The Forgotten 4%

All this talk about fairness and the “rich” paying their “fair share”, you’d think the lower classes were bearing the greatest burden of taxation but they are not, not by a long shot!  First of all, 49.5% of tax filers pay NO INCOME TAX WHATSOEVER–these of course are the lowest earners, not the highest earners!  For this reason, and others, the United States has one of the most progressive tax systems in the world and has the highest corporate tax rate in the world.

I do think the current tax system is unfair, but because only the top half of all earners pay anything at all! And what’s worse, it’s the top earners, not the wealthiest, who pay the vast majority of the taxes. The idle rich (not that there’s anything wrong with that!) and the government-connected rich (there IS something wrong with that!) aren’t necessarily the ones paying income tax. Income tax is paid by those who earn an income for labor. The richer you are the less you need to do this so per force the majority of the highest earners are still below the level of those rich enough not to have to work–this is primarily (and perhaps by definition) the upper middle class.

According to the chart below, the lower 95% of earners are paying the same in taxes as the top 1%–both groups pay roughly 40% of the taxes. That other 4%, what I am going to categorize as the upper middle class–doctors, lawyers, etc–pay 20% of the taxes. These are the people who racked up graduate school loans til they were 30, who pay top dollar to live near the city for shorter commutes to accommodate long work hours, who pay private school tuition for their kids and who are saving for their own retirements–all while paying close to if not more than 50% in federal, state and local income taxes alone! And of course everything they buy has taxes attached, as well as exorbitant property taxes which pay for the schools they don’t use.  Now THAT is unfair! (See more on this subject in general on my post on income inequality and my podcast of the same.)

And don’t let anyone fool you into thinking that raising taxes will solve any of our fiscal problems at all! The government will always spend more than it takes in so giving it more taxes will increase spending, no question about it. When will we stop feeding the beast and acknowledge the truth? It’s a spending problem!

This chart below shows that federal per capita spending in real dollars has grown from $3000 in 1950 to $17,000 today! The more surplus wealth we create, the more the government takes and grows.  And what’s worse, like I said on the show Saturday night, I’d rather burn the money than give it to the government because of the awful things they do with the money!  Taxes are lose-lose to this anarcho-capitalist!

Here are my three favorite websites about taxes:

The Tax Foundation

US Government Revenue

Tax Policy Center

7 thoughts on “The Forgotten 4%

  1. nice blog. This is another issue that trips up the right big time. They think that something is unfair about half the country not paying income tax but to remedy the unfairness they want that half to pay more tax or their fair share. They are playing the same class envy game the left plays when they claim to want the rich to pay their fair share. The real answer is nobody pays taxes. That would be fair for everyone.

    • I almost fell for that trap myself! As a proponent of a voluntary society, I don’t believe in a coercive, monopoly government with the right to tax by force, but I still resented the fact that half of the people don’t pay taxes until Ron Paul said something simple but spot on. He was asked what he thought about the fact that almost 50% of Americans don’t pay taxes; he answered, “It’s a good start.” Gotta love that guy!

      It does gall me, though, that many of the non-taxpayers are actually negative taxpayers who receive money from the government, but as for paying taxes, I wish I had the courage to be a conscientious objector and refuse to pay for a government I object to.

      • The negative income tax (thanks milton friedman, freedom lover extraordinaire, for that one) is absolutely wrong. I too am relatively new to the libertarian\ anarcho-capitalist movement (thank you Pres. Bush) and have been wondering how to resist the state. I feel trapped because I too wish for more courage but i currently live a relatively decent life and would not be fond of imprisonment for tax evasion or other actions considered dubious to the state. But the truth is the government has been setting up the system so everyone is a criminal and can be threatened by the state.

  2. Read How I Found Freedom In An Unfree World by the TRULY GREAT Harry Browne. He says to keep a low profile–ha ha! I guess I didn’t follow his instructions! But still, I think the book is very comforting. The fact is the state has always been oppressive and humanity has always survived the rise and fall of every tyranny. My mom looks forward to living with Jesus. I don’t have her faith but I try to balance my weak faith in an afterlife with a strong faith in the noble spirit of man.

  3. I will check it out. My aunt told me about that book when she found out i was a libertarian too. Instead of keeping our heads down we could go the other way like Henry David Thoreau “On July 24 or July 25, 1846, Thoreau ran into the local tax collector, Sam Staples, who asked him to pay six years of delinquent poll taxes. Thoreau refused because of his opposition to the Mexican-American War and slavery, and he spent a night in jail because of this refusal.The next day Thoreau was freed, against his wishes, when his aunt paid his taxes.” The date is kind of shocking because we have this flowery picture of America way back when but the truth is the state was and almost always has been imperialistic. I cannot believe i every was a conservative that wanted to conserve this history.

    • Sounds like you really need to read Nock–check out my review/summary of his fantastic and tiny book, Our Enemy the State. Nock is the first one I’ve read to point out that even the founding of this country was based on propaganda not libertarian ideals! It blew my mind!

  4. Pingback: » “Not Obama” Is Not Enough: Listen to Monica Perez Show slap down the neocon hoax ‘anyone but Obama’

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