Thanks to a charter member of RTE for sending me, just in time for income tax day, the animated version of how ten men who want to pay their beer bill the way we pay our income taxes run into problems.
Long time readers of this blog will remember the referenced post below of August 2012 that presented the unanimated version of this same lesson.
The Urban-Brookings Tax Policy Center, a non-partisan research group, has estimated both the incomes & federal income taxes for the 175 million American households by dividing them into quintiles, each consisting of about 65 million people, for 2017 & 2018. See graphic below that shows in 2018 people in the four bottom quintiles are all projected to pay lower shares of the federal income tax – i.e., tax cuts – & only people in the top quintile are projected to pay a larger share than they did in 2017.
click on graphic to enlargeActual data from the IRS are not available for a few years after returns are filed but the above estimate pretty much follows previous distributions of income & federal income taxes – see graphic below for 2014.
Reference Post: The Income Tax System Explained in Beer – original unanimated version from August 2012
Thank you for the visual of the taxes paid and incomes of the US tax payers as analyzed by the prestigious Brookings Institute. It confuses me that the certain fact that the upper quintile does bear most of the tax burden is not realised by the American people. Who wants to walk out the door 5 days a week if she/he is not able to retain most of those earnings. People have suffered for years under an unjust tax system that can be manipulated. Article I Section 8 states that all Duties, Imposts, and Excises shall be uniform in the United States. The American people and the Congress do not heed that at all.
ReplyDeleteHey thanks for the information. I’m surprised, however, at how little you have to say about the tax cuts. This cut is a killer for our deficit and disproportionately benefits the rich. Surely you know this, so where is the criticism, have I missed it? I’m really curious about your lack of passion here. I find it strange.
ReplyDeleteWhile the chart you provide is interesting, I found this from NPR,
“The average household would get a tax cut of $1,610 in 2018, a bump of about 2.2 percent in that average household's income, according to a report released Monday by the Tax Policy Center, a nonpartisan think tank that has been critical of the tax overhaul plan.
However, extremes make averages, and the benefits would be much larger for richer households. A household earning $1 million or more would get an average cut of $69,660, an income bump of 3.3 percent. Compare that with the a tax cut of $870, or 1.6 percent, for the average household earning $50,000 to $75,000.”
This article has charts that are informative as well. Here’s the link if you’re interested.
https://www.npr.org/2017/12/19/571754894/charts-see-how-much-of-gop-tax-cuts-will-go-to-the-middle-class
Beyond the charts however, NPR discusses how things will change significantly after 2025.
Beyond the charts however, NPR discusses how things will change significantly after 2025.
“The numbers look bleaker a decade out for most American households. To help ensure their bill met the budget limits Republicans had set for themselves, lawmakers set many individual income tax changes to sunset after 2025 (however, they made cuts to corporate tax rates permanent).
For example, the bill changes tax rates across income brackets, increases the standard deduction and increases the child tax credit — but only until the end of 2025.
As a result, the Tax Policy Center predicts that in 2027, the average tax cut would amount to $160, or just a 0.2 percent income bump.”
Now I find that bit to be especially damaging, considering that the burden we will have for the deficit certainly isn’t going anywhere. Just saying....take a look at the article, I know you love statistics!
For my part, I find it an outrage that NJ is hit the hardest of any state, according to a new article from April 14 in nj.com. Here’s the link:
http://www.nj.com/politics/index.ssf/2018/04/another_reason_why_so_many_in_nj_opposed_trumps_ta.html
If our elected politicians are not concerned about the Medicare shortfall of 2029, if spending is not brought under control, I think we can more assuredly discount calculations regarding budget deficits in 2025 & 2027, 8 to 10 years from now – which are much less certain than the Medicare projections. One of the URLs presented in the comment above explains how Congress can make the tax cuts permanent 8 & 10 years from now, or preferably before.
DeleteI don’t think an extra $1610 per year (or almost twice that by many calculations) is considered crumbs by the recipients in the middle class.
With re to my opinion of the tax cut bill please go through the first nine posts in January & February – seven of the first nine posts of 2018 pertained to the benefits of the new tax bill & some went over the increase in government spending which is the real cause of the budget deficit increase. The Omnibus Spending bill is the real culprit that will increase the budget deficit. In the first five months of fiscal year 2018 spending increased $42 billion more than during the same period last year while revenue increased $31 billion during the same period – these figures are before the Omnibus was signed into law so the gap will only widen.