The Wagon Is Getting Heavy

I have written before about the arguments that are made that the "rich" are not paying their fair share of taxes in this country.  Like so many liberal arguments, what is "fair'?  Who makes that decision?  What is the objective standard to determine a "fair" share of taxes.  See my post, "How Progressive Do We Want To Be?" which shows that the highest 10% of income earners in the United States are paying a higher share of taxes than all other industrialized countries in the world.  That's right, higher than Australia, Austria, Canada, Denmark, Finland, France, Germany, Italy, Japan, Korea, Netherlands, Norway, Sweden, Switzerland and the UK.

The highest 10% of income earners in this country earns about 33% of the total income but is paying 45% of the tax burden.  In other words, they are paying about 35% above their proportionate share if all taxes were levied based on their respective share of income. The average of the the other industrialized countries is to pay about 11% over their share of income.  Based on this objective measure of fairness, the rich are paying more than their fair share.  Of course, you will not hear this objective view from President Obama and the Democrats.  Their definition of "fair" is whatever they need to keep spending as much as they can.

John Merline in Investors Business Daily this week on "Obama Peddles Myths About Taxes And The Rich" writes about the misleading rhetoric coming from President and is worth your time. As Merline points out in his closing paragraph,

Polls show that the public largely favors raising taxes on wealthier families to help close the deficit. Whether that would change if they knew just how progressive the tax code already is remains an unanswered question.

I have found over the years that most Americans have no idea how heavy the tax burden is for the rich already.  When I recite the data Merline refers to below, most don't believe me.

For example, the top 5% of income earners — those making more than $159,000 — accounted for almost 60% of the nation's federal income taxes, although their share of total income was only 35%, IRS data show. At the other end, the bottom half of income earners account for just 2.7% of income taxes, although they earn 13% of all income. A whopping 45% of households don't pay any federal income tax, according to the Tax Policy Center. 

To put it all in perspective, look at this chart that shows the continued increase in the income tax burden on the Top 1% and the gradual elimination of taxes on the bottom 50% since 1980.  This may be good politics but it will eventually be the undoing of our republican democracy.  You simply cannot have fewer and fewer people pulling the wagon and more and more people in the wagon before it all breaks down.