April 15, Tax Day is almost upon us. Republicans will no doubt use these weeks before and after to push a new tax cut. Skewed towards the wealthy of course. All the while DOGE, with both administration and GOP Congress Critters is making noises along the lines of cuts to Social Security, Medicaid and Medicare to pay for their new tax boondoggle. Meanwhile Democrats will push having rich people pay more, instead of less in taxes. The term “their fair share” will come up as it has in the past. That begs the question of just what is “fair” hence all the political fights. It’s easy to overlook some basic data that everyone should know and understand. If you want to form the right opinion and/or take the right action you should be armed with cold, hard facts. Just as the greatest athletes go back periodically and brush up on fundamentals, so should we all on stuff like who pays what in taxes and how wealth is distributed in the U.S.
What prompted me to write was this Wall Street Journal piece that dove into American’s understanding of taxes. It’s a decent read and at times tries to offer some balance. The author credits the public for knowing more than he thought reading the results of the survey he cited, but is also pointed in noting the public doesn’t get it right on how much the top 1% pay in taxes. He also notes the complexities of our system and laments not being able to find recent studies that take into account more than income taxes. Boo hoo I say because he’s using it as an excuse to minimize the subject of rich people and investment income! Since that’s where the bulk of the top ten percent’s money comes from (investments/capital gains) I’d say that’s a rather significant thing to mention only in passing. This is however the WSJ so putting on some spin that paints the very rich in a more favorable light is par for the course.
The author as I’ve noted gives the public credit for knowing things like the top tax rate, but takes us to task for not knowing how much of the income taxes the government collects come from the richest people. He makes a big deal about the top 1% paying 42% of income taxes. Although he doesn’t outright say it in so many words he tells us they pay more than their ‘fair share.’ Well, it’s not that simple. Not by a long shot. As noted the top tax rate on the rich is thirty seven percent but again that’s only for income taxes. For payroll taxes like FICA (social security) for example once a certain point (into six figures) is reached they are done paying those payroll taxes. That’s quite the tax break. Then there’s the capital gains tax on investment income which I pointed out earlier is where these people get most of their money. There’s a nifty table on NerdWallet that explains the levels/rates of capital gains taxes but what you need to know is that for single people it tops out at 20% once you hit $533k in investment income. The threshold for married people filing jointly is $600k ($300k if married filing separately) and $566k if filing as the head of a household. Again, most multi-millionaire accrue more wealth via investments rather than “paycheck” income as most of us do. The richer someone is, especially once they’re worth hundreds of millions or even billionaires they only pay 20% of taxes on their income from investments. Which is almost always hugely more than they get in salary assuming they work at all.
So there’s all that but there’s more the author of the WSJ didn’t talk about. I’m referring to wealth distribution and that’s where too many Americans don’t pay nearly enough attention. When I was growing up (I’m a senior citizen now) the U.S. had the largest middle class the world has ever known AND that middle class had a much larger share of our national wealth than has been the case since Reaganomics took hold. Reagan presided over a major tax overhaul that began a steady transfer of wealth from the middle class (and poor) to the rich. Subsequent “Supply Side” tax cuts put that on steroids and we now have wealth inequality as large as at any time in our history.
So, when we talk about taxes and groups (like the super rich) paying their fair share it’s worth looking at how much of the nation’s wealth various groups on the income/wealth strata pay in taxes. I wanted to embed a pie chart from this article by statista but you’ll have to go to the link to see it for yourself. Ten percent of Americans control TWO-THIRDS of U.S. wealth! Yikes. More specifically the breakdown in that top ten percent is the 90-99 percenters hold 36.5% of the wealth, those in the 99-99.9% category hold 16.7% and that top .1 percent (the Musk, Bezos and Zuckerberg types) hold 13.5% – an eye popping (at least to me) amount of U.S. wealth. Simple arithmetic tells us that adds up to the top ten percent holding 66.7, literally TWO-THIRDS of the money.
But they don’t kick in two-thirds of the taxes collected! Somehow the WSJ guy ‘overlooked’ that fact. Overlooked my ass! He pulled the same sleight of hand b.s. we are sure to see plenty of in the weeks and months ahead. My own take on “fair share” is that the taxes collected from the rich should be pretty much the percentage of wealth they control. Yes, the pay a lot, but the line from an old song by Bread, “The more you make, the more they take” is wrong. At a certain point and utilizing the right tactics the rich wind up paying less, at least as a percentage of their wealth than most of us do.
The numbers are there if you know where to look and care to do so. We ALL should make the time periodically to look up the current status but I can say this: for most of us the trend has sucked in recent decades. However for the rich during that same time frame the trend has been quite favorable. Also, the richer someone is the more favorable the system that took hold with Reagan has been. So when someone like Paul Krugman says “soak the rich” I’m not going to argue with him! They sure as hell can pay more, a lot more into the system and it won’t affect their lifestyle one effing bit!
So with friends and family, on social media and in contacts with your elected representatives remind them of the information I’ve provided here. Yes, the richest pay in a high percentage of income taxes but that’s not nearly the whole story. Remind them just how much of the nations wealth the top ten percent hold, and that the amount this group pays in taxes doesn’t come close to two-thirds of the taxes collected by the government. If like me you think it should, that THAT is how we define “fair” or “fair share” then make your voice heard. Over and over.
*****Zoomers, if you can hunt through the sofa cushions for spare change, we could use it. We are in month five of depressed traffic while a depressed nation tunes out. I have every belief that the disenchanted will tune back in and some point and return to the fight but until that happens, the bills keep coming and we need help. Thank you. Ursula*****
That article likely also ignored shell companies in places with little or no income tax, offshore banks,,and other major loopholes. And Social.Security would be solvent through 2070 if they raised the payroll.tax supporting it to income of 400K. I bet if it were raised to a million, it’d be solvent well.into the next century,,without forcing us to work till we’re 80. Fuck Trump. Fuck every last billionaire, but especially Rabid Muskrat. And use a blackthorn stick to do it.