Paying Their “Fair Share” Won’t Help
Posted by cann0nba11 on September 7, 2011
Tonight we are going to hear President Obama repeat the phrase “fair share” for the umpteenth time. He is going to continue his class warfare meme by vilifying the rich and riling up the poor. Frankly I’m tired of listening to the perpetual campaigner, and I’m even more tired of his blind followers that parrot the “fair share” phrase. So for the sake of my sanity, if nothing else, let’s do some basic math.
I quick internet search gave me updated tax data for 2008. This is the most recent accurate data I can find, my point will remain the same if I can find more current accurate tax data.
The federal government took in $1.03 trillion in individual income taxes for the 2008 tax year. The table above shows that the top 1% of American wage earners paid 38% of all taxes that year, totalling $392 billion. To be included in the top 1% of income earners you had to make at least $380,ooo that year.
At the other end of the spectrum, the bottom 50% of all taxpayers contributed a total of $27 billion to federal coffers, or 3% of individual income taxes collected.
What the president has repeatedly said, and what his staffers like Valerie Jarrett continue to say is “We need a fair tax system. We need to make sure that people that are paying their fair share, that those who can most afford to pay a little bit more do.”
But what is “fair?” Looking at the table above the evil rich are already paying the vast majority of the taxes. But for the sake of argument lets carry on the class warfare torch and change the numbers to make them more “fair.” Let’s soak the evil top 5% and double their taxes. I think we can agree that doubling their taxes is more than “a little bit more” right?
If we were to double the tax rate of the top 5% of all earners, those making more than $159,000 a year, the government would take in an additional $605 billion dollars. Given that the 2012 budget calls for more than $3.7 trillion, soaking the evil rich will only cover about 15% of the budget, or about 55% of the 2012 projected deficit. Of course, I’m not factoring in how jobs or tax revenue would change for the top 5% of tax payers based on the doubling of their taxes. My model assumes that everyone is completely fine with their taxes being doubled, because at the end of the day President Obama is so awesomely awesome, right?
Here’s another way to look at this. In 2008 the federal government collected about $1 trillion from individual income taxes. The chart below compares this income tax revenue with the budget for the same year. The green bar at the far left shows the total amount collected. The second bar shows how much the top 5% of wage earners paid. The middle bar shows the amount collected if we pursue the “pay their fair share” model and double taxes for the top 5%. (that would be a 100% increase in their tax rate). The second bar from the right shows how much would be collected if we tripled taxes on the evil rich (again, those making more than $159k). The blue bar on the far right is how much our government spent in 2008.
The bottom line for everyone to see: Taxing the rich will not solve any of our problems. We could tax every America 100% of their income and we would still not be able to pay the bills that this administration is creating. We have a government spending problem, not a tax receipt problem.
So, given this easy to understand data, if you believe that the rich should pay more and that doing so will fix our problems, you are horrible uninformed. If you parrot the phrase “pay their fair share” you are woefully out of touch with reality. This isn’t an insult, just a statement of plain fact. The numbers don’t lie. Remember, emotion is the enemy of critical thought. We need to change the way our government works. Obama promised this in 2008, but we now know that he had a completely different idea than most people expected.