Taxes aren’t distributed equitably — but they could be

Taxes are a requirement payment that needs to be made to the government for public services like roads and public schools to be funded. In America, there are many different types of taxes. Moreover, to compare who pays the lowest taxes, all types of taxes need to be taken into account. 

When Vox looked at all the taxes, which are consumption taxes, payroll taxes, estate taxes, corporate taxes, property taxes, and income taxes, all together, the richest people paid the least amount of taxes. 

Payroll taxes are for Medicare and social security, but since they are very expensive they are separate from income taxes. When someone earns more than 130,000 per year, the money beyond that is not subjected to payroll taxes. As a result, rich people pay a small portion of their income toward payroll taxes. 

Everyone needs to buy necessities such as clothes and food to go on with their daily lives, so that is where consumption taxes play a part. 

Relative to how much money rich people have and the taxes they pay, it is a relatively small portion of their income. Taxes for rich people is like taking a drop out of a bucket that will leave the bucket the same weight. For people, the necessities and taxes are almost all they earn. Taxes for poor people is like taking a scoop out of a cup that leaves the cup almost empty. 

America’s tax system as a whole is not very progressive because poor people pay about the same amount of taxes as rich people. Moreover, billionaires pay a smaller portion of taxes than the poorest people in America. 

Even though estate taxes and corporate and property taxes mostly apply to the rich, payroll taxes and consumption taxes flatten out the graph so no matter your economic status you pay the same portion of taxes. 

Oxfam, a global organization that fights inequality to end poverty and injustice, states “ the 25 richest Americans paid $13.6 billion in taxes from 2014-2018 — a “true” tax rate of just 3.4 percent on $401 billion of income.”(Oxfam). Billionaires, people who are in a comfortable financial position, get away with paying the least amount of taxes. Meanwhile, others are struggling to pay for necessities like food, shelter, and healthcare. Moreover, it is illogical for billionaires to pay so little in taxes. 

Equality means each individual is given the same resources and opportunities with no consideration for life circumstances. However, Equity considers each person’s circumstances to be able to allocate the exact amount of resources and opportunities needed to reach an equal outcome. In taxation, America should strive for equity. Everyone is born into different economic places in society whether it be poverty or wealth, Taxes should be flexible and accommodate people’s needs based on their economic status. 

The tax system can be made more equitable through progressive taxation in the whole tax system. Progressive taxation means that people with higher incomes have higher tax rates while people with lower incomes have a lower tax rate. Even though income tax is a progressive tax, progressive taxation should be applied to all other types of taxes for the American tax system to be considered equitable. Through tax loopholes and many other ways, Billionaires can avoid paying taxes. Stricter laws should be made to make it harder for rich people to be able to avoid taxes. 

When you only take a look at income taxes, rich people pay more than low-income people. According to the National Taxpayers Union Foundation, “New data from the IRS find that the top 25 percent of earners paid nearly 89 percent of all income taxes in 2020.” Income tax is an example of progressive taxation that can lead people to question whether poor people are getting away without paying their share. Even though rich people pay more income taxes, income tax is just one type of tax that can not serve as a representation of the rate rich people are taxed. Furthermore, people have to look at all taxes in total to see the dreadful reality of taxation in America.

Taxes in America are not fair when we look at the bigger picture. All taxes need to be looked at together to be able to identify an accurate portrayal of American taxes. Currently, billionaires are paying less tax than the poorest 10% of America. People should not continue to overlook this unfairness in taxes, but legislation for progressive taxation should be put in place.