Not so over­bur­dened

Northwest Arkansas Democrat-Gazette - - VOICES -

A let­ter from Joe T. Tucker raises the is­sue of tax rates across in­come groups, ap­par­ently com­mis­er­at­ing with high-in­come tax­pay­ers’ tax bur­den.

The fig­ures that Tucker cites, from the Pew Re­search Cen­ter, are based on fig­ures pro­vided by the In­ter­nal Rev­enue Ser­vice in their “Sta­tis­tics of In­come” re­port. The in­come fig­ures are based on what is re­ported on in­di­vid­ual in­come-tax re­turns, some­thing called “ad­justed gross in­come,” or AGI. But AGI omits many sig­nif­i­cant sources of non­tax­able rev­enue sources, e.g., mu­nic­i­pal bond in­ter­est, em­ployer con­tri­bu­tions to re­tire­ment plans, other non­tax­able fringe ben­e­fits, etc.

A more se­ri­ous flaw is that the anal­y­sis only con­sid­ers fed­eral in­di­vid­ual in­come taxes. It omits pay­roll taxes (e.g., So­cial Se­cu­rity) as well as all state and lo­cal taxes. An anal­y­sis by an­other group, the In­sti­tute on Tax­a­tion and Eco­nomic Pol­icy, in­cludes a broader mea­sure of in­come as well as a broader range of taxes. The re­sults, by in­come (low to high) and tax rate (taxes as a per­cent of in­come): Low­est 20 per­cent of tax­pay­ers by in­come pay a 19.1 per­cent tax rate; sec­ond-low­est 20 per­cent of tax­pay­ers: 23.1 per­cent; mid­dle 20 per­cent of tax­pay­ers: 27.5 per­cent; fourth 20 per­cent of tax­pay­ers: 30.8 per­cent; next 10 per­cent of tax­pay­ers: 32.3 per­cent; Next 5 per­cent of tax­pay­ers: 33.0 per­cent; next 4 per­cent of tax­pay­ers: 33.4 per­cent; high­est 1 per­cent of tax­pay­ers: 34.1 per­cent. The over­all rate is 31.1 per­cent.

The top 1 per­cent, with av­er­age in­come of $1.8 mil­lion, pays 3 per­cent more of their in­come than the av­er­age tax­payer. One pos­si­ble in­ter­pre­ta­tion is that “the rich” are not over­bur­dened com­pared to their less well-off tax­pay­ers. MIKE WATTS Lit­tle Rock

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.