Tax Realities
Posted: Wed May 04, 2011 2:31 pm
I read yesterday that a recently-released study by the CBO concluded that 51% of American households paid NO FEDERAL INCOME TAX in 2009. Indeed, many of these households paid “negative” taxes in the form of the EITC, and there is no reason to believe that 2010 and 2011 will be any different.
Is it even necessary to point out that this is an absurd and potentially disastrous situation? More than half of the voting population has no vested interest in the fiscal health of the U.S., other than to keep the money and benefits rolling in and to demand (through their votes) that the U.S. Gub’mint continue to be financed by Other Peoples’ Money.
The other half of the population – the ones paying ALL of the federal income taxes – is not only burdened more and more with the accumulated bills for our profligate central government, but the top ten percent of wage earners are paying an ever increasing portion of the total. And the AMT snags more and more middle class taxpayers every year.
Democrat politicians, who have constructed this situation in an attempt to perpetuate their grip on Government, portray any attempts to rectify our absurd current tax scheme as, “seeking to balance the budget on the backs of the poor and middle class,” and “tax cuts for the Rich.”
Of course, truth is never the objective of the Democrat political narrative. It is noteworthy, for example, that Democrats always speak of the taxes being paid by “the Rich,” tax cuts for “The Rich,” and so forth. And yet there is nothing in the Internal Revenue Code that says anything about being rich or wealthy. We are taxed on our INCOME, not our wealth. We have many people with high incomes who are decidedly not “rich,” and many people with modest taxable incomes who are very rich. Wealth has absolutely no bearing on what you pay in Federal income taxes. In fact, our wealthiest demographic is our retired population, and NOBODY – least of all Democrats – is suggesting that we start taxing wealth, for fear that it will alienate a reliable source of campaign contributions.
And Democrats always talk about taxes paid by The Rich (i.e., high earners) in terms of percentages and never in terms of dollars. It paints one picture to say that a “Banker” with a four million dollar income is “only” paying 25% of his total income in Federal Income Taxes, but quite another picture to describe him as paying more than a million dollars a year in Federal income taxes. Indeed, a casual listener might actually sympathize with someone paying a million a year to the feds, and probably another couple hundred thousand to state and local governments for basically less benefit than what is realized by your average welfare queen (thankfully a dying breed – no play on words intended).
The Dem’s position on corporate income taxes is equally devious and obfuscatory. The Tax Code has intentionally been developed to induce corporations to do certain things and refrain from others, using tax incentives to bend the corporations to do Congress’ will. Then when the corporations take advantage of those tax incentives and inducements – behaving as Congress wants them to – Democrat politicians excoriate the enterprises for not “paying their fair share” of Federal taxes.
Of course, the corporate income tax itself is utterly stupid and counterproductive. A corporation is nothing but a fictitious person created by the state to serve as (among other things) a conduit for business revenues and profits to flow from the business to its owners (where it is taxed as ordinary income). Indeed, Subchapter S recognizes the fictitious nature of corporations, taxing only the owners. As a side benefit, it allows Democrat politicians to say – accurately but essentially falsely – that “90% of American corporations PAID NO FEDERAL INCOME TAXES last year!” Of course they didn’t; they filed under Subchapter S. Their owners paid the taxes directly.
Again, truth is not the objective.
It has been written recently that neither side wants to resolve the coming Federal fiscal calamity at this time. The Democrats don’t want to alienate their base by cutting programs, the Republicans don’t want to alienate their base by raising taxes, and the Republicans are willing to allow a bad situation to fester so they can use it against the Democrats (particularly in the WH and the Senate) in the 2012 elections.
My own view is that EVERYONE ought to be paying Federal taxes. I recognize that about half of the people in that 51% paying “no” taxes are actually paying SS and Medicare taxes, which counts for something, but “freeloaders” are a bad thing in any organization. Everyone has to have a vested interest in the outcome, even if it comes about through some sort of federal sales tax or value added tax. Alternatively, voter registration cards should be distributed by the IRS, and people who don’t pay anything should not get one. (Maybe I would “grandfather” grandfathers).
