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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Monday, April 18, 2011

Super rich see federal taxes drop dramatically - Yahoo! News

As of late, we have heard new salvos of bombs fired at the high income earners in the US. "Tax the rich" we continue to hear from the Democrats and the left. However, there is a serious problem with this since we also know that.....
There are so many breaks that 45 percent of U.S. households will pay no federal income tax for 2010, according to estimates by the Tax Policy Center, a Washington think tank.
Why is that such as large swath of Americans completely get off of paying any taxes? Of course these people are going to swing for the fences and ask to tax others for their own benefit!!! Is this shared sacrifice? Not! We are not hearing squeals from this nearly 50% of American taxpayers saying that 'this is unfair that we are taxed nothing.' I wonder why this is??

I think that most of all of this 'tax the rich' nonsense can be summed up in this amazing and insightful quote,
"Tax the rich is the lazy man's approach to government"
-Glenzo, 2011-
Additionally, the IRS tracks and releases information on the 400 highest income earners in the US. The latest data released is from 2007 where the average income for these people was $345mm each. And also, we see that that the average tax rate for these super high income earners has fallen from 26% to 17% over the period from 1992 to 2007 (we are not evaluating the absolute levels of taxes being paid just the rates on this income). The primary reason that tax rates have fallen is that taxes on dividends and capital gains are much lower. But lets assume that we can magically raise taxes on these people back to 1992 levels, and assume that they will not change their behavior at all to change their income profile, then the US treasury will increase the funds available for wasteful government spending instead of where these high income earners allocate it by 345mm x 0.09 x 400 = 12.42 billion. This is less than 1% of the current deficit and less than 1/10 of 1% of the total government debt.

But we also know....
More than half of the nation's tax revenue came from the top 10 percent of earners in 2007. More than 44 percent came from the top 5 percent.
So, what is the logic of continuing to concentrate more an more of the nation's tax income into a smaller group of people? And also, the arguments that I hear over-and-over is that these super wealthy can afford to pay more. Of course they can but also the regular folks can afford to pay more too. Its their government too and once you remove them from paying for this, removing them from responsibility, then I think that the nation will never get its fiscal house in order.

This just illustrates the complete silliness of the current debate. Raising taxes on the high income earners is the least difficult thing to do for politicians but it will not even be close to effective. People will change their behavior leading to lower incomes and taxes collected then absolute rates imply. Furthermore, the additional taxes paid by these superwealthy will be diverted from investments that they would normally make. The national will shift investment from these initiatives to those directed by the central planning government, probably not as productive for the nation. Also, higher taxes makes a nation less competitive by raising the cost of capital and this moves jobs, income and opportunity to other nations where the business environment is more favorable. This is not a positive for the nation.

Super rich see federal taxes drop dramatically - Yahoo! News


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