Well, the title of this post is a little tongue and cheek. First of all, I am not a wealthy person. I live in a modest home, drive modest/used cars, have a "dining out" budget and go on one vacation per year within driving distance. So, I don't have any bias here against the poor or rich for that matter.
I was prompted from a recent lecture to look at why democrats continue to waive the flag that the wealthy don't pay enough tax or get too many tax breaks. The general sentiment from the dems made me feel really sorry for the poor. One poorer person might make a few bucks then Uncle Sam swoops in to just take it away. No food or shelter tonight folks, pockets empty...
That scenario is simply not true. After searching the internet for such discussion, I discovered that Rush Limbough(spelling), made this argument years ago when the flat tax was a hot issue. However, since then, he has moved on to other topics. So what is the truth you ask? Well, I never thought the IRS was my friend, but in this case, they are very open with the stats of their business - collecting income for the running of our country. Thank you federal government! My discovery was astounding:
In 2004 (the most recent published data), the total tax share - that's who paid what portion of all federal reserve collections for the year 2004, is as follows:
The top 1% AGI Earners -- paid 36.89% of the fed reserves total collections
The top 5% AGI Earners -- paid 57.13% of the fed reserves total collections
The top 10% AGI Earners -- paid 68.19% of the fed reserves total collections
The top 25% AGI Earners -- paid 84.86% of the fed reserves total collections
The top 50% AGI Earners -- paid 96.70% of the fed reserves total collections
That means that 50% of the bottom AGI wage earners pay 3.30% into the pot to service our country. I won't address the idea that the bottom 50% of wage earner likely contributes to our country's expenses with special programs et.al. more than the top 50%, but I just don't see how this tax structure encourages success.
Heck, for the matter, for argument, let's look at it from another angle... From the statistics above, the top 5% of wage earners pay over 50% into the pot for government service that serves 100% of us. Hmm...
Taxing the successful just doesn't make since nor is it the American way. I am not for or against the poor or rich. Heck I am a middle class kind of guy here, but I am in favor for success incentives. Capitalism. The opportunity to succeed is what our country's success was built on, not mediocrity.
After reviewing the stats, I am amazed by the facts. Even in the midst, we still are the land of opportunity that I mention above. I just think about how much opportunity is lost due to myopic ideas on taxation instead of progressive. Woah, did I say "progressive". Isn't that the new buzzword for democrats? Aren't they now labeled "progressive" instead of "liberal"? Maybe we need to define the term progressive -- again tongue and cheek.
So, what am I going to do? For starters, I will pay my taxes next year. I mean, we do live in a free and safe country where I have the privilege to make a profit (though it's taxed out the butt), worship my God, and write about my concerns about our society, among many others. I will also pay more attention to what our future leaders stand for concerning the issue of tax.
Any thoughts out there?
Source: http://www.irs.gov/pub/irs-soi/04in05tr.xls (all the way to the bottom)
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2 comments:
like most statistics, anything can be bent to prove a certain view. however, i can understand both points of view here.
1. consider someone living in Georgia, making minimum wage, working 40 hours per week. The annual income (before any deductions) is $10,712. No matter what percentage you take from them, they're still screwed. no wonder they have to take advantage of all the social services programs.
2. now consider someone living in Georgia making $400,000 a year. it takes them about a week and a half to make that same $10,712 the minimum wage earner made. no matter how much you take from them, they're kind of screwed, too. Take too much and it seems as though you're punishing them for financial success. Take to little and then you're catering to the upper class.
working in the restaurant business, my boss had a saying: Volume cures all ills. If your store does $100,000 a month, spending $25,000 (25% of your income) on Repairs and Maintenance is insane, even if you absolutely have to do it. Move to a busier store doing $400,000 a month, spend that same $25,000 (now just 6.25%) and no one even notices.
the same can be said for personal income. the more you make, the less it hurts you to pay taxes. granted, seeing Uncle Sam take away $100,000 plus of your income is definitely painful, but you still have a few hundred thousand left to spend. Take away $1000 from someone making $10,000 a year and it's a whole different ball game.
That said, i don't know if it can/will ever be "fair."
- Hanes
Understood "Hanes". I really like what you're boss said, "volume cures all ills". He is absolutely correct. As you know I am in a commission structured business. I see that theory in my own life. When deals are slow, I tend to be equally slow in my spending. On the other hand, when deals are moving and commissions earned, I tend to spend more. By the way, the spending I speak of is business spending, our family budget is pretty static.
One thing to consider is the trickle down benefit of spending. Like I said, spending when income is up, can be a great catalyst for economic health from top to bottom. For instance, if I purchase a new computer from a local office retailer, that purchase contributes to jobs and tax revenue both on the local level, state level, and many times the national level. Just think if $1,000,000 small business owners had $1,000 to spend on a new computer.
Great point in comparison of a minimum wage earner to a very high net worth earner. I agree with you. 10% to a $10,000 wage earner is very serious. Whereas, 10% to a $400,000 wage earner has less impact. Good call! However, most American's fall somewhere in between getting beat up from both ends. I don't have any statistics to prove this point. Maybe I could find out the break point of income between the top 50% and the bottom 50%.
Maybe there's a solution! Again, typing off the cuff... Wasn't there a tax plan brought up a few years ago that was a flat tax, but it didn't begin taxation until after earnings reached over the poverty level?
Hmm... Many things to think about here.
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