Taxation

Prior to the mid 1950’s, distribution of Federal and State Income taxes by classes was a problem in America. Policy makers had received complaints from taxpayers that the burden of taxes was hurting all taxpayers. Most citizens believe that the tax system was setup to benefit one class of Americans. The average Americans believed that wealthy Americans were using their power and influence to avoid paying most federal taxes. In the article, “There was a slight burse of interest when Secretary of the Treasury Joseph W. Barr revealed his amazing discovery that 154 individuals with adjusted gross income of $200,000.00 or more paid not a dime to the federal treasury on their 1966 income (Barr, XXX). As a result of the 1966 survey (Barr, 1972) congress enacted a Tax Reform Act of 1969. The individual and corporate income taxes are part of the tax burden of 1966.

The individual income tax was accounted for the $59 billion in 1966. The figures of the MERGE file (MERGE File means-Major Sources of Income from Property and from Earnings) are use in the survey of this article to create a better understanding of the income classes. The file has federal individual income tax reported by the taxpayer so that it is easy to show the burden of this tax by the income classes by comparing the amount of tax reported with the total income. When taxes are paid and compare to the total for all families, the weight of the individual income tax did not go above 21 percent of income in any class. For most income classes the tax is less than 10 percent of income below $25,000.00 and 20 percent only after it passes $100,000.00. For families with more than a $100,000.00 the tax was 19 percent. This indicates that federal individual taxes bear more weight on the families who rely mainly on earnings than on those who rely on property income. In each adjusted family income class, the tax rate on total income for earners are larger than on property income. However base on the result variation...