Posts Tagged ‘tax rate’

Taxes & Stupid: When Less of One Means More of the Other

April 16, 2008

Gallup conducted a survey between 6-9 April, asking, “Are Americans paying Their fair share in federal taxes, paying too much or pay to little?” Here are the results, with the figure on the right representing “too little”:

Middle-income People  4% (pay too little)
Lower-income people 13%
Upper-income people 63%
Corporations               73%

Okay. So that’s what a survey of 1,021 adults thought (with a margin of error at +/- 3%, blah, blah, blah).

Democrats ubiquitiously claim that “It’s time for wealthy Americans and corporations to pay their fair share!” And – judging by this poll, anyway – it appears that they have won the case in the minds of most Americans.

The only problem is that these people are completely wrong.

According to the Congressional Budget Office figures (Historical Effective Federal Tax Rates: 1979-2005, released December 2007) on “Individual Income Taxes”:

The top         1% Pays 38.8%
The top       20% Pays 86.3%
The top       40% Pays 99.5%
The bottom 60% Pays 0.6%

The actual facts are just the opposite from what we are routinely told, aren’t they?  Let me put it in capital letters so you can see it better: THE WEALTHIEST 40% OF AMERICANS PAY 99.5% OF THE INCOME TAXES!!! And they’re not paying their fair share?  The Democrats and the media have won the case in the culture by misrepresenting the truth.

When the Bush tax cuts took effect, it threw a lot of people (in that 60% group) off the tax roles entirely, and created a new lower tax rate (people who’d been paying 15% rate paid a 10% rate, etc).  It is a flat out lie to say that the rich benefitted unfairly from the Bush tax cuts.

Corporations pay a 35% federal tax rate.  Republican Presidential hopeful John McCain wants to reduce that to 25%. Why?  Because he’s trying to make the U.S. more competitive, that’s why! The world average corporate income tax rate for industrial democracies is 24%. The 35% rate – which is the 2nd highest corporate tax rate in the world – makes the U.S. less competitive.  You want to know why jobs are going overseas?  There’s one of the big reasons.  Some of the others are the demands of American labor unions, environmental regulations, the lack of protection from frivilous lawsuits, etc.  But those issues are for another day.

Now, the rare few Democrats who aren’t entirely stupid point to the payroll taxes as evidence that the rich – in spite of what you’ve read above – don’t pay their fair share.  People who earn over $1 million pay 18% of the total federal tax bill; those between $200,000 and $1,000,000 pay 23%; and those between $100,000-$200,000 pay 25% of the total tax. But payroll taxes – which hit middle income people the hardest – are those taxes that pay into Social Security and Medicare.  But in point of fact, the wealthy are virtually banned from these programs (if they use their own retirements funds, they don’t qualify for Social Security and Medicare) – and they certainly don’t get more “benefit” than anyone else in these programs).

Conservatives have frequently talked about lowering payroll taxes – which DO effect the middle class’ bottom line – and who screams about it?  Democrats!  Why?  Because they claim (rightly) that it would hurt Social Security and Medicare.  So they complain about taxes that they have repeatedly refuse to allow Republicans to lower?  That’s nice.

Here’s another issue: the United States currently has a 67,000 plus page tax code!  Does that sound like the pathway to efficiency to anyone?  We have an incredibly non-competitive and inefficient economy because of this idiocy. Democrats have done to our economy what the EPA did to our car engines in the mid-1970s.

What we need to do is to return to the 1986 Bill Bradley – Ronald Reagan Commission compromise that lowered tax rates but removed loopholes. But Democrats in the 22 years that have followed have encouraged unwise behavior by adding tax loopholes (for pet projects such as efficient cars, community colleges, ethanol, etc.). Obviously, Republicans have fed from this trough as well, but let’s not be dumb as to who keeps this mindset going.

We need to return to the Bradley-Reagan mindset to eliminate these breaks and return to a competitive and efficient economy. Every time the government hands out another loophole, they are deliberately encouraging an embrace of an inefficiency.  It’s a way of saying that we (the government bureaucracy) want to turn something that people would not rationally do into a tax break loophole so they will do what they would not do otherwise. That’s not the path to a healthy economy.  It’s the guaranteed path to a dysfunctional, schizophrenic economy.

Democrats and the media outlets rail at the wealthy, and blame “tax breaks that benefit the rich” for virtually every ill facing society.  But stop and ask yourself, “Who gave me my job?” Was it a poor guy, or was it a rich guy? Unless you are working on straight commission for one of those guys on the city street corner who wash car windows at traffic signals, you probably got your job from a rich guy.  Now, as long as that rich guy is making a sufficient profit, you have your job.  But what happens if he isn’t making a profit anymore?  What happens if you decide to vote for people who will raise his taxes, increase his costs and expenses, and lower his profits?  Congratulations: you lose your job.

This demagoguery has got to stop.  The wealthy create jobs by investing in markets that supply funds, by starting businesses themselves, and by managing their assets wisely.  The Democrats – who routinely divide people into groups according to race, gender, and sexual orientation – want to play their Ace card and divide people into economic classes as well.  Realize that’s already been tried by Karl Marx, and it didn’t turn out too well.  John Edwards’ and other Democrats’ talk of “two Americas” is little more than a recasting of the Communists’ tired bourgeoise vs. proletariat class-hatred.

It’s time Americans wised up, stopped playing self-defeating games of class warfare, and got together on tuning up the U.S. economy to perform – for everybody – the way that it is capable of performing.