Wintery Knight

…integrating Christian faith and knowledge in the public square

Are the rich paying their fair share of taxes?

Do the rich pay their fair share of taxes?

Do the rich pay their fair share of taxes?

The Hoover Institute at Stanford University tweeted this article.

Excerpt:

The Democrats’ position in the negotiations to raise the debt limit and deal with runaway government debt can be summarized in one mantric phrase: the rich must “pay their fair share” in taxes. White House communications director Dan Pfeiffer, for example, said a day before the Obama’s Sunday summit with Congressmen that any deal requires a “balanced approach that asks the very wealthiest and special interests to pay their fair share.” Earlier this year, Illinois Congressman Jan Schakowsky introduced legislation called the Fairness in Taxation Act, which she justified by saying “It’s time for millionaires and billionaires to pay their fair share.” Clearly, the Democrats think this is a winning formula going into the critical 2012 elections, despite the historically verified fact that raising tax rates on top earners will not over time generate more tax revenues.

Some political Socrates needs to challenge this formula by asking for a definition of “fair.” Clearly, having the top 10% of taxpayers pay 70% of all income taxes––while nearly half of taxpayers pay nothing––isn’t considered “fair” by those who want to increase taxes on high earners. So what would be fair? Having the top 10% pay 80%, or 90%, or 100%? The U.S. already has the most progressive tax system among 24 OECD countries, ahead of socialist heartthrobs like Sweden and Norway, so what more do Democrats want?

It might be a good idea to send this article to your friends, and bookmark it in case you get into a debate.

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15 Responses

  1. jerry says:

    You’re thesis is still weak and dosn’t address the main thesis of your opponents, namely, and I will use a very specific example, people like Buffet pay only 17.7% of his income to taxes while he admits his secretary pays more (in the area of 30%). So to claim that the top X% pay Y% of the taxes means nothing if that sum is not equivalent, i.e. I have to pay 30% of my family’s income to taxes. So yes, monetarily, the 17.7% that Buffet pays is more than the 30% that I pay, but that 18% he pays affects him much less than the 30% I pay affects me.

    So you’re argument is not even close to what is being put forth, but is instead a major twist on the truth. So no, if the “rich” (poorly defined, but I will continue with that word) are not paying the same percentage of their income to taxes that the middle class is, then it’s not fair to those that have to pay the percentages defined in the IRS tax code.

    • Stan says:

      So the idea is that it has to hurt them as much as it hurts you? Is it sharing the tax burden, or sharing the tax pain?

      I think it would be difficult to get the latter simply because a middle class rate of 30% hurts far more than the same rate would hurt the upper 25%. A middle class $75,000 a year pay rate, for instance, would end up with only $52,500 take home, but a 30% tax on a million dollar income would still net $700,000, a plentiful sum.

      But I do wonder if that’s the goal. Is it “equal share” or “equal pain” that we’re seeking?

      • Jerry says:

        I thought it was obvious – equal share. I pay 30% of my pay, they pay 30% of their pay (and I’m in the top 5% of taxpayers, I just don’t have capital gains to offset what I get to pay, hence I’m one of the top payers that has to pay the full 30%)

  2. Sarah Bonner says:

    Overall, I whole-heartedly agree with Jerry’s above comment on the disparity of what “tax share” actually means in light of someone’s actual income.

    I also want to address the article’s link and position that raising taxes does not create jobs; I cannot argue whether it does so or not (as I have not spent the time to research it myself), but I will say that the opposite assumption that gets championed by those on the right — that lowering taxes will increase jobs — is wrong. Individuals with money invest money to make more money, and lower taxes allows them to do that to greater effect. Money accruing interest does not get spent, and it does not “create more jobs.” This idea has had years to bear fruit, and it hasn’t. Lowered taxes does not significantly help middle to lower classes; the percentage that their taxes would be lowered is quite small, and it doesn’t change the fact that they have no money with which to invest to begin with.

