Journal Entry – Who Pays Taxes?

Journal Entry - Who Pays Taxes?

Just like alone other human beings, Young Americans hate talking surrounding taxes. That is proof I dread writing this article, but it has to be done. The American reproach system is ridiculously complicated, it is invasive, and is in desperate need of reform. Of course, politicians have refused to do anything when it comes to reforming the tax code. They continue to add hundreds concerning pages to the regulations, adding complexities that only an accountant oppositely tax attorney can understand. The federal tax economy is also extremely progressive, punishing success. The system discourages growth and investment, which are vital to creating jobs. Until the federal government cuts taxes and reforms the tax code, Young Americans now well as the rest of the country will continue to face tough times.

Unfortunately, most support the principle that the rich should pay more taxes but what few realize is that the rich account for nearly thoroughly taxes that are paid to the government. Democrats have convinced Youthful Americans that the rich somehow evade federal taxes while the middle class gets screwed whole year. Some even argue that we contain a massive budget deficit therefore the rich don’t return their fair share.

But, as John Adams said, “facts are stubborn things”.

Who pays taxes? When it comes to income taxes, about 47% of Americans pay none at all. Most Americans with jobs remunerate the FICA tax, which includes the Social Sanctuary and Medicare taxes on their W-2s. Corporations also pay taxes on their profits. Finally, the federal government taxes inheritances, capital gains, dividends, and a host of other things. The number biggest taxes are the individual income tax and the FICA tax, which combine for 85% of thoroughly revenue.

When it comes to ontogenetic income taxes, the American system is unfair because half the pastoral pays zero. Whereas there are individuals et cetera families that cannot afford to pay taxes, there are many middle income individuals and families that no longer have to pay income taxes either. According to the Heritage Foundation, a typical family of four that earns a total of $51,000 will pay no emolument taxes.

Under this system, the rich pay virtually ALL of the means taxes collected. In 2007, over 71% of the income taxes collected by the federal administration came from the top 10% of income earners ($113,000 and higher). It has not always been this unbalanced. In 1990, the 10% of income earners paid 55% while in 1980 they paid 49%. The rich Americans tip a massive division of income taxes further it is only getting bigger

What is bizarre is that the IRS distributes checks to millions like Americans that haven’t compensated a dime in federal income taxes. Heritage Foundation start that many Americans that don’t pay income taxes received cash payments through “refundable” tax programs such as EITC, or the children tax credit. The federal government paid out $72 billion in these refundable tax credits in 2008.

This is “redistributing wealth”. The top half yield taxes while many in the bottom half harmonize checks. This may sound acceptable to some, but it does not procreate jobs or economic growth.

This idea is best expressed through the Chinese Proverb: “Give a homme a fish, feed him for a day. Teach a man to fish, feed him for a lifetime.” President Obama and the Democratic Congress seem to think that handing out fish is the way to go.

The FICA Tax is imposed on employees et sequens employers. The assistant pays 7.65% (6.2% for Social Security, 1.45% for Medicare). The employer pays the selfsame rate as well on wages. The FICA Tax is usually the mere federal taxes lower income workers have to pay. According to the focus on Allowance et alii Policy Priorities, about 75% of taxpayers pay plus in FICA taxes than they do in income taxes. A big discourse being 47% do not pay income taxes at all.

To make matters worse, the taxes on capital gains, dividends, corporate profits, inheritance, and other areas hurt the economy and provide very little gains to the federal government. These taxes account for only 15% of all revenue the government collects. The economic growth that would result from cutting these taxes would easily offset the revenue lost, but more importantly it would create jobs.

Young Americans also tend to remain the notion that corporations use loopholes to get around paying their fair share in taxes. This is also not true. First, the corporate tax does negative target rich executives, upscale shareholders, else other unsympathetic victims. When the government taxes a corporation, it is indirectly taxing all like its employees, shareholders, and creditors. The U.S. corporate tax rate is the moment highest in the developed world (35%). The average corporate tax rate among developed countries is virtually 24.2%.

The shrill U.S. rate puts American corporations at a major disadvantage respecting foreign competitors. It is an unnecessarily chief tax that weakens American companies.

It is important that Young Americans realize that many of the things they heed from Democrats and pundits concerning taxes are inaccurate. Our economic struggles will not be solved by taxing the rich more or redistributing wealth to low income workers. These policies have never worked paramnesia and will not work now.

It is no mystery what government policies would help the economy. What is missing is the governmental will to implement them. If the U.S. Government wanted to encourage American businesses to expand and begin hiring again, they would eliminate the unnecessary taxes on capital gains and dividends as well as sever the FICA tax and the corporate tax.

Young Americans own a strong interest in economic growth and job creation. Reforming the tax code would be an excellent means from promoting both. Cutting taxes has always led to higher economic growth and job creation. However, President Obama and the Democratic Congress have raised taxes and attempted to redistribute wealth. It is no question the U.S. continues to struggle economically under their leadership. Free market policies are needed if we are to turn the U.S. economy around.