This is Part IV of our intermittent series: Taxation in America
. The first three parts are on our website: www.mllg.us.
The final part likely will be in January once the outcome of tax legislation is known. This post reveals who pays how much in federal income tax. Also, I propose a new intrepid minimum and maximum tax plan.
IRS data show Americans in the top 1% of income pay 40% of all federal income tax; the top 10% pay over 70%. Converting those data to living, breathing humans means that only 1.7 million people (one-half of one percent) pay that 70%. The bottom 45% of households pay no federal income tax whatsoever, while the bottom 60% pay about 1% (net of credits) of all income taxes. Note: people and income cohorts are not aligned, i.e. the top 10% of income is not derived from the top 10% of taxpayers.
US corporate tax rates (including states) are 40% – the highest in the developed world. Politicians fool people into believing they will impose taxes on business or property – but not on real people. Economist Walter Williams uses a good example. You are a homeowner and the government imposes a property tax but tells you it is not a tax on you but on your property. You see right through that fraud. But when liberals say they are taxing corporations (and not you) you are suckered in. Corporate and business taxes are passed along to you in the form of higher prices just as property taxes are passed on to the homeowner. Only living, breathing people pay taxes!
MLLG Boldly Proposes New Minimum and Maximum Taxes
Something is dreadfully wrong when in the richest nation on earth, 60% of its citizens pay virtually no income tax and hence have no skin in the game. They form a brawny advocacy group favoring government spending (since it costs them nothing) and opposing tax cuts because they threaten their government benefits and they will not benefit directly from lower taxes. This is something we must fix.
MLLG’s minimum tax plan would continue to exempt the bottom quintile (20%) of Americans from income tax. The second lowest quintile would pay a de minimus tax rate of 6% subject to a minimum tax of $1,200 per year. The middle income quintile (half of which by definition earn above average income) would pay a 12% rate subject to a minimum tax of $2,400. This minimum tax plan would give 80% of Americans a vested interest in reducing spending and taxes along with the, not inconsequential, quiet dignity of being a taxpayer and contributing to the common weal.
When surveyed, large majorities of Americans consistently respond that no one should pay more than 33% of income in taxes. The MLLG maximum tax plan would cap all taxes at 40% – including federal, state and local income taxes, payroll taxes, property taxes (principal residence only), sales taxes and certain other taxes The maximum tax would be computed on a new one-page form filed along with your income tax. If taxpayers paid more than 40%, they would get a credit or refund from the IRS – which could recover pro-rata from the other taxing jurisdictions.
MLLG’s minimum/maximum tax plan would make America a much fairer place while preserving a high degree of progressivity. When you hear that the rich do not pay their fair share, recall that one-half of one percent of Americans pay over 70%
Inscribed directly above the entrance to the IRS Building in Washington is: “Taxes are what we pay for a civilized society“. Stop and think about that one for a while. They got it dead wrong. Taxes are the price we pay for an uncivilized society!
In our next post November 12, we take on Neo-Nazis and Antifa.