Editorial: Welcome to the most progressive tax system in the world
In recent years, the American left has tried to ignite a class war by raising the issue of “income inequality,” even though the gap widened under President Obama, the most liberal president since Franklin Roosevelt.
As it is the deadline for filing one’s federal and state income tax returns, today is a good time to review just who pays income taxes and who does not.
“America’s taxes are the most progressive in the world,” wrote Dylan Matthews of the Washington Post, based on data from the Organization for Economic Cooperation and Development.
While the top 10 percent in the United States earn 33.5 percent of all income, they also pay 45.1 percent of the federal income taxes, a gap of almost 12 points.
In the United Kingdom, the top 10 percent earn 32.3 percent of the money and pay 38.6 percent of the taxes, a gap of 6 points.
In Sweden, the taxes are flat. Thus the top 10 percent earn 26.6 percent of the money but pay 26.7 percent of the taxes.
Indeed, more than two-thirds of all federal income taxes are from the top 20 percent of all taxpayers.
The top 1 percent pay 24.2 percent of all federal income taxes.
But wait. There is more. The income tax code includes effectively a negative tax for lower earners in the form of tax credits that exceed the taxes due. This leads to tax refunds that are larger than taxes deducted during the year.
For example, last year 28 million people divvied up $62.9 billion in Earned Income Tax Credits for an average of $2,200 each, according to the Internal Revenue Service.
There also is the Child Tax Credit of $1,000 for each child 16 and under. Additional money is given to families whose child tax credits exceed their taxes due.
On Tax Day, people should remember that of the top 20 percent will pay $944 billion in federal income taxes this year.
The other 80 percent will pay $427 billion.