Old Hillary wants to topple the wealthy. Old Bernie wants to raise the top tax rate back to 90% Assorted other politicians want to redistribute more from the wealthy to the “everyday American.”
I guess if you are one of those average people who feels slighted by life and stymied by the 1% this all sounds pretty good. One may even think these politicians suffer from a Robin Hood syndrome, if that is a real thing.
On the other hand do we even know what they are talking about? Better question is do they know what they are talking about…yeah right, like we don’t know the answer to that question.
In any case, let’s ask ourselves a few questions and see if we have any consensus.
- What is wealthy? Are we talking about billionaires, people who have an income of $1 million or is it anyone who earns more than the national median, which for a family is about $51,000 a year. Or, is it based on the wealth people have accumulated in their lifetime, in which case it can include many Americans with modest incomes.
- What should the top income tax rate be and who should pay it? What is fair for government to take, 30%, 50% 90%? You may be shocked to learn that in 1951 an income of $200,000 or more was tax at 91% ($1,819,992 in 2015 dollars). Keep in mind that the average income of the top 5% of Americans is $159,619 according to IRS data. The average income for the top 1% was $380,354. The top 5% represents 6,998,029 income tax returns and that group paid 58.72% of all income taxes. About 47% of Americans pay no income tax, but about 60% of those do pay payroll taxes. That group comprises the working poor who receive tax credits, the elderly who are low income with all or most of their Social Security tax-free and the very low income.
- What should government do with any additional money? Should we fix what is now in jeopardy like Medicare and Social Security? Should we improve programs such as Social Security as some politicians want to do? Should we add more programs, like free college and free day care? Should be pay down the national debt or at least reduce the deficit of nearly half a billion dollars a year?
- If we raise taxes on the yet to be defined wealthy, how will that increase the income or income earning ability and opportunities for the rest of Americans?
QUINNSCOMMENTARY 
Promising more than you can deliver is of course not limited to the political realm. A few non-political examples come to mind: General Motors, TV preachers with 800 numbers at the bottom of the screen, breathless cable news show hosts telling us they’ll be right back with a blockbuster revelation (after we watch a commercial for a product that promises increased brain power and delivers vitamins.)
A sucker born every minute? A line first uttered before mass media and atrocious schooling. The line has sped up considerably since the days of P T Barnum.
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How about half the states and their public employee unions?
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Dick, you state: “… About 47% of Americans pay no income tax, but about 60% of those do pay payroll taxes….”
Remember the difference. Income taxes fund the government. Payroll taxes fund only a modest percentage of income-based entitlements. And, importantly, for the “median” household paying payroll taxes, their contributions over their lifetime generally do not fund even 50% of the cost of the benefits they will ultimately receive. That is because the benefits are regressive as to income – very regressive. Medicare Part A taxes and the associated trust fund will run out of money soon. The DI of OASDI trust fund will run out of money soon. And, the OAS trust fund is likely to run out of money in 2030 or so – just 15 years from now. When they do, either the benefits will be reduced or they will be funded from general revenue – that’s the 53% who are paying income taxes.
So, be careful to properly adjust “income inequality” and “wealth inequality” for entitlements – where the middle class funds only a modest percentage of the entitlements.
Not that Harry, Hillary, Bernie and the other demagogues would ever admit to Americans that they all know the facts about entitlements.
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At the beginning of this month I read somewhere and I cannot find the source again, but somebody defined the middle class as people who make between 20% to 80% of the median income. This is not the math I use to define “middle”. If 47% does not pay any income taxes then does that make 47% of the population poor which is closer to half. Are we at a two class society now of the government stated haves and have nots?
I often wonder, have the people who followed the American dream always felt this way about taxes? Work hard only to have the government take it away? Is this how socialism and communism got started in the early 1900’s? If it is, the cause is clear to me. Politicians and ruler’s of all types try to keep the masses happy to stay in power by making them so depended on government that the people at some point become enslaved. To me Greece has proven that. With 47% of Americans not paying any taxes, when do we hit that tipping point of no return. I hope that I will not live to see America go over the edge.
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