The top 1%

There are few days that pass without Americans being reminded to hate those evil rich people. The top 1% who are undoubtedly responsible for all the injustice and poverty in the world (especially the USA). There is an interesting fact sheet from Curtis Dubay at The Daily Signal that sheds some light on this debate. For some time, conservatives have touted the fact that the top earners pay the vast majority of Federal income taxes (top 10% pay 68% of Federal income taxes). This information drew considerable criticism on the basis that it only covered INCOME taxes, and that middle and lower income families actually paid other taxes that (implied) equalized their share of the tax burden.

As is normally the case, facts are stubborn things, and Mr. Dubay details those facts with new charts that chronicle the truth about the total tax burden. One striking fact in the latest chart is that the top 1% account for 15% of al income and they pay 24% of the total tax burden. the bottom 40% of earners also account for 15% of all income, but only pay 4% of all the tax burden. Bottom line – the “rich” still pay far more of the tax burden than do the poor.

I can hear what many are thinking already, so I won’t be surprised when the comments come in. “They should pay more, they can afford it.” That inbred jealousy is the foundation of our “progressive” tax system. I only caution that we carefully look at the results as well as the intentions of that system. Americans were promised in 1913 when the income tax was added to the Constitution (Amendment 16) that this system would be “fair” and take more from those who had more, and far less from those who had little. Let’s leave until later a discussion of the reality that this system could have come straight out of the Communist Manifesto, and deal with the results.

The gap between the rich and poor has been expanding ever since this great equalizer of humanity was put in place. The reason is simple. Those who have more money have greater opportunity to manipulate income to avoid taxation. The almighty IRS has struggled to wrangle in those wayward rich folks and force them to pay more for a century, but the inequality continues to grow.

Here is a basic question that deserves discussion. Should a tax system make moral judgments? In other words should the purpose of a tax system be to equalize society (Communism) or fund government operations (capitalism)? I submit that the former has been true from the beginning, and it has worked no better here than it did for Stalin. We all know that the definition of insanity is to continue doing the same thing while expecting different results. If we want (and sorely need) a different result, perhaps we should do things differently. There are alternatives to our failed progressive system. Have you ever heard of any of them? Most people I talk to have not.

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