Who Pays Taxes

Economist Stephen Moore edifies those of us interested in the raging budget debate by offering some facts about taxes:

The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent — those below the median income level — now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.

This is interesting because we're constantly told that we need to tax the rich as if the wealthy aren't paying any taxes.

What income demarcates the top 1%, 5%, etc.? It turns out that to be in the top 1% you needed to make $380,000 in 2008. The top 5% earned $160,000 or more and $114,000 put you in the top 10%.

If you made less than $33,000 you were in the bottom 50% and paid almost no income taxes. In other words, only half the wage earners in this country are paying taxes.

The President wants the top 2% to pay their "fair share", but what is their fair share? They already provide over 40% of the income tax revenue to the treasury. How much more should they have to pay? Here's another question Mr. Obama should answer: How much could taxes go up before no more revenue would flow into the treasury? Raising the top rates does not increase revenue and often depresses it, so what's the point?

The problem, as the Republicans repeat like a mantra, is not that we need more taxation. Raising taxes stifles job creation and generates very little revenue. What we need is less government spending, but cutting spending will hurt social programs, we're told.

So what's the implicit assumption in this claim? Is it not that 5% of the people in this country should have to carry the other 95%? Is that just? And what's going to happen to those social programs anyway when the wagon gets so heavy that the top 5% can no longer pull it? The attempt to sustain these programs at current levels while taxing the top earners even more will guarantee that the programs will collapse under their own weight.

Raising taxes is a myopic pseudo-solution that should disqualify anyone who proposes it from being taken seriously.