Well, for us tax preparers, another “tax season” is finally in the bag. Oct. 15 was the big day.
We’ve had fun showing all our clients what to look forward to with the new Trump tax law for 2018. Most business owners are already planning on how to hire new employees, purchase new business equipment, expand their facilities, give out bonuses, etc. (most have already been doing so), much funded by the new Trump law tax savings. Folks, don’t let the mainstream media try to hide this. What is happening to our economy is hugely driven by this tax cut. Business owners are not buying consumer items, they are investing in making their businesses bigger and more profitable. Remember, more profits mean paying more tax, even if the tax rates are lower.
So, many people are confused about whether our current tax system taxes the “rich” enough or not.
Here are some statistics that the Internal Revenue Service just released for the 2016 tax year:
The top 1 percent of individual taxpayers paid 37.32 percent of all federal income taxes. So, how does the IRS define this group? Their adjusted gross income is at least $480,804 or higher. This group represents 19.72 percent of the total adjusted gross income of all taxpayers combined.
The highest 5 percent of individual taxpayers paid 58.23 percent of all federal income taxes. This group accounted for 35.2 percent of all adjusted gross income of all taxpayers combined. That means they had to have at least $197,651 of adjusted gross income or higher to be counted in this prestigious group.
The top 10 percent, those with adjusted gross income of at least $139,713, bore 69.47 percent of all federal income taxes collected in 2016. Are you in that group?
The bottom 50 percent of all taxpayers (who filed tax returns) paid only 3.04 percent of the total federal income tax collected. Their share is so low because many of them get substantial tax relief through refundable tax credits.
So, to answer the question, “Do the rich pay their fair share of taxes?” I think the answer is a resounding “yes.” In fact, they pay way more than their fair share. Ten percent of the taxpayers in America (the “rich”) pay almost 70 percent of all federal income tax. The bottom half of the country pays almost no federal income tax.
Did you hear? Proverbs 22:2 says, “The rich and the poor meet together; the Lord is the Maker of them all.”
Kelly Bullis is a certified public accountant in Carson City. Contact him at 775-882-4459, on the Web at www.bullisandco.com and on Facebook.