As we see and hear all of the political commercials, one thing is abundantly clear: The message that is being sent by both sides is not a fair representation of the truth. One of the battle cries that I have heard so much for the past eight to 10 years, in fact, so much that I believe most of us have come to accept it as fact, is that wealthy people are not paying their share of taxes. I believe it was as far back as the Clinton campaign that we began hearing about "tax cuts for the wealthy" that the Republicans are now known for (whether true or not.)
It is a significant enough of an issue that I decided to do a little research on my own, and I was quite surprised by some of the things that I found. I hope you will look at this with a non-partisan mind and compare just the facts, not the hyperbole.
The first thing I wanted to find out is, how many of these rich fat cats are not paying any taxes? We all heard Warren Buffett tell the world that his secretary paid more taxes than he did, so how many more wealthy tax-dead-beats are there out there? I Googled it and was a little surprised at what I found. Here is the information from 2009 (the most recent I could find) as printed by CNN Money. The title of the article is "47% will pay no federal income tax." I have to tell you, I was more than a little startled by that headline. I was even more startled to find out who wasn't paying. To the left is a figure with the percentage of those households NOT paying ANY federal income tax, broken down by household income.
Wow! Nearly 70% of homes with incomes UNDER $50k pay NO FEDERAL INCOME TAX! Really!? I find that unimaginable, but that's what the report says.
It also states that only 1.5% of those making over $1 million paid no taxes. I would have guessed much higher than that based on what I hear in campaigns, but those appear to be the facts.
What about the other thing that I hear all the time, you know, the "…rich people don't pay their fair share of taxes…" OK, that's believable, after all, they do have access to the best accountants to keep their taxes down. However, the article also states: "A key reason why there is a zero-liability group at all is because the U.S. tax system is progressive. Those who bring in more money pay more than those lower down the income scale to support government functions such as national defense and social safety nets like Medicaid for those in need. That progressivity can be dialed up or down."
This article is published by CNN and sourced to the Tax Policy Center, and I don't believe either of them have leanings in favor of the wealthy. Here's the entire article if you care to read it.
Ok, so I am also led to believe that the real tax burden in the US is placed on the middle class. I Googled that too and was once again, quite surprised at what I found. The higher the income levels, the share of the tax burden paid goes up dramatically. In fact, households in the bottom 50% of income paid only 2% of the federal taxes. That means that 98% of all of the federal income tax is derived from households that rank in the top 50% by income. What is really eye opening is those in the evil "1%" who have been vilified by those in the "99%" actually paid 37% of the US tax burden. In fact, those in the top 10 % are responsible for delivering 71% of the US taxes. Here's that tax chart.
OK, so what do they mean when they say "…tax cuts for the wealthy…?" Have the wealthy people in the US gotten big tax cuts that the rest of us didn't get? Well, when I Googled that, I found that yes, they have gotten some nice tax cuts. In 1979 under President Jimmy Carter, the top tax bracket was 70% on income over $1,000,000. In 2011, the maximum tax bracket is 35% on income over $379,000. When I hear someone say that people who make over $ 1 million should pay 35% in taxes, it appears to me that they already do. Maybe I'm not smart enough to understand that, but that's what the facts seem to say. If you want to see that article, here it is.
One other thing…this is ONLY federal income tax. It does not take into account state, municipal, sales, property, automobile, capital gains, or any of the other countless taxes that we all pay.
So, what's the point? The point is simple: Don't be persuaded by all of the hyperbole that you hear during political campaigns. The speech, by both parties, is carefully crafted and practiced to have just enough truth in it to not be a completely false statement, but it is usually far from the actual truth.