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Fair tax rate would truly be fair to all taxpayers

Published 10:08am Monday, September 17, 2012 Updated 12:13pm Monday, September 17, 2012

President Obama and many of his supporters say the wealthy aren’t paying their fair share of taxes, but what’s fair?

When you look at the Federal tax tables, it looks as though almost everyone should pay federal tax, and yet the IRS tells us that about one half of taxpayers pay no federal income tax at all; mostly for the following reasons.

The first is that a married couple with three children filing jointly can take the standard deduction of $11,900 plus five personal deductions of $3,800 each for a total deduction of $30,900.

Their taxable income is lowered by that amount. All income levels can take advantage of these deductions.

At low income levels, these deductions lower their tax liability and can even eliminate it.

The second reason many people pay no income tax is because of the Earned Income Tax Credit.

For example, if you earn less than $49,000 and have three children, you may be eligible for an earned income tax credit of up to $5,751.

This offsets income tax that you would otherwise owe and could result in a refund from the IRS.

Let’s say a couple with three children earns $40,000, their taxable income is lowered by $30,900 because of deductions to $9,100.

They would be in the 10 percent tax bracket and owe $910 to IRS. This would be offset by the earned income tax credit and they should also get a refund from IRS.

The tax brackets on taxable income for a married couple are as follows: $0 to $17,400 is 10 percent: $17,400 to $70,700 is 15 percent: $70,700 to $142,700 is 25 percent: $142,700 to $217,450 is 28 percent: $217,450 to $388,350 is 33 percent and everything over $388,350 is taxed at 35 percent.

If a married couple with no children, using the standard deduction, were to have a gross income of $500,000, they would pay a $137,314 tax to the IRS which is an effective rate of about 27 percent of total income.

At a million, they would pay about $312,000 or 31 percent of total income to the IRS.

A lot of people who pay no taxes or pay at low rates are complaining that people, who pay at high rates, aren’t paying enough.

It’s true that the tax code is long, complicated and unfair, but higher income earners are paying more than their fair share.

If you’re looking for fairness in the tax code, you should support a single rate flat tax with no deductions.


Austin Culp

Battle Lake

  • Richard Olson

    Since Austin Culp received $252,888.65 in USDA Farm Subsidies from the United States Government, we can safely assume that he is part of that 47% of the voting public that according to Mitt Romney are MOOCHERS.

    Austin Culp should begin applying himself by pulling himself up by his republican bootstraps and wean himself off the government welfare rolls and stop depending on the government. Then he too can become a citizen who Mitt Romney will be proud to represent as President of the United States.

  • Walt Henry

    Oh the absurdity of it all—- General Electric (Corporations are people too) earned $5.1 Billion in profits and paid zero ($0) taxes in 2010.
    The letter writer lists lots of deductions, credits and exemptions, but fails to acknowledge the current tax reform discussion. It is those deductions, credits and exemptions Romney talks about eliminating.
    So let’s look at this another, more realistic, way. Suppose I earn $1,000,000 and pay 40% of that in Federal Income tax. I would have $600,000 left to live on which I think we can agree would make it pretty to balance our personal budgets. Now let’s say I and my family of four earn $52,000 and because of tax reform pay 10% in Federal income tax (Everyone should have some skin in the game). That leaves me $46,800 to raise my kids, send them off to trade school or college, buy a little beer for myself to celebrate the end of the work week and save for my old age. Fair? I would suggest one of the two worked harder and is likely to live fewer years. FaIr?
    Maybe fairness is the wrong way to frame a discussion about taxes. Maybe a better way would be to make some decisions about what we want to do as a nation via our government and then decide how best to pay for those decisions. (Frankly, I don’t care about US Embassies being in unfriendly countries but oil companies and other big businesses seem to need them to be there. And these big businesses, like GE pay how much in taxes?—Fair?)

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