We used to have an issue in this country about taxation without representation. In other words, paying taxes, but not getting to decide how you’re governed…of course, back then, we were a colony and not a country…and that’s my point. Backasswards taxation policy was once enough to start the American Revolution. Perhaps it’s time for another revolution.
Some people wonder why I care so much about taxes, and my answer has always been that tax policy has a tremendous impact on virtually every other policy we put in place. It’s the “glue” that keeps everything together or pulls it apart.
Recently-released Federal Reserve data (from the most current year, 2006) shows that 39.89% of all income taxes paid in America come from the top 1% of income earners — people earning more than $388,806 annually. 60.14% come from the top 5% of earners, or those making more than $153,542 a year. 70.79% of all income taxes paid come from the top 10% of earners (making over $108,904 per year), while 86.27% of all income taxes paid come from the top 25% (that would be people making over $64,702 per year). And even more shocking, 97.01% of all income taxes paid come for the top 50% of income earners, which you join once you cross the $31,987 threshold annually. To put it another way, we now have half of all workers (those showing a positive AGI) paying only 2.99% of the total income taxes in America…that’s nearly 68 million people…and yet, we allow those folks’ ballots to count as much as yours or mine. You might just want to re-read this paragraph slowly so this sinks in some.
I find this deeply troubling, especially among much talk of our new Administration raising tax rates on the top 5%…and we all know that more than just that group will have to “contribute” with the way spending in Washington is going these days. If half the people eligible to vote aren’t paying much in income taxes (actually, 23 million Americans of working age paid nothing, yet still received federal “refunds” totaling $45 billion), then isn’t it easy to essentially “buy” their vote? What do they care if we teeter into socialism or worse? Why would they care if government continues to grow…they were getting all of the benefits with none of the “sacrifices” in the first-place.
I still believe this is the most upwardly-mobile country in the world, yet we have a political class that wants to keep squeezing what I call the “productive class.” I suppose that’s where the money is, but eventually you can no longer get blood from a stone. And in the middle of a recession, this is economic suicide. Maybe when the ratcheting-up of taxes begins again, we can refer to it as the “Success Tax” — at least let us keep some dignity about it. And by the way, for all the talk of the “rich getting richer,” recent Federal Reserve data shows the top 1% held 33.38% of the nation’s wealth in 2007, actually DOWN from 33.9% in 1995 — and that was BEFORE the $11 trillion in household net worth was lost in the past 18 months.
Sure, there are people among the top 5% of income earners that are undeserving and even some that are even immoral, probably. But there are also people there that are the source of many of the jobs in America. The people that make business a source for good in this country and around the world. The people that make America go. Among this group are the people that took the risks that were available to everyone else, but that few others ever take…to start a business, against the criticism of everyone who said it would be foolish. The Many don’t take the risks…not because they cannot, but mostly because they convince themselves they cannot.
I guess I’m still reeling from our Vice President’s comments on the campaign trail that I’m somehow “un-American” for working so hard to earn what I do…I kind of thought that WAS American. At least that’s what my friends who were born in foreign lands tell me when asked why they moved here. I also happen to think there’s probably a direct correlation between the amount of television watching one does with their income: more hours, less dough. And I’m pretty sure there’s a correlation between the number of books, magazines, newspapers, newsletters, etc. read, to income. I see entrepreneurs every day that don’t do what “everyone” else is doing…and I think they ought to keep more of the rewards they earn, not have the desire taxed out of them. But maybe all of this makes me old-fashioned and resistant to “change.” I’m just a little sick of the class warfare.