How much Fairer is Fair
The CBO just released its annual analysis of Household income for 2021. There are several things that are clear.
The US tax code is very PROGRESSIVE with the top 1% paying 41.7% of their income as taxes. The bottom quintile actual has a -4.7% income tax rate as they get more in tax credits then they pay in taxes. The 2nd lowest quintile pays 1.5%. The middle quintile pays 7.4%. The 2nd highest quintile pays 14.7%.
The highest quintile CONTINUES to pay an increasing share of the nations tax revenues relative to their share of income.
Poor are becoming more dependent on Government
All quintiles get some income from the government. Upper quintiles benefitting from Social Security and Medicare. Lower quintiles benefiting from Social Security, Medicaid, Tax credits and various entitlements.
Concerningly, lowest quintiles are getting an increasing larger percent of their income from the Government reaching 46% of their net income in 2021.
And even more concerning is that the way that tax credits and various entitlements are designed, there is the perverse incentive not to earn more for the poorest as they are implicitly taxed through loss of entitlements and credits resulting in very high effective tax rates of almost 100%.
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