Taxes… The New Weapon on the War on Poverty

In Government, Taxes by Landmark Financial Advisors, LLCLeave a Comment

Statistics reported last year by the Tax Policy Center stated that families with incomes in the top 20% of the nation will pay an average of 27.2% of their income in federal taxes. The top 1 percent of households, those with incomes averaging $1.4 million, will pay an average of 35.5%. These tax rates, which include income, payroll, corporate and estate taxes, are among the highest since 1979.

This leads to the question of why do we have a revenue problem now?  We feel the answer is found in the explosion of tax subsidies being provided today:

Starting in the late 1970s, poverty programs changed dramatically. Tax subsidies played a bigger role and, as they did, beneficiaries were no longer just the very poor. Low-income and even middle-income working households also began getting assistance.

The best example is the Earned Income Tax Credit (EITC). In 1976, government spent about $22 billion (in today’s dollars) on Aid to Families With Dependent Children (AFDC), then the nation’s major welfare program for poor households. By contrast, the EITC, created the year before, provided only about $5 billion in assistance.

By 2010—in the depths of the Great Recession— the successor program to AFDC, Temporary Assistance for Needy Families or TANF, paid about $27 billion in benefits. But it was dwarfed by an EITC that had grown to $61 billion. The Child Tax Credit, created in 1997, provided nearly $60 billion more to low- and moderate-income households.

We don’t have the answer… but the massive manipulation of the tax code needs to stop!  It’s time to champion a drastic overhaul to our tax code.

Let’s get the lowest rate possible and strip out all of the credits/deductions and lobbying that is being done in our now 73,954 page tax code.

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