The “Rich” already pay more than their fair share. According to The Tax Foundation, ( http://www.taxfoundation.org/news/show/250.html#Data) which gets it’s information directly from the IRS, the top 1% (those who make $380,000 or more per year) of earners in this country pay 38% of the federal taxes collected. The top 5% (those making above $160,000) pay nearly 59%, and the top 10% (above $114,000) pay 70% of the taxes collected by the Federal government. When 10% pay for 70% that sounds like they are already pulling their “fair share” to me.
The bottom 50% (less than $33,000) of taxpayers; what do they pay? They send in 2.7% of the revenue. If any one group is not paying their fair share; it’s this one. Raising taxes on those people is not going to produce a lot of revenue, so it is certainly not worth the aggravation, but using the argument “fair share” seems like per demagoguery to me.
The fact of a tax capacity has been demonstrated time and time again, when you look at the chart (link below) that shows the amount of money collected in revenue (taxes) as a share of the Gross Domestic Product (GDP). It has never exceeded 20.9%.
I know, your eyes just glossed over, and you are about to find a new link. Let’s try this. First think of GDP as America’s income. This is what America makes each year in dollars. It is something on the order of 14 trillion in 2011. Each year, no matter what year, the Federal Government has never been able to collect more than 20.9% of it. They have tried. That top tax rate, the one that “The Rich” pay, started at 7% in 1913 and has been as high as 94% in 1944. But, never, say again, never has the Federal Government collected more 20.9% of all of that money.
So if in the last 100 years the federal government has never collected more than 20.9% of GDP; why is this important? Well if we can’t collect more than 21%, no matter what the tax rates are, then we can’t spend more than 20.9% without going into debt. We are currently spending 25% of GDP. (See Table 1.2 at http://www.gpoaccess.gov/usbudget/fy11/hist.html)
Finally, “The Rich” don’t have the money. If you add up all of the Adjusted Gross Income of the top 1%; those rich people making more than $380,000 per year, you get 1.685 trillion dollars. That’s a lot of money, but it would only fund 5 months of President Stimulus’ proposed 2011 budget of 3.69 trillion dollars. http://www.nytimes.com/interactive/2010/02/01/us/budget.html You have to start stealing, I mean taxing, lower income groups (down to about the top 10% $114,000 per year) at 100% to get to that historically large number.
But, then what? Even if you take all that money from all those people (who are the actual job creators and wealth producers) in 2011, what about 2012? How much incentive are those people making $114,000 a year going to have to make even one dollar more? Then I guess we just move down to those people making $50,000 a year, right?
The answer is not to tax “The Rich”. The answer has a two prong approach. You have to spend less money and you have to grow the economy. You spend less; you don’t have to collect as much. Even the dumbest politician should be able to grasp that. The other half, grow the economy, so that there are more people working, more people paying taxes, and more general wealth that can be taxed, is more difficult, but not much.
Next time, I will explain how we can do just that. Here’s a hint; Obama isn’t doing any of the things necessary to make it happen.