Democrats/Liberals are fixated with the phrase “tax cuts to for the wealthy.” In his State of the Union Address, President Obama continued that obsession when he said:
And if we truly care about our deficit, we simply cannot afford a permanent extension of the tax cuts for the wealthiest 2% of Americans. Before we take money away from our schools, or scholarships away from our students, we should ask millionaires to give up their tax break.
It has become a tiresome chant meant to demonize those who have in the eyes of those who have less. What they don’t want to discuss is what constitutes the “wealthiest 1 or 2 or 5% and what their contribution to the tax pool is already.
Last month, Kevin McCormally, Editorial Director of Kiplinger.com, published an informative chart showing the disparities in current income vs taxes:
(Note that these figures include only federal income taxes. According to one study, 56% of all wage earners pay more in Social Security and Medicare taxes than they do income tax and the percentage of those paying more payroll tax than income tax soars to 86% if you count both the employer and employee share of Social Security and Medicare taxes.)
Look carefully at this chart. The top 1% of taxpayers account for 20% of income, but pay 38% of income taxes. Are these millionaires? Nope. The adjusted gross income is less than $400,000. Yeah, it’s a lot of money, but so what? I’ll throw back the other mantra – why unfairly tax success?
My favorite quote from the 2010 elections came from an street interview. A middle-aged lady, talking about this very subject said, “I never worked for a poor person.”
For those of us of lesser means, check the respective category. If you’re in the top 50% of taxpayers, you’re paying 97% of federal income taxes. How is hitting up that top group even more gonna help you?