that total taxes per income of the rich is approximately 10% higher than the poor. Paying 10 percent higher of income tax for a person who earns 20,000,000 dollars per year is reasonable when we compare that income with an annual incom 20,000 dollars.

    2. As it is stated in the article, the regressive taxes are the main reason why the richest pays a lower level of tax on average.

    3. The richest 1% earn about 23% of total income while the poorest 20% earn about 3% of total income. We cannot say that America has a progressive tax system because America is decentralized in many ways and some states and local government have regressive tax system. Proggresive tax systems may remove the incentives depending on how strict they are.

    4. No, I am not suprised at all. For a productive and wealthy country, this is an expected gap. I don't think any fiscal policies should be used to remove the gap. the solutions such as levying high taxes on the rich would be destroying the incentives and reducing the production. More social rights like access to better education etc. would help the poor to ascend and earn higher incomes.

  89. Mehmet_Mert_Sumaon 15 May 2011 at 7:05 pm

    @Nicole_Sonderegger_Norris I agree that American tax system is decent because it does not destroy the incentives while it gives a fair higher proportion income tax for the rich. Besides, it seems that there is a combination of progressive and regressive tax system in the country. this is quite helpful, as well.

  90. tiffany_williamon 16 May 2011 at 8:44 am

    1.It's not an unfair proportion since it is shown that the total income of the rich is higher compared to the poor. So paying 10% higher of income tax is still fair and appropriate.

    2. It is because the type of taxation is regressive. So it makes the richest pay a lower level of tax on average than the 5% below them..

    3. I dont think it destroy the incentive for Americans to work hard because the tax and the income are slightly proportional. However, it is highly suggested for the tax to be slightly lower than the income received to increase employees' working motivation.

    4. Increasing the tax will only make the employees not motivated and not having the incentives to work. no, it doesn't surprise me in this situation.

  91. tiffany_williamon 16 May 2011 at 9:05 am

    @# Sondos2

    totally agree with you sondos :)

  92. Noah Flanikenon 16 May 2011 at 4:34 pm

    - Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    I would say that these rates are not unfair. Any higher tax rates imposed on the rich and then I might start saying that the rich are paying an unfair amount. As I was looking at some countries tax system, the rich were paying almost 50% of their income. That is definitely unfair. I would say that the rich are not paying an unfair proportion of the taxes the government collects. The government has to collect enough taxes to provide public services and if we started taxing the poorer percentage of Americans more than already they may not be able to afford the taxes along with other necessities and may not be able to afford a home and drive our economy into the ground as more and more Americans drop into that poverty level.

    – Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The tax would be lower for the top 1% richest people so that they pay a similar tax in terms of dollars. A lower percentage of his or her higher income will still be similar dollar amount as someone with a higher tax rate at a lower income. For the richest Americans, the government figures that taxing them a higher, or the same percentage as the 4% of Americans making the next highest income, percentage may be too high of a dollar amount.

    – How much of America’s total income is earned by the riches 1% compared to the poorest 20%? Does America’s total progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% of Americans earns about 23% of the total income accumulated by Americans as a whole while the poorest 20% of Americans earn only 3-4% of the total income. I would not say that the progressive tax system discourages people from working hard. The tax is low enough that even for the rich Americans, working hard and making a high income will still provide you with a very nice disposable income. The rich are still making a much higher disposable income than the poorest, and even middle income, Americans.

    – Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    I was not surprised by the fact that there was a decent size gap but the fact that the sum of the share of income made by the “lowest” 60 % of Americans is less than the income may by only the top 1% of Americans is very surprising. I would say that the government does a good job redistributing taxes though. They do a good job of having the top 20% of Americans make up a bit higher percentage of the share of taxes while the “lowest” 60% incomes make up a share of the taxes collected that is a bit less than there percentage share of income.

  93. Michael_Mayeron 16 May 2011 at 9:23 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    It is fair even though it is more than the poorer people, because the rich can afford to lose more money to taxes without feeling a loss.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    They have already made their money and feel no need to continue working.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% of America's population still makes much more than the poorest 20%, and America's progressive tax system does not discourage the rich from working diligently because the rich still make a significantly greater amount of money than the poor.