    • Banks used money on deposit to lend to businesses to expand, which creates jobs. You have to read a nice Thomas Sowell book like “Basic Economics”, where he lays it out.

      Tax cuts lower unemployment:

      http://winteryknight.wordpress.com/2009/09/01/what-lowers-unemployment-bushs-tax-cuts-or-obamas-spending/

      That’s why Obama’s trillion in spending has left us with a 9.2% unemployment rate, but Bush’s tax cuts gave us a below-5% unemployment rate.

      Please reference facts in your comments if you make a claim.

      • Sarah Bonner says:

        Our current unemployment rate began BEFORE Obama came into office, and its been a delayed effect. I would say that our economic problems — which include the lending/housing bubbles, bank woes, and unemployment — began a long time ago (for some factors, Clinton and pre-Clinton) and have just been building up steam. The Bush tax cuts accelerated that, but the tsunami didn’t hit until after Obama was in office.

        Your older linked post appears to only discuss statistical rates as though they only depended on the factors for which they occured — as though the unemployment immediately responds to change (it doesn’t).

        • Sarah, Nancy Pelosi took the House gavel in January 2007. At that time, the budget deficit was 160 billion dollars, ONE TENTH of this years deficit. The Democrats controlled the Senate in 2007 as well. That was the beginning of a MASSIVE spike in unemployment and a 5.34 trillion dollar increase in the national debt. The Democrat administration started in January 2007, it was their aggressive coercion of banks to make risky loans that caused the financial crisis.

          Please read this and watch the videos of the Democrats covering up for Fannie Mae and Freddie Mac:

          http://biggovernment.com/jdunetz/2010/08/11/blame-barney-frank-for-the-recession-not-george-bush/

    • Stan says:

      Actually, the idea is that if taxes are lower, people have more money to SPEND. More money into the economy is more jobs. The opposite idea is raising taxes so we have less discretionary funds. Now we’re counting pennies, not spending, and the money the government has taken will have to create its own jobs … which doesn’t happen as demonstrated by the Obama’s efforts to create jobs through government spending.

  3. Mariangela says:

    The point of WK is making is that the left are ideological in their tax position. Fair to a leftist always means equal, but in this case of course they are not arguing for a flat tax, they are arguing for their ideological premise : Unequal distribution of wealth is a sin and inheritantly evil. They are not trying to get the rich to pay their “fair share” because they want to have a healthy economy where people are employed and essential services can be afforded. Their focus is re-distribution at all costs. Therefore when Stan says it’s about sharing the tax PAIN he is right. What WK is referring to in regards to Sowell is the fact that the person paying 30% of his income in taxes can only help the economy by paying taxes. He is not earning enough to contribute in any other meaningful way. If he was, than he aswell would be paying less than 30%. Businesses and Banks as WK mentioned pay less taxes because of the role they play in the economy, the tax breaks they receive allow them to use money that the government would otherwise collect and misspend and put it towards real immediate job creation and real investments in the businesses that drive the economic stability America relies on. So if you find yourself in a position where you think that you are paying too much taxes, ask yourself not what your country can do for you, but rather what you can do for your country!

    • Sarah Bonner says:

      I tried avoiding going into the unqual distribution of wealth in my first post, because it’s actually something that is a very full topic and I just don’t have the time to write on it — nor the desire to write a novel longer than the original blog post. However…

      Unequal distribution of wealth is a significant problem. There are even numerous conservatives who admit that this country has a wealth accumulation issue. A common thing you see being argued against leftist tactics is that they are trying to start some sort of “class war”, but the pure and simple truth is that there will eventually be conflict anyway. Historically, the unequal distribution of wealth always leads to civil unrest (and I would also add social stagnation — in an unrelated argument, one could use the unfettered free market to reverse equal working rights for women, as but one example). I don’t know about you, but I would prefer not to devolve into a modern version of feudalism — and yes, that’s an extremity, but it certainly has its points. So when you get liberals who start talking about re-distribution, that’s born out of the (realistic) fear that we’re selfish creatures and our country lends itself quite well to being bought and sold by the power elite — a power elite that, by the way, often views those in the lowest ranks of society as filth, regardless of how they got there.

