It’s Time to Soak the Rich

Like I was sayin… sometimes less is more.

You have been hearing it all the time lately.  John Edwards spoke of two Americas and Barack Obama is promising to make the rich “pay their fair share” of taxes.

Recent data from the IRS shows an interesting way to make this happen.  In 1990, long before the dreaded Bush tax cuts that allowed millions of Americans pay less in taxes to a bloated government, the top 1% of earners only paid 25% of the taxes.  Since the Bush tax cuts, what do you think they pay now?  21%? 19%? 15%?  In 2005, the total share of the tax burden on the evil 1% has changed from 25% in 1990 to 39% in 2005.  That’s right, since the tax cuts, the top 1% has seen their tax burden increase.

Ah, but surely the tax breaks must have gone to the rich as we hear our democrat leaders declare all the time.  Perhaps the top 5% got all the tax break…  Well, in 1990, the top 5% paid 44% of the total tax burden and in 2005, they paid 60%.  You are reading that correctly.  The top 5% of earners pay 60% of the taxes.

Surely the poor got soaked in all this because the media and the democrats keep telling us that is what happened.  However, the bottom 50% of earners paid only 2.9% of the taxes which is the lowest percentage ever.  That means that the top 50% of earners pay 97.1% of the taxes.

It seems that when you cut taxes across the board, “the rich” end up paying more of the total tax burden.  I for one say we stick it to them again by another round of tax cuts.  Heck, let’s really show them by cutting taxes across the board AND cutting spending.

Ending the Bush Tax Cuts

(April 9, 2008 ) – Like I was sayin… would a rose by any other name smell as sweet?  Every Democrat member of congress that can get next to a microphone indicates that ending the Bush tax cuts is a top priority for the Democrat lead congress, but what would ending the tax cuts mean to the American people?

First off, you have to determine if you believe that eliminating the tax cuts are a tax increase or not.  Many people would like to pass this off as an “un-lowering” of the taxes.  However, regardless of the definition, the tax rates will rise and all Americans that pay taxes will pay more tax.

In an opinion piece in the WSJ, John F. Cogan and Glenn Hubbard lay out a good case why taxes should not be raised.  Regardless of their case, the facts are staggering.

“The tax code changes enacted in 2001 and 2003 are scheduled to expire at the end of 2010. If they do, statutory marginal tax rates will rise across the board; ranging from a 13% increase for the highest income households to a 50% increase in tax rates faced by lower-income households. The marriage penalty will be reimposed and the child credit cut by $500 per child. The long-term capital gains tax rate will rise by one-third (to 20% from 15%) and the top tax rate on dividends will nearly triple (to 39.6% from 15%). The estate tax will roar back from extinction at the same time, with a top rate of 55% and an exempt amount of only $600,000. Finally, the Alternative Minimum Tax will reach far deeper into the middle class, ensnaring 25 million tax filers in its web.”

Notice some of the details.  A 50% increase in the lowest rates, return of the marriage penalty, and a cut in the child credit of $500.

What this means is that if you are married and you and your spouse make $80,000 combined, you pay more in taxes than a two single people earning $40,000 each.

There is also the reduction of the child credit by $500.  That means that couples that have 2 kids, would owe $1000 more in taxes.

This is often passed off as a way to fix the economy, but does taking more money out of the American people’s pockets boost the economy?  If so, why is congress rushing tax rebates to the American people in May to stimulate the economy?

This is often also passed off as a way to reduce the budget deficit.  However, you can also cut spending and achieve the same result.

Anybody who is for allowing the tax cuts (or tax un-raisings) to expire needs to ask themselves if they really want to pay hundreds or thousands more in taxes.  Many people don’t understand what it means to their finances and will end up hurting themselves in the end.