    4. Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    There is a progressive tax that taxes the wealthy more than it taxes the poor, but the gap is still notably large. However, there really is no completely fair way of controlling this, so I do not hold the government, or anybody else for that matter, to blame.

  94. Michael_Mayeron 16 May 2011 at 9:25 pm

    @Noah:

    Your answer to question #2 actually makes a ton of sense, and helped me to understand what I was originally confused about. I applaud your clarity of thought.

    -Michael

  95. mboadeon 17 May 2011 at 1:32 am

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    The only group that pay an unfair proportion of the total taxes the US government collects are the 5% with the highest income. The rest of the Americans pay a fair amount which is a progressive tax.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% of America actually pay a lower level of tax on average than the 5% below of them because the have some tax reduction. Some people say that this is a consequences of their influence in the congress.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1% earn 7 times more income than the poorest 20%. In a way the progressive tax system destroy the incentive for Americans to work hard and become rich because they need to give more money if their income increase but at the end they will have more money in their hands.

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    Yes, the American's tax system is doing an effective job re-distributing the the money until the last 5% richest people who are paying less money than they should.

  96. Noah Flanikenon 17 May 2011 at 1:48 am

    @AbhinaSav

    I thought you used the graph well to make your point in your answer to question 3. You mentioned that taxes have been this high but the richest Americans are still making a very high income. This shows us how we can definitely use history (even fairly recent history) to prove a point such as the fact that Americans will keep working hard at higher tax rates. What do you think would be a limit for tax rates for the richest Americans where they would still work just as hard?

  97. Talia_Greeneon 18 May 2011 at 12:07 am

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No, they don’t. The second graph shows that the amount of taxes individuals pay is proportional to the share of income they receive. Also, many state governments have systems that are much less progressive than the federal government, and so the two counter each other.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Many states have a regressive sales tax system, which means that people pay less in taxes with a higher income. This offsets the federal government’s progressive system, resulting in the rich paying fewer taxes.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The top 1% earns about 22% of the income, while the poorest quintile earns about 3%. It does not destroy the incentive. As shown by the graphs, the rich do not pay taxes that are disproportional to their income or that are even significantly higher than the middle class. The rich are still able to keep the majority of their income, and so the benefits of becoming rich far outweigh the slight increase in taxes.

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    It is very large, but does not surprise me. The system is obviously not effective, as the rich do not pay a proportionately higher tax level and basic services are not widely available for the poor.

  98. Talia_Greeneon 18 May 2011 at 12:13 am

    @mboade:

    I disagree that the American tax system effectively redistributes income. While the progressive system is meant to accomplish this, the rich do not pay a significantly higher percentage in taxes than the middle income class. Especially after the Bush tax cuts, which predominantly cut taxes for the wealthy, the taxes paid by the rich don’t seem to be high enough to effectively redistribute the income. I think that if it was effectively redistributed, it would be in the form of public services such as healthcare and education, which simply aren’t widely available at a good quality level for the poor.

  99. Eleonora_Bisioon 19 May 2011 at 12:13 am

    2. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Rich American people do pay an unfair proportion of the total taxes the US government collects. AS shown in the second graph, from 20%lowest to 20% middle share or total income is greater than share of total taxes paid. On the contrary, from the next 10% to top 1% share total income is less then share total taxes paid. Therefore, since rich people have more taxes than income they pay an unfair proportion of taxes.

    3. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% in America pay less tax on average because it might be that as the disparity between the incomes of the 2 groups increases than the disparity of tax rate between the 2 groups increases. Therefore, the structure of the progressive tax system is not always optimal.

    4. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    22% against less than 5%. American’s progressive tax system does destroy the incentive for Americans to become richer because the richer you are the greater is the percentage of taxes that you have to pay. Therefore, at the end, you will not entirely benefit from your increased profit.

    5. Use the data to construct a Lorenz Curve for the United States. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    The gap does not surprise me because such disparity of income is present in the majority of the countries. This is because it also depends on the structural characteristics of the economy such as the low system. In order to narrow the gap between the poor and the rich, we could increase the tax for the richest. According to the progressive tax system, this solution will incentive, however people to work less and consequently earn less income.

    ________________________________________

  100. Merve_Akpinaron 19 May 2011 at 1:11 pm

    2) Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Based on the data above, rich people pay an unfair proportion of the total taxes the US government collects. I know that the government collects the taxes according to income, but I believe that it is discouraging to effort for a luxurious life. Very rich people are giving almost 25% of their income as a tax; rich people are giving almost 16% of their income while the poor people are giving almost 5% of their income. In my opinion rich people have higher life standards so they must have more money. As a result it is unfair.

    3) Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    I think it is related with population. The number of rich people which form the 5% of rich people in USA is lower than number of people who are below than 5%. So, as a total these people get more money as a wage, therefore they pay more money as a total. That is why government gets more money from these people.

    4) How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The government gets 21% of the income of 1% of the richest people while it gets 5% of the income of the poorest 20%. As I stated in my previous answer it is unfair and discourages people not to be very rich. Of course no one would say that: “I do not want to be rich because I will pay more tax”, but after they became rich, they do not want to invest anything for their country as a reaction to government. As a result I believe that America’s progressive tax system destroys the incentive for Americans to work hard and become rich, even if it is long process.

    5) Use the data to construct a Lorenz Curve for the United States. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    The gap between richest and the poorest Americans did not make me surprised. Because when we look at the tax distribution, we see a great difference. It is the reflection of income distribution. Rich people earn really much and they pay really much as a tax. I think tax system works well. But my first impression was not like that. I would like to say that paying taxes are the bad and side of capitalist system for rich people also it is the only one, but we must add that mostly poor people are the ones who are crushed under the system. As a result it is fair.

  101. Merve_Akpinaron 19 May 2011 at 1:16 pm

    @Michael

    I liked your answers especially the third one. You also beleive that tax system is a progressive one. Even if the richest people are paying highly much it is fair because they are earning highly much.

  102. Bryan_DiLauraon 20 May 2011 at 8:22 pm

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No, I don't think that the rich are paying an unfair proportion of the total income. To explain this, I will show what I mean in the context of each graph, individually. For the first graph, we can see that America is on a progressive scale of taxation, with the richer paying more, while the poor are paying less. However, we can see that near the really high end of the income groups, that their proportion goes down. So in fact they are paying less than they supposedly should. In the second graph, you guys are getting too hung up on minor things here. The whole idea of a progressive tax is to try and even the distribution of wealth, which is what is being done here. The rich are being taxed more, and are contributing more of the tax than the poorer people, leading to less money for the rich (but they have tons of it so it doesn't really matter) and more for the poor (who sometimes have a hard time buying food). So overall, I think that the rich are paying a totally fair proportion of taxes.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    I think this can be for many different reasons. First of all, the progressive income tax system has a hard time taxing them as there is such a big difference of incomes for these people. Both bill gates, and some other random person who earns a lot of money fit into this band, which means there could be a large gap in the amount of income. Also, the way these people earn their money can sometimes be unorthodox, making them harder to tax (like just earning interest, foreign business affairs etc.). Finally, many governments have some regressive taxes, like sales tax, so these don't effect the super rich nearly as much, leading them to pay a lower percentage of their money.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The poorest 20% of the population earns less than 5% of the total income, when the richest 1% earns almost 25% of the total income. Although the richer people pay more of their income towards taxes, you don't see really rich people living in cardboard boxes in the streets, the fact is that they have more to give. I think that this question is focusing on the wrong thing, it isn't taxes that is the incentive for Americans to work, it is their standard of living. It is just common sense that if you earn more, you have a higher standard of living. Taxes play a part in that, as they take some money away, but it shouldn't be the main focus.

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    The gap between the rich and the poor in America doesn't really surprise me, as I live in America, and I see this everyday. I see people begging on street corners, and yet I also know that there are big CEO's that live in America as well. I think that America's tax system is doing an OK job at re-distributing the wealth, however it can do much better. It has a true progressive system, taking more from the rich, and less from the poor, but I think that they should go to further extremes on both sides. This will increase the standard of living for everyone in the country, rather than just having all the good stuff for the top 20%.

  103. Bryan_DiLauraon 20 May 2011 at 8:25 pm

    @Merve_Akpinar

    I disagree. I think that the rich are paying just as much as they need to, if not less. They have much more money to give, and will feel less hurt from giving up the money, when compared to to a much poorer person. The government's goal is to help all of the people it governs, not just the select few at the top.

