Any cut in the tax rate for the ones who lie in the middle-income group will also provide a benefit for the ones who are further up in the level of income which actually includes the top twenty percent of earners who pay about 95 percent of total income taxes. This is according to the director of the Office of Management and Budget, Mick Mulvaney who played the role of a professor on Wednesday night at the Georgetown University while he was explaining the complicated system of taxes which the administration and the congressional Republicans are trying to simplify. In an addition to this, he also dished the eye-popping numbers and about the impact of a tax rate cut for the middle class.
This actually came in a discussion before students of the school's Institute of Politics and Public Service at the McCourt School of Public Policy. This particular discussion was directed by Cathy Koch who is a tax expert and former Senate aide. When both of them turned to taxes, the rich pay, Mulvaney declared that the top 20 percent of folks who file a tax return basically pay 95 percent of the total taxes. This data might be the highest ever. According to the Wall Street Journal only about two years ago it was revealed that it was 84 percent. He then explained that if the tax universe of five equal parts which are called quintiles that are equally sized columns of 20 percent each.
In this break up, the first two columns that is the upper quintile and the lower quintile do not pay any taxes at all. That middle quintile which is described as the middle-income groups or the middle class pays at an effective rate in low digits and all of the taxes are paid by earners in the top two quintiles & that the last quintile pays almost the total tax that is 95 percent of the total taxes. The people always ask why the rate of cut on taxes is only for the rich and the reason is quite simple, which is because the tax system is a progressive one. In the conclusion, it can be said that if the rate of taxes are lowered for the middle class and all other things remaining equal, the ultimate result of tax rate cut will benefit the rich.