The future Elections cause a lot of dialogues about the economy and taxes, in particular. Some politicians will be talking about so-called ‘right’ level of taxation and it would be useful to know ins and outs of taxes while talking about them.
One of the most popular misunderstandings is the belief that poor people do not pay taxes. It is partially true, as people with low income pay low or do not pay federal income tax. However, it is only one type of tax and there are others that are obligatory for all people. Social Security payroll taxes are paid from every type of the wage. That is the biggest tax people pay. If to take to the account the fact that poor families do not pay federal income tax, it still appears that the fifth of poor families pay 16% of their income taxes, and the second fifth is paying almost 20% tax.
It is also wrong to believe that the federal income taxes are higher than ever. If to analyze the historical aspect of this question one will be able to see that the current taxes are on the contrary got lower. Back in 1944 the level of taxes on the income more than $200,000 amounted 94%. They dropped to 28% in 1988 but than again rose in 1993. And it took a bit more than 7 years before they had reached their current level of 35%.
If to consider the taxes from the point of view of overall economic activity, it appears that the federal income tax got also lower. It is even the lowest in the history. In this case federal taxes mean social insurances (Social Security and Medicare), individual income taxes, corporate income taxes, estate and gift taxes, excise taxes, customs duties, and miscellaneous receipts.
Another fact about taxes is that the government supports the companies or individuals with an income more than $ 1.1 trillion and give them tax breaks.
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