Skip to comments.America divided by Democrats: "The Non-Paying Class"
Posted on 11/20/2002 3:11:21 AM PST by The RavenEdited on 04/22/2004 11:47:33 PM PDT by Jim Robinson. [history]
The stars look to be in perfect alignment for tax relief. With a GOP majority in both houses of Congress, the Bush Administration is making eager and energetic noises, and the economy is in what Fed Chairman Greenspan calls a soft spot.
(Excerpt) Read more at online.wsj.com ...
All of which suggests that the last thing the White House should do now is come up with more exemptions, deductions and credits that will shrink the tax-paying population even further.
The Honorable James DeMint (R-SC)
United States House of Representatives
THURSDAY, APRIL 5, 2001
"There has been a shift in the relationship between individuals and government, he argues, such that fewer and fewer are paying taxes at the same time that more and more are receiving increasingly generous benefits. If it becomes the case that most voters do not bear a financial burden for this largess, then there will be little to restrain--and significant political incentives to encourage--the continued growth of government. And at that point, DeMint warns, we have reached a major crisis in our democracy."
- "If we're to have an income tax, it's a good thing for everyone to pay at least a nominal amount," he said. "If non-taxpayers become a majority in society, what would restrain them from voting for ever higher taxes on others?"
If you're among those who pay little or no federal income taxes, what do you care about tax cuts? Moreover, if you think tax cuts pose a threat to government handout programs, you might be openly hostile and support Al Gore's silly "risky scheme" talk. So many Americans paying little or no federal taxes makes for a natural spending constituency. It's like me in the restaurant: What do I care about extravagance if you're footing the bill?
Right now the bottom 60% perceive little to no "Individual Income Tax" burden,(in many cases even a handout) and 70% of the voting public clamors for more from government looking for the top 40% of income earners/producers to foot the bill.
|Effective Individual Federal Income Tax Rate (Percent of gross income)|
Those that readily perceive some of the burden.
|Effective Individual Federal Income Tax Rate (Percent of gross income)|
While Congress plays both ends against the middle; hiding the real burden in inflation, higher prices on all goods and services, lower takehome pay, lower return on investment, and higher interest rates. All keeping the poor right where they are and pushing for more freebees.
Consider that 15.3% SS/Medicare tax on the 1st $75K of wages/self-employment income, plus the 6% Federal/State Unemployment tax, all of which are but a portion of the effect of federal taxes embedded the price of all products we purchase. Taken together with the Individual tax rates above we all pay more than:
|Effective Total Federal Tax Rate (Percent of reported income)|
Data from IRS collections statistics and The Bureau of Economic Analysis as compiled in tabular form by the Congressional Budget Office.
Corporations do not pay taxes, individuals do. It's all a big scam to send money to the central state but it comes off our hides. Politcians figured out that raising incime taxes on individuals would not buy them votes, but they wanted the money anywa, so they inveted corporate taxes and conned the ignorant into believing it a tax on the rich, not realizing that corporate taxes are part of the end price of goods and services.
In reality we all pay higher taxes than the article claims. Only the taxes are backdoor taxes and hidden rather than the obvious income taxes.
Taxes are a scam and eventually stifle economic activity and expansion and that is what is happening everywhere.
Cut Capital Gains
Turn a portion of offshore oil production royalties back to the states.
Insert your suggestion here.
This article leaves out one thing, and that is the hidden tax that is called corporate tax.
Same is true of the VAT. Any time government is able to hide or disguise taxation from the electorate as a whole by burying it in inflation or "taxing the rich.", it place is base card:
A government which robs Peter to pay Paul can always depend on the support of Paul.
-George Bernard Shaw
Until we place the full burden in sight that the cost of largess can be perceived, we will continue to have a Congress more than willing to pander to the basest instincts of the people.
Sir Alex Fraser Tytler (1742-1813). Scottish jurist and historian:
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
That is why we desparately need to establish the National Retail Sales Tax and dump the current tax system into the bit bucket.
Before numbers get thrown around too much, how much wealth is owned and/or generated by this tiny group of people? Then I would like to know how much wealth is owned and/or generated by the rest of the people. If I could see the two proportions then I would be better able to judge if and how the ratios are out of whack.
Opponents of progressive taxation would be well advised to focus their arguments on job creation noting that higher income people save more and that an economic truism is that "savings equal investment". I don't have any current statistics but I would not be surprised if it takes about $100,000 to create a single new job. That $100,000 doesn't come from the government but must come from those with savings,i.e. capital formation.
The corporate income tax is the most progressive of taxes since the finished product, in most cases, must pass through a pipeline of packagers, transporters and retailers before it even gets to where the consumer may decide to buy it. Each of these entities, essential to our modern economy, adds its tax burden to the final cost of the product.
The best example of this I can think of off the top of my head is the common loaf of bread. The last figures I saw revealed that a single loaf of bread contains roughly four to five cents worth of wheat, which goes to the farmer who grows the wheat. The rest of the cost is added, in turn, by the wholesale purchaser at the grain elevator, the corporate purchaser of the product, the transporter of the wheat, both from the elevator and then again from the corporation to the retail chain and from the chain to its individual sales outlets, and further from the retail outlet itself. Costs of transportation and manufacture are, of course legitimate costs, and should be expected. What is generally forgotten is that each of these private sector business entities must also pay taxes, all of which are added to the product before the consumer even has a chance to pay his overt sales tax on the item.
Just think how a partial cent increase in tax on each gallon of oil percolates through the economy; then think of each and every product one buys in order to live a decent life.
Then, of course, all that you've managed to save in your lifetime, paying taxes all the way, is again taxed when you die. As far as I'm concerned, even the much publicized "tax freedom day" is laughable.
That said, I'd like to see some hard numbers regarding ratios of income/wealth broken out in much the same way as the numbers were in the article.
For instance, if the top 5% of americans make 30% of the income of the nation, yet pay 80% of the taxes, that is truely an evil situation. If, however, the top 5% made 80% of the income and payed 80% of the taxes, the situation would still be evil (as income taxes are by definition IMO), but somewhat less so.
Do any freepers on this thread have or have seen such data?
The Republicans have got to come up with a brand-new and fair tax system that gives an immediate, tangible result to the taxpaying citizen. They have got to quit dilly-dallying around. They don't have much time. People are getting angry.
This misinterprets the data it presumably relies on (the Joint Committee on Taxation study of 1999 data) and, in any event, presents an incomplete picture. See JCT Study on 1999 Data.
First of all, from a procedural standpoint alone, without knowqing what fraction of the total income the group in question earns, it is impossible to tell whether 28% is progressive, regressive, or flat.
Secondly, page 3 of the above linked report (which is the relevant data since it includes almost all income and almost all taxes, indicates that the top 1% of taxpayers (beginning at $340,000 and averaging $1 million) earn 17.2% of total income and pay 23.2% of the taxes. Therefore, this article, which claims the top 1/2 of 1% pay $877B when the data shows the top 1% paid $391B has done a shoddy job of research---at best. It's calculations leave something to be desisered as well. If the $877B figure were correct, it would represnt closer to 50% of all taxes rather than 28%.