Who Pays More Taxes?

Dear Madame L,

I see one of your other readers has asked you to research the Cato Institute, and you still haven't done that. So I want to ask you also to do that. I'm asking now because I just read an article saying that someone from the Cato Institute said poor people in the U.S. don't pay taxes. If that's true, then I can understand why the rich people don't want to pay taxes.

Please clarify,

Another Reader

Dear Reader,

Madame L apologizes for not writing about the Cato Institute yet. She will do that when she has more free time. Meanwhile, though, she thinks you might find this information interesting. It's from an article titled "Three Lies About Taxes," from Salon.com:

"In 2007, the poorest Americans -- taxpayers in the bottom fifth of income -- paid 8.8 percent of their income as payroll taxes. The next fifth paid almost ten percent. The top 20 percent of earners paid only 5.7 percent." 

In other words, while rich people are claiming to be burdened because of the high taxes on their income, they are actually paying about two-thirds the amount that poor people are paying in taxes and about half of what people in next bracket up from poverty are paying.

Madame L has noticed that extremists on both ends of the political spectrum love to pick and choose their facts, naturally wanting to use the ones that support their opinions, and unfortunately sometimes making up facts.  Madame L encourages you, as always, to learn as much as you can about issues that are important to you. 

To begin with, if you're interested in taxes and the U.S. budget and fiscal policy, you may want to think about the other two lies, from that article:

Lie Number Two: The U.S. suffers from high taxes. The truth: "The U.S. pays less taxes, as a share of GDP, than Denmark, Sweden, Italy, Austria, France, Netherlands, Germany, United Kingdom, Canada, Spain, Switzerland and Japan."

Lie Number Three: U.S. corporations are over-taxed. The truth: "Actually, as measured in terms of share of GDP, the U.S. has the lowest corporate tax burden of any OECD nation."

 Read it and weep, my friend,

Madame L