By now everyone’s familiar with the gist of Obama’s plan to address this nations deficit and dire financial circumstances: by raising the taxes on those who are “fortunate.” For the purposes of this post, though, I’m going to set aside the fact that our problem isn’t a revenue issue but a spending issue, and focus solely on the word “fortunate.”
You’ve probably heard numbers thrown around lately giving certain statistics regarding which “fortunate” members of our society pay how much of the total federal revenues received from income taxes. There’s a very good report by The Tax Foundation which uses actual IRS data. It’s pretty easy reading and you can see the numbers for yourself. Here are some points to take note of:
- In 2008, “the top-earning 5 percent of taxpayers… earned 34.7 percent of the nation’s adjusted gross income, but paid approximately 58.7 percent of federal individual income taxes.”
- “Overall, these data on high-income tax returns appear to confirm that the recent recession…”, like most recessions, “occurred for the same reason, a sharp decline in income at the high end.”
- The top 25% of income earners had a sum total AGI (Adjusted Gross Income) of approx $5,678,179 Million (yes, that’s over 5 Trillion) and were taxed at an average of 15.68%, thus paying $890,614 MILLION in taxes. (That would be over $890 Billion dollars. )
- “… taxpayers with an AGI of $159,619 or more in 2008 constituted the nation’s top 5 percent of income earners. To break into the top 1 percent, a tax return had to have an AGI of $380,354 or more”
- The top 1% of income earners paid 23.27% of their AGI in taxes. (That would be $88,508.38 out of the $380k quoted above.) Top 5% paid 20.7% of AGI in taxes. (That would be $33,041.13 out of the $159,619 quoted above.) The top 5-10% paid 12.44%. Top 10-25% paid 9.29%.
Could you imagine having a small business and working your butt off at least 18 hours per day, “24/7/365″ as they say, and having an AGI of $159 thousand dollars and having to turn around & give $33 thousand to Uncle Sam? OR doing very well, having an AGI of $380 thousand and having to give away $88 thousand of it?!?!?
Did you know that if you win the lottery or report your gambling earnings, the Federal Government will take 40% of those winnings as taxes on “unearned income”? Based on the stats above, the folks who work their butts off to earn that money may as well have been gambling or playing the lottery instead of working hard to make a buck. AND hire employees for good paying jobs. Which would you rather do?
Let’s look at it like this. Most people believe they could live comfortably if they were earning $50,000 annually during their retirement. In order to be earning that much money in interest and dividends – remember you’re not working so you don’t have an “income” – you’d have to have ONE MILLION DOLLARS invested and earning 5% interest (which you just about can’t find any more). Want to be earning $75,000 annually so you could travel and live a life of relative luxury? Then you better have $1.5 Million in those investments earning 5%.
And guess what? You’re still gonna have to pay taxes on that “income” too.
Does any of this sound very “fortunate” to you? And Obama wants to make it worse!