My friend Fudgeman and I have had a lively debate about how much tax lower income folks should pay. He is outraged that 47% of American families do not pay Federal Income Tax. As shown in the graph above, however, the lowest income quartile does pay something, primarily for Social Security and Medicare.
It is clear to me that we need to raise revenue or cut costs to pay for our entitlements - Social Security and Medicare. And Medicaid, Obama Care and Defense all need either cuts or increased revenue - Most likely both. Our current path is not sustainable.
In terms of program costs, Social Security, Medicare, and Medicaid have gotten out of balance because of a couple of good things - we are living longer, in part because of better medical care. And those of us in the Baby Boom era are a very large cohort - as we retire we have fewer workers behind us to pay for the Social Security and Medicare benefits.
So Congress faces a difficult task - Raising the debt limit and perhaps cutting program costs and or increasing taxes. And cutting benefits and raising taxes is a politically difficult and unpopular thing to do.
Fudgeman, you will be happy to know that I have thought this through and I do think that lower income folks should pay at least a little income tax. But it won't raise much revenue - they don't make enough. As shown by the Chart Below, the folks closer to the bottom rung don't make enough to raise very much revenue.
Click to Read the Article
http://ntu.org/tax-basics/who-pays-income-taxes.html
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