  104. Melis_Selin_Tatlicanon 20 May 2011 at 11:49 pm

    2) Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Based on the data above, rich people pay an unfair proportion of the total taxes the US government collects. Because government collects the data according to the incomes of the families but the ratios are changeable. So there should be a balance in order to make these taxes fair.

    3) Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    I is about population. The number of rich people which form the 5% of rich people in America is actually lower than number of people who are below than 5%. So that, these people have more money and pay more as taxes.

    4) How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The taxes have no balance according to the income of the people. Yes rich people are earning more money but they are also paying lots of money to the government. This situation discourage rich people to work for their country so we can say that, America’s progressive tax system destroys the incentive for Americans to work hard and become rich

    5) Use the data to construct a Lorenz Curve for the United States. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    The gap between richest and the poorest Americans did not make me surprised because we can see the difference from the distribution of the taxes. It is occurred according to the income of the society. This can be proper for the incomes of the people but this difference should not be that much high in order to save both poor and rich people for the benefit of the country.

  105. Melis_Selin_Tatlicanon 20 May 2011 at 11:51 pm

    Hi Merve, ? agree with you about your answers to the questions. I like the way you think about taxes and the income.

  106. Dilan_Guneson 21 May 2011 at 12:28 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    In my opinion, according to the data above rich in America don’t pay an unfair proportion becuase the system for paying taxes has been arranged. For example; because the income of rich is more than the income of the poor the rich one will pay more.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    The richest 5% in America pay a lower level of tax on average than the 5% below them. For making the equilibrium in balance government make an equal distributing of taking money. Government should increase taxes for poor people having less income and by this poor ones pay almost the same amount of money as rich ones do.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    There is a huge gap between the amount gained from rich people and poor people even though the percentages are far different from each other too. America’s progressive tax system don’t destroy the incentive for Americans to work hard and become rich because even though the rich ones may a lot they are still rich and have more than enough money to survive. On the other hand, as answered in the third question there are more taxes on poor people for make the amount the same with the rich ones.

    4. Use the data to construct a Lorenz Curve for the United States. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    It surprised me and confused me a little bit. The new tax system can be efficient for redistributing the income. Normally the progressive tax system is taking more money from the rich ones. I think putting more taxes to poor people for taking exact amount of money from everybody will make poor ones poorer so I don’t think that will narrow the gap.

  107. Dilan_Guneson 21 May 2011 at 12:32 pm

    To KangSan Keum,

    I liked your ideas they are short but meaningful on the other hand I also think that the tax system is fair enough because if poor adn rich pay the same amount of money then the poor ones will be poorer or worse than that.

  108. Jackson_Moteon 23 May 2011 at 2:38 pm

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Based on the data above, the top 25% of Americans pay an unfair proportion of the total taxes the US government collects. This is evident in the second bar graph titled Shares of Income and Taxes Paid. In this graph, you can see that the purple bar which represents taxes in higher than the percent of income received. This means that the top 25% pay too much in taxes.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    This is because tax cuts that were implemented by President Bush give the richest individuals in America tax cuts therefore leading to lower taxes or at least a lower percentage of income paid within these privileged individuals.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest receive nearly double of the percent of income compared to the poorest. Yes, it poaches off of individuals hard work and determination. I agree with taxes, but just because someone chooses to do well in school and be successful does not mean that they should be unfairly taxed.

    Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    No, the gap does not surprise me. Use fiscal policy to aid the lower income individuals while keeping the hard work of the high income individuals intact.

  109. Jackson_Moteon 23 May 2011 at 2:40 pm

    @Sondos2

    I disagree with you regarding the richest Americans and taxes. As seen in the second graph, the high income americans do pay more percent of the total taxes than the lower 75% of americans. The purple bars are higher than the blue bars in the top 25% supporting this.

