Tax Rates Rise as Income Rises

Tax Day is here. In a column about this unhappy day, Christine Emba of theWashington Postprovides her views regarding income tax filing and tax simplification.But then she says:Meanwhile, the wealthier among us (remember: corporations are people, too!) are able to hire tax lawyers, consultants and accountants to clue them in on lightly advertised but heavily lobbied for loopholes that allow them to pay a lower tax rate or even no taxes at all.Emba ’s language is imprecise, but generally the wealthier among us do not “pay a lower tax rate.” There are exceptions. Agriculture has good lobbyists andmany farmers pay little income tax on farming.However, it is ridiculous to imply that the rich generally pay lower tax rates when the contrary facts are readily available from authorities such as the Urban-Brookings Tax Policy Center (TPC).Emba may be referring to statutory federal income tax rates. These rise from 10 percent to 37 percent, as shown in the first chart belowfrom TPC. The Republican Tax Cuts and Jobs Act (TCJA) slashed statutory rates virtually across the board, but the chart shows that higher earners still pay steeply higher rates. The TCJA also reduced some “loopholes” that the wealthier among us use, such as the state and local tax deduction.Or Emba may be referring to average effective tax rates, which are total taxes paid divided by income. These are shown in the second chart belowfrom TPC. Looking at the income tax column, the bottom two fifths, on net, p...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs