REALITY CHECK Taxation By The Numbers

REALITY CHECK Taxation By The Numbers

Note from Andrew:  Today I’m pleased to introduce you to a new periodic column by my friend Roger Reality.  Roger has been a key mentor in my life particularly with regard to critical thinking and analysis, and as you will see…he speaks with passion.  Enjoy.

I have become increasingly irate at the insanely skewed tax code in this country.  The more that I have researched the situation and discovered the facts the greater has become my ire with a “system” that is so patently unfair that it is almost difficult to believe!

Please take a close look at the facts as assembled and organized by the great folks at the nonpartisan Tax Foundation from the raw data available from the Internal Revenue Service (IRS).

For tax year 2006, the last year for which complete data is available, there were exactly 133,208,934 federal individual tax returns filed.  That means the bottom 50% of filers constitute 66,604,467, roughly 67 million filers.  So exactly how much of the federal government’s income tax revenue does the bottom 50%, those 67 MILLION “taxpayers”, put into the pot??  How about a mere 3.11%!!  So does that sound “fair” to you?  It does to a lot of people, particularly those in that 50% and those who pander to them.  But before you decide, let’s look at some more numbers.

  • The top 1% of tax filers (81,943 individual filers) in Florida paid a total of 3.308% of the NATION’s tax burden
  • The top 1% of tax filers (97,174 individual filers) in Texas paid a total of 3.197% of the NATION’s tax burden
  • The top 1% of tax filers (85,314 individual filers) in New York paid a total of 4.097% of the NATION’s tax burden
  • The top 1% of tax filers (150,001 individual filers) in California paid a total of 5.500% of the NATION’s tax burden

So a relative handful of taxpayers in each of four states paid more in taxes than the 67 MILLION did together!

Even in my home state of Missouri, the top 1% of tax filers (just 25,715 filers) pay .524% or one-sixth as much as those 67 MILLION folks pay for all the rights and benefits of living in America!

However, those amazing numbers don’t tell the whole insane story.  The top 1% of filers pay 39.43% (I’ll call it 40%) of the government’s total “take”!!!  The top 10% of individual income tax filers pay 70.45% of the tab.  The top 25% get tapped for an unbelievable 86.08% of the tax burden!!

Many, perhaps most Americans look at these numbers gleefully or at least smugly since human nature automatically embraces the two-headed cobra of spiteful jealousy and personal greed.  Society revels in “punishing” the “rich” for their success whether obtained through pure luck or extreme effort and regardless of how these people contribute to our country’s amazing success.

Before you go out and shake the hand of the nearest Democratic Congressman for “sticking it to the man”, let’s see who qualifies as “rich” according to our insane tax code.  No it isn’t just the Hollywood celebs, Wall Street bankers and “Big Oil” execs that are “rich” according to our tax collectors.  Nationally, the individual filer had to report at least $392,645 to make the top 1%, $109,441 to be in the top 10%, and $65,084 to be among the top 25% of filers.  The numbers in Missouri are $305,597; $97,634; and $60,353 respectively. So how “rich” are you?  Also remember that if you and the spouse file jointly for your two or three jobs, that qualifies as an individual return (filer) for these purposes.

So before you cheer for a candidate or support a party that vows to “tax the rich” or eliminate “tax breaks for the rich”, it is critical to know who they mean.  If you’re “rich” and fall into the top 25% or 10% and are already paying 86% of the taxes, you are the target!

How about an analogy!  Let’s say that you invite 9 of your neighbors, coworkers, “friends” over to your very nice, well maintained, safe and upscale house to watch a ballgame and share some pizza and beer.  The pizza and beer arrive and since everyone there gets to enjoy the house and game, everyone is expected to chip in for the pie.  The whole bill is say $100 for the goodies.  Four people dive into the pizza and beer without putting in a penny, one tosses down $3 and powers through the beer, two folks throw in $5 each and eat reasonably, the remaining three of you have to pay the remaining $77 bucks and may get single slice but usually just a couple crusts and no beer.  Perhaps it wouldn’t bother you that the five mooches don’t thank the folks who paid the vast majority of the cost, then again it might when those five start complaining that they didn’t get enough despite consuming much, much more than their share of the goodies and it might really irritate you when some politician encourages them to gripe about how much the three have and tells them that they are “entitled” to have even more free pizza and beer!!

The 50% who contribute nothing but consume the bulk of the government’s resources and the politicians who shamelessly pander to them assume that those of us who actually pay the bills will feel “guilty” for our hard earned success and simply do what we have always done, pay up!  They count on us not knowing the facts!  Their self satisfaction from knowing that as long as they can give a simple majority (50% +) enough stuff without making them pay even a fair portion of the cost they can perpetuate this cycle of dependency indefinitely.

I am tired of “paying for the party” for the 50%!  Let’s let everyone who enjoys the rights and privileges of being an American pay for their portion!  The ludicrous myth of “progressive” taxation has been made Holy Writ by several generations of Democratic politicians pandering for votes.  Those who already consume nearly 50% of the federal budget from “redirected income” in its various guises should contribute in proportion to their income just as everyone else does.  I advocate the Flat Tax or Fair Tax or whatever appellation is assigned to it but the bottom line is that a 10% across the board tax rate for ALL incomes without exception and without ANY exemptions, deductions, or other loopholes would fill the basic need, supplemented with a Federal sales tax on consumption rather than earnings to “punish” those who spend lavishly.  This obviously levels the playing field because 10% is 10% no matter how hard liberal activists protest it.  Saving rather than spending would be rewarded and the dependency mindset that is the root of most of our social ills will start to degrade.  Ownership rather than expectation and entitlement will be enhanced.

Keeping it Real,

Roger Reality

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One Response to “REALITY CHECK Taxation By The Numbers”

  1. Andrew J. Jackson says:

    The most appealing part of the flat or fair tax for me is that by moving more people onto the taxpaying roles…more people will care how are taxes are spent, and hopefully reduce the dialog of class warfare… Haves (to pay taxes) versus Have Nots (to pay taxes).

    Andrew J. Jackson

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