Who Pays The Taxes?
By Mark Fernwood, a member of the Contra Costa Republican Party and a Danville resident.
We constantly hear the left demanding that the “rich” need to pay their “fair share” of income taxes. When asked what percentage would a “fair share” be? No suggestions are given, other than “more.” At the core of the left is a belief that it is unjust for some to have so much while others have so little. Their belief is not deterred by the explanation that they earned it. The reality is that upper income earners pay almost all of the federal income taxes. The figures below are compiled from IRS data and provided by the TaxFoundation.org. The same data is available from the National Taxpayers Union Foundation.
The data below does not include federal transfer payments to lower earners, such as the Earned Income Tax Credit and Medicaid. There are also a wide variety of state programs. Lower incomes end up paying an effective negative income tax.
The primary problem with confiscatory levels of taxation is that it greatly discourages productivity. High levels of taxation deny capital from the very productive few that would create needed jobs and products. Many will consider: why take the risk of a new business venture when much of the profits will be taxed away. However, if the business is not successful, all could be lost. Statistics have shown that lower tax rates raise more tax revenue! Art Laffer explains the Laffer Curve - YouTube 3 ½ min.
Some will point out that, long ago, top tax rates were vastly higher. Never mentioned is there also were a labyrinth of deductions (often called “loopholes”) that resulted in top earners paying far less. These deductions were mostly lost during passage of the Tax Reform Act of 1986. At the same time the top tax rate was lowered to 28%. The top tax rate now stands at 37%. Additionally there are many other federal taxes, such as “Capital Gains Taxes,” “Excise Taxes” and Social Security and Medicare Taxes.