  110. Dogan_Can_Ozcanon 24 May 2011 at 6:17 pm

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    *I think based on the data above, rich people pay an unfair proportion of the total taxes the US government collects. Because if we look at the graph we see that really rich people pay only 25% of their income. Rich people pay 16% of their income and poor people pay 5% of their income. When we consider about the economic level of US we can see that rich people have very high life standards so they should pay more taxes than poor people because of this I think it is unfair.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    *The most important reason for this is population. The people who are in that 5%, get higher wages. Because of this they pay more taxes.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    *1% of rich people give 21% of their income. 20% people give 5% of their income. I think America’s progressive tax system destroy the incentive for Americans to work hard and become rich. Because if government gets more taxes from rich people this means government will have more money and they can give more money to the poor people(help).

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    *It didn't make me surprise because all of the people in the world know that there is a huge difference between rich and poor people in America. This is because of the income. For example rich people earn more money than poor people. So they pay more taxes than them. I think government should take more taxes from rich people. Because poor people pay most of their money for their taxes. If government takes less money from them they will have more money in their hands. So this means government will be giving a chance to poor people to become rich.

  111. Dogan_Can_Ozcanon 24 May 2011 at 6:19 pm

    @Jackson_Mote

    Good answers, I liked your opinions but for the 4th question I think if you give some examples from the graph it would be better.

  112. Nesibe Z?rzak?ranon 24 May 2011 at 7:30 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    No. As seen in the graph, the amount of taxes that riches pay is proportional to their income. Rich people are more wealthy and have better life conditions which make them pay more. In a way it is unfair but the money that poor pays with respect to their income matches with riches.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    That's because those people have such place in economics that contributes more than income. If they pay higher taxes, this would be incentive for them to reduce their investment which is bad for growth. So government considers this. This is also to regessive taxes as stated in the article.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    It in a way destroys. Rich people already have consistent level of wealth and do not have such worries for future. Also from poor's side, poor people are discouraged and they lose their confidence to work harder because they see that their income is at the same level, always.

    4. Does the gap between the richest and the poorest Americans surprise you? What kinds of changes could be made to the tax system to narrow the gap between the top income earners and the middle and low income earners in America? Should this be done, why or why not?

    It did not really surprise me. In US, the tax system is doing well but I think more serious initiatives should be taken for it. Yes, the re-distributing wealth is going good because rich pays as proportinal to their income but this seems not enough. Rich is getting richer and poor is getting poorer. Maybe imposing extra taxes to riches whould help the balance system to be set.

  113. Cleon 25 May 2011 at 1:51 am

    Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Yes, because the rich are so disproportionally ricer than the poor that they should have to pay the disproportionate amount of taxes. Some people are earning massive amounts of money, that they could never spend, some of that should be heavily taxed.

    Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    Because the top 1% pays a high tax but the net 4% don’t they pay a much lower tax then the top 1%.

    How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    No, America's progressive tax system does not destroy the incentive for Americans to work hard and become rich, because the tax in the rich isn't that great compared to how much they earn.

    Does the gap between the richest and the poorest Americans surprise you? Do you think that America’s tax system is effective at re-distributing the nation’s income? How does it succeed? How could it do better?

    It surprises me a little, i knew that there was a gap, but the width of the gap is so huge, it seems that there sould be a little more re-distribution of income. I think that the richest citizens ar emaking way more than they could ever possibly spend, and that they could stand to have a lot less. I think that the government should have a higher tax on the richest 5%, and have them pay at least 5% of their income to either the government or Charitys.

  114. Cleon 25 May 2011 at 2:11 am

    # Talia_Greene

    I agree with your opinion about the progressive tax system in america. the problem with taxing the wealthy in america, is the wealthy give lots of money to political campaigns, and so if the elected officials want to say in office, they cant make the people who give them money mad.

  115. John Bianchion 24 Aug 2011 at 11:35 pm

    Mr. Welker,

    Although I personally believe in a regressive tax structure, I wonder if the graph presented accurately reflects the Top 1%'s contribution to society as a result of their income, beyond their taxes. In U.S. tax structure, persons that earn under a certain margin (about median income) have little tax incentive to utilize deductions (such as the charitable deduction), while top income earners are heavily encouraged to take advantage of deductions that may benefit society in other ways.

    For example, If a person earns $10M per year and donates $1M to charity, they receive a tax break of $300,000 or more…a strong incentive to donate to charity. Meanwhile, a person who earns a mere $35,000 per year would not benefit from donating the same percentage of their income ($3,500 in this case) to charity, as they would receive a tax break of $0.

