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why is income tax so high

It begs the question, “Why is income tax so high?” It is the fault of the wealthy, who have a lot of money but pay a low income tax rate. The tax code is designed for them, and their investments are not subject to taxation. Billionaires, on the other hand, pay zero taxes on asset appreciation and can hold their assets indefinitely. As a result, Americans are grossly under-taxed, and the government must borrow to pay for the various taxes.

State income tax rates are much lower than federal rates, with some states taxing 0% on the first few thousand dollars of income. High-tax states can reach as high as 13% or even 14%. High-tax states are likely to levy fuel and utility taxes as well as federal taxes. Some states add federal taxes. This results in a high tax burden for low-income families.

The cost of government services is high, but Americans pay very low taxes compared to other countries. For example, Sweden has free healthcare, but America does not. In addition to taxes, businesses pay payroll and personal taxes. Those taxes go to programs like Social Security, a mandatory retirement system. According to some estimates, 33% of federal spending is spent on Social Security. 27% goes to Medicare/Medicaid which provides comprehensive health care for the country’s poor.

The rate of evasion under the income tax is between 15 and 20 percent. This rate could rise to 35% if sales taxes were added to the income tax. Furthermore, if the states were to convert their income taxes into sales taxes, they would conform to the federal tax base and have combined federal and state sales taxes of 45 percent. If the state were to convert their income tax to sales taxes, a similar rate could be reached.