Sunday, May 8, 2011

Progressive Tax System in USA, Really ?


What Is a Progressive Tax System?


A progressive tax is an income tax that distributes higher tax burdens on individuals who have high household incomes. The progressive tax shifts a nation's tax burden from the poor to the rich, enabling those with the inability to pay taxes an exemption from this burden. Most progressive taxes are based on personal or household income, both at the state and national levels of the U.S. workforce.

Advantages

The biggest advantage seen in a progressive tax is the wealthier individuals pay more of the tax burden. This protects the poorer classes from a heavy tax burden and also allows individuals who suffer a decrease in household income to lighten their tax burden. Proponents of a progressive tax also believe wealthier individuals should pay more for services provided by the government because the wealthy have the ability to pay for others from their wealth.

Disadvantages

Opponents of the progressive tax system believe that progressive taxes are an invasion of individual rights because they are punished for their success. As they increase income and wealth, these individuals are constantly required to pay more in taxes. Because the taxes are then redistributed to poorer individuals through government aid programs, some see this as socialism. Some also believe progressive tax systems encourage off-shore banking, allowing high-income earners to hide their wealth from government taxes.

Just How Progressive Is the Tax System? 


Congressional Budget Office versus Citizens for Tax Justice ! You Decide !


Effective Federal Tax Rates 2006
Before Tax and Total Federal Tax Laibilities 2006

Congressional Budget Office released updated data on effective average federal tax rates — that is, the percentage of their entire incomes that Americans hand over to the federal government in the form of personal income, social insurance, corporate income and excise taxes. As this is effective tax data, it also takes into account the fact that many Americans use deductions that make their taxes lower than statutory rates would imply.


The main findings: The overall effective federal tax rate (the ratio of federal taxes to household income) was 20.7 percent in 2006, with the highest quintile of American households paying 25.8 percent of their income in federal taxes.
Because higher-income groups earn a disproportionate share of pretax income and because tax rates rise with income, higher-income groups also pay a disproportionate share of federal taxes. In 2006, the top quintile of households earned 55.7 percent of pretax income and paid 69.3 percent of federal taxes, while the top 1 percent of households earned 18.8 percent of income and paid 28.3 percent of taxes.



Share of Income and Taxes Paid

Total Taxes as Percent of Income

Citizens for Tax Justice doesn't think so and released an updated analysis of the effective tax rates for Americans at different income levels. The research from Citizens for Tax Justice — a liberal organization that advocates “fair taxes for middle- and low-income families” — uses 2008 data for all federal, state and local taxes combined. It found that the average effective tax rate is 29.8 percent, and that including state and local taxes makes the tax curve look much less steep.





The group also finds that in 2008 the share of total federal, state and local taxes paid by each income group was relatively close to the share of income that that group brings in, at least as compared to comparable 2006 numbers for effective federal tax rates.

Just food for thought ! Are benefits such as social security and medicare progressive ? Do we really get based on how much we pay through out the years ? Well Rich and Poor can fight along while the middle class is taking a hit right to the face. There are two parties here in United States of America, one is taken by the Poor and one by the Rich. No one cares about middle class !

References:
nytimes.com
ehow.com
Citizens for Tax Justice
Congressional Budget Office


Citizens for Tax Justice, founded in 1979, is a 501 (c)(4) public interest research and advocacy organization focusing on federal, state and local tax policies and their impact upon our nation. CTJ's mission is to give ordinary people a greater voice in the development of tax laws. Against the armies of special interest lobbyists for corporations and the wealthy, CTJ fights for:
  •     Fair taxes for middle and low-income families
  •     Requiring the wealthy to pay their fair share
  •     Closing corporate tax loopholes
  •     Adequately funding important government services
  •     Reducing the federal debt
  •     Taxation that minimizes distortion of economic markets

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Long Island Property taxes most important issue, say LIers

No surprise here ! To stop this ridiculous rise in property taxes we have to educate our fellow LIers and contact your representative that they should demand Speaker Silver respond to the pleas of homeowners across the state and support a property tax cap in New York. It has already passed the senate but is being stalled in the Assembly by Assembly Speaker Sheldon Silver.

Also this year we are seeing some enormous rise in property taxes in school districts such as
William Floyd 12.47% and Seaford 8.99%. Some school districts such as Middle country is resorting to blackmailing its residents. The deal for districts residents is either approved a 6.68% increase or the district is going to force 21.61% increase in tax levy.


Published by THOMAS MAIER at Newsday

By a wide margin, property taxes are the most important issue facing Long Islanders, according to a Newsday / News 12 Long Island / Siena Research Institute Poll. Property taxes were cited overall by 45 percent of respondents, more than twice the 21 percent who cited "availability of good jobs" as the second most pressing issue for Long Islanders. "Property taxes are really an issue here because it keeps the young people from staying on Long Island and it will prevent the older people from staying, too," Tafuri explained.

Property taxes also are a large part of why the 57 percent of those polled said Long Islanders are headed in the "wrong direction" rather than the "right track" in the poll. A similar margin said New York State was headed in the wrong direction as well.

Property taxes are a particularly raw issue in Nassau County, where 53 percent cited them as the biggest issue, compared to 36 percent in Suffolk. Islandwide, Republicans and people 55 years or older complained about property taxes the most. "The Democrats love to spend money and they have to get it from the taxpayers," said one poll respondent, a retired Republican who lives on Nassau County's South Shore.

School costs - the biggest part of property tax bills - were also on the minds of Long Islanders who cited "the quality of public schools" among their top concerns. "The first thing I would do is eliminate tenure for teachers in public schools to cut costs," said another poll respondent, a 50-year-old Garden City man who is a Republican and who did not want to give his name. Although he was happy that his two children attending local schools got a good education there, he said his family's property tax bill has been overwhelming.

Property taxes hit a chord with all respondents, regardless of age, race, gender, religion, location or party affiliation. In addition to identifying the most important issue, the poll underlined the intensity of Long Islanders' general feelings about property taxes, with 86 percent calling the issue "very important" and 11 percent as "somewhat important." Crime, schools, good jobs and health care also received strong reactions, with traffic congestion and the local environment getting milder reactions.