Analysis Of The Influence Of Income Tax On Different Groups Of People

There is something in the world that ranges in various ways. That is taxes. Every year, we calculate our taxes naturally making it become an essential ritual as you would say. People consider doing taxes as a civic responsibility. Taxes are typically composed of income, payroll, property, sales, capital gains, dividends, imports, estates, and gifts, and other various fees. In the present circumstances, I will be revealing how taxes can be properly classified into three main groups. Those groups consist of the rich, the middle class and the poor. These three economic groups are undoubtedly affected by taxes. They are affected in many numerous ways. I eagerly hope to shed some light on how they are affected. Let’s start with the group that you could declare is the highest on the list: The rich. The wealthy has it better when it comes to taxes being completely honest. People don’t like believing that the rich pay a lower tax rate than the middle class and poor but it’s true. “For the first time on the official record, the 400 wealthiest Americans in 2018 paid a lower total tax rate — spanning federal, state and local taxes — than any other income group, according to newly released data. ” This might seem like it needs to be fixed yet President Trump believes otherwise as he was the spark of it all. His signing of the 'Tax Cuts and Jobs Act' into law on Dec. 22. 2017, brought sweeping changes to the tax code. This act resulted in being hated by many but favored by the rich. His 2017 tax cut, which in absolute honesty was a handout to the rich. The tax cut helped to decrease the amount of tax that needed to be paid by the wealthy. It helped push the tax rate on the 400 wealthiest households below the rates for almost everyone else, middle and poor. 'In 1970, the wealthiest Americans paid more than 50% of their income in taxes, twice as much as working-class individuals,' the book notes.

'In 2018, following Trump's tax reform and for the first time in the last hundred years, billionaires have paid less than steelworkers, schoolteachers, and retirees. ” Once you reach the top 0. 1 percent, effective tax rates start going down. Each of the top 1,300 richest households in America made more than $62 million in 2012, but they pay a lower percentage in federal income taxes than upper-middle-class people. The second group on the list comprise of the middle class. It is challenging to define the middle class. The reason for that is there are two subgroups within the middle class. Those two groups are the high middle class and the low middle class. Because of this, you can say taxes can affect them in two different ways. They have been paying a bit much in taxes but that might change in 2020. The Tax Policy Center estimates that just one in 20 families face a higher tax burden this year because of the law including 7. 3 percent of middle-income groups. The benefits of the tax law will be pretty evenly spread in the next few years. “According to the Joint Committee on Taxation, families earning from $200,000 to $1 million will see their tax bills drop about 9 percent next year. That’s one percentage point more than the tax cut for households earning $75,000 to $100,000”. That means that the wealthy will have more of a tax cut than those who necessitate it. According to the Tax Policy Center, unless Congress acts, 53 percent of all taxpayers will see a modest tax hike by 2027 including almost 70 percent of middle-income families. The third group on the bottom of the list is the poor. Low-income Americans go wildly left behind. They pay a mighty lot in taxes, and their active role in provide finance for schools, roads and other public services largely go unnoticed. It turns out that even the poorest among us pay a high proportion of their income in taxes. For example, low-income taxpayers in Texas pay an effective state and a local tax rate of 13. 0% and top earners pay 3. 1%. This means that low-income taxpayers pay a rate equal to 4. 3 times the rate faced by high-income taxpayers.

According to the Institute on Taxation and Economic Policy, the lowest-income quintile — those making less than $19,000 a year — pays almost 11 percent of their income in state and local taxes. Working people, even if they don’t make enough money to pay federal income tax, also pay payroll taxes that contribute to Social Security and Medicare. Also, basically anyone who drives a car pays gas taxes. One-fifth of one’s income would be a lot for anyone. For a low-income family struggling desperately to get by, all costs add up. Like many low-income families when they go to the store, they are pinching pennies all the time. The results in low-income families never having enough food and everything. Did you know that if you donate to charities you can get a charitable tax deduction? The key point of it makes sense as it undoubtedly shows you care about things. The only problem with it is that people with more abundant money can contribute mightily so much money from thousands to millions. I sincerely believe it is unfair as wealthy people have the amount of money to get a huge tax deduction. You can never tell if the wealthy are donating from the bottom of their hearts or just because they are selfish and wish not to pay as much taxes as middle or low-income people. Those who are poor or middle class can maybe donate five, ten or twenty dollars. Which may not seem like a lot but it's all they can afford. In the ultimate end, taxes undoubtedly affect everyone typically ranging from rich to poverty. They are completely incompatible with each economic class. Taxes today are not how they should be. It should be fixed so that it makes sense according to the three main groups. I sincerely hope this aided and correctly classified what each group entails.