An effective tax rate, the percentage of your income you pay in taxes, is different from a nominal tax rate or legal tax rate. For example, if a rich spends $3000 in total taxes among his total income, $60000, his effective tax rate is 5%. In contrast, another person earns $30000 as total income and pays $3000 in taxes. This person’s effective tax rate is 10%, twice the rich pays. In this case, tax is regressive, and richer person pays less tax rate.
Over 10 years in the past, 1987-1997, people got richer in general and the income tax became more progressive. Increased rich people paid a larger share of taxes. Therefore, the statement “the rich are getting richer and the poor are getting poorer” is wrong. Not only the rich got richer, but also the poor got richer than before, according to the data table of Federal Individual Income-Tax Return Data both in 1987 and 1997.
I like how you used real data to support your post.
Comment by sakura16x — September 30, 2009 @ 11:14 AM |