Power and Privilege

 

In this project, we looked at how taxes, specifically income taxes, affect the cycle of poverty and the accumulation of wealth. Based on the conclusions we reach concernning these two issues, we needed to answer the overarching question: Is the income tax system in America fair?

 

To answer these questions, the tax system in America first nneeds to be understood. Regressive, Proportional and Progressive taxes are the main three different tax systems used around the world. Regressive tax is a flat tax which is applied uniformly, regardless of income. Proportional tax uses the same rate of tax for all citizens regardless of income. Progressive tax increases as the taxable base amount increases. The U.S. uses a progressive tax system based on the idea that higher income citizens pay a higher percentage of tax.

 

Progressive tax in America comes in the form of tax brackets, as shown in the table below:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The amount of tax paid by higher income is significantly higher than the people with lower income. The reason for this is that the people with the highest incomes have a higher percentage which leads them to pay more both because of their income and because of their tax percentage. The High Income pays the largest amount of tax. The top 10% of income accounts for 70% of all taxes paid in the United States.

 

However, the effect of tax is felt more intensely by lower income individuals because they have less money to spare. The poor people end up staying relatively poor and the rich people stay rich. It is very hard for these things to change based on tax brackets but it is definitely an effort.

 

Accumulation of Wealth

 

An individual who makes $100,000 a year will be taxed $5,156.25 a year for their income. That means that they will have $94,843.75 left after taxes. That is $7,903.65 a month for an individual's expenses, more than sufficient to cover one person's costs and sill allow them to invest and grow their money. In this way, the rich have enough left to make themselves mone money through investments. 

 

Cycle of Poverty

 

Consider a family at the poverty line. Poverty line for a family of four is $23,850 and they fall into the first and second tax brackets, for 10% and 15%. As they are married and filing together, their first $18,150 falls into the 10% and the second $5,700 falls in the 15%

• $1815=10%

• $855=15%

• Together=$2670

• Remainder=$21,180

• $1,765 per month

• Average rent for a two bedroom is about $1,341

• That leaves a family $424 a month for all of their needs

 

How Income Tax is Calculated

 

Based on tax brackets: first amount is taxed by 10%, after that it is taxed in increasing percentages. It is like a water fountain, water filling one bucket and then spilling into the next. Here, the income cash is filling one bracket and then spilling into the next. Then, depending on which bracket the cash falls into, it is taxed by a certain percentage.

 

In order to calculate that, I made a tax calculator using python. My code takes the water fountain effect and represents it through code. 

 

If copied and pasted into a coding site, this code will become a basic income tax calculator based solely on tax brackets, without tax deductions:

 

while True:

    try:

        income=int(raw_input("Input annual income?: "))

    except ValueError:

        print("Not an integer!")

        continue

    else:

        if float(income) >=9225:

            if float(income) - 9225 >=37450:

                if float(income) - 37450 >=90750:

                    if float(income) - 90750 >=189300:

                        if float(income) - 189300 >=411500:

                            if float(income) - 411500 >=413200:

                                if float(income) - 413200 >=413201:

                                    money=float(income)

                                    first=9225 * .10

                                    second=(37450-9225) * .15

                                    third=(90750 - 37450) * .25

                                    fourth=(189300 - 90750) * .28

                                    fifth=(411500 - 189300) * .33

                                    sixth=(413200 - 411500) * .35

                                    last=(money - 413201) * .396

                                    total=first + second + third + fourth + fifth + sixth + last

                                    print "This is how much you will be taxed, based on your income:"

                                    print total

                                else:

                                    first=9225 * .10

                                    second=(37450-9225) * .15

                                    third=(90750 - 37450) * .25

                                    fourth=(189300 - 90750) * .28

                                    fifth=(411500 - 189300) * .33

                                    total=first + second + third + fourth + fifth

                                    print "This is how much you will be taxed, based on your income:"

                                    print total

                            else:

                                first=9225 * .10

                                second=(37450-9225) * .15

                                third=(90750 - 37450) * .25

                                fourth=(189300 - 90750) * .28

                                fifth=(411500 - 189300) * .33

                                total=first + second + third + fourth + fifth

                                print "This is how much you will be taxed, based on your income:"

                                print total

                        else:

                            first=9225 * .10

                            second=(37450-9225) * .15

                            third=(90750 - 37450) * .25

                            fourth=(189300 - 90750) * .28

                            total=first + second+ third + fourth

                            print "This is how much you will be taxed, based on your income:"

                            print total

                    else:

                        first=9225 * .10

                        second=(37450-9225) * .15

                        third=(90750 - 37450) * .25

                        print "This is how much you will be taxed, based on your income:"

                        print total

                else:

                    first=9225 * .10

                    second=(37450-9225) * .15

                    total=first + second

                    print "This is how much you will be taxed, based on your income:"

                    print total

            else:

                first=9225 * .10

                second=(float(income) - 9225) * .15

                total=first + second

                print "This is how much you will be taxed, based on your income:"

                print total

        else:

            total=float(income) * .10

            print "This is how much you will be taxed, based on your income:"

            print total

    break

 

 

 

 

 

Reflection

 

Overall, I enjoyed this project because of the focus on coding. I used one Habit of  a Mathematician in order to create my code, which was to solve a simpler problem. When I first looked at the task I had, I was overwhelmed because I was not sure how the whole code would look. However, I broke the code up into each individual tax bracket and that made everything so much easier because it was no longer overwhelming.  I also stayed organized, another Habit of a Mathematician, by keeping each segment of my code that explained what it did, until it was time to simplify.