The Wealthies 1% in U.S. Contribute With 45% of Income Tax

I'm writing about something that I consider is going to create waves for a very long time: The Wall Street's article on federal income tax.

According to a report by Tax Policy Center,   the wealthiest 1% in U.S contribute with 45% of Income Tax; but, they earn about 17% of the total income. On the other hand, the bottom two fifths earn about 14% of the income (it does not only include pay checks) and receive money when filling their taxes by several tax credits. It seems very progressive.

Since the government is mostly financed by the wealthiest 20%, should they control it? Or should they pay less taxes? I'm leaving aside any argument about inequality so far.

If we account the argument of inequality, due to the structure of progressive taxation, is the government better off having a very unequal population? In other words, if minimum wage increases and money is moved from the top brackets to the bottom brackets, will the government collect less taxes?

So far, I have only addressed the issue of federal income tax. It seems very progressive and can be exposed as a victory of our tax system. However, it only includes the burden by the federal income tax but not all kind of taxes.

This other burden is exposed in another article by The Wall Street Journal title The One Tax Graph You Really Need to Know.

Take someone who makes $4 million dollars a year and someone who makes $40,000 a year. The person making $4 million dollars, assuming he's not doing some Romney-esque planning, is paying a 35 percent tax on most of that money. The person making $40,000 is probably paying no income tax at all. So that makes the system look really unfair to the rich guy.

That's the basic analysis of the 47 percent line. And it's a basic analysis that serves a purpose: It makes further tax cuts for the rich sound more reasonable.

But what if we did the same thing for the payroll tax? Remember, the payroll tax only applies to first $110,100 or so, our rich friends is only paying payroll taxes on 2.7 percent of his income. The guy making $40,000? He's paying payroll taxes on every dollar of his income. Now who's not getting a fair shake?

We are facing a very unfair situation for the bottom percentiles. Furthermore, if we combine all the taxes, the burden for each fifth of earners does not seem as progressive as it is in the federal income tax. Actually, it seems regressive once we are facing to the top percentiles.

My take away is that in matter of taxes and income, we, as a society, still have much to do. I'm very eager for seeing the further arguments to these realities.