It is often mis-stated that the “rich” don’t pay their share. When it comes to federal income taxes, as the Tax Foundation’s new chart points out, they most definitely do pay their share (and more).
There is always the rejoinder that other taxes are not so progressive and that payroll taxes are “regressive.” This is true and is yet another reason to reform those broken and heavily-indebted programs from the ground up.
I’m tired of looking at the top 1% and who pays what share of the cost of running our government…. The bottom line is, the consumer pays for everything. All costs, including taxes, are a cost of doing business and they’re included in the price of everything we purchase.
The portion of Government that isn’t paid for in tax revenue is paid for with an ever increasing debt and an ever decreasing value of the dollar through inflation as the Fed prints more dollars. This isn’t macro economics or even global economics, it’s Economics 101 – The more there is of anything (including dollars), the less value it has.
This is why Americans’ standard of living has been in decline for decades (ever since Richard Nixon took us off a Gold backed currency), this is why it takes two incomes to own a home and have two cars in the garage when it only took one in 1971. It’s why the income gap keeps increasing, why the poor keep getting poorer, and why the middle class is disappearing.
To explain further, let’s say the CEO of General Motors earns $1 million per year. To make things simple let’s just look at Federal Income Tax and say that her tax rate is 35% and she “brings home” 65% of that $1 million, or 650,000 per year.
Now, if Congress changed her tax rate from 35% to 90%, and her take home pay dropped from $650,000 to 100,000 per year, she would simply go to the Board of Directors and tell them that, because of this new tax rate, she needs a raise in salary from $1 million, to $6.5 million per year in order to continue working for General Motors.
If she’s any good at what she does, and the Corporation’s profits are a result of what she does – the Board’s answer will be “Sure, no problem.”,
To keep things in perspective, let’s say GM sells 230,000 vehicles per month. All GM would have to do is raise the price of each vehicle sold by $2 to cover the cost. of her increase and go on as if nothing happened. Nobody will notice the extra $2 on the sticker.
So, who ends up paying her taxes – the people who bought GM vehicles – her “take home pay” didn’t change one bit and the higher taxes didn’t cost her a dime. So :the rich get richer” (because they control prices) and the poor get poorer because the prices keep going up and all they have is a pay check, or welfare check.
Some say this is reason to raise the minimum wage, but all that does is reduce total employment, making government more expensive, and/or raise prices further.
So before we start calling for anyone (including corporations themselves) to pay “their fair share”, let’s ask ourselves where will they get the money they’re using to pay those taxes.
In order to get past all of this – I think there are two things that have to happen. First, eliminate the income tax and all the deductions, and “loopholes” Congress uses to control and manipulate businesses and the citizens and replace it with a national sales tax. Second, a balanced budget amendment to the Constitution so Congress can’t keep passing off their reckless spending onto future generations.
I agree with you on eliminating hte income tax, but it is not going to be easy.
Wow Paul! This is one of the most disingenuous bar graphs I have seen in a long time. Look at how all those blue bars appear at first glance to represent more-or-less equal amounts of income and population, and the red bars show an outrageous amount of taxes paid by those at the top! It almost makes me want to shed a tear for those beleaguered 1%-ers.
But let’s look deeper. The top 1% has 21.9% of all the adjusted gross income, while the share of adjusted gross income of the bottom 50% is 11.1%. Please re-read that statement: the adjusted gross income of half of all wage earners in this country amounts to 11.1% of the total adjusted gross income in America. That means 1/2 of all Americans are sharing 1/10 of the income. And look at the other end of the graph again: the share of adjusted gross income of the top 1% is twice the adjusted gross income of the bottom half. 1/100 of “us” get to share over 1/5 of the AGI.
Paul, I see only one solution to the oppressive taxation of the “rich?” If they are over-taxed they should pay less and by implication, those of us who are under-taxed should pay more. I think it’s way past time to tighten the screws on the lazy, stupid, free-loading, bottom 50%!
On the other hand I rather like the idea of having the folks making all the money being the ones paying all the taxes.
Ken, It’s not a disingenuous chart. The left constantly talks about how the “rich don’t pay their fair share.” That is simply false. I am not saying the poor should pay higher taxes either and the poor play plenty of taxes for those regressive “entitlements” which the left treasures. I think that we’d be better off if we reformed government and shrank the amounts that everyone paid in taxes including for wars, the drug war, subsidies for agriculture and ethanol, and a dozen other boondoggles that make us all poorer.
Paul, I did not say the “rich don’t pay their fair share.” Maybe they are paying what they should pay and should stop whining. The chart is disingenuous because it makes it appear that each group contains the same number of people when in fact the first bar on the left represents 50% of all Americans, while the bar on the right which is the same width actually represents only 1% of all Americans. The chart would be more accurate if the width of each bar represented the actual number of people in that economic group. Thus, the bar representing the lower 50% would actually take up half the width of the entire graph and the bar representing the top 1% would only take up 1/100 of the entire graph.
I agree that our tax system is completely out of whack! If we are looking at “welfare” we should be looking at corporate welfare, which is so often overlooked. Why are ordinary taxpayers, especially the 50% at the low end, shelling out $4 billion worth of welfare to big oil? Ethanol is a gift from politicians to corporate agriculture. It is outrageous to think that in a world with starving people we are growing food to use for fueling our automobiles.
When you and others mention “entitlements” I wish you would delineate for us what those “entitlements” actually are.
I assume you think Social Security is an entitlement, but it is actually an insurance policy that people have been making payments on for their entire working lives. In other words, they’ve earned it.
Providing health care for people who otherwise can’t afford it is not an entitlement. It is simply a means of compensating for our disastrous profit-based healthcare system which mandates that a person’s health is determined by their income, who they work for, where they live, their gender, their age, and any “pre-existing” conditions they may have. Aren’t we better off as a nation if we have a healthy population? Most western European countries with lower infant mortality rates and longer life expectancies believe this and I agree. Check out the latest issue of Time magazine to get a clear picture of how competition works in modern American healthcare.
Are veterans benefits one of your “entitlements?” Need I say more on that topic?
Please enlighten me as to what you mean by “entitlements.”
I always enjoy our discussions. Perhaps we could meet for coffee again at some point.
I will defer on coffee until after the legislative session, but will contact you then. Yes, Social Security, Medicare, and veterans care are entitlements. All three have significant room for reform. I’d be happy if Medicare were limited to only those who were truly poor. I shouldn’t be paying for Warren Buffet’s health care.
Corporate welfare is indeed a problem. I am more concerned about outright expenditures than about tax breaks, but both are worth analyzing and discussing.