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The Modern Tax System: Fair to the Average American?

Floor Speech

Location: Washington, DC

Mr. CRITZ. Mr. Speaker, in April, the Johnstown-Somerset Central Labor Council announced the winners of its annual scholarship essay contest. This year's first-place winner, Lisa Vatavuk, wrote an essay entitled: ``The Modern Tax System: Fair to the Average American?''

I would like to read Lisa's essay, as it has particular meaning to our current tax and budget debate:

Dating back to ancient Egypt in the year 3000 BCE, taxes have been a familiar part of society for almost as long as civilizations have existed. So how do taxes affect the current citizens of the United States? Today's tax system affects all three classes in different ways. Unfortunately, in the United States, taxation hits the average middle class family the hardest out of all three demographics.

The United States follows a progressive taxing system. This means that, ideally, families in the lowest income brackets pay the lowest percentage of taxes, while families in the highest income brackets pay the highest percentage. However, this system of taxation is flawed. Because the Bush administration cut taxes for the wealthy, families in the top income brackets pay much lower tax rates than the progressive system calls for. Also, because taxes include sales taxes, property taxes, and other kinds of taxes in addition to income taxes, families in the highest income tax brackets almost always pay lower percentages of their income in their total taxes than low and working class families. In addition, because State and local taxes are typically regressive rather than progressive, low and middle class families are given a higher percentage of taxes than wealthy families. In 2007, out of all the income brackets, families in the middle-income bracket paid the highest percent of their income in their total taxes in Washington, D.C., Maine, Minnesota, New York, South Carolina, and Vermont. In the vast majority of the remaining States, the lowest-income families paid the highest tax percentage, and the highest-income families paid the lowest. There were no States in 2007 in which the wealthy families paid taxes at a higher rate than the middle and low classes.

The current tax system affects families in high-income brackets much differently than it affects those in the low- and middle-income brackets. First, wealthy families receive many tax deductions. The government, on average, pays for about 35 percent of high-income families' taxes. A second way in which the wealthy are not affected by the tax system as much as lower class families is that they generally do not have to pay as much income tax. The average millionaire does not earn their money from working; they earn money from their investments. Taxes on long-term investments are lower than taxes on income because the government wants to encourage consumers to spend money. However, this means that wealthy families that earn money from investments pay lower taxes than middle- and low-income working families.

Finally, the families in the top income brackets are almost never hurt by the current tax system because some politicians do all they can to protect the wealthy. Some politicians believe that as long as the wealthy families have money to spare, they will make investments that will benefit the economy and the lower classes. While this theory may or may not be true, the higher classes continue to have lower tax rates than the middle and low classes. The United States' current tax system clearly benefits wealthy families.

Wealthy families are not the only ones that benefit from this system of taxation in the United States. Poor families are often given benefits as well. While families in high-income tax brackets receive many breaks on their taxes, they are not the only people that receive these breaks. Families that are considered to be in poverty by the United States Government are many times given breaks on their taxes as well. For example, the Earned Income Tax Credit, or EITC, is given to many low-income families in this country. This tax credit gives families money back to help relieve the burden of taxes. In some cases, the EITC gives families back more money than they originally paid in government taxes. In some cases, poor families also receive benefits from the current tax system because in some cases the members of the family do not work. In families in which no one works, there are no income taxes or payroll taxes. These families instead receive assistance from welfare. There is no tax on money received from welfare, so families receiving this aid that do not earn additional income from a job do not pay any income taxes. Consequently, the tax system in the United States can be beneficial to low-income families.

In the current tax system, there are certain advantages to being in either high-income families or low-income families, but what happens to those families that fall in the middle? The majority of Americans are hardworking citizens that earn a moderate salary. These citizens are the ones that have to pay for the benefits that others receive. For example, when the wealthy receive tax deductions, the government receives less money as revenue, and the people that fall in the middle are the ones that suffer.

The less money the government has, the less it can provide funding to programs that benefit middle-income families, such as education funding, libraries, and government aid for skyrocketing college costs. A second way in which the middle class is hurt by tax deductions is when poor families receive tax credits. As previously mentioned, sometimes when families receive the EITC, they receive more money from the government than they originally paid.

This money comes from money taken straight from taxpayers. Middle-income families are many times forced to pay the highest tax rates out of any of the income brackets, and they receive no special treatment from the United States government.

In conclusion, in the United States today, most of the burdens of taxation are put onto the average middle-income working families. The system of taxation is extremely unfair for working families; they work their entire lives to have a large part of their income taken away from them by the government when people in both high- and low-income brackets receive special treatment from the government. The average American family falls in the middle-income category, and in the current tax system, this family, the heart and soul of America, is the one that ultimately suffers.

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