Government


Here’s an interesting article on who is paying the most in taxes. Is it time to “stick it to the rich” as the Democratic candidates think? Consider these statistics:

  • The bottom 40% of Americans had, in aggregate, an effective tax rate that’s negative (meaning they got back more from the government than they paid in taxes),
  • The top 10% of tax payers paid 70% of total income tax,
  • The top 1% of tax payers paid 40% of all income tax.

While I firmly believe those are the bottom end of the income scale shouldn’t have to pay much in taxes, should so much of the Federal government (and state government funding supplied by the Federal government) be paid by just a few? From a sustainability point of view, that’s not good. Suppose they decide not to work for a year or two?

Maybe it’s time for the flat tax, 10% of everyone’s income is paid to the Federal government. No deductions, no tax shelters, no credits. How would you spend the average 10-20% more in income you would receive? A quick look at the adjusted gross income for 2005, as reported here by the IRS, was $7.4 trillion. So if everyone paid 10%, that would give the government at least $740 billion to spend for the next year.

I know there are other nuances to this issue that are beyond a blog, but think about spending 10% of income on taxes instead of 20-30-?%

— Colvin, G. (2008, April 2). The Tax Debate We Need to Have. Fortune. http://money.cnn.com/2008/03/31/news/economy/tax_debate.fortune/index.htm?postversion=2008040211.

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Normally I’m not a political person in my blog. There is more than enough of that out there to satisfy most people’s desires. But I was looking at the graph below, which is part of a research report published by The Pew Research Center, and if you notice, the scores for how satisfied people were with the direction of the country declined throughout the period of the war. If politicians study this, are they going to be less likely to engage in anything more than cruise-missile foreign policy in the future? There are times we need to go to war, but not everyone will generally agree with the assessment of whether war is necessary. But looking at this graph, I think politicians in the future may be more likely to fire a weapon and declare that “they have been taught a lesson.”

Pew Research Graph

— Kohut, A. (2007, March 22). Trends in Political Values and Core Attitudes, 1987-2007. The Pew Research Center. http://people-press.org/reports/pdf/312.pdf.