|
Federal income tax accounts for the majority of
the income collected by the federal government.
It is collected both from individuals, corporations
and some other entities. The federal income
tax system is a progressive system of higher tax
rates on higher income earners.
Income taxes are collected by employers through
out the year through a mandated payroll withholding
system. The withheld taxes are deposited with
the Internal Revenue Service (IRS) under the
employee's name. When the employee files his
federal income tax return he is credited for the
amount of taxes collected by his employer. If
the taxes collected were less than owed, the
employee sends in the difference with his income tax
return. If he over paid, the government will
issue a refund to the employee. The IRS does
not pay interest to the employee on the money it
holds for him.
Over the years, Congress has fiddled with the tax
code to provide incentives to make certain
investments or for corporations to develop certain
products. Examples include the income
deduction for interest paid on a mortgage and the
income deferral on money placed in an approved
retirement plan.
Congress has also made the federal income tax a
progressive tax. As an income earner's taxable
income increases, so does the rate at which it is
taxed. Believing the wealthy should bear the
burden of paying most of the taxes, Congress has
skewed the tax code against them. The IRS
reports that the 2005 tax data shows:
Income Earners — Pays This Percentage of All
Personal Income Taxes
Top 1% ———–———– 38.8%
Top 20% ——————– 86.3%
Top 40% ——————– 99.4%
Bottom 60% —-———– 00.6%
It is obvious from this data that those making
over $60,000 per year (approximately the top 40%)
pay nearly the entire income tax burden.
|
