After two decades in which the taxes had dropped Obama has negotiated higher taxes for the super-rich. However, analysts say this is not enough to reach taxes justice.
The Internal Revenue Service has issued new data on Wednesday showing the taxation levels for the top 400 super-rich Americans.
According to the data, the federal income taxes paid by the super-rich increased to 22.9 percent. However these are similar levels to those from the early 2000s which were below the levels from the previous decade.
The history of tax droppings started from President Reagan, when the super-rich paid 27 percent income tax. George H.W. Bush has slightly decreased the taxes to 26 percent, Bill Clinton to 25 percent and finally George W. Bush took it to only 20 percent.
In 2013 the top marginal tax rate has been raised to 39.6 percent but that made the tax paid by the 400 super-rich Americans to fell under 17 percent which was actually a record low. During Obama’s first year at the White House the super-rich paid 19.04 percent income tax.
The economic adviser Jared Bernstein claims that Obama’s move of raising the taxes of the super-rich was a significant step towards tax fairness. However he considers this to be a drop in the bucket considering the widely spread tax avoidance industry.
This could be seen in numbers as the super-rich have paid lower taxes than those below them. If the top 1 percent, with an average income of $1.24 million, have paid 27 percent in taxes, those with smaller incomes paid 39.6 percent. More than that, those with much smaller incomes, from $150,000 to $200,000 pay similar taxes to those paid by the rich.
According to NY Times there have been two major changes over the last 20 years which lead to the situation in which the super-rich pay smaller taxes: Bill Clinton raised income taxes in 1993 but under pressure made by the Republican Congress the tax on investment income has been decreased and the second one came from George W. Bush who decreased both the investment rate taxes and the ordinary income taxes in the early 2000s.
Those in favor of low taxes for capital gains and dividends argue that it encourages investment and foster innovation. This has benefited the super-rich more than anybody else since the majority of their income comes from investments. However, most of them are actually scams created by tax advisers who help transforming the ordinary income into the half-taxed investment income.
In conclusion, even if Obama proposed higher taxes for the super-rich and has been highly applauded for that, taxation equality is still so far for the super-rich that they couldn’t see it even with binoculars.
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