Just 39% Think Federal Income Tax System Is Fair
By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
Posted 04/14/2014 05:22 PM ET
As millions of Americans rush to file their federal income tax returns on Tuesday, few will be thinking that the current tax code is the fairest one of all, according to the latest IBD/TIPP survey.
Just 39% of Americans say today's income tax code — which features multiple tax brackets along with myriad deductions and exemptions — is the fairest.
As to what sort of tax system would be more fair, the public hasn't made up its mind. Thirty-six percent say a flat tax is the fairest way to collect income taxes, while 19% would prefer a national sales tax.
However, the survey also found that most (54%) think the amount they pay in taxes is "about right." More than a third (39%) say they're taxed too much, and just 3% say they pay too little in federal income taxes.
Not surprisingly, Republicans are more likely to say they're over-taxed — almost half (48%) say so — compared with 25% of Democrats and 43% of independents.
Regionally, those living in generally more liberal Northeast states are more likely to say they pay too much in taxes (48%), compared with 41% for those in the Midwest, 33% in the South, and 39% for those living out West.
At the same time, people tend to think that their own income group pays more than its fair share of total federal income taxes.
Nearly half (46%) of those making less than $30,000 a year believe low-income Americans pay too big a share.
More than half of those making $30,000-$75,000 say middle-income families pay too big a share of taxes — 60% of those making $50,000 to $75,000 feel this way.
No group seems to think high-income Americans pay too much. Only 18% of those earning $75,000 or more say they do, and just 6% of low-income families say that.
Middle-class families, meanwhile, get somewhat less sympathy from Democrats than others. While 53% of Republicans and 55% independents say middle-income Americans pay too large a share of the tax burden, fewer than half (47%) of Democrats feel this way.
On this "fair share" score, the poll results show that the public is badly misinformed about who pays what in income taxes.
IRS data show that just the top 1% of income earners accounted for fully 37% of federal income taxes paid in 2010 (the last year for which data are available). That's nearly twice their share of total adjusted gross income (19%).
The bottom half of tax filers, in contrast, account for 12% of total income, but pay just 2.4% of all federal income taxes, IRS data show. More than 40% of households pay no federal income tax, or get more money in refundable tax credits than they owe. (This does not include payroll taxes).
What's more, the tax load carried by the top 1% is higher than it was in 2001, and the burden carried by the bottom half of taxpayers is lower.
And these numbers don't account for the tax hikes President Obama has imposed on upper-income families .
Not only has the top marginal rate increased, but high-income families now pay higher tax rates on capital gains and dividend income, and face a new Medicare surcharge.
Total income tax revenues are expected to surge 12% next year, according to the Congressional Budget Office. Two-thirds of the increase, the CBO says, is driven either by expiring tax cuts or tax hikes implemented under Obama. The rest comes mainly from projected economic growth.