Towards th end of this post is a chart of the current Trump marginal tax rates for 2025 along with more fair and progressive marginal rates. Below that chart is an other chart with details of the federal income tax collected for 2022. The current Trump rates were put in place in 2018 and scheduled to stop in 2025. Trump is pushing to make them permanent.
If you compare the two sets of marginal rates, you can see that the Trump rates are very regressive favoring the rich (the 1%) and the fair rates are very progressive favoring the less well off.
If you look at the range starting at $626,350, you will see the first occurrence of the top marginal rate, 37%. The the current range stays flat from that dollar amount on up without any limit.
This is the key feature of the Trump tax cuts along with the destruction of the alternative minimum tax. In fact in 2022, the average total tax rate was 27% for anyone filing taxes with income covered by the 37% marginal tax rate.
Federal Deficit for 2022
Since 2022 is the most recent year that the IRS has published data tables, I am focusing on the federal budget deficit for 2022. The deficit is very straight forward. The government spent $6.3 trillion and took in only $4.9 trillion, a $1.4 trillion short fall. See the image below.
Unfortunately, the FY-2024 deficit was worse, $6.8 trillion vs. $4.9 trillion, a $1.9 trillion shortfall.
The "not serious" peolple call for cutting spending to close the deficit. However, you can only trim a spending budget so much. "Serious" people go out and get a second job to cover their basic expenses. For the federal government a second job comes down to raising taxes and not on poor people but on very rich people. With simple arithmetic, this means the federal government needs to raise an extra $2.0 trillion every year.
Note:
The corporate income tax rate is currently 21% and it needs to be raised back to at least 30%.
I don't think taxing corporate profits is a good way to raise revenue
but until we get a wealth tax, we don't have an alternative to the corporate tax system.
Note:
The income limit on FICA taxes also has to be eliminated.
The "1%" War on Taxes
Since 1960, the "1%" has waged an intense and successful war on the fairness of the federal tax code.
- The top marginal rate was 91% in 1960.
- The top marginal rate was 70% in 1980.
- The top marginal rate was 39.6% in 2000
- The top marginal rate is now 37%.
Under Trump, people with taxable incomes below $10,000 pay a 10% marginal tax rate. While people with taxable income over $500,000 pay only a 37% marginal tax rate. You can see why rich people love Trump.
Why any poor person voted for Trump is insane.
In 2022,
- a person earning $40,000 paid 10.2% in federal income tax.
- a person earning $75,000,000 paid 11.95% in fedral income tax.
- a person earning $150,000 paid 13.92% in federal income tax.
- a person earning $20,000,000 paid only 26.79% in fedral income tax.
The federal income tax, obviously, is based on income earned during the year. It is not a tax on net worth.
As of 2024 the top 1% in the US had a net worth of $49.2 trillion, while the bottom 50% had a net worth of $4.0 trillion.
This wealth disparaty does not enter into the income tax calculation.
The 1% do not want a progressive income tax system but the 99% needs to demand that the major part of the burden of financing the government be born by the citizens who most benefit from the success of the country.
The objective of the progressive marginal tax rates is to shift the 55%/45% distribution of the tax burden to a 33%/67% distribution with the 1% carrying the 75% share.
Why should the 1% pay the 67%? Because they are insanely wealthy and without the protection of the 99%, their wealth would be at risk.
Taxes in 2022
In 2022, the IRS collected $2.1 trillion dollars in personal income tax.
Of that amount the bottom 98.59% paid $1.155 trillion and the top 1.5% paid $0.945 trillion.
The progressive tax rates would have raised about $4.0 trillion and given the 91% a lower tax bill
In order to close the federal budget deficit, the federal government needs to collect at least $4 trillion in personal income tax
as well as a siginificant increase in corporate income tax and lifting the income cutoff of Social Security taxes.
A proposed progressive marginal tax rates will, if applied to all taxable income ($11.404 trillion), generate approxmately $3.0 trillon return with close to $2.0trillon coming from the wealthest 1.5% of the filers and $1.0 trillion from the rest.
| Start | End | Current Marginal Rate | Proposed Marginal Rate | % of Total AGI(2022) | Taxes Paid in 2022 with Trump Rates (biilions) | Estmated Taxes Paid in 2022 with Altenative Rates (billions) | Avg. % of Taxable Income Paid with Proposed Marginal Rates |
| $0 | $11,925 | 10% | 3% | .5% | $0.2 | $.02 | 2% |
| $11,925 | $48,475 | 12% | 8% | 12.4% | $63.7 | $32.0 | 5% |
| $48,475 | $103,350 | 22% | 14% | 18.8% | $213.2 | $135.7 | 7.2% |
| $103,350 | $197,300 | 24% | 20% | 24.0% | $397.7 | $331.4 | 11.6% |
| $197,300 | $250,525 | 32% | 32% | 19.5% | $143.1 | $143.4 | 19% |
| Break Point | |||||||
| $250,525 | $626,350 | 35% | 48% | (part of 19.5%) | $334.7 | $382.4 | 22% |
| $626,350 | $1M | 37% | 50% | 7.6% | $254.3 | $343.2 | 34% |
| $1M | $1.5M | 37% | 69% | 2.9% | $110.8 | $206.7 | 51% |
| $1.5M | $2M | 37% | 80% | 1.7% | $67.3 | $145.5 | 62% |
| $2M | $5M | 37% | 85% | 4.2% | $166.0 | $381.4 | 68% |
| $5M | $10M | 37% | 87% | 2.4% | $96.5 | $226.9 | 69% |
| $10M | and up | 37% | 96% | 7.1% | $289.1 | $658.9 | 70% |
| Total | $2,098.9 | $2,998.5 |
| AGI Range | Number of tax returns for range | % of total range | Total AGI for the range | % of total AGI | Taxes Paid | % of taxes to AGI |
| All | 161M | 100.0% | $14.834T | 100% | $2.099T | 14.15% |
| Under $50K | 87M | 52.0% | $1.909T | 12.9% | $63.795B | 3.34% |
| $50k to $100K | 39M | 24.2% | $2.782T | 18.8% | $213.183B | 7.66% |
| $100K to $200K | 26M | 16.0% | $3.567T | 24.0% | $397.758B | 11.15% |
| $200k to $500k | 10M | 6.2% | $2.891T | 19.5% | $478.105B | 16.54% |
| $500k to $1M | 1.7M | 1.0% | $1.124T | 7.6% | $254.285B | 22.62% |
| $1M to $1.5M | 0.4M | 0.2% | $0.435T | 2.9% | $110.820B | 25.47% |
| $1.5M to $2M | 0.2M | 0.1% | $0.255T | 1.7% | $67.287B | 26.44% |
| $2M to $5M | 0.2M | 0.1% | $0.621T | 4.2% | $166.027B | 26.73% |
| $5M to $10M | 0.1M | 0.033% | $0.363T | 2.4% | $96.476B | 26.59% |
| $10M and up | 0.03M | 0.021% | $1.052T | 7.1% | $281.097B | 23.88% |
