Everyone Should Pay Income Taxes - It's bad for our democracy to exempt half the country

[w¡n9Nµ7 §£@¥€r 123]

By ARI FLEISCHER

A very small number of taxpayers -- the 10% of the country that makes more than $92,400 a year -- pay 72.4% of the nation's income taxes.

...

As a result of the 2001 tax cuts enacted by a bipartisan Congress and signed by President George W. Bush, the share of taxes paid by the top 10% increased to 72.8% in 2005 from 67.8% in 2001, according to the latest data from the Congressional Budget Office (CBO).

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According to the CBO, those who made less than $44,300 in 2001 -- 60% of the country -- paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax. They paid less than 1% of the income tax burden. Their share shrank even when taking into account the payroll tax. In 2001, the bottom 60% paid 16.3% of all taxes; by 2005 their share was down to 14.3%. All the while, this large group of voters made 25.8% of the nation's income.

When you make almost 26% of the income and you pay only 0.6% of the income tax, that's a good deal, courtesy of those who do pay income taxes.

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Mr. Obama is adding to this trend with his "Make Work Pay" tax cut that means almost 50% of the country will no longer pay any income taxes, up from a little over 40% today. A certain amount of income redistribution in a capitalistic society is healthy, but this goes too far. The economic and moral problem is that when 50% of the country gets benefits without paying for them and an increasingly smaller number of taxpayers foot the bill, the spinning triangle will no longer be able to support itself. Eventually, it will spin so slowly that it falls down, especially when the economy is contracting and the number of wealthy taxpayers is in sharp decline.

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It's time to create an Economic Growth Code whose purpose is to fix and grow the economy, not redistribute massive amounts of wealth. A new tax code that creates growth and reforms our entitlement system is the only way to dig our way out of the hole we're in.

Under an Economic Growth Code, everyone in American would pay income taxes -- everyone. Such a system would be designed to foster broad-based growth for all, in contrast to the loophole-ridden system we have today.

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Given the state of the economy and trillion-dollar deficits projected as far as the eye can see, we need to return to an era of more conservative, fiscal discipline.

Congress should start by refusing to go along with Mr. Obama's promise to cut taxes for 95% of the country. With the government running an almost $2 trillion deficit, no one should have their taxes cut -- no one.

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I favor the abolition of all Social Security, Medicare and estate taxes. In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays. The bottom 50% won't be excused from paying the cost of government and top earners will no longer have the loopholes they're used to. The middle-class, whose wages have stagnated, will benefit from economic growth. Social Security and Medicare will be funded from income taxes, ending the myth that these programs are supported through government trust funds and payroll taxes.

http://online.wsj.com/article/SB123958260423012269.html

[Mr. Big Dog 10,747]

So when is Ari going to address the rising income inequality (where we're now back in the range where we were back in the 1920's) and continued wealth concentration (see below)? The "poor" folks he's crying about shouldering all this burden - that top 10% which pays 72% or so of the income taxes - do after all control 80% of the financial wealth and represent 71% of the nation's net worth. That's as of 2001. The concentration of wealth didn't stop there so the figures are very likely even more disturbing today.

[fozzie 41]

Its a percentage. The more you make the more you pay. Simple. In fact someone earning $250,000 pays the same amount of tax on the first $44,000 as someone earning $44,00 in taxable income.

Do you propose that people who can barely afford their rent should have more deducted than people who earn significantly more?

I agree that taxes are necessary but the economy is not so simple. If the masses (60% the article says) can't afford to buy stuff then the economy will tank.

[alienlovechild 75]

So when is Ari going to address the rising income inequality (where we're now back in the range where we were back in the 1920's) and continued wealth concentration (see below)? The "poor" folks he's crying about shouldering all this burden - that top 10% which pays 72% or so of the income taxes - do after all control 80% of the financial wealth and represent 71% of the nation's net worth. That's as of 2001. The concentration of wealth didn't stop there so the figures are very likely even more disturbing today.

He clearly said he wanted a progressive tax. The idea that wealth distribution should be more even sounds good but there needs to be an accumulation of captital by the few to create industries that hire all the little people out there. If more even wealth equals prosperity then Belarus among others would be one the richest countries around. Even Russia and China figured that out and now Obama and crew are all about the class struggle.

In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays.

[Peikko 1,575]

Its a percentage. The more you make the more you pay. Simple. In fact someone earning $250,000 pays the same amount of tax on the first $44,000 as someone earning $44,00 in taxable income.

Do you propose that people who can barely afford their rent should have more deducted than people who earn significantly more?

I agree that taxes are necessary but the economy is not so simple. If the masses (60% the article says) can't afford to buy stuff then the economy will tank.

You will find that most people do not understand this concept. Most people assume, wrongly that all of the income is taxed at a higher rate. Most people don't really understand anything about taxes except that they hate paying them. Most people can be pulled by the nose to do whatever a government wants them to do by holding a tax cut carrot in front of their noses

[GaryC 7]

The real solution to this would be to scrap the IRS and go with a VAT. Exempt things like food, utilities, health care and gas so the lower income people are not hurt. This would mean that the rich still pay more, the poor are not hurt, savings are not taxed and loopholes are closed.

[Mr. Big Dog 10,747]

So when is Ari going to address the rising income inequality (where we're now back in the range where we were back in the 1920's) and continued wealth concentration (see below)? The "poor" folks he's crying about shouldering all this burden - that top 10% which pays 72% or so of the income taxes - do after all control 80% of the financial wealth and represent 71% of the nation's net worth. That's as of 2001. The concentration of wealth didn't stop there so the figures are very likely even more disturbing today.

He clearly said he wanted a progressive tax. The idea that wealth distribution should be more even sounds good but there needs to be an accumulation of captital by the few to create industries that hire all the little people out there. If more even wealth equals prosperity then Belarus among others would be one the richest countries around. Even Russia and China figured that out and now Obama and crew are all about the class struggle.

In their place, we should create a simple income tax system that has no deductions or credits at all. The result would be a progressive, multitiered income tax in which everyone pays.

I have no problem with wealth concentration as long as it passes the sanity test. And I also have no problem with entrepreneurs being able to make tons of money and accumulate all the wealth hard work can buy.

But please spare me the "we need the rich to be rich so they can give us jobs" line. Nonsense.

A good portion of that top 10% tier aren't exactly entrepreneurs but employees of publicly owned enterprises. Those enterprises, one could argue, would be simply be owned by a wider spectrum of the population if the income and wealth distribution would be somewhat more even. That wouldn't mean that there are all of a sudden less jobs available. The opposite might actually be true if that small portion of the staff would not take in huge rewards whether the enterprises they're tasked to run prosper or fail. These guys don't really carry any of the risks anymore. They can't fall down, gravity doesn't apply.

Wealth accumulated that way doesn't pass the sanity test and it isn't healthy for the economy or the nation at large. It doesn't create industries or jobs - quite the contrary as we've seen over the course of the last couple of years.

Now, you want to talk about a progressive income tax system that has no deductions or credits and I'll tell you that I'm all ears. That 10% that Ari pities in his piece, however, would very likely feel quite differently. Remember that we live in an age where the richest of the rich pay a smaller effective tax rate than those in the middle of the income range.