Tax Confusion – Removal of the Middle Class!
As a CPA and a Tax Preparer it has always amazed me about the confusion regarding tax brackets. The confusion lies in the fact that most people feel the rich are paying a higher percentage in taxes than the poor. I would argue that the Middle Class Tax payer in the 15% - 25% tax bracket is paying the highest percentage of taxes compared to income.
In 2009 federal income taxes are 35% for anyone making over $373,650 in taxable income. They are paying 15% in FICA taxes on their first $106,800 (half of which is paid by the employer as cost of employment). So basically if you make 1 million dollars you are paying around 35% in taxes.
Anyone making $82,400 in taxable income is paying $16,781 in federal income taxes. Around 20.4%. They are also paying around 15% in self-employment taxes. Anyone making around $82,400 in taxable income is paying around 35.4% in taxes.
This doesn’t account for other costs like Gasoline excise taxes. I would argue that Bill Gates does not pay much more in Gasoline Excise taxes than I do.
Thirdly, there is the great hidden fiat tax created by Government Deficit spending. This creates inflation with the creation of paper money. I would argue this hurts the middle class the most, because inflation the last 50 years has mostly affected – energy bills, automobile costs, groceries, housing costs, etc. It has helped Stocks, and Investments go up which are owned by the wealthy.
I am not arguing we need to raise tax rates on the rich. In fact it is my goal to pay 35% in Federal Income Taxes. I am stating that we have a Government system that is created to help the poor, and the Super Wealthy. No Government entitlement programs are helping someone in the 25% tax bracket. Also Government Bailouts are used to help the Super Wealthy! We are heading to a two class system the Super Wealthy and the Lower Middle Class!