Your Fair Share

It's tax day in the United States.

An estimated 179 million income tax returns are required to be filed by today for the 2021 tax year.

It is projected that  57% of those returns will not owe any federal income tax.

Source: https://thehill.com/policy/finance/599753-study-57-percent-of-us-households-paid-no-federal-income-tax-last-year-amid/

In 2020, thanks to Covid relief and reduced incomes due to the lockdowns, 62% did not have to pay one cent of federal income tax.

Some of you might remember when Mitt Romney made the observation that 47% of Americans paid no income tax in the 2012 Presidential election campaign and stated it was hard for him to get their vote due to that fact.

He was roundly criticized for that remark despite the fact the number was exactly right.

Source: https://www.politifact.com/factchecks/2012/sep/18/mitt-romney/romney-says-47-percent-americans-pay-no-income-tax/

47% isn't anything anymore.

We have reached the point that well more than half are paying no federal income taxes.

However, we still hear incessantly that "the rich" are not paying their fair share.

Elon Musk is now the favorite target of the Left on that score, especially since he wants to buy Twitter.

This is a tweet from a "community organizer" in Tennessee who is running for Congress.

This is a tweet from a current member of Congress.

This intellectual giant has 408,000 followers on Twitter.

Really! 

And these are the same people who think that everyone who complains about high gasoline prices should buy an electric car.

Source: https://homafiles.info/2021/11/17/psaki-high-gas-prices-are-a-blessing-in-disguise/

Never mind as well that Elon Musk disclosed in December that his income tax bill for 2021 was over $11 billion.

That is reported to be the largest individual income tax amount in history.

I think that shows no matter what it is, it is never enough.

Having practiced as a tax attorney and CPA and worked on thousands of tax returns I always find it incredible that so many people believe "the rich" are not paying their "fair share."

Source: https://time.com/3751254/pew-research-taxes/

Of course, no one ever seems to be able to define exactly what a "fair share" is to begin with.

We also know that 62% in a recent Rasmussen poll (March, 2022) say they pay more than their "fair share".

I thought that was interesting in that 57% are paying no federal income taxes on their tax returns due today.

Is a fair share ZERO?

What are the facts on who is paying what when it comes to federal income taxes?

The IRS will not have detailed data for 2020 and 2021 for several years but in 2019 (before Covid relief) the top 1% of earners paid 39% of all federal income taxes. The share of the top 5% was 59%.

These numbers were undoubtedly higher in 2020 and 2021.

Source: https://www.ntu.org/foundation/detail/who-pays-income-taxes-tax-year-2019

In 2019, that 47% number Romney cited as those who paid no income taxes had dropped to 44% primarily due to the strong economy in the Trump years.

However, the bottom 50% of taxpayers only paid 3% of all income taxes while the top half paid 97%.

Source: https://www.ntu.org/foundation/detail/who-pays-income-taxes-tax-year-2019

Yes, the top 1% earn much more. The top 1% had 20% of all income. However, they paid 39% of all of the income taxes.

For those that argue for a flat tax take note. That would actually reduce the income tax paid by "the rich" by half.

The share that the top 1% is paying has also been increasing over the last 40 years.

Part of that is due to greater concentrations of income in the wealthy but it is also due to the U.S. tax system becoming more progressive with fewer deductions and tax shelters over the last 40 years,

What is your fair share?

What is the fair share that the wealthy should pay?

Senator Russell Long (D-LA) was the Senate Finance Committee Chairman from 1966-1981.

He always said this about how most people viewed taxation.

"Don't tax me. Don't tax thee. Tax the man behind the tree."

The same is true today. 

It is always someone else that is not paying their fair share.

YOUR share is always too much.