Tuesday, November 1, 2011

The 47% People Don't Like to Talk or Hear About

Wow, so this daily writing hasn't gone as I'd planned.  Between work, child, wife, and the thousands of other things I'm constantly trying to do or keep up on, writing in this blog seems to be the one that slips through the cracks most days.  I will however consciously work to change that, this I pledge to you, oh loyal reader.

Today I'd like to talk about the 47% of Americans that don't pay income taxes.  Recently a great deal of attention has been paid to the 99% of Americans that represent most of the population, but very little of the income and wealth, particularly in comparison to the 1% they've recently declared war on.  However, much less attention seems to be paid to the fact that 47% of the people in this country PAY ZERO FEDERAL INCOME TAXES.

Look, this may not be popular-mostly because it indicts almost half the population-but it's fact.  Is it a sad fact as it highlights the other fact that this means that 47% of Americans don't make enough money to pay income taxes?  Absolutely.  Does that make it any less "fact"?  Nope, you see in the real world just because something's sad doesn't mean it isn't happening or isn't fact.  Additionally, just because something is sad doesn't make it right.  Pulling at your heart strings is not a legitimate substitute for logic, it just isn't-although it's often used as one.

I recently saw a clip of a man-a rich man, one who claims to be part of the 1% a great deal of America is currently railing against-who went down to Zuccotti Park with his own sign.  That sign read "I am the 1%, Let's talk".  He proceeded to engage many demonstrators regarding many of their issues, particularly his income and how much they deserved of it (in higher taxes on millionaires) as well as capitalism in general.  At any rate, his visit to the park intrigued me because it forced protesters to justify their talking points, their lines, their generalized positions.

The 99% like to go on about what's fair and what isn't fair.  However I have yet to hear why it's fair that this 1% should pay a higher percentage of taxes than the 99% whether they can afford it or not.  Look, there are some things that aren't right, there are times when the 99% movement are very right, but this point is not one of them.  While those in Zuccotti Park will argue that things aren't fair, let me tell you what's not fair:

47% of people DO NOT PAY FEDERAL INCOME TAXES.  Very simply put.  They don't.  In fact many get kick-backs in the form of earned income credit.  So people that pay nothing and get earned income credit which is enabled by the taxes the rich pay are complaining that the rich don't pay enough?  I mean really?  Look, I know the argument here is "people pay payroll taxes, they pay local taxes, they pay state taxes" and yes, these things are true.  What people arguing those points conveniently leave out is that employers MATCH those taxes, and on top of that pay their own taxes, and on top of that investors and owners pay their own personal taxes-in some cases twice!

Only in America-a place that is becoming a country of whiners-is it okay for someone who pays nothing to complain that those who have aren't paying enough.  A guy like Peter Schiff, he worked his you know what off to get where he is.  He started his company in a one bedroom apartment working 20 hour days-and that's after doing the same thing to work his way through an Ivy league school.  He worked that hard only to get to the top and find out what?  It's his job to completely support the slacker who dropped out of school in 9th grade?  The guy who partied throughout college, earned a 2.0 gpa, and could only get an hourly paying job as a result?

America is the country of opportunity-at least that's what we'd like to be known as-but that doesn't mean that once you work hard to get ahead, finally get ahead, that you're to be dragged back down.  That doesn't mean unequal effort should earn you equal rewards.  That most certainly doesn't mean that a guy who worked hard to get ahead should be penalized for it with a higher tax rate.  It simply doesn't-at least it shouldn't-and it isn't right if you ask me.

Furthermore, the entire concept is detrimental to America and our success both as a whole, and individually. Do you think for a moment that in this day and age if you start taxing the 1% at a 70% rate (yes I heard that rate quoted by people in Zuccotti Park) that they'll continue working?  Or that they'll continue working here?  Let's over-simplify it for a second to drive my point home: A millionaire makes a million a year.  He currently pays 35% of that to the government.  He makes this money as a partner in a business, he has 9 other partners, so total they make $10 million a year, and pay $3.5 million in taxes.  Now let's say the proposition on the table is to start taxing them at 70%, bringing that total to $7 million annually.  Let's also say (again this is for simplicity's sake) that moving their business overseas would cost them an additional 5% in logistics, plus an initial start up cost of putting factories or offices in, etc, etc.  Let's say that initial cost is...I don't know, $50 million.  While these costs are negatives, let's say the country they're aiming for is...Mexico, where the tax rate for the top earners is 28%, and they're still close enough to America to enjoy visits.

If America has instilled a 70% tax rate on the top earners they'd be paying $7 million in taxes here, vs. a collective $2.8 million in Mexico.  Sure the costs of moving would be tough, but amortize that over the life of the factory (let's say...25 years) and you're talking about a savings of $2.2 million annually by this fictitious group of businessmen.  Now maybe they won't starve to death on $300,000 a year in take home income each, but they'll do a hell of a lot better on $720,000.