      I am not for a flat tax. A flat tax only immediately and assuredly serves one group of people, and contributes to the issue of unequal distribution of wealth (*cough*roadtofascism*cough*). It comes at the expense of revenue, which we DO need for a better budget (you can’t do just one and not the other — we have to cut AND seek new revenue), and unnecessarily punishes the lower class. I am, however, for a much simpler tax code.

      • Marshall Art says:

        Wealth is not “distributed”. That is the first problem of the liberal thought process as regards economics. Wealth is created and earned. What gets distributed is the money each individual personally donates.

        There is no possibility of civil unrest if more people are working and earning at a level that allows for personal comfort and pleasure. NO ONE wants to mess with their personal comfort and pleasure to rise up against others simply because they have a greater level of comfort or pleasure. When enough people are unemployed and unemployed for long enough, THEN you may see unrest. But not simply because others might be better off.

        Only the left condescends to those they consider “the lowest ranks of society”. The right, whether rich or poor, do not.

  4. bobbymike says:

    The basis of some of the leftist arguments really are “sure the rich pay a lot but because they are so wealthy they can pay more.”

    They don’t need the extra money even with high tax rates, for example. If a person makes $1 million/year and pays 50% tax the leftist doesn’t ask whether it is morally right to ask anyone to pay 1/2 his income to the government they say, “They still have $500k to live on and THAT is too much. No one needs $500k/year to buy stuff.” The opposite is that a person making fifty thousand pays 10% so although the pay only 1% of the amount of the millionaire they have only $45k.year to live on and that is not fair.

    It all comes from the mindset that all money is government money until they deem how much we can keep.

    • Jerry says:

      There may be some uninformed people that propose what you’re claiming, though I have serious doubts that they’re anyone in power…that’s just plain and simple fear mongering with nothing to back it up.

      It’s society that allows one to get rich. Without an educated workforce, infrastructure (roads, ports, internet, phone, power, etc), a military to protect your economic interests, the road to riches is impossible. The money to build and maintain these facilities is not cheap and must come from somewhere. Otherwise you’re subsidizing one group at the expense of another in order to maintain a lifestyle they couldn’t afford on their own

      • Sarah Bonner says:

        THIS.

        On the surface, I generally agree with conservative arguments concerning who keeps what and how much — however, in practice, what occurs is that the only people who can afford to ensure that THEIR children get what they need to stay on top are the “rich.” Throw in some political connivery, and now you’ve got a government that defends the principle that if you can’t afford it, you have no right to education (or health care, or a comfortable quality of life), while at the same time cutting funding to programs necessary for those not already in a “good position” to be able to climb up. (Pell, unemployment, etc) These programs are considered waste because those who receive them are obviously “deadbeats” who just drink, do drugs, perform crime, and have illigitmimate babies. (Oh wait, the wealthy don’t look down on others. My bad.) Our entire system is rigged against people who are currently in bad finance (for example, why does an employer do a credit check when the job is to sedate animals?).

        To Marshall, I think you really need to step down off your horse for a minute and scrutinize the way conservatives play politics. Spend 10 minutes watching Fox to hear how anyone on welfare is just there to pop out babies and get a free ride (they’re not). Or, how some conservatives (albeit FAR-right) believe that in order to vote, you should first own land. The right say, Group X has no right to Y and Z (which contribute to a quality of life) because they can’t pay for it — and then they fail to see it to that there are privatized options for these people, because it is not profitable. I had a conservative cousin who once told me not to ever give money to a homeless person, because God put them there to be punished. Don’t tell me conservatives don’t look down their nose at people.

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