The wealthy pay more than their 'fair share'— and liberals know it | TheHill
S E E D E D C O N T E N T
While I hope that Congress has the good sense not to enact Build Back Better, thank goodness a liberal politician can finally discuss taxes responsibly, without demonizing an entire class of Americans.
For decades, we have heard liberal politicians — including presidents, cabinet members and congressional leaders — demonize wealthy Americans by asserting that our deficit problems could be resolved, and progressive social policies achieved if only the "rich would pay their fair share of taxes." It is divisive and demagogic — the height of public irresponsibility — for anyone in power to demonize any class or group of Americans.
Even on its face, the claim that the rich were under-taxed was always erroneous. The top 10 percent of taxpayers pay 70 percent of federal income taxes. What would be "fair?" 75 percent? 90 percent? The top one percent pays 40 percent of federal income taxes, despite earning only about 21 percent of total reportable income. Is that less than "their fair share?" Since 2001, the top 1 percent's share of federal income taxes paid grew from 33 to 40 percent.
Moreover, what goes unsaid in liberal framings of our tax system is that 50 percent of Americans pay virtually no (less than three percent of) federal income tax. This fact is especially problematic, as half of Americans have no direct personal interest in reducing federal spending. This explains why rich new social programs often poll so well — they do not cost half of Americans anything. If you don't have to pay for Congress's profligacy, why oppose more spending? And, would it be "fairer," better for America, if 80 percent of Americans paid no taxes?
Admittedly, payroll and excise taxes tend (paid by most working Americans) are more regressive, but, by almost any measure, the United States's tax system is significantly more progressive than almost every country in the left's beloved Europe, which relies primarily upon highly regressive value-added taxes to fund their vast social programs. Are those tax systems "fair?"
Unfortunately, in a tax system that relies heavily on its citizens' willingness to file and report their own income, some people cheat. The IRS estimates that the tax gap (that is the difference between what taxpayers owe and what they pay) is approximately $400 billion. But cheaters span all income levels. Three of the largest areas of cheating come from low-income taxpayers who claim excessive amounts of refundable tax credits (like the earned income tax credit and the child and dependent care tax credits), middle-income small businesses (like restaurants and stores) and sole proprietors (like hairdressers, doctors and handymen) that transact with high amounts of cash and from the under-reporting of income from so-called "pass-through entities" (like limited partnerships), a favorite investment vehicle of high-income earners, for which the IRS is unable to electronically trace and verify income without an audit. Cheaters do not pay their "fair share," but cheaters come in all sorts of shapes and sizes — and income tax brackets.
Liberal politicians should have the integrity to say what they really mean: "We want to spend more money on social programs (or we want to redistribute wealth in America) and need to raise taxes to pay for it. For the same reason that gangster Willie Suttononce answered for why he robbed banks, we want to tax the rich more — not because they do not pay their 'fair' share, but — because "that is where the money is.'"
With the Secretary's declaration that we will achieve "fairness" in Build Back Better bill if enacted, and even if it does not become law, let's hope that liberal politicians will stop — once and for all — attempting to demonize the wealthy, or any other class, of Americans.
David F. Eisner was the assistant secretary for Management at the U.S. Department of the Treasury from 2018-2021.
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So, what IS "fair share"?
They never put a real number to it because they know the rich pay more than any suggested amount they can come up with reasonably.
We all know that what ever number they assign to it will be high enough so that it won't affect them.
Will the progressive liberals dream of everyone paying their "fair share" (read that as "we must tax the rich more to pay for our social programs) be met by giving the very wealthy a HUGE tax break through SALT cap changes?
How can any self-respecting liberal demand we tax the rich more WHILE giving them a massive tax break?
No, the Richest One Percent Don’t Pay 40 Percent of Taxes. (nymag.com)
The actual truth about the American tax system is that it is slightly progressive. The richest one percent earn about 21 percent of the income and pay 24 percent of the taxes:
So even if we use your chart, the top 20% pay more in taxes based on income than any other bracket does.
