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.
Great article, another point I would make is what are taxes used for? Yes a lot of taxes go to national defense, but a ton of tax dollars go to medicare medicaid, social security, public transportation, and entitlement programs. Now who is more likely to use these “benefits” such as medicare, public transportation, etc. and who is more likely to rely on social secuirty and entitlement programs to survive? The poor use these things infinitely more than the rich because the rich dont have too, yet we expect the rich to pay for the bulk of these things? I cant think of a clearer case of stealing than that. Make them pay for services they dont rely on so other people can rely on them……its ridiculous!
but isn’t the bigger question
IF U.S. corporations made $7.65 TRILLION in reported profits
why did they only pay $191 billion????
2.73% isn’t a VERY HIGH TAX RATE
maybe a 20% AMT on reported global PROFITS is better solution
@Joe: The issue presented in the article pertains to the morality of taxation, and it’s clear that the author is not trying to point out what group pays the least so it can be penalized with higher taxes. Corporation provide enormous amount value to society by the goods and services they deliver, and the $7.65 TRILLION IS EARNED WEALTH.
“Because I have the money doesn’t justify someone taking it away.”
Jeff, you’d never make much of a philosopher. You fail to realize you own nothing but the skin on your own back and whatever you can carry. Everything else you believe is yours is a byproduct of ‘society’.
Like money, which has no value beyond our belief in it, your belief that you have ‘earned’ and deserve your wealth must be believed in by those around you to possess substance.
People join together to amplify their chance of success, not diminish it. I’m sure every squirrel firmly believes the tree it lives in is its own property.
Just because you earned it doesn’t mean you deserve it. That’s for the rest of us to decide.
Actually I do fancy myself as somewhat of a philospher. I’ve studied Aristotle, Kant, Locke and Hume, etc. So I think I know something. If your comment isn’t facetious (I’m hoping it is), then you’ve got to explain to me why we have a contitution and property rights.
Sounds like cookie-cutter philosophy, Jeff. Study some thinkers who don’t support your views. It’s easy to support a philosophy that you profit from. You seem like a money-grubbing Scrooge. And your icon, the Monopoly Man? Really? I feel sorry for you. I feel sorry that you feel you have to write this blog. If you feel that your tax money is being badly spent, donate more to a tax deductable charity. But I doubt you or some of these posters would.
You’re going to die one day, no matter how much money you have, just like all the people before you who have been whining about the same shit for centuries. Are you planning on being buried in that Mercedes of yours, clutching your gold-plated Premium Edition Monopoly board game? Your are no more special than the poorest dirt farmer in Vietnam. Just a bag of cellular material with an expiration date that means nothing to the Universe. You are a speck, and if you are so damn concerned with clutching your little bit ‘o money, then you are a waste of an opportunity to exist.. Quit being a whiny, blog-bitch, trade your car in for a Malibu, and go help somebody.
Ha ha. Now I know you are being facetious.
The constitution, or any similar document, was drafted for the purpose of creating a stable and sustainable society. Individual property rights are intended to compliment and support society, not exist in a realm apart from it. Money was created to facilitate the transfer of goods and services within relatively small and close knit communities. It was not created to be an end in and of itself.
If one accumulated wealth in earlier times it was likely one was providing tangible benefits to the community. Fairness was easily identified (better farmer, better woven kilts etc.). Excellence or efficiency were deserved when its benefits were self-evident and visible to all. During such a fabled time expectations, fairness and worth would have been in equilibrium with wealth accumulation. Of course this is an idealized simplification.
In our current environment there has been a breakdown of fairness precisely because we exist in a world far from equilibrium. This blog rightly illuminates the corruption of our monetary system. The Federal Reserve has short circuited the traditional allocation of wealth by enriching those closest politically to the reserve banks and government bureaucrats. The existence of titanic transnational corporations which pay no taxes, yet demand equal rights as citizens renders mute the concepts of societal fairness or proper allocation of capital. Such companies are as concerned with their factories in China as those in the USA. Should we use slave labor and dump chromium salts in the Grand Canyon?Needless to say the bulk of the population is ‘society’ whether you like it or not. If they perceive that your society is not their society, then they just might come a-knocking on your door.
Since wealth is speech and ultimately political power, it is proper that gross distortions of wealth distribution be corrected and the source of that wealth considered(isn’t that a major argument against fiat currency???????). It’s not just about property rights, its about understanding that others with great, possibly undeserved wealth, have the ability to distort both the value and quality of your property!
I find it odd you regard ‘brute force’ as unreal and unworthy of consideration when
it comes to understanding wealth inequality. The only reason anyone values property rights is because the seizing of property by the more powerful is as natural as a ball rolling down hill (Plato anyone?). Barbarism is endemic to the human condition. Perhaps we’d better have a look at the origins of inequality before it capsizes the boat.
P.S -Aristotle would have agreed with me.