Taxation With Representation - Article 3.

What Does it Mean to Pay a "Fair Share" of Taxes

Do you know how much somebody making the amount of money you make "should" be paying in taxes?

It's OK if you haven't a clue - I have no idea either. There are simply too many variables. However, I can tell you if, given your particular circumstances, you are paying more than the law requires of you. And this is powerful information, information I think you ought to have available to you as you struggle with your personal tax returns at tax season.

Let's look at some general parameters. This statistical information is gleaned from the IRS website and related sources.

SOME STATISTICS
(remembering that statistics lie and that liars use statistics)

In 2001, this was "who" paid what amounts in personal income taxes, sorted by AGI (adjusted gross income):

Group 1 = People who had an AGI of at least $292,913 each paid an average of $233,585 in Federal income taxes, and their effective tax rate was actually a little over 27%.

Group 2 = Taxpayers who had an AGI of $127,904 to $292,912 paid an average of $33,366 per return.

Group 3 = People who had an AGI from $92,754 to $127,903 had average tax bills of $16,044.

Group 4 = This group had AGIs from $56,085 to $92,753 and average tax bills of $8,275.

Group 5 = Taxpayers with an AGI of $28,528 to $56,085 paid $3,620 on average in taxes. Group 6 = People with AGI's below $28,528, paid about $500 apiece in Federal income taxes.

It is easy enough to find yourself in these strata. And now you can see at a glance where you are in the grand taxpaying scheme of things. Do you pay more or less than the "average" of your AGI group? Do you know why - either way?

PUBLIC POLICY
(or at least this fool's view of it anyway)

I assume that the central government must raise funds in order to provide the essential services our society and culture deem worthwhile - silly things like a national defense and a legal system and even some bells and whistles like care for the elderly and sick and monetary systems to assure a reasonable economic engine. So, I assume that we must raise taxes and will leave the debate about how it "should" be done to those more passionate about it than I.

Once the decision to raise money is made, then how to raise it must be worked through, which is why we have a tax code. As matters of public policy, our legislature favors some behaviors and activities over others in the tax code. How much you agree with those policy decisions or how much you reject them or cannot qualify to follow them determines to a large extent how much you will pay in taxes.

As matters of public policy, we favor home owning, for instance, over renting and we favor retirement savings over non-retirement savings.

If you do not know how to take advantage of the policies - or if your "lifestyle" is out of favor with the policy makers, then you will likely be on the high end of the average tax bills in your group above.