Apr
15
Do the Rich Pay Their “Fair Share” of Taxes?
We hear a lot of talk (mostly from the political Left) about this “fair share” idea. My question has always been, “Who decides what is ‘fair’, and how do they come up with that?”
To me, “fair” would be roughly equivalent to “proportional to income”, which is what everyone should pay (with exceptions for the poorest among us). Ideally, this would be a flat percentage for all, regardless of who they are, how much their income is, or what their net assets are valued at. (No, I’m not going to get into “flat tax” vs. “Fair Tax” in this post.) From what I can gather, though, this “fair share” for the “rich” is a mostly arbitrary idea that wealthy people must simply pay a lot more — i.e., over and above a proportional amount. It is assumed that rich people owe it to the rest of society to pay extra, simply because they have lots of things that the rest of us don’t. (This is deemed to be “not fair”.) This in turn stems largely from the assumption by many that rich people got rich by unethical and/or illegal means, perhaps by taking unfair advantage of the poor.
While there are indeed cases where someone gets rich(er) by scamming people or other unethical/illegal practices, just as I am sure that some cheat on their taxes (as do many in the middle-class), it is unfair to lump the majority in with them. This is class-warfare type of thinking, pure and simple, based on Marxist philosophy. As such, it is un-American.
You may be wondering, though, just how much the “rich” in America do pay in taxes. Remember how Rep. Nancy Pelosi and friends (unsurprisingly) accused the recent tax reform bill as being more “tax cuts for the rich”? (Btw, that has got to be one of the most tiresome refrains from the Left, ever.) Well, as per a recent article at the Center for Individual Freedom (CFIF) by Timothy H. Lee,
“The reality is that the rich pay more than their fair share by any reasonable definition of ‘fair.’
And here’s a new kicker: Following comprehensive tax cut and reform legislation passed by Congress and signed into law by President Trump, wealthier Americans will pay an even higher proportion of the nation’s taxes.”
Lest you think this is just something the Trump administration or the GOP is pushing, it actually comes out of “a new report from the left-leaning Tax Policy Center, comparing income tax estimates for 2017 and 2018.”
The study found that the top 1% of American households will pay an estimated 43% of all income taxes received by the federal government — up from the 38% they paid in 2017. Yet, that top 1% earns just 16% of the nation’s total income. Wouldn’t a truly equitable arrangement, then, result in this group paying ~16% of federal income taxes?
Enlarging the circle to the top 3%, they will pay an estimated 62.9% of all federal income taxes — up from the 59% they paid in 2017. Yet, that top 3% earns just 28.6% of the nation’s total income.
Now, let’s include the entire top quintile (i.e., income approx. >$150,000). They will pay an estimated 87% of all federal income taxes for 2018, compared to the 84% they paid for last year’s earnings. Yet, that top quintile earns just 52.2% of the nation’s total income.
Does any of this actually sound fair?
Moving to the bottom two quintiles (i.e., income approx. $0 – 48,000), they will pay an estimated -4.5% of all federal income taxes for 2018, as opposed to 2017’s -3.2%. (The negative numbers are due to benefits received, like the earned income tax credit (EITC).) Yet, those bottom two quintiles earn 13.1% of the nation’s total income.
Lee provides a few more numbers, but the bottom line is this:
“[T]he wealthiest 40% of American households essentially pay the entirety of American income taxes, which themselves account for the largest source of federal government revenues.”
That sort of puts the lie to the Democrats’ claim of “tax cuts for the rich”, since they will actually be paying proportionally more. Plus, as Lee points out, the answer to “Do the rich pay their ‘fair share’ of taxes?” is “No. They pay much more.”
Lee concludes by quoting The Wall Street Journal with a related bit of good news:
“You probably didn’t read anywhere else that CBO says the tax cut will help the economy grow faster – to 3.3% this year and 2.4% in 2019. The last time the economy grew that fast was 2005. This produces more revenues than CBO previously estimated.”
So, the “poor” are paying less in taxes (actually, receiving more payments), the “rich” are paying more, and the economy is being stimulated more than previously thought, largely due to the Trump-signed, Republican tax cut. You might think even the Democrats in DC would be happy about that. But, no, they are threatening to gut or repeal the tax reform and raise taxes, as soon as they return to power. SMH. Now, that is the blinding power of an irrational ideology….
