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.