Sunday, July 31, 2011
The reality behind calls to "Tax The Rich"
I'm sure many readers have seen protest signs held up by left-wing or so-called 'progressive' demonstrators, demanding that the rich pay more taxes to fund social programs like Medicare, etc. Here's one example from the recent budget protests in Minnesota.
Unfortunately, such calls illustrate only the economic illiteracy of those making them.
The National Taxpayers Union has a series of tables showing the proportion of income taxes paid by those at various income levels over many years. Here are the figures for 2008, as provided by the Internal Revenue Service.
So, the top 25% of taxpayers - those earning more than $67,280 per annum, which isn't all that high - paid 86.34% of all income taxes received by the Treasury in 2008. The top 1% paid almost 40% of all the income taxes in the USA. Tell me again how the rich can be taxed even more than that . . . without driving them either into poverty, or into emigration, taking their money with them?
Anytime you hear someone demanding that we 'tax the rich', or insisting that 'the rich must pay their fair share', show them those numbers, and ask them whether the rich aren't already being soaked for far more than their fair share. If they say they're not, you know you're talking to a hard-core ideologue who's not interested in facts - only the politics of envy.
You want a fairer tax? OK, how about one that causes the bottom 50% of earners to pay something towards their upkeep? How about replacing income tax with a consumption tax - a sales tax, or a value-added tax, or something like that - which taxes every penny spent, rather than every penny earned? It's easy enough to exclude genuine staple items such as bread, milk, etc. from the tax net, so that the poor won't have to pay more for what they truly need for their daily survival. However, luxuries - including soda, candy, cellphones, etc. - would all be taxed, ensuring that all those who spend money on more than the basic necessities of life contribute to the common good.
I'd accept the replacement of income tax with consumption tax in a heartbeat. Those who are rich enough to spend more would automatically pay more tax by doing so. Those who are poor, and can't afford to spend much, would pay relatively little tax, because much of their money would (or should) be spent on basic necessities that aren't subject to taxation. Seems fair to me. What say you, readers?