In fact, the top 20% is the ONLY bracket where taxes collected as a percentage is more than the percentage of money earned.
Sounds JUST like they DO pay their fair share.
What do YOU consider fair, and why?
You’ll never get a real answer but I can answer for them.
What do they think is a fair share?
More. For everyone but themselves.
The reason that the percentage of ALL taxes paid by the one percent goes down when compared to just income tax is that the one percent pay far less of a share of non income taxes.
Perhaps this article is afraid to mention that since the upper economic stratus literally owns almost all of America's economic output would be that the owners feel as if they are not required to pay a fee--or rent--on that which they already own or control?
W-h-a-t?????
it is quite clear who earns the most money and pays the most in taxes.
And who doesn't pay income taxes.
And those who get tax 'refunds" of money they never put into the system.
And actually, the article does indeed mention it. Surprised you missed it, really.
Here:
And that proves nothing. The accumulated wealth is all that matters.
Bull.
So far we haven't taxed wealth but income in this country. If a percentile of earners gets about 60% of the earned income, how does making them pay more than 66% of income taxes collected means they are not paying their fair share?
Wrong. We don’t tax accumulated wealth that has already been taxed until they die.
“Fair“ is a loaded term that can never be satisfactorily defined in this context. There is no “fair.” There is only what people think is “right.”
I think it would be right for the wealthy to contribute more to the general welfare than they typically do. I’d prefer if they did it voluntarily, but since they often don’t, we have taxes.
Then folks should stop using the word.
A graduated flat tax with no deductions or credits would be a whole lot more fair and easier to collect.
You simply exempt the lowest percentiles from paying income tax (and take away the "welfare-like" "refunds") and go from there, raising the percentages each income bracket pays.
I do agree that the whole thing should be easier. I’m still disappointed that I can’t do my taxes on a postcard like Trump said we would be able to. (Although doing it electronically is better in every way, but I digress) Instead, all year long, we save receipts and other documents, and then my wife and I have to waste an afternoon once a year figuring out our taxes. It’s a ridiculous system.
Maybe we should instead create ways that wealthy people could donate to various programs and projects, sort of like a “go fund me” thing but for public projects. Want to build a bridge? Set up a website for donations, and when we have the funds, the thing gets built. Other programs, like housing the homeless or feeding the hungry will constantly be spending and taking in money, so maybe those programs have some minimum level of funding to be maintained.
I don’t know. I’m just spitballing here. The system we have is lame and we need to find creative ways to improve it. But I also think there needs to be a stronger moral tradition in society that compels the “haves” to more eagerly help out the “have-nots” - as opposed to either side whining about what’s “fair.” Life is inherently unfair, but that doesn’t mean we should allow people to suffer from that unfairness.
There are some who have made the argument that philanthropy was stronger from say 1900 through the 1920s, but that government programs instituted in the 30s and taxes to pay for them, have arguably sabotaged that impulse. For some in the modern age, it has become an excuse to justify a cold heart. Just look at wealthy liberal people who insist the government should raise taxes on the wealthy but don’t increase their own giving. They are hypocrites.
A flat tax with no deductions or credits would be far simpler.
Time for the government to put an end to social spending and wealth redistribution through tax "refunds" and "credits".
I agree.
Example: 10% flat federal income tax
Earnings - $50,000 - $5,000 leaves a person $45,000 to pay their other assorted taxes and then pay for essentials like food, clothing, shelter, medical, dental, transportation, etc.
Earnings - $500,000 - $50,000 leaves a person $450,000 to pay for ...........
Earnings- $5,000,000 - $500,000 leaves a person $4,500,000 to pay for ........
Earnings- $50,000,000 - $5,000,000 leaves a person $45,000,000 to pay for......
I can understand why the (.1) one-tenth of one percenters are trying to sell the "fairness" of the flat tax. I can't understand why anyone outside of their income bracket would consider it fair on any level.
