I am having a debate with a friend who believes that the government should tax the rich at an even higher rate as that will somehow alleviate the US debt. He cites as an example that a rich person’s secretary pays more of a percentage in income tax than does the rich person (I’m assuming the Buffet story from a few years back). I believe that the rich already pay an exorbitant amount in taxes and that the real problem is spending…. However,….
My question has to do with the difference in corporate gains that the rich pay and the income tax that the rest of us pay. Can you help me out here?
Thank you for the charts. It appears that short term capital gains tax is the same as income tax. I’m guessing the rich go with the long term to avoid the higher tax rates.
Can you address the notion that some hold that taxing the rich more alleviates the debt?
So, in 2013 Federal taxes as a percent of personal income was around 20 percent and federal income taxes as a percent of personal income was around 11.4 percent. If the federal government confiscated all of the income of the top five percent, it would just more than cover its entire tax revenue. Of course, it could only do this once.
Here are federal taxes paid by each income quintile:
We have a large debt because federal spending in out of control. The top five percent do not earn enough income to make a dent in paying off the debt as long as federal government expenditures are not reduced.