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etc. - a little of this, a little of that - by Oliver Del Signore

Archive for April 20th, 2012


It’s official: 41% not paying their fair share of taxes

Friday, April 20th, 2012

I missed this story last Saturday. I was too busy filling out forms as I figured out how much I had to “voluntarily” pay in taxes.

Using IRS statistics, the Tax Foundation determined that those who’ve raised a hue and cry about many Americans not paying their fair share of taxes are absolutely correct. But it’s not the 1%. It’s the 41%.

Americans Making Over $50,000 a Year Paid 93.3 Percent of All Taxes in 2010

Americans making over $50,000 paid most of the federal taxes that were paid in the U.S. in 2010.

According to statistics compiled from the Internal Revenue Service (IRS) by the Tax Foundation, those people making above $50,000 had an effective tax rate of 14.1 percent, and carried 93.3 percent of the total tax burden.

In contrast, Americans making less than $50,000 had an effective tax rate of 3.5 percent and their total share of the tax burden was just 6.7 percent.

Americans making more than $250,000 had an effective tax rate of 23.4 percent and their total share of the tax burden was 45.7 percent.

Out of the 143 million tax returns that were filed with the IRS in 2010, 58 million – or 41 percent – of those filers were non-payers.

Click Here to read the rest of the story.

That’s right. 41% of those filing tax returns paid zero dollars. And in many, perhaps most cases, they actually received money from the IRS in the form of refundable tax credits, $105 billion worth!

There was a time when I was a strong supporter of the flat tax. Everyone would simply pay the same percentage of what they earned with no deductions or loopholes. It seemed eminently fair. But at some point, I thought about how that would play out in the real world. Paying 10% of a $15,000 income has far more impact on a taxpayer’s standard of living than paying 10% of $150,000 or $1,000,000.

Apparently, those who write the tax code felt similarly, but they carried it too far, because everyone should pay something, no matter how small an amount, to support the nation in which they live.

We value and care about things we pay for far more than those we get for nothing. Perhaps that truism goes a long way toward explaining why so many Americans appear to care so little about what happens in Washington, DC, and in their own statehouses and city halls.

I believe everyone should pay something, if only to make them aware that it really does cost money to run a country, a state, and a town. We can dump all the deductions and close all the loopholes if we all agree and have a simple, graduated scale of percentages based on total income. Start at 1% for those at poverty level and step up from there. Then, everyone pays something, but those who benefit more also pay more.

I’d also end all the “withholding,” which only serves to hide the true cost of government. I’d rather see us all have to write a check each month when we pay our bills, which would probably make more of us wonder what government is doing with the money we send them. And that would be a good thing.

It sounds pretty fair to me.

Or…we could cut the size and scope of government by 70% to 80%, returning it to it’s actual Constitutional limits, and fund it through import duties and such, as it was in the beginning.

That sounds even better to me.

What do you think?

How would you structure income taxes if you were given the power to do so?



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