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September 23, 2011

How much more?

Joe Charlebois

The rich need to pay their fair share! They have been getting off easy for much too long. The poor and middle class have been subsidizing lavish lifestyles for the uber-rich with their disproportionate level of revenue payments and this has got to stop now!


The left would have you believe that the scenario above is what is really happening in Washington. In reality it is the top-tier of income taxpayers who are paying a disproportionate percentage of income taxes, while the poor and middle class are paying an ever decreasing percentage of revenue.


In fact in 2008, according to data collected from Internal Revenue Service data by the Tax Foundation, nearly 36% of all tax filers were non-payers. This percentage has seen a yearly increase – except in 1997 – since 1984. The number of non-payers had remained constant hovering around 12% of the tax filers for nearly 25 years until 1976.


The president of the Tax Foundation, Scott A. Hodge, published a press release in March following his testimony before the U.S. Senate Budget Committee. In short, it clearly shows how no other country in the industrialized world has a more progressive income tax system than the United States does.


What does this mean?


The top tier of taxpayers in the United States pay the most disproportionate share of taxes in terms of the ratio between actual income and taxes paid in the industrialized world. The industrialized world is defined as the members of the Organization for Economic Co-operation and Development. In the United States the top tier constitutes 33.5% of the market income but pay 45.1% of the share of taxes. This is a ratio of 1.35. In comparison a country like Sweden whose top tier constitutes 26.6% of tax payers pays in 26.7% of taxes or a ratio of 1.00. The countries of Poland and Switzerland are where President Barack Obama – and like-minded Democrats – should be making the plea for tax fairness. These two countries top tier pay a ratio of 0.84 and 0.89 respectively meaning that the wealthiest do not pay their “fair” share.


There are definite issues with our 70,000 page tax code. It is a behemoth of inefficient legal loopholes that is based on federal micro-management and is built upon political favoritism.


In an economy such as ours each additional rule, regulation or deduction enacted into the tax code acts as a powerful marionette’s string. The federal government is, of course, the marionette handler with special interests whispering instructions into the ear of the handler while stuffing bills into his pocket.


The growing tax code increases the number of pulls on the strings of the United States free enterprise system. With each addition we become less a free market and more a mixed economy. As we are pushed by the tax code toward a mixed economy, it is doubtful that certain industries in the United States will feel the effects of a more command style grip. I speak specifically of the energy and automobile industries. But their influence has more to do with regulations from the Environmental Protection Agency and less to do with the IRS.


In regard to corporate taxes, there is one corporate giant that has become legendary in the fact that it stands alone in its ability to avoid the taxman. That would be General Electric. GE has been the beneficiary of the tax code for decades, paying nary a cent to the IRS. This is the same GE that has benefited from generous tax benefits given to GE customers to promote their green energy business.


That things could be simpler and fairer is certain, just like earmarks, the tax code micro-management needs to be eliminated. After all, tax incentives are just a giveaway to certain individuals or corporate entities. This is true preferential treatment.


The personal income tax system currently shows preferential treatment; but it cannot be fairly described as benefiting the top tier who pays 40% more as a percentage than they earn. It is the nearly 50% of Americans who aren’t paying any federal income tax that are riding in the wagon to an unfair advantage while the other 50% are pulling their weight.


Yes, there needs to be fair payment of taxes. It is the Obama Administration’s contention that it is that the top tier isn’t paying its fair share. The numbers don’t back up the rhetoric. This is why the term “class warfare” has been bandied about recently and for good reason, they’ve perfected it.


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