Monday, August 18, 2008
Who Pays What Share Of Our Federal Taxes
As with every national election, the Democrats insist upon waging class warfare to win votes. Their claim is that "The Rich" aren't paying their fair share of taxes. The tables above demonstrate the lack of foundation for that claim. The top table demonstrates that more than 60% of the federal taxes are paid by the top 20% by income. The middle table demonstrates the effective tax rate by income group. Note that the highest taxed group by effective rate includes those earning between $1 million and $100 million a year. The effective tax rate declines for those earning more than $100 million a year. People with that much money often own lots of tax-exempt bonds issued by the government. That allows our government to borrow, which it's pretty good at doing. The bottom table demonstrates the effective tax rate paid by broader income groups. Under this measure, the top 20% of income earners pay at the highest effective rate, which is just over 25%. As you can see, the statistics really bring home Sen. John McCain's point that it is irrelevant to define "The Rich" for purposes of discussing income tax rates. I've always believed that the rates should be flat across the board with very few exemptions, credits and deductions except for those at the very bottom of the income ladder. This provides a much fairer income tax. If you earn more, you pay more even if the rate doesn't escalate. Believe it or not, I'm old enough to remember the top tax rate reaching 90%! Reagan did away with that extreme progressive aspect to our federal income tax. If the Democrats and Obama have their way, we will return to that system. And guess what? People will find all sorts of creative ways to hide their income just like they did under that old system.