The US government has been doing an outstanding job of cutting taxes for the wealthiest of the wealthy for several decades and making trade deals to allow US corporations access to cheap labor and also opening the border (to asylum seekers) to allow a steady supply of cheap labor in the US that is partly supported with welfare benefits. While "illegal" mirgrants are not entitled to benefits their US born children are. Asylum seekers are granted work permits, social security numbers, drivers licenses and social benefits for them and their dependents.
There are already too many wrongs being done to the working class of the US. There is no reason to add another one.
I advocate for a graduated flat tax with no deductions or tax credits.
Much simpler to file that way, and no loopholes for people to exploit.
If you graduate the flat tax upwards by income bracket, it is amazingly fair.
We would also collect a whole hell of a lot more money that way.
How about anyone who has earned below $100,000 should not pay a dime in federal taxes and then reimplement the tax rates of 1980 for a start?
Historical Income Tax Rates and Brackets, 1862-2021 | Tax Foundation
No, that allows for far too many not to pay anything. And deductions and credits reduces the effective tax rates by too much.
So what should the base income be? How many workers will be at that rate? How many workers should be at that rate?
You could start with anything below the poverty line is not taxable.
Or just say that the first $25k or 30k is tax free.
Then 5% tax on earnings above that amount until you get to the next income level.
income below $30 k = no tax
$30-$50k = 5% tax
$50 - $75k =7% tax
$75k -100k = 10% tax
$100k-$150k = 12% tax
$150k - $250K = 15% tax
$250k - $350K = 18% tax
Above $350k - 20% tax
NO deductions or credits.
The Federal tax system has been configured to function as a flat tax. Everyone ignores FICA taxes which are levied against pre-tax income. Workers are assessed a 15.3 pct tax on pre-tax income before they pay any income taxes. Workers are paying for their own social safety net.
Also keep in mind that the Federal income tax brackets are sequential. Everyone is taxed 10 pct on the first $9,950 of income. Income between $9,950 and $40,525 is taxed at 12 pct. Income between $40,526 and $86,375 is taxed at 22 pct. Income between $86,376 to $164,925 is taxed at 24 pct. Income between $164,926 to $209,425 is taxed at 32 pct. Income between $209,426 to $523,600 is taxed at 35 pct. Income above $523,601 is taxed at 37 pct. The sequential nature of the income tax brackets is why everyone except the bottom bracket pays a lower effective tax rate than their highest tax bracket.
FICA taxes are added to the total Federal tax burden up to an income of $142,800 (which falls in the 24 pct tax bracket). So the seven tax brackets with FICA taxes added in becomes 25.3 pct, 27.3 pct, 37.3 pct, 39.3 pct, 32 pct, 35 pct, and 37 pct.
Income between $40,526 and $142,800 actually have a larger Federal tax burden than income above $142,801. While it's true higher income earners are required to pay FICA taxes on their first $142,800 of income, the Federal tax burden on additional income drops to less than or the same levels as incomes of $40,526. For incomes above $40,526 the Federal tax system essentially functions as a flat tax.
Income taxes may be progressive but that argument ignores Federal tax burden of FICA taxes. The overall Federal tax system is actually slightly regressive and certainly is not progressive.
No, the rich are not paying their fair share.
Correct.
According to the percentage of income they receive, they pay more than their fair share.
Not when our Federal tax system is configured to function as a flat tax. If anything our Federal tax system is slightly regressive. And that is before all the weird and wonderful tax deductions are considered.
The growing disparities in income and wealth are direct, clear evidence that the very rich are unfairly exploiting the economy. Global finance is feeding on the US economy like a parasite. The Federal government favors very large globalized business entities. And those very large globalized business entities have an overwhelming advantage for creating obstacles and barriers for innovation and competition. Only the very rich are allowed to innovate. Competition has almost become impossible.
Not true and the examples of such are many.
Amazon, Whole Foods, Google, Facebook ...... I could go on. All had very humble beginnings.
Liberals must agree, after all the BBB they are so desperate to pass contains a massively regressive tax break for the wealthy.
Details .... details ....