Saturday, October 20, 2007

Tax Cuts, Income Tax, and Who Pays Their Fair Share

As the presidential debates and monologues intensify, tax cuts, income tax, and who pays their fair share is once again a popular topic. Which side of the fence are you on?

On the liberal side, the mantra is that the richest income earners should pony up more income tax because they can afford it. On the conservative side the mantra is that singling out high income earners is a punishment for hard work and innovation.

Let's look at the cold facts.

The following figures and statistics come from Stephen Moore via the Glenn Beck radio show last week. Mr. Moore is a highly regarded economist whose writing can be found in the Wall Street Journal.
  • The top 1% of wage earners contribute 39% of the total income tax paid in the U.S.
  • The top 5% of wage earners contribute 59.9% of the total income tax paid in the U.S.
  • The bottom 50% of wage earners contribute only 3% of the total income tax paid in the U.S.
So it seems that who contributes their fair share is spelled out in black and white already. The top 6% already bear the brunt of funding the government coffers. Of the bottom 50%, shouldn't 3% compared to 59.9% be considered fair? Well, it is, unless unless Marxist philosophy is the guideline.

But this isn't about that.

This is about the implications of putting more of a burden on the top 5% of wage earners. The fact of the matter is that 2 out of 3 that fall into this category are small business owners. Small business owners create more jobs than any other sector. Well, except for maybe Walmart? And the government?

The realistic implication of taxing them further is that they will lose the incentive for expanding the market, pushing technology, and creating jobs.

The moral implication of taxing them further is punitive, not "fair". They took the risk, they worked the long hours to get the business off the ground. So why deny them the reward?

Without subscribing to any particular political agenda, this is a common sense issue. Why do people emigrate to the U.S. and work eighteen hours a day building up their business to claim their share of the American pie?

And please, show me one senator out there who raves about taxing high wage earners who doesn't seek out every tax deduction at the end of the year and declines the lucrative insurance programs and retirements that we can't get.

Please, show me just one.

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