Would Raising Taxes on the Rich Make a Difference?

Would Raising Taxes on the Rich Make a Difference?

By: Moneytips

Tax policy and the concept of "a fair share" is a great dividing line between Democrats and Republicans, and the election campaign has brought that to the forefront. From Bernie Sanders' constant critiques of billionaires to the lower tax rates or flat tax plans produced by Republicans, the benefits of adjusting the tax rate for the 1% at the top of the American income scale have been heavily debated in recent months.

Democrats argue that raising these rates will bring in much needed revenue. Republicans argue that raising these rates will stifle investment and growth. Both parties could be right.

A recent analysis by the New York Times looks at the Democratic side of this argument by attempting to answer the question: if the total tax burden were raised on the rich, how much revenue would it really generate for the U.S. coffers? That answer is not as straightforward as it might seem, because of the multiple sources of income (and taxes) that the rich have and the distinction between capital gains and regular income tax rates.

Using information from the Treasury Department and the Tax Policy Center, the Times compiled information on total federal tax burdens by percentile of revenue. Tax sources include federal income tax, payroll taxes, the share of corporate taxes that investors pay, excise taxes, estate taxes, and gift taxes. The average tax burden calculated this way is 19.8% for all Americans, ranging from 3.6% for the lowest 10% in income to 25.7% for the upper 10% in income.

Read the rest of the article on Moneytips.com.