Should High-Income Taxpayers Pay Most Of Taxes In 2009 And 2010

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ANALYTIC ESSAY #2
The data shows that high-income taxpayers pay most of taxes in 2009 and 2010. Some one indicates that the tax base of income tax should be expended. In my opinion, income taxes should not be increased, especially low-income taxpayers. The tax base should not be expended, as well.

At first, the conditions in 2009 and 2010 are unique, so the figures are unreasonable, especially 2009. Because of the economic recession, the number of low-income Americans increased rapidly. President Barack Obama signed the Recovery Act that cut taxes temporarily and removed millions of Americans from the federal income tax rolls. Meanwhile, the Recovery Act’s Making Work Pay tax credit benefited almost 95 percent of working families and reduced their federal income tax liability in both 2009 and 2010 by $400 for individuals and $800 for married. This tax credit even eliminated someone’s federal tax liability entirely. Both of these temporary tax measures have expired in two years. Most nonpayers who received tax credits are old people and disabled people who cannot work or cannot find a job. (Tax Policy Center) So the low-income taxpayers did not pay so little and receive so much tax credits as the article said.

Secondly, increasing income taxes on low-income taxpayers may increase government expending. If more income taxes are paid, the disposable income will decrease. Residents may spend less on education and medical treatment. What’s more, some poor even cannot afford the expense of education and medical treatment. In the meantime, government would spend more on public education and medical treatment. During the economic downturn, both federal and state taxes revenue decline sharply. Increasing income taxes is not a good choice to increase tax revenue.

Thirdly, low-income taxpayers pay more than federal income taxes. They also pay substantial amounts of other federal taxes, especially the payroll tax, and substantial state and local taxes. About 82 percent of working households pay more in payroll taxes than in federal income taxes. What’s more, low-income and moderate-income taxpayers pay higher percentage of their incomes in federal payroll taxes than high-income people do. Because high-income taxpayers earn their income from dividends and capital gains that are not subject to the Social Security payroll tax; and earnings above $110,100 in 2012 aren’t subject to the Social Security tax. (Marr and Huang) In addition, the taxes of many states and locals are regression. Low-income and moderate-income even pay higher percentage of their income than high-income taxpayers do. According to CBO data, the bottom 20 percent pays 16 to 17 percent of their incomes in taxes, including all federal, state, and local taxes.

At last, increasing income taxes would discourage working enthusiasm and increase poverty. In spite of the same job, taxpayers will get less after-tax income if income taxes rise. If keeping the same earning, people have to do more jobs. The decreasing earning and
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