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RDQ’s recent post about seniors paying taxes reminded me that presently only 53% of Americans pay federal income tax. Many of the remaining 47% are net recipients of money from the treasury. We all know that everyone working pays payroll taxes, but should everyone pay income tax?
On the Yea side, having all citizens paying income tax would give everyone “skin in the game” when it comes to voting on tax policy and expenditures. As it is, it is very easy to see why the 53% would ask why the 47% gets to vote on how much the 53% is taxed and where those funds go. If the percentages flip just a little more there will be more non-payors than payors, creating a potentially perverse situation.
On the Nea side, one must wonder if we’re asking for blood from a turnip? As it is, if the 47% are net zero or net takers and are barely making ends meet as it is, where does this tax money come from?
Fixing a one trillion dollar deficit would deplete the entire wealth of a thousand billionaires. In turn, fixing the current 36 trillion dollar national debt would deplete the entire wealth of 36,000 billionaires. (Not just their annual incomes.) We have about 850 billionaires in the United States. People just don’t comprehend the hole we are digging for ourselves. Even taking every cent of the money of the multi-billionaires isn’t going to come close to covering the deficit. We have to face the fact that taking bigger slices of what the wealthy (and near-wealthy) earn is simply not going to fix the problem, unless this country finds a way to spend less (and keep any budget line item increases well below inflation rates) and also generate more revenue – from more and higher real personal earnings – across the board for all, not just raising taxes.
I actually agree in principle that everyone should pay “something” for the rights and privileges of citizenship, but it won’t make a hoot of difference in our country’s financial reality, and the government would spend too much time trying to collect it. But it does make people think about where their money is being spent – or wasted. Perhaps we need a “symbolic” tax payment – an small but specifically-identified tax contribution deducted from a Medicare, Social Security, Medicaid or refundable tax credit payment.
And then let’s just pay attention to the math. Remember that old cartoon by Sydney Harris, of two men standing before a blackboard with a lot of math on the left and right, and a big blank space in the middle between the formulae? The caption: “And then a miracle occurs.” That’s where we are.
Hey, don’t forget there’s a whole lot of millionaires to take money from too! The top 1% has something like $50T of wealth (according to the Fed). That’s enough to cover the debt and give a little bonus to all the taxpayers 😉
“To whom much is given, much is required.” I support our nation’s progressive federal income tax system and am grateful that our family’s income and resulting payment of federal and state taxes help those less fortunate, as well as paying a larger share for national defense, regulating commerce, maintaining interstate highways, etc.
For those who confront illness or disease, or other unexpected setbacks in life (whether mental, emotional, physical, job loss, or whatever), I am happy to outsource my benevolence through a state or federal government means-tested programs which my taxes go to support. We are happy to do this as a household within the top 5% or 10% of income. My thinking is that households whose incomes exceed $500,000, $1 million, $10 million, or $100 million should be willing to pay a larger percentage share of their income bounty. The financial opportunities provided in our country, and the stability resulting from the rule of law supported by our federal and state governments, are big parts of these high earners’ success.
What I don’t support is those who are able to perform some type of gainful employment, but whether by flaws in the governmental program design or the recipient’s dishonesty, benefits are paid to some who really shouldn’t qualify (in my opinion at least). Those who can work, but choose not to, spoil it for those who really need help. Bad apples spoil the whole bunch.
When it comes to federal income taxes, our system has become incredibly more progressive. 47% of Americans do not pay income tax, in large part due to the standard deduction of $14,600 single, $29,200 married filing jointly. Others actually receive money from the income tax system due to a variety of credits.
But, most descriptive is the distribution of federal income taxes:
Top 10%, 15.3MM returns, average tax rate 21.5%
Top 50%, 76.8MM returns, average tax rate 16.2%
Bottom 50%, 76.8MM returns, average tax rate 3.3%
The percentage of income tax burden born by the top 10% is about 55% of the total. In 1980, that percentage was 32%. In 1960, it was substantially less.
I believe every American with income should share in financing the “enumerated powers” of our fe