Tax Day is not one of the favored holidays for the masses here in the United States, where millions of people count down to the very last penny, how much of their hard earned money is being delivered to the government’s bank account. The key part of that last statement is what? Tax money is OUR money! At some point along the line, our leaders began talking about that money in a way bereft of any recognition that our blood, sweat and tears went into earning it, only to see a hefty percentage removed by multiple types of taxation. Should our government not continually thank us for our monetary support, without which nothing could ever be accomplished? We all have an understanding that we must supply a certain amount of our earnings to numerous places in order to keep America moving, but the lack of gratitude and appreciation for our bi-weekly sacrificial donations to Uncle Sam’s pocket have been lost to a generational attitude of entitlement.
Another mantra that has arisen during the last four years is “paying your fair share”. The narrative has become that high income earners are not paying enough in relation to the total sum of their profits. In other words, they make too much and give too little back to the government’s spending account. Without even knowing the statistics behind who gives what (which we will get to), do these not sound like the words of envy? This mantra has gained steam in the mainstream, coming from people and groups who are not a part of the upper-middle class and above. But where is this oft-repeated statement being continually pumped from? The White House, of course (http://www.youtube.com/watch?v=n2PctLbhiJk).
Class-envy and warfare are dangerous narratives to unleash upon the public. From the French Revolution to The Dark Knight Rises, pitting the haves against the have-nots never results in a happy ending. It is essential for everyone to discover reality when it comes to our national taxes – the people supposedly not giving their fair share are actually giving much more than most people realize.
Let’s first get down into the nitty-gritty numbers that make up our income tax brackets. The U.S. income tax rates span from a low of 10% up to 35%, but those numbers don’t accurately depict what is being paid and by who. In 2012, the brackets were:
Problem is, nearly half of people who earn an income are paying zero income taxes, leaving the burden on the other half to pay 100% of the taxes. Whether through mass deductions, tax credits or just not meeting the threshold for minimum income earned, it leaves a big hole in the tax-paying public. Though the percentage ebbs and flows each tax year, the number has drifted between 47% all the way up to 51% in 2009, according to the Committee on Joint Taxation, a bipartisan Congressional committee.
Here are some additionally important statistics not often cited by those making the “fair share” argument:
-The top 50% of wage earners pay 97% of all income taxes.
-The top 25% of wage earners pay 86% of all income taxes.
-The top 1% of wage earners pay 39% of all income taxes
When you look at these brackets at face-value, all it takes is some basic math to unearth more reality. If you make $8,000 and pay at a 10% rate, you provide $800 in income taxes (which will all be refunded due to not meeting the minimum threshold). If you make $1,000,000, you pay at 35%, equaling $350,000 in income taxes. So paying over a third of your income isn’t considered a “fair share”? This doesn’t even include state and local taxes, social security, Medicare taxes and sales taxes (which, by the way, the higher income earners supply a massive amount of sales taxes as well). In Socialist France, the newly elected President, Francois Hollande, proposed that individuals earning over one million euros a year will be taxed at a 75% rate. Guess what the top earners are now planning to do instead of accepting the massive tax burden? Adieu France!
One prominent argument brought up by President Obama is that Warren Buffet, world-renowned billionaire, investor and entrepreneur, pays fewer taxes than his personal secretary (http://www.youtube.com/watch?v=j602U10VWJw). This argument has been persuasive in many circles, but its facts are purposely veiled in order to skew reality. The truth is Mr. Buffett pays a lower tax RATE than his secretary. The inconvenient fact they fail to mention is that he and his secretary are paying tax rates on two DIFFERENT categories of income. Income taxes are the normal paycheck workers receive, with certain taxes withheld. This is the type of tax his secretary pays. Mr. Buffett, on the other hand, is paying Capital Gains taxes, which are taken on his many investments at a top rate of 15%. For example, Mr. Buffett takes the risk of investing $1,000,000,000 of his own money into a company that could either prosper or fail. If it fails, he loses every cent. If it succeeds and thrives, he makes additional profit above that $1,000,000,000. As a reward for taking that risk and investing in a company – which hires more employees and helps boost the economy – the profits on his investment are taxed at a lower rate than general income. Boost the Capital Gains tax rate and investment will plunge.
Let’s put this all into perspective on a personal level. President Obama isn’t even referring to the ultra-wealthy when he says they need to pay their “fair share”. Even against the urgings of his own party (which should really tell you something), he wants to lump everyone making over $250,000 into this category. How many of you work for a small business, where a handful of employees are responsible for the work that goes on. Your boss/owner provides benefits and a paycheck to you as he works hard to keep his business afloat. This man or woman is also being targeted to pay their “fair share”. Guess what? If President Obama gets his wish, their personal income taxes will rise, along with the overall taxes on the business itself. Guess who gets hurt? The workers, whom the owner can no longer afford to maintain due to the rise in costs. That money, which used to be there to fund your paycheck and benefits, is gone. Profits stayed the same, output stayed the same, but the money being taken by the government rose, leaving no other choice but to lay off workers. This, my friends, is personal.
This brings us to the final point: without money, nothing can be accomplished. Without money, the U.S. government cannot run the nation. Without money, individuals cannot pay their bills, put food on the table or efficiently support their families. Without money, the wealthy cannot invest in business, ingenuity and free-enterprise. The tax code must be fixed, where more individuals are contributing to the pot. The government must limit its spending, which has become a train without breaks, flying down the track toward a cliff on the horizon. The wealthy will continue to pay the lion’s share of the taxes, but must be allowed to invest their dollars at the current rate in order to grow the job market.
Once you take away those available dollars with higher tax rates, less is available to invest. If investment lessens, the job market shrinks. The unemployment rate grows even higher than the stagnant 8+% we have been stuck at for years. Food stamp usage continues to fly sky high. Money leaves the country and goes where it is more welcome to be invested and is guaranteed not to be plundered by those in power under the auspices that it is “fair”.
Bottom line: those making more not only supply a massive percentage of tax revenue, but are the reason jobs are created and businesses are kept alive.
It’s time for those marching to the mantra to come back to reality.