    I would be very interested to see, of the Top 1% earners, the breakdown of their tax deductions.

    Regards,

    Mr. Bianchi

  116. Matthew Burnhamon 28 Aug 2011 at 4:50 pm

    1. Based on the data above, do the rich in America pay an unfair proportion of the total taxes the US government collects? Why or why not?

    Yes, with the vast amount more money that the rich have, which is more often than not, not being spent on anything. They should be taxed proportionately to their wealth instead of the poorer income earners who pay more. A tax on their wealth would benefit the government and allow for greater spending in the future.

    2. Why do the richest 5% in America actually pay a lower level of tax on average than the 5% below them?

    This is because of their higher income. If the top 5% where to pay the same as the rest on their income, they would be paying a proportionately much larger sum of money each time. The lower taxes is to keep equality in the sense that the top 5% aren't paying the most taxes and the poor the least but a more equal sum of money coming from each person.

    3. How much of America’s total income is earned by the richest 1% compared to the poorest 20%? Does America’s progressive tax system destroy the incentive for Americans to work hard and become rich? Why or why not?

    The richest 1 percent of income groups in America pays about 23% of American taxes, while the poorest 20% only pay about 3%. This tax system in a way demotivates the poorer to work harder and gain more income because for them their taxes will only ever increase. For the rich however the taxes on them are fairly stead and because they are already the richest their taxes will never be that much higher. Only get lower if they happen to lose all their money.

  117. Penelopeon 29 Aug 2011 at 6:22 pm

    Based on the data, I think the rich in America do pay an unfair proportion of the total taxes the US government collects. America has a progressive tax, which means that tax increases as income increases. As a result, the top 1% has to pay over 20% of their income in tax to the government, whereas those in the lowest 20% only pay half of what the top 10% have to pay. Because the rich have the ability to live comfortably paying 20% of their income, they have to bear a larger burden of the nation’s total tax receipts when the lower income households are paying a lot less tax from a smaller percentage of the income, which is unfair. The richest 5% in America pay a lower level of tax than the 5% below them because of their type of income. Roughly 23% of America’s total income is earned by the richest 1%. This destroys the incentive for Americans to work hard and become rich to a degree; because the more they earn the higher percentage of their income they have to back to the government, which doesn’t benefit the rich. However, the rich make enough money for the 20% they have to pay back to the government not have a large effect on their lifestyle and it would be more beneficial to them to pay earn more and pay higher taxes than to be poor and pay low taxes. Compared to the rich, the poorest 20% collectively earn about 3% of America’s total income.

  118. Nathan Pinnockon 29 Aug 2011 at 8:26 pm

    I believe that a progressive tax is the correct method of taxation for a nation. The rich are able to pay higher taxes, and they should if the nations best interests are put forward. The poor must pay taxes too however. Taxes allows for the government of a nation to pay for public goods such as health-care and education, which will allow for the poor of the nation to learn the skills that are required in the labour market. These taxes will allow a way for the nation to become both more efficient, and more equal (more people are entering the labour market, and their average income is increasing, allowing for a way out of relative poverty).

    Although some people may say that the higher taxes on the rich is 'unfair', the rich have other opportunities to make profit, such as investment in stocks, which are not available to the poor, and are not taxed heavily, allowing for the rich to make up what they lost to taxes in of their wages.

  119. Alexandre Kon 30 Aug 2011 at 4:48 pm

    Although it may seem unfair that the top 5% earners pay a lesser proportion of their income in taxes compared to the previous 5%, it is probably due to the fact that their income might come under different forms such as 'stock earnings', or 'profit', which is taxed differently. I believe that the top 5% rich Americans should not be taxed much more heavily, as they often are in command of large companies and provide jobs for many other Americans. Those people should clearly be taxed at a high rate, but also often pay taxes through their company, which also accounts for some tax receipts for the U.S. government. The U.S. government should also be particularly careful as to increasing tax rates. Potentially, this could lead to some capital flight, which could not be prevented, and would clearly not benefit the American government. Therefore, should taxes really be much higher on the richest Americans?

