Cribbing about Tax rates, you have got company
IN the US of A, the deadline to file individual income-tax returns was on April 15.
Here are some facts & figures and the public opinion -
+ About 6 in 10 believe that the tax system is unfair i.e. the very rich don't pay their fair share. The richest 400 individual taxpayers, with an average income of more than USD 200 million, pay less than 20 percent of their income in taxes - far lower than mere millionaires, who pay about 25 percent of their income in taxes, and about the same as those earning a mere USD 200,000 to USD 500,000. And in 2009, 116 of the top 400 earners - almost a third - paid less than 15 percent of their income in taxes.
+ Citizens for Tax Justice, an organization that advocates for a more progressive tax system, has estimated that, when federal, state and local taxes are taken into account, the top 1 percent paid only slightly more than 20 percent of all American taxes in 2010 - about the same as the share of income they took home, an outcome that is not progressive at all.
+ The top rate in the United States, 39.6 percent, doesn't kick in until individual income reaches USD 400,000 (or USD 450,000 for a couple). Only three O.E.C.D countries - South Korea, Canada and Spain - have higher thresholds.
+ General Electric has become the symbol for multinational corporations that have their headquarters in the United States but pay almost no taxes - its effective corporate-tax rate averaged less than 2 percent from 2002 to 2012.
+ For the rich, hiding such assets has become an elite sport. Many avail themselves of the Cayman Islands or other offshore tax shelters to avoid taxes. They don't have to report income until it is brought back ("repatriated") to the United States. So, too, capital gains have to be reported as income only when they are realized.
+ And if the assets are passed on to one's children or grandchildren at death, no taxes are ever paid, in a peculiar loophole called the "step-up in cost basis at death."
+ Our tax system relies heavily on voluntary compliance. But if citizens believe that the tax system is unfair, this voluntary compliance will not be forthcoming.
What the man on the street wants - "We could have a much simpler tax system without all the distortions - a society where those who clip coupons for a living pay the same taxes as someone with the same income who works in a factory; where someone who earns his income from saving companies pays the same tax as a doctor who makes the income by saving lives; where someone who earns his income from financial innovations pays the same taxes as a someone who does research to create real innovations that transform our economy and society. We could have a tax system that encourages good things like hard work and thrift and discourages bad things, like rent-seeking, gambling, financial speculation and pollution. Such a tax system could raise far more money than the current one - we wouldn't have to go through all the wrangling we've been going through with sequestration, fiscal cliffs and threats to end Medicare and Social Security."