Washington Needs to Trim the Fat, Not Tax More

I generally do not write about politics, but a recent article in the Wall Street Journal was too interesting not to comment on. Barack Obama has stated he wants to raise taxes on the rich so they pay their fair share. Following is the breakdown of the taxes paid by taxpayers in 2006. Not sure how one gets more tax dollars out of the top 50% of taxpayers without shutting down the economy:

• 1% of taxpayers, those who earn above $388,806, paid 40% of all income taxes in 2006, the highest share in at least 40 years.

• The top 10% in income, those earning more than $108,904, paid 71% of all income taxes.

• The top 50% paid 97.1% of all income taxes.

• The number of Americans who declared adjusted gross income of more than $1 million from 2003 to 2006 nearly doubled to 354,000 from 181,000 in a mere three years after the tax cuts.

  This is precisely what supply-siders predicted would happen with lower tax rates on capital gains, dividends and income. The economy and earnings would grow faster, which they did; investors would declare more capital gains and companies would pay out more dividends, which they did; the rich would invest less in tax shelters at lower tax rates, so their tax payments would rise, which did happen.

• Taxes paid by millionaire households more than doubled to $274 billion in 2006 from $136 billion in 2003. No President has ever plied more money from the rich than George W. Bush did with his 2003 tax cuts.

If Mr. Obama does succeed in raising tax rates on the rich, we'd also wager that the rich share of tax payments would fall. The last time tax rates were as high as the Senator wants them -- the Carter years -- the rich paid only 19% of all income taxes, half of the 40% share they pay today. Why? Because they either worked less, earned less, or they found ways to shelter income from taxes so it was never reported to the IRS as income.

Maybe Washington needs to look at cutting their expenses before raising taxes on their constituents. You can't get blood out of a turnip.

Source:
Their Fair Share
Opinion Journal, WSJ
July 21, 2008

Comments

[farmer448:]

Please leave the political tax arguments to the Political Blogs.

2008 Jul 22 08:21 AM

[User 209166:]

All you did was copy and paste another article under your byline. Please do some actual thinking on your own next time.

2008 Jul 22 10:07 AM

[sbenard:]

I and other small business owners are already looking to position more income in places to protect it from confiscation by Obama the shameless pickpocket politician. Why is it that these paid goons are heroized for stealing from others, when if they did the same thing with their hands, they'd be thrown in prison? They are just as dishonest, but end up with their names on buildings and highways instead.

This is already beginning to have reverberations through the economy. One business owner down the street has already laid off two employees. He's working 12 hours days to make up for the lost productivity.

"The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence. If `Thou shalt not covet' and `Thou shalt not steal' were not commandments of Heaven, they must be made inviolable precepts in every society before it can be civilized or made free." -- John Adams (A Defense of the American Constitutions, 1787)

We have now arrived at the tipping point where half the U.S. population sees almost no taxation, and they have no qualms about voting for the politicians to keep taking from the other half so they can have freebies. It will end disastrously. Just ask Hugo Chavez. He's been doing the same thing in Venezuela for the past five years, and his country's economy has all but collapsed. If it weren't for billions in oil revenues, he'd probably be living on the streets, too.

2008 Jul 22 01:11 PM

[sbenard:]

Great article on the subject:

www.canadafreepress.co...

2008 Jul 22 01:14 PM

[Jason Rines...:]

1) 45% of all Americans now receive some form of hand-out.
2) 50% of all Americans pay little or no taxes.
3) Wealth is leaving this nation for more productive and less taxed shores. The word expatriate comes to mind, but note new legislation to tax dual-citizenship above XXX assets is now being considered by Congress.
4) Forgot specific name of theory/study this was conducted over 30 years increase vs. decrease taxes show 22% income tax paid as median mean. Increasing taxes does disrupt the economy and redistributes to the least productive in our society (Democrats). Tax cuts do restore the equalibrium (Republicans). Since we're talking politics why would any true capatalist EVER vote for the socialist party? Mind-blowing. The uneducated masses with there hands out I understand...

2008 Jul 22 01:32 PM

[Sr. Pessimist:]

I thought I was going to read an idiotic Republican spew crap without any real point when I clicked on the article. I was pleasantly surprised. I never thought of the 2003 retroactive tax cuts this way. I applaud the author for making a good point (and must take this chance to note that my old blogging hobbies aren't doing as much for me anymore).

2008 Jul 22 07:15 PM

[GSlusher:]

For a real comparison, though, you have to see how much of the INCOME is concentrated in each of those groups. It's far more concentrated than taxes. Many wealthy people pay a smaller percentage of their incomes in taxes than lower-middle-class people because of the regressive payroll (Social Security) tax that is capped.

The reason the rich paid a smaller percentage of taxes in the Carter years was because they had a smaller percentage of the INCOME. The concentration of income at the top has dramatically increased in the last two decades. It has nothing to do with "working harder," either. The average income of workers in the lower half of the strata has actually gone DOWN in real terms. The only way families have been able to even come close to maintaining their real income levels is by more members working--both spouses and, often, children.

2008 Jul 22 08:03 PM

[Steven Hansen:]

we are going to vote for whatever candidate we see will make our lives better (translate this to mean whichever candidate will make us the wealthiest). this is one piece of historical fact which will repeat in the next election.

with inflation affecting the lower income groups disproportionately, it will be a hard sell to the people below obama's rich definition that they should vote for mccain. obama has even cleverly proposed to exempt from taxes the retired who earn less than $50K.

one final thought for those who like conspiracy theories. are the power brokers manipulating the market now to try to create a more rosy feeling for the election?

2008 Jul 22 10:33 PM