First and foremost, federal income taxes need to be approached. Every person in the country pays some form of federal income tax ranging from 10% for the lowest earners, to 39.2% for the highest earners in the country. The manner of taxation is not that simple however. If someone makes $500,000 a year, they don't pay 39.2% taxes on all of that money. Instead they pay 10% for a portion of that money, then a portion at 15%, and so on and so forth until they reach the highest tax bracket. For a single filer, incomes of $415,000 and higher are taxed at 39.2%, meaning that every dollar over $415,000 is taxed at the highest rate, but none of the cash flow below that.
As far as capital gains taxes are concerned, they are structured differently as long as the return on investment is larger than a one year time period. If the period on the investment is shorter than one year, than the income made on that investment is taxed at the tax bracket that all the other income of the specific individual. If the investment is longer than a year, the taxes are lowered, with members in the lowest tax bracket paying no taxes on investment and members in the highest tax bracket paying only 20% as opposed to 39.2%. Another interesting angle about capital gains tax is that money made through investments are effectively attacked twice. The money is first taxed at the corporate tax rate, usually 32% when the company receives income for the service that they render. Once the money is taxed at the corporate level, the money is then split and given to the share holders in the form of dividends, which is taxed at the capital gains tax level, an interesting means of taxation.
These are all taxation records based on the current year, but a past model and taxation rates around the world are also necessary for a proper consideration of the question; are Americans overtaxed? In 1960, the average american made about $44,000, adjusted for inflation of course. Today, most Americans make around $52,000 which is a good step more. Tax rates were also quite different in 1960, with the average American income being taxed at about 25% compared to 22% nowadays. This difference is not nearly as big as the difference between the high income earners. In 1960, someone who made 1.5 million dollars paid 91% income tax on that money, whereas nowadays they only pay about 40%. This is a huge decrease in just 50 years, but despite this, the government has managed to maintain about the same income levels from taxes.
Finally, tax rates globally play a huge role in the American tax policy. As far as America goes, it has the third lowest tax rate in the OECD (Organization for Economic Cooperation), which has some of the most powerful economies in the world in its folds. Despite having the third lowest tax rate, it has the fourth highest income tax rate, which seems rather curious. This huge gap is due to value added tax, which taxes corporations on the increased value of goods should they refine them, like crude oil being refined into petroleum. America has no value added tax, the only country in the OECD to not implement one. For that reason alone, Americans could be seen as missing out on a tax burden that many others face.
All in all taxes are an incredibly complicated and difficult topic. Just trying to explain how they work is quite the hassle, but I've done the best I can. The previous information is all I can offer when wondering are Americans overtaxed?
Sources/links: http://www.schwab.com/public/schwab/nn/articles/Taxes-Whats-New
