With all the talk about who should pay more taxes and income equality, the Wall Street Journal today had a piece by David Wessel on this very topic. It was one of the articles that comes to a point without making a point. By laying out the statistics it shows that the rich pay more income taxes as a percentage of their income than any other income quintile.
Here is the chart they provided:
Here are some of the highlights of the article:
The top 5%, top 1% and top 0.1% of Americans have been getting a bigger slice of all the income and paying a growing share of federal taxes.
- In the 1980s, the top 5% averaged 22.6% of income and paid 28.5% of taxes.
- In the 1990s, the top 5% averaged 25.3% of income and paid 34.3% of taxes.
- In the 2000s, the top 5% averaged 28.4% of the income and paid 40.3% of the taxes.
Average tax rates have come down for everyone. On average, the tax bite on the rich is bigger—except for those whose income mainly comes from capital gains and dividends.
The share of taxes paid by the bottom 40% of the population has been shrinking along with their share of income.
In 2007, the bottom 40% received 14.9% of the income (including the value of government benefits) and paid 5.9% of all federal taxes. In 1979, they had a bigger share (17.4%) of the income and paid more (9.5%) of the taxes.
In 2011, according to the Tax Policy Center, about 46% of households didn’t pay any U.S. income taxes, a proportion swollen because so many have seen paychecks shrink or evaporate. But even in the better years of the mid-2000s, roughly 40% of households didn’t pay any federal income tax.
This is all about income “inequality”. There is no such thing as income inequality, at least as defined by the Left. The argument assumes that because some people earn more than others, “inequality” exists as in “unfairness” and “social justice.” The implication is that wealth is stolen from the “less fortunate” (“workers”) who were responsible for putting the cash in the pockets of the fat cats.
This is a false argument because it is based on the principle of force used by one group, usually a majority, to take wealth away from a minority and redistribute to the majority. Capitalism at its ethical and moral base is voluntary, not coercive. These are concepts based on the ideas of Natural Law, especially as developed by David Hume and John Locke. Thus a policy based on coercion is immoral because any gang can claim “moral” superiority by dint of force. It is defies human nature.
This is a complex topic, but the fact I earn more than someone else means nothing. I am a more productive person, having been able to create wealth for my own benefit through voluntary exchange on the open market. I am not “fortunate”; I earned it. I exchange something of value with other people who paid me value for what I gave them. I don’t need to “give back” to my community because I gave equal value for what I got. This is quite “fair”. Because I am successful the policy makers want to take it away and redistribute my wealth to those who are unsuccessful.
So to be “fair” why shouldn’t everyone pay taxes?
Because I have the money doesn’t justify someone taking it away. It’s as if I had a Mercedes and the government took it and gave me back a Malibu. Thanks but no thanks. I would feel better about it if they just came out and said, “You’ve got the money, we need it, and we’re taking it.” At least there would be no pretense of fairness.