Fleeced: The upper 1% earned 19.6% of total income before tax, and paid 41% of the individual federal income tax. "No other major country is so dependent on so few taxpayers"

by The blogprof

Fleeced: The upper 1% earned 19.6% of total income before tax, and paid 41% of the individual federal income tax. "No other major country is so dependent on so few taxpayers": "The most productive citizens in this country are being fleeced by the unproductive. The so-called rich are being punished for achieving the American Dream via punitive taxation. Earlier this month, and after voters repudiated Democrats' class warfare rhetoric in November, Dick Durbin trots it out again - the class warfare card - and gets taken behind the woodshed by Dave Ramsey for his effort:

Darned straight! The rich in this country pay far more than their fair share. And not only does bottom 47% of taxpayers pay no federal income tax, but the bottom 40% GET MONEY BACK! That goes right along in consistency with a prior post of mine: 60 Minutes/Vanity Fair Poll: 50% of Americans that don't pay taxes thinks 'rich' people ought to pay more, even though top 1% pay more than bottom 95%
Note that the bottom 50% pay almost no taxes, while the top 5% pay about 60% of the federal tax bill. I agree with one thing - this isn't fair. But I think it is the rich that are paying too much, only to be sneered at by those that pay nothing at all and get OUR money back from the government. It's now gotten so bad, so unfair, that the top 1% pay more in federal taxes than the bottom 95%: The rich are paying far more than their fair share, and instead of being thanked are demonized by Obama and their ilk. Dave Ramsey is right - Dick Durbin and those of his mindset are thieves. In addition, all data clearly shows that conservatives and the evil rich give far more of their money to charity than liberals. Liberals are very generous... with other people's money. But not their own. They are the true scrooges. With all of that as a backdrop, from Instapundit:

EXPLODING A TAX MYTH: A 2008 OECD study of leading economies found that ‘taxation is most progressively distributed in the United States.’ More so than Sweden or France. The problem in the United States is that too many people vote, but don’t pay income taxes.

And from Star Parker: Taxing the wealthy is just a sign of envy. The Wall Street Journal also ran this great piece: Taxes and the Top Percentile Myth

...Arguments for these retaliatory tax penalties invariably begin with estimates by economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of U.C. Berkeley that the wealthiest 1% of U.S. households now take home more than 20% of all household income.

This estimate suffers two obvious and fatal flaws. The first is that the 'more than 20%' figure does not refer to 'take home' income at all. It refers to income before taxes (including capital gains) as a share of income before transfers. Such figures tell us nothing about whether the top percentile pays too much or too little in income taxes.

In The Journal of Economic Perspectives (Winter 2007), Messrs. Piketty and Saez estimated that 'the upper 1% of the income distribution earned 19.6% of total income before tax [in 2004], and paid 41% of the individual federal income tax.' No other major country is so dependent on so few taxpayers.

A 2008 study of 24 leading economies by the Organization of Economic Cooperation and Development (OECD) concludes that, 'Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. . . . Taxes tend to be least progressive in the Nordic countries (notably, Sweden), France and Switzerland.'

The OECD study—titled 'Growing Unequal?'—also found that the ratio of taxes paid to income received by the top 10% was by far the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile's share of Swedish taxes is the same as their share of income).

The solution of course is an overhaul of the tax system such that everyone has some skin in the game. And our own Dave Camp has the plan. From George Will: Dave Camp's plan: Taxes made simple

Many parents have heard FICA Screams. Indignant children, holding in trembling hands their first paychecks, demand to know what FICA is and why it is feasting on their pay.

FICA (the Federal Insurance Contributions Act tax) is government compassion, expressed numerically: It is the welfare state; it funds Social Security and Medicare. Sometimes it makes young people into conservatives.

I recall a commercial that I cannot seem to find on YouTube or elsewhere where a teenager opens his first paycheck and exclaims 'Who's FICA? Why's he getting all my money?'

Dave Camp was 14, working for his father's garage in central Michigan, when he made the acquaintance of FICA. Now 57 and about to begin his 11th term in Congress, he will chair the House Ways and Means Committee, where he will try to implement the implications of his complaint that 'the tax code is 10 times longer than the Bible, without the good news.'

His aim is 'fundamental' tax reform, understood the usual way - broadening the base (eliminating loopholes) to make lower rates possible. He would like a top rate of 25 percent - three points lower than Ronald Reagan achieved in 1986, with what proved to be perishable simplification.

In George W. Bush's 2004 speech to the Republican convention, he denounced the tax code as 'a complicated mess' that annually requires '6 billion hours of paperwork' - now estimated at 7.6 billion. He vowed to 'simplify' it. The audience cheered. Then he promised new complexities. There would be 'opportunity zones' - tax relief for depressed areas - and a tax credit to encourage businesses to establish health savings accounts. The audience cheered.

My recommendation would be to scrap income tax altogether and go with a consumption tax only, also known as the 'fair tax.' Of course, that would take all the graft out of the political arena. Politicians simply cannot do without that.

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