PUTTING SOME TRUTH ON THE SPIN ABOUT WHO PAYS FEDERAL TAXES
John Goodman
An article by John Goodman in Forbes explains who pays U.S. income taxes and the percentage of the total they pay. Here are some of the points he makes:
- Who benefits from income tax cuts? Consider these two statements:
- Most of the benefits of the 2017 (Trump) tax cuts went to the rich.
- The tax code today is just as progressive (if not more so) than it was before the tax cuts went into effect.
- The first statement is true but misleading. The second statement is simply true.
- Half the population isn’t paying any income tax at all.
- The top one-half of taxpayers are paying 97.9% of all income taxes, while the bottom half pays 2.3%.
- Progressivity is a different matter. Suppose we cut everyone’s taxes by 1%. For a millionaire, that would be $10,000. For a $30,000-a-year worker, that would be $300. That’s a big difference in raw numbers. But from an equality standpoint, everyone’s share of the country’s after-tax income would be the same both before and after the tax cut.
- When Joe Biden says “the rich aren’t paying their fair share,” what is he talking about?
- If we define the rich broadly (to refer to the entire upper half), their share is already approaching 100% and that is as high as it can go. But even if we are talking about the really rich, their share is quite high.
- The top 1% (people who earned more than $682,577 in 2021) paid 45% of all income taxes collected that year. The top 10% (earning more than $169,800) paid three-fourths of all income taxes.
- The United States has the most progressive tax system in the world. We tax the rich proportionally more than any other country.
- Both private and government analyses confirm that the same is true of the 2017 tax reform law. In 2018, the top 20 percent of the income distribution faced a lower tax rate, but they paid a larger share of the total tax burden than the year before.
- The Tax Policy Center (TPC) estimates that 20% of the corporate income tax is paid by labor in the form of lower wages and 80% is paid by capital (lower dividends and interest payments, for example). For certain types of tax changes, the TPC assumes a 50/50 split. The Congressional Budget Office (CBO) assumes that 25% is paid by labor, and it is the official score keeper for Congress.
John Goodman’s article provides facts that expose the rhetoric of the D.C. Elites and bureaucrats, but it doesn’t provide a solution. This is no criticism of Mr. Goodman because there is no solution that would fix the present income/payroll tax system. It is broken beyond repair.
Of course, no one likes paying income taxes. Politicians routinely generate support by promising a voting bloc that their tax burden will be shifted to someone else. This natural desire by people makes the income/payroll tax a great favorite of the D.C. Elites and their minions in Congress.
They know that they can threaten to add or remove a tax benefit and contributions will flow in from both sides—those who want to see the change implemented, and those who oppose it.
The D.C. Elites and their minions in Congress also greatly value the power they derive from the income/payroll tax system. They love the idea of being able to punish anyone who dares to oppose their agenda with higher taxes and IRS audits.
Are the D.C. Elites and their minions in Congress going to willingly give up this system that gives them the two things they crave the most—power and money?
Obviously not. All of the promised reforms have only resulted in a tax system that’s better for them and worse for us.
The question we should be asking all of the candidates seeking our vote, “Why do we need such an incomprehensible and corrupt system for funding our government that only benefits the D.C. Elites and their minions in Congress and not us?”
Why are we allowing the Elites and the D.C. bureaucrats to control our lives through the income/payroll tax system when there is a much better alternative—the FAIRtax.
The FAIRtax:
- Is so simple everyone can understand and comply with it without having to hire expensive professional help.
- Individuals will not have to file annual tax forms.
- Shows the true cost of the federal government on every retail receipt so all of us can understand how much we are paying in federal taxes and determine if the benefits that we are receiving are worth the cost.
- Helps U.S. companies compete with foreign competitors and not be required to move overseas to stay in business.
- Keeps jobs in the U.S. rather than exporting them to other countries.
- Permanently establishes the solvency of Social Security and Medicare.
- Eliminates special treatment for any group of taxpayers.
- Benefits lower income groups more than the present income/payroll tax system and is FAIR.
- Eliminates the need to file tax returns.
- Eliminates the need for the IRS!
- Allows each of us, not the Elites and their minions, to determine the amount of federal tax we pay.
- IS THE LARGEST TRANSFER OF POWER FROM D.C. TO THE PEOPLE SINCE THE CONSTITUTION WAS ADOPTED.
The American people will overwhelmingly support the FAIRtax if they are given the chance and all of us will benefit.
Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.
THE SOLUTION—PASS THE FAIRTAX!
Why would D.C. pass the FAIRtax and give up this almost unlimited source of donations? The only way that they will is if the rest of us demand it!
Isn’t it time to end this ludicrous tax collection system and the IRS?
HELP BRING ABOUT REAL TAX REFORM AND STOP FUTURE IRS ABUSES
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Please go to this link to invest in AFFT and help us pass the FAIRtax. It’s an investment in your and your family’s future.