The Real Numbers vs The Propaganda

Guy Benson posted an article at Townhall today about taxes.

The article includes the following:

Democrats already have a well-worn, and misleading, talking point about it: 83 percent of the tax cuts go to the wealthiest 1 percent. That’s true for 2027 but only because most of the individual income tax changes expire by then…The important missing context is that the final tax legislation, which President Donald Trump signed into law Dec. 22, allows most of its individual income tax provisions to expire by 2027, making the tax benefit distribution more lopsided for the top 1 percent than in earlier years. In 2018, according to an analysis by the Tax Policy Center, the top 1 percent of income earners would glean 20.5 percent of the tax cut benefits — a sizable chunk, but far less than the figure that’s preferred by Democrats. And in 2025, that percentage would be 25.3 percent, with the top 1 percent (those earning above $837,800) getting an average tax cut of $61,090. Just two years later, in 2027, the percentage of tax benefits to this income group jumps to 82.8 percent, “because almost all individual income tax provisions would sunset after 2025,” explains TPC. 

The article explains who pays income taxes:

The much-maligned top one percent paid more than 37 percent of all federal income taxes that year, which is the most recent on record for which we have data.  The top three percent footed just over half of the total federal income tax bill.  And those in the top five percent were responsible for paying nearly 60 cents of every federal income tax dollar collected by Uncle Sam.  If you look at the black lines on the bar graph above, you will see that the federal income tax share paid by “the rich” far outpaced their respective portions of the nation’s overall earnings.  The bottom half of US earners — 50 percent of the country — paid approximately three percent of all federal income taxes in 2016, slightly less than the contributions of the top .001 percent alone.  The Left’s political stories about “fair shares” and “millionaires and billionaires” may pack a potent rhetorical punch in the service of fueling grievance politics and class warfare, but they’re not grounded in facts and omit crucial perspective.  It’s worth noting that in the latest NBC/WSJ poll, the GOP holds a record-high 15 point lead over Democrats on the economy.

It really is time to consider a flat tax, where deductions are very limited and everyone pays the same percentage. Our current tax code is demotivational–it does not encourage prosperity. However, in reality we need to fix the spending–that will eventually fix the tax code.

 

Preventing The Fleecing Of The Middle Class

The American tax code is a tribute to the effectiveness of lobbyists and big campaign donors. The loopholes in the code for people who make a lot of money are numerous. Even with loopholes in place, the rich pay a lot of taxes. As I have previously reported, The top 10 percent of income earners, those having an adjusted gross income over $138,031, pay about 70.6 percent of federal income taxes. About 1.7 million Americans, less than 1 percent of our population, pay 70.6 percent of federal income taxes. These numbers come from actual IRS data.

However, it seems that when it comes to eliminating loopholes, it’s always the middle class loopholes that go away.

Breitbart posted an article today about Congress‘ latest effort to take away a middle-class tax break. Because of a certain lack of faith in the future solvency of Social Security, many employers offer employees 401k retirement plans. Aside from allowing middle-class families to save for the future, these programs provide a place to put money so that it will not be taxed during the highest earning period of the employee. It will be taxed later at retirement when traditionally a person’s earnings are lower and generally taxed at a lower rate. Congress was evidently planning to alter the current system.

Breitbart reports:

“There will be NO change to your 401(k),” Trump tweeted. “This has always been a great and popular middle class tax break that works, and it stays!”

House Republicans were considering a plan to slash the amount of income American workers can save in tax-deferred retirement accounts. Currently, workers can put up to $18,000 a year into 401(k) accounts without paying taxes on that money until they retire and withdraw money from their savings. Proposals under discussion on Capitol Hill would set the cap lower, perhaps as low as $2,400. The effect would be a huge tax hike on middle class workers.

The plan to lower the cap on 401(k)’s would not have had an effect on long-term government deficits. Instead, it would have raised tax revenue now but lowered it in the future, since the retirement savings would already have been taxed. But taxing the savings would have had an impact on household budgets and may have discouraged workers from saving, increasing their future dependence on government benefits.

Let’s cut spending to ‘pay for’ tax cuts. Actually, if taxes are cut, economic growth should increase to a point where there is no loss of revenue. During the 1980’s, after President Reagan cut taxes, government revenue soared. Unfortunately, the Democrats who controlled Congress at the time greatly increased spending, so the government debt increased rather than decreased. Generally speaking, lowering taxes increases revenue–people are less inclined to look for tax shelters.

The Laffer Curve works:

Congress needs to keep this in mind while revising the tax code.

 

Sometimes Our Tax System Is A Joke

Hillary Clinton has released her tax forms. The Daily Caller has the story.

This screen shot from The Daily Caller tells most of the story:

ClintonDonationsThere’s even more. The article reports:

Desert Classic Charities effectively returned that donation back into the Clinton orbit. Its 2015 tax filing shows that it contributed $700,000 to the Clinton Foundation for work on obesity programs. The group handed out $1.6 million in grants that whole year.

The Clintons’ effective federal tax rate was 34.2 percent, the Clinton campaign said in a press release. With state and local taxes amounting to nine percent of their income, they paid just over 43 percent of their income in taxes.

It remains to be seen if Clinton will face the same scrutiny for her in-house contributions as former Massachusetts Gov. Mitt Romney did when he ran on the GOP ticket in 2012.

What the Clintons did is a glaring example of why the tax code needs to be changed drastically. Otherwise, in the interest of fairness, all of us should be able to declare ourselves a charity, give about 8 percent of our income to actually help people, and declare the rest as tax deductible. This is obscene.