If taxpayers are on the hunt for someone to put the blame into for federal deficits, as well as the state of the country’s tax code, one good place to begin is the mirror.
For decades, both Republican and Democratic politicians have been telling the American people that they are taxed way too high. One common line that we always hear from running politicians: “The country’s federal taxes are steadily increasing.” For their part, American voters were eager to believe these politicians. If you want to be the perennial campaign favorite, all you have to do is to promise a huge middle-class tax cut.
US President Donald Trump talked about it on the trail. He brought the same topic again last week saying that the middle class was being taken advantage of by many politicians in the country for years. He made such statements in an interview with Fox Business.
Yet for decades, it would seem that this underlying premise is incorrect. Americans, at every income level, pay a small percentage of their wages in federal taxes in comparison to what was required by the government 10 to 30 years ago.
If you are paying a high percentage, then you most probably belong to the richest of households. This was the only increase that was passed under the presidency of Barack Obama. The increase was meant to pay for the signature health care policy of the former President.
Liberals who are in favor of the idea of Trump’s progressive income tax which imposes a much higher rate on the wealthy and a tax reduction for the middle class, may be lending full support to a Trojan horse. Any rate reduction for the lower and middle-income taxpayers would be dwarfed by the savings of the wealthiest, given the long-time desire of House Speaker, Paul Ryan, to lower top rates.
“They keep saying that there won’t be any tax cuts that will be given to the rich. We don’t believe a single word they say,” said Sol Price Fellow of Urban-Brookings, Robert Williamson.
“It is almost a religious belief or a religious cult. Politicians have made tax cuts to be an elixir for basically everything. Tax cuts are always good, as some people may think so,” said Norman Ornstein of American Enterprise Institute. Ornstein, in the recent years, has grown extremely critical of Republicans. According to Ornstein, the richest people in the country always get the lowest rates because politicians just tell everyone else that the rich people drive the economy. However, there is no evidence that this is the case.
House Speaker, Paul Ryan, always sought ways to cut the tax rates for the rich. Any tax reform legislation that the Congress will pass is likely to be signed immediately by Pres. Trump. The supporters of Sen. Sanders disagree, but the current tax code is already heavily leaning to the country’s wealthiest. The richest 1% of households pays 25% of all the federal taxes. This includes payroll taxes, personal income tax, excise taxes, and corporate income taxes.