Touching the first day of Autumn at the 2012 Common Ground Fair in Unity, Maine
The defense of freedom by believers in laissez-faire has never been to ask “what’s in it for me”—which can be easily asked by any of the numerous interest groups that lobby for federal handouts under the current rules of the game.
The vision of freedom that I want to defend gives individuals the maximum sphere of control to run their own lives. If left to their own devices, many people will continue to keep the commitments that they make by contracts to others; they will show love to the family and friends whom they admit into their lives; and they will exhibit both charitable and patriotic impulses for a country whom they have come to love because it has provided the framework of opportunity to all.
It’s clear to me that many operate under the misconception that the only thing preventing an economic rebirth and the continual expansion of the welfare state is the stubborn refusal of the highest income earners to willingly surrender their earnings. We could get these $1 trillion deficits down if The Rich would simply pay their fair share. That’s the Obama argument, put in such painless, gauzy, terms – we are only “asking the most fortunate to pay a little more” so we can “invest in our future.”
The Congressional Budget office confirms we have now run a $1+ trillion deficit for the fourth straight year. As a share of Gross Domestic Product, the current spending rate of around 24-25% of GDP is unprecedented outside of wartime and well above the previous long-term average of 18-20% of GDP. Our economy suffers from reckless fiscal profligacy.
The Federal government now spends one trillion dollars and more every year above and beyond what it collects in tax revenue.
Here’s the math – courtesy of the Tax Foundation and the Internal Revenue Service, data as of 2009:
|Number of Returns with Positive AGI||AGI ($ millions)||Income Taxes Paid ($ millions)||Group’s Share of Total AGI||Group’s Share of Income Taxes||Income Split Point||Average Tax Rate|
|Top 25%||34,495,551||$5,149,871||$755,903||65.8%||87.3%||$ 66,193.00||14.68%|
|Top 50%||68,991,102||$6,770,174||$846,352||86.5%||97.7%||> $32,396||12.50%|
|Bottom 50%||68,991,102||$1,055,215||$19,511||13.5%||2.3%||< $32,396||1.85%|
The third column is Adjusted Gross Income (AGI). Keep in mind that for the last fiscal year the Federal government spent $3.6 trillion and ran a deficit of about $1.3 trillion.
$1.3 trillion happens to be the total amount of AGI earned by the much-maligned Top 1% of income earners in 2009. Deficit problem solved, right? Just tax the Top 1% at 100%. Let’s say you can get away with that. Storm the castles and take.
Every. Single. Dollar.
What do you do next year? The year after? My supposition is that the incentives to work change somewhat materially even for the Vampire Rich if you tell them that 100% of their earnings belong to the State.
Damn. Maybe we need to expand the size of the
victim class, ahem, I mean – redefine what level of income makes up the “fortunate” rich. How about the Top 5%?
“We Are the 95%” is still, after all, a catchy slogan.
The Top 5% collected $2.5 trillion. Uh. oh. That’s not enough to cover all the Federal spending for even one year.
Maybe We Are the 90%?
The top 10% collected $3.4 trillion. 100% of their income would almost cover a year of spending, but the rest of us would still have to give up a couple hundred billion of invaluable Federal largesse. That would be some hardship, but perhaps we could manage.
I don’t know, though, enslaving 10% of the population hardly seems sporting, and I’m not really sure how long that cow could be milked. The Top 10% collected 43% of income, but they also paid 70.5% of all income taxes in 2009. Is that fair? If not – how much, at long last, is enough? How much should we take?
Before someone argues that the picture looks more favourable for The Rich when you add in payroll taxes paid by lower income earners, here’s more math:
Source: JP Morgan
It’s worth noting that since 1979 the total effective Federal tax rate, including Social Security and Medicare payroll taxes, has dropped from 18.9% to 11.1% for the middle quintile of earners. The lowest quintile used to contribute at a 7.5% effective rate, but their rate has been slashed to 1% today. In 1979 the rate paid by the top quintile was 3.6 times greater than the bottom quintile. In 2009 the ratio was 23.2 times. Our tax code has become even more progressive over the last 30 years, and in fact we have one of the most progressive codes in the developed world.
It turns out that covering the gaping hole in the budget is not so straightforward after all.
Suggestion: the next time someone tells you we’ll be fine if a certain class of society would only pay their “fair share,” perhaps ask them to show you the math.
What a fabulously confident and ingenuous-seeming political narcissist Ms. Fluke is. She really does think—and her party apparently thinks—that in a spending crisis with trillions in debt and many in need, in a nation in existential doubt as to its standing and purpose, in a time when parents struggle to buy the good sneakers for the kids so they’re not embarrassed at school . . . that in that nation the great issue of the day, and the appropriate focus of our concern, is making other people pay for her birth-control pills. That’s not a stand, it’s a non sequitur.
Prepare to hear the word “invest” frequently tonight.
Government cannot “invest” one single dollar without first either taking it from the private sector – through taxation, borrowing it, or (in a world of fiat currency) printing it.
No matter which path the politicians choose, in the end every single dollar must be paid by private citizens. Either we will pay today, or our children and grandchildren will pay tomorrow.