The Trump Tax Cuts

The following is a graph from a New York Times article of April 14th:

The article notes:

To a large degree, the gap between perception and reality on the tax cuts appears to flow from a sustained — and misleading — effort by liberal opponents of the law to brand it as a broad middle-class tax increase.

That effort began in the fall of 2017, when Republicans prepared to introduce legislation that models by the independent Tax Policy Center predicted could raise taxes on nearly a third of middle-class taxpayers. It continued through Mr. Trump’s signing of the law, even though the group’s models showed that the revised bill would raise taxes on relatively few in the middle class in the 2018 tax year.

The only thing missing from the article is The New York Times taking some responsibility for what is illustrated by the chart.

It gets even more interesting. The article also includes this chart:

This might be a reflection of the news sources the Democrats choose versus the news sources the Republicans choose. It illustrates the fact that much of what is being reported in major news sources is simply not true. Much of the mainstream media is doing a disservice to the people who choose to watch it.

Why We Need Tax Reform

Yesterday, Walter E. Williams, a professor of economics at George Mason University, posted an article in The Daily Signal. The article explains who pays taxes in the United States.

The article reports:

According to the latest IRS data, the payment of income taxes is as follows.

The top 1 percent of income earners, those having an adjusted annual gross income of $480,930 or higher, pay about 39 percent of federal income taxes. That means about 892,000 Americans are stuck with paying 39 percent of all federal taxes.

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.

The article points out that there are some serious questions about the fairness of this arrangement:

But the fairness question goes further. The bottom 50 percent of income earners, those having an adjusted gross income of $39,275 or less, pay 2.83 percent of federal income taxes.

Thirty-seven million tax filers have no tax obligation at all. The Tax Policy Center estimates that 45.5 percent of households will not pay federal income tax this year.

There’s a severe political problem of so many Americans not having any skin in the game. These Americans become natural constituencies for big-spending politicians. After all, if you don’t pay federal taxes, what do you care about big spending?

So why should the bottom 50 percent of income earners and those who pay no income tax be interested in electing people who will cut taxes and stop runaway spending? If less than 1 percent of the population is carrying the tax burden, they really don’t have any serious political leverage–they are a very small voting bloc.

There is also another aspect to this:

There’s another side to taxes that goes completely unappreciated. According to a 2013 study by the Virginia-based Mercatus Center, Americans spend up to $378 billion annually in tax-related accounting costs, and in 2011, Americans spent more than 6 billion hours complying with the tax code.

Those hours are equivalent to the annual hours of a workforce of 3.4 million, or the number of people employed by four of the largest U.S. companies—Wal-Mart, IBM, McDonald’s, and Target—combined.

Along with tax cuts, tax simplification should be on the agenda.

Our current tax code is a tribute to the successful efforts of lobbyists and special interest groups. That needs to change.

 

 

Facts Are Such Inconvenient Things

Pinocchio visto da Enrico Mazzanti (1883)

Image via Wikipedia

Yesterday Ed Morrissey at Hot Air posted an article about a recent fact check on some details of one of President Obama’s speeches. After Warren Buffet claimed that his secretary paid more taxes than he did, President Obama began to repeat the claim. Associated Press decided to do some fact-checking.

The article at Hot Air reported the following:

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

There is also the fact that if Warren Buffet wants to pay more in taxes, there is a place on his tax return that allows him to do just that. The flip side of this is wondering how many lawyers and accountants he employs to keep his taxes as low as possible. While I am piling on, I would like to refer to a story I posted on September 1 at rightwinggranny explaining that a business move recently made by Warren Buffet will result in Berkshire Hathaway paying a tax rate of 10.5 percent on the $300 million in dividends it will receive each year from Bank of America instead of the normal rate of 35 percent. If Mr. Buffet is so convinced millionaires should pay higher taxes, why did he bother to make that move?

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