These numbers are far from exact and are inventions of my own, but they illustrate a fact-if you continue to push tax rates up on businesses and the wealthiest individuals in the world, what's to keep them from leaving for greener pastures?  Particular in this day and age of travel and globalization?  It's not like moving would keep them from selling to the US if they chose to.  Hell, the US isn't even the biggest consumer anymore-or at least we soon won't be-with the industrial emergence of both China and India and their billions of people. Couldn't the US cut itself completely out of the picture with policies jacking up tax rates that are already among the highest in the world?

I'd like to hear any one of you justify the concept of a "progressive" tax system (one that taxes the wealthiest few a higher percentage than others) without using the words "because they can afford it" or any variation.  I'd also love to hear any defense for the 47% (that's 75 million households) that don't pay a dime to live in what we think of as the greatest country on earth.  Because if we charged even just $1 a day (that's less than most individuals spend on coffee daily) to each household (not person, but entire household) to stay here, that's another almost $30 billion in tax income.  That's enough to fund a lot of things in this country; 2/3 of homeland security, a good portion of veteran's benefits, many  social programs.  Think about all the things the 99% go on about, programs that should be instituted but aren't.  Then think, $365 a year from you, just $1 a day from your entire household could change some of that.  That's not even $1 a person.  Let's say you make $30,000 a year with 1-2 kids and therefore don't really pay any income taxes.  That's 1.2% of your income that could make some significant change-and you're "shaming" people for not paying 70%?  I say, shame on you.

I look forward to your replies.


  1. I think disconnecting this issue of "47% of people don't pay federal income tax" from the issues that CAUSED them to not make enough money to pay federal income tax is problematic.

    IF (and this is a big if) all of the 47% people just didn't have the ambition to work in school, and in work - then your argument would be be valid. However, you argument does not take into account the institutionalized forms of oppression that do not allow people with ambition and burdened with difficult situations to get themselves out of the hole they're in.

    An argument for higher taxation of the rich could be one of distribution. We know from evidence that as wealth inequality increases to the levels we see the economic and democratic values our society cherishes cease to operate as they ought. If we care about that, we will find a way to prevent this from happening.

    And here is another much much deeper look at a line of argument that must be dealt with when one claims that people are entitled to the money they make off things: http://www.truth-out.org/how-99-percent-really-lost-out-far-greater-ways-occupy-protesters-imagine/1319561990

  2. "I'd like to hear any one of you justify the concept of a 'progressive' tax system (one that taxes the wealthiest few a higher percentage than others) without using the words 'because they can afford it' or any variation."

    A progressive tax system places a higher priority on a person's ability to eat, survive, obtain education, and raise a family than on a person's ability to procure luxury items. That's it. If we, as a society, decide that it's more important to use a nation's resources to help as many citizens as possible obtain the things we value more highly, it makes sense to tax more of the income used to procure luxury items (the incomes of the wealthy, who have more than enough to afford the goods we value) and less of the income of those who spend a much higher percentage of their income on these important goods -- goods some of us would call necessities.

    Is it so crazy as a country to prioritize general education, say, over the ability of individuals to pursue the highest possible levels of economic luxury? The idea of progressive taxation springs so immediately out of any concern for the general welfare of one's fellow citizens that it requires a particular - and shocking - form of warped ideology to generate even the weakest argument against it.

  3. First off, I do agree that it is NOT all of the 47% that don't pay taxes simply because they're too lazy to get up and get a job and so forth, very true. But I-like you I'm sure-know tons of people that you simply knew were gonna be broke and have a hard time finding a job.

    Throughout college so many times I'd have conversations with people. They'd go to me "what's your major" and I'd say "Accounting with a minor in economics" and they'd reply "boooring" or some equivalent. I'd then ask them, well what's your major? They'd come back with something along the lines of "Art History" or perhaps "Underwater Basket Weaving" (okay there I'm just being facetious but you get my point).

    I'd ask them what they wanted to do after school, what job they figured they'd get, etc. They often had no answer whatsoever, and when they did it was along the lines of "I haven't thought about that yet" or "I don't know".

    I'm not saying all the 47% are those people-but I bet a good chunk of them are. I bet a lot of these people who are "underemployed" are people trained with a master's in some completely obscure, irrelevant major, and now they're shocked that they can't get a job, and it blows my mind.

    One has to admit that a large portion (even without having the exact numbers I'm pretty sure we can agree this is true) maybe even 95 percent or more of college and high school dropouts are among the 47%. That's not to say that 95% of the 47% are college or high school dropouts, but that most dropouts and their equivalents end up as part of the 47%.

    While I agree that there are those who are unfairly pushed there through no fault of their own, and I agree that there are those in the 47% who use their time there to get into the 53% (I did), I think the vast majority are the people who you knew were going to be in the 47% as you watched them in classes, work, and life around you.