Is it even necessary to point out that this is an absurd and potentially disastrous situation? More than half of the voting population has no vested interest in the fiscal health of the U.S., other than to keep the money and benefits rolling in and to demand (through their votes) that the U.S. Gub’mint continue to be financed by Other Peoples’ Money.
The other half of the population – the ones paying ALL of the federal income taxes – is not only burdened more and more with the accumulated bills for our profligate central government, but the top ten percent of wage earners are paying an ever increasing portion of the total. And the AMT snags more and more middle class taxpayers every year.
Democrat politicians, who have constructed this situation in an attempt to perpetuate their grip on Government, portray any attempts to rectify our absurd current tax scheme as, “seeking to balance the budget on the backs of the poor and middle class,” and “tax cuts for the Rich.”
Of course, truth is never the objective of the Democrat political narrative. It is noteworthy, for example, that Democrats always speak of the taxes being paid by “the Rich,” tax cuts for “The Rich,” and so forth. And yet there is nothing in the Internal Revenue Code that says anything about being rich or wealthy. We are taxed on our INCOME, not our wealth. We have many people with high incomes who are decidedly not “rich,” and many people with modest taxable incomes who are very rich. Wealth has absolutely no bearing on what you pay in Federal income taxes. In fact, our wealthiest demographic is our retired population, and NOBODY – least of all Democrats – is suggesting that we start taxing wealth, for fear that it will alienate a reliable source of campaign contributions.
And Democrats always talk about taxes paid by The Rich (i.e., high earners) in terms of percentages and never in terms of dollars. It paints one picture to say that a “Banker” with a four million dollar income is “only” paying 25% of his total income in Federal Income Taxes, but quite another picture to describe him as paying more than a million dollars a year in Federal income taxes. Indeed, a casual listener might actually sympathize with someone paying a million a year to the feds, and probably another couple hundred thousand to state and local governments for basically less benefit than what is realized by your average welfare queen (thankfully a dying breed – no play on words intended).
The Dem’s position on corporate income taxes is equally devious and obfuscatory. The Tax Code has intentionally been developed to induce corporations to do certain things and refrain from others, using tax incentives to bend the corporations to do Congress’ will. Then when the corporations take advantage of those tax incentives and inducements – behaving as Congress wants them to – Democrat politicians excoriate the enterprises for not “paying their fair share” of Federal taxes.
Of course, the corporate income tax itself is utterly stupid and counterproductive. A corporation is nothing but a fictitious person created by the state to serve as (among other things) a conduit for business revenues and profits to flow from the business to its owners (where it is taxed as ordinary income). Indeed, Subchapter S recognizes the fictitious nature of corporations, taxing only the owners. As a side benefit, it allows Democrat politicians to say – accurately but essentially falsely – that “90% of American corporations PAID NO FEDERAL INCOME TAXES last year!” Of course they didn’t; they filed under Subchapter S. Their owners paid the taxes directly.
Again, truth is not the objective.
It has been written recently that neither side wants to resolve the coming Federal fiscal calamity at this time. The Democrats don’t want to alienate their base by cutting programs, the Republicans don’t want to alienate their base by raising taxes, and the Republicans are willing to allow a bad situation to fester so they can use it against the Democrats (particularly in the WH and the Senate) in the 2012 elections.
My own view is that EVERYONE ought to be paying Federal taxes. I recognize that about half of the people in that 51% paying “no” taxes are actually paying SS and Medicare taxes, which counts for something, but “freeloaders” are a bad thing in any organization. Everyone has to have a vested interest in the outcome, even if it comes about through some sort of federal sales tax or value added tax. Alternatively, voter registration cards should be distributed by the IRS, and people who don’t pay anything should not get one. (Maybe I would “grandfather” grandfathers).