  120. Emmaon 30 Aug 2011 at 9:04 pm

    I agree with Alex that is does seem a little unfair that the absolute richest and paying a lower percentage of tax, if only by a tiny amount than the income bracket below them. However this could be seen as a very slight incentive for people to try and earn to become that top percentage on earners. When the rich have a much higher tax rate it decreases incentive to work hard to make that much, therefore causing inefficiency. The difference is very small, but when it is being taken as a percentage of a half a million dollar income, 1.3% doesn't come out to such a small amount anymore.

    For the progressive tax to be effective it has to be set at the right level. If the percentage tax increases too steeply it will cause inefficiency in the work force. However if set well I think it is very effective and gaining good revenues for the government and keeping society slightly more equal.

  121. […] I said the uber wealthy pay the top rate on LIKE income Do you have a problem with obtusement? Tax progressivity in the US: Do the rich pay more than their fair share? The evidence indicates NO! do you not understand that earned income, dividend income and long term capital gains income are […]

  122. Chris Bon 30 Aug 2011 at 9:36 pm

    Personally, I believe that a moderately progressive tax system would be the best option for a government. As the rich Americans earn a higher income, it won't make much of a difference if they have to pay a tax that is slightly above their fair share. In addition, rich households can make investments and in return make capital gains or earn dividend which are generally taxed lower than normal income. On the other side, this gives poorer households an opportunity to haul themselves out of the relative poverty. Furthermore, poorer households can invest their money as well and therefore obtain even lower taxes in proportion to there income. I am sure that not everything a poor household spends would be seen as a necessity (big car, big house). The higher taxes on the rich means that the government can supply better education as well as health care which in return means more people are capable of working which increases the efficiency. However, I would say that governments are generally not good allocators of money. Often times, money ends up in the wrong hands(wrong allocation or too high salaries for government officials) no matter who is in power. If this were minimized or eliminated, the poor as well as the rich would benefit in the long run. The poor will have better opportunities to get richer and the wealthy gain more money as firms can increase their efficiency due to a better educated work force.

  123. Nathan R.on 30 Aug 2011 at 9:51 pm

    I think the progressive tax system needs to be reworked so that each income bracket pays a higher percentage of their income on their taxes then the one before. The richest one percent should be paying less tax then the 4 or even than the 10% below them. And like the article proves, even if the progressive tax was to be revised in the United States so that the rich pay more, they would only be paying their fair share. Now, some may argue that everybody should pay a fix tax rate, but this does not promote equality or even equity in income. In a country where there is a fixed tax rate of 30% people who earn $100 spend $30 tax while people who earn $1,000,000 pay only $300,000 in tax, which speaking in terms of relative usage of disposable income is a lot lower for the richer than the poor. This also counters the argument that higher taxes discourage the rich from working. Having a real progressive tax rate will certainly increase the tax-burden on the rich but a billionaires drive to work is not going to be stopped because he has to pay 100,000 more dollars to the tax-office. Either way, tax on income is a lot higher than that on investments, which is where some of the richest of the rich get their income from. So even with a real progressive tax system, the rich would have a lot lower tax-burden than the poorest 20% of the population. So I don't agree that raising the tax on the rich would decrease either their incentive to work or the incentive to reach their level of income because, relatively speaking, tax burden always seems smaller when you have a lot more disposable income.

  124. Karen.Leungon 24 Oct 2011 at 10:18 am

    From the article I observed that the top 1%rich pay almost 25% of the tax in America. It seems unfair for the rich when we just look at the data. However, when we take a further consideration, it’s fair for the whole society. They own the most wealth of the society so it’s fair for them to pay back to the society. With the progressive tax, the income inequality can be minimized. The society can use these taxes to build the road, set the public transportations, and give the subsidy to the poor. All of these actions are good for the whole society and do well to the economic growth.

    I think one of the possible explanations for the phenomenon that the richest 5% in America actually pay a lower level of tax on average than the 5% below them is a small percent of the 1%rich is equal or even higher then the large percent income of the people in the next 4% below them. It’s a question about proportion. The proportion may be less but the actual number is higher.

    The first 1% in America earns almost 22% wealth of America, having a big divergence with the low income group which 40% of them only earn 10% of income in the US. I think the progressive tax won’t destroy the incentive for the Americans to become rich since they remain lots of money themselves after paying the tax. That’s say, the rich still rich after the tax and although the low incomers pay the low tax they are still much poorer than the rich. No one would not stop trying to being rich just because the tax.