    There's no way to separate the two that I know of, so the question is-do you punish the successful for being successful, thereby driving their businesses and possibly them out of the country, or do you actually ask for equal contributions from all?

    Look I've been poor okay. I'm not part of the 1% now, and the only 1% I've ever been part of is the lowest earning 1% throughout my entire life growing up. After the company I worked for went bankrupt last year I'm back to being a part of the 47% right now, working my ass off to get back to being a part of the 53%.

    I'm not saying taxes shouldn't be paid, I'm not saying programs shouldn't be in place to help those who need it. As I've said, I benefited from those programs myself, those programs helped get me into the 53%, helped earn me a degree, and continue to help my family with our disabled son daily. What I am saying is don't take it too far. America has become a very lazy country full of very lazy people, and saying that those who have the most should be taxed at incredibly high rates to support those who don't currently or didn't in the past want to work as hard as their 1% counterparts is just plain wrong. Far more wrong than the 1% keeping what they worked their fingers to the bone for. If not, what is the "American Dream"? To sit at home on welfare and be the greatest Halo or COD player known to man?

  4. Nate-why can't people place their own high priority on their own ability to eat, sleep, and live? If you can't even feed yourself-a pretty basic tenant of living, as you so eloquently point out-what are you contributing to society that it's so important the rest of us keep you alive?

    Is eating important? Sure is, but why can't people feed themselves? Let's take it back 100-200 years. If you had two neighbors who both owned the same rifle, both owned a similar plot of land, and both lived in the same area. One guy cares for his gun well, spends his money upkeeping it, spends his spare time hunting and learning to shoot, etc, and ends up a very capable and productive hunter, capable of hunting enough to feed himself and sell a great deal as well. The other guy spends his money on beer, his spare time drinking with his friends, and occasionally goes out hunting only as much as he needs to. He often begs off the first guy as opposed to hunting himself, as he's not very good at it. Is it now the first guy's responsibility to feed the second guy for the rest of his life? No. Because the second guy didn't put a priority on his eating, why is it the first guy's responsibility to?

  5. Luke, I think you've missed an entire point of being human. Some people "get off" or are passionate about business. Making deals, contracts, hiring, firing, managing, its what makes them tick. They love it. They do it while they're eating and sleeping. And it just so happens this is profitable for an economic market.


    Do we want our society to ONLY care about people who uphold an economic market? Or do we want our society to upload all of humanity and our experience?

    Just because the vast majority of art does not uphold an economic system doesn't mean that people are not allowed to explore art. Just because the vast majority of priests/pastors/imams/rabbis does not uphold an economic system doesn't mean that people are not allowed to explore theology. Just because the vast majority of literature does not uphold an economic system doesn't mean that people are not allowed to explore literature. The same goes for philosophy, sports, and tons of things I cannot even think of right now.

  6. I understand that, I'm a person who enjoys what I do-business-but I also get that's not everyone.

    What you're not getting is there are plenty of people who would rather be doing something else, that bite the bullet and do something they'd prefer not to do despite the fact it's not fun, despite the fact it's difficult, so they can make the money they need to support themselves and their families.

    Look, take me for instance. Do I enjoy business? To a point. I like analyzing numbers, etc, do it in my spare time even but I don't like a lot about it. I hate the people, hate the phone calls, the conference calls, the meetings, etc, etc. Prior to this job I worked covering the Boston Celtics. I attended all their home games, and also covered the Providence Friars and URI basketball teams. But I gave that up to focus on a job that's much more boring, much less fun, but much more steady and a better paycheck because I don't want to be one of the people whining that I don't have a job, or the money to pay my loans, or whatever it is.

    Nobody said people aren't "allowed" to "explore" what it is that interests them. Hell, I didn't even say they couldn't try to make a career out of it. What I am saying however, is don't make the people that made the responsible choices, the people that bit the bullet and did what they had to instead of what they really wanted to, don't make them pay so others can ignore those same responsibilities.

    You ignore those responsibilities so you can support a family, so you can enjoy your retirement, so you can enjoy the "finer things" in life. NOT so you can support someone else that wanted to shirk those same responsibilities. One doesn't skip out on the fun things so someone else can do the fun things we might have skipped out on.

    I agree there's a great deal of income inequality, but I see it in a different way I guess. Art, philosophy, sports, these things are free markets, and should not be treated as some sort of government subsidy. There are lots of things people want to do in life, but that doesn't mean EVERYONE can make a career out of them.

    The world needs ditch-diggers to. Maybe some ditch-diggers need to do those things in their spare time, and just accept the fact that they're ditch-diggers, I don't know. What I do know is that just because something captures your interest doesn't mean you have a "right" to earn a living doing it. Again, plenty of us gave up doing what we loved, enjoyed, or liked to do the responsible thing and take care of our families and ourselves-we should have to pay for that so others don't have to do the responsible thing? Ridiculous at best.


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