    The big gap between the high income and the low income really surprise me. I believe that there must be some difference between the rich and the poor but I do not think that the gap is so big. I think the progressive tax is efficient. From one side, the government can get most of the money they need from the rich for the development of the society. Form the other side, the government gets less proportional tax from the poor which can help them to save more money and gradually become rich.

  125. sbroughtonon 26 Mar 2013 at 4:22 pm

    1. Summarize the argument against a government taking measures to redistribute its nation’s income to reduce the level of inequality between the rich and the poor.
    The real reason this argument is made is because a large enough portion of earners in the higher income bracket do not want the government to take the money from their work and their effort and then give it to someone who may be less deserving. Beyond this, though, some economists also believe that the gap between rich and poor actually improves economic progress because it encourages those earning less to be more productive in order to achieve a higher income. Of course, this theory and others like it have been disproven by many studies and statistical analysese, including the one mentioned in the article.

    2. Summarize the argument for a government reducing inequality.
    Multiple studies that have been done on the economic theories of “trickle down” and “rising tide” came back with results indicating that neither led to greater economic prosperity. The idea that a free-market can do just as well, if not better, without any government influence to keep the allocation of resources and income properly distributed has been disproven time and time again. The core of this problem comes from the fact that, when rich people get richer, they don’t just start throwing their money at the poor because they have enough to, they find other ways to spend it. That can include buying imports or just not spending it at all and saving it for as long as they can. Even if they did have enough extra money to make same large group of people richer, why would they? It’s in their best interest to keep competition low and employee wages even lower. That way, they never have to worry about something like profit margin.

    3. Popular belief holds that “a rising tide lifts all boats”. In other words, if the total income of a nation is increasing, it does not matter if the rich are enjoying a larger percentage of the higher income than the poor and middle, because everyone is likely to be better off than if total income were not growing at all. Does the study discussed above support this popular view? Why or why not?
    The study above does disprove this. The reason the “rising tide” theory doesn’t work is because it assumes the same thing trickle down does, “If the rich a bunch extra money, they’ll spend it on domestic products and employee wages”. The problem is, they don’t. As I said, it’s in the rich people’s best interest to keep wages low so they don’t have to worry about their profit margins. They can buy imports from other countries and, even they do buy domestically, most of that money is going to go to the rich, business owners and not the workers. Why? Because the wages are so low!

    4. What measures can a government take to assure that higher national income leads to higher standards of living for everyone in society, including the middle class and the poor? Why might the highest income earners be opposed to such attempts by government?
    To ensure a greater distribution of income, the government can set additional tax regulations for citizens within a certain, higher income bracket. They can then take the money earned from that and use it to subsidize companies that work to improve the lifestyle of poorer citizens and give money to those in the lower income bracket or who are less capable of doing work. However, the highest income earners are opposed to this because, as I said before, they don’t like the idea of the government taking the money they earned and giving it to whoever needs it, even if the person that gets the money never tried to work hard and improve their quality of life, anyways.

    5. Should government intervene to reduce the level of income inequality in society?
    Yes, and for two key reason. First, because greater distribution wealth means greater economic prosperity and greater economic prosperity, with government intervention, actually means greater income overall. Second, because the whole of economic progress to give everyone a better quality of life but, if we can only ensure that better living for 10% of the population, then what’s the point?

  126. sbroughtonon 26 Mar 2013 at 4:30 pm

    @Nathan R.

    I like the way you think, and that’s the same way I feel. Although, I assume you mean that richest 1% should pay more than the richest 10%, right? There should just be a logical stair-step system where income tax goes from nothing to something like an extra 5% every $50,000 or so that you make more. You’d essentially just have these simple intervals where people in higher income brackets would be taxed more but there would still be a higher net income than the net income for anyone getting paid less than them. Before we can setup a system like that, though, we should probably find a way to prevent those rich 1% or 10% from putting all their money in tax havens and off-shore accounts.

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    Tax progressivity in the US: Do the rich pay more than their fair share? The evidence indicates NO! | Economics in Plain English

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