Gil’s Musings

Taxes: Whose Money Is It Really?

Amidst all the debate about taxes, a certain amount of confusion abounds based on perceptions of ownership. One worldview holds that we are all in this together, and certain”lucky” individuals happen to control much of our “collective” money and they should be willing to share. Another worldview is that what I may have earned is mine, and you keep your grubby fingers off. Some people spend a little time on both sides of that view, and often change positions based on how the topic at hand impacts them directly. This can lead to “What’s mine is mine, and what’s yours is mine.” It can be manic and conflicted, sort of like one of my former female supervisors who would make a big deal of the African animal heads on my wall and what a shame it was that I had shot them. Those words coming from her as she stands before me in her mink coat. She justified the difference because her minks were raised specifically to die for her coat, while my animals were wild and not intended for such a fate. She also smokes and runs marathons. Everything is a matter of perspective, I guess.

So we all seem to have opinions about right and wrong based on what it (whatever “it” is) means to us. There is an old story about the college senior deriding her father about his unwillingness to “share the wealth” with other citizens. He asked if she would be willing to give up her 4.0 GPA average and take a 3.0 so her partying co-eds could get their 1.0 to a 2.0 and pass. She nearly fainted at the thought of all the hard work and sacrifice she had made to get that 4.0. He said “me too”.

So the current debate about “the rich not doing their fair share” also deserves a little perspective. Conflicted debate about taxes is at a fever pitch when people argue for tax refunds equal to the rich, when the low wage earner never paid any taxes to begin with. That takes entitlement to a whole new level.

Let’s go over the math of taxation and you can jump to your own conclusions about fairness and who pays what. IRS data is available up to 2008, so let’s use their numbers for that tax year.

The top 1% of wage earners earn 20% of all income. They pay 38% of the IRS’ total receipts. Despite how “obscene” their incomes are, they paid taxes at essentially twice that rate (1.9 to 1).

The top 10% of wage earners earn 46% of all income. Yet, they pay 70% of all taxes. Said another way, you walk into a restaurant that holds 100 people, and where your income is 4.6 times that of the average patron. Yet, when you leave, you and nine other patrons will each pay for your meal and that of six others who did not arrive with you.

Let’s move to the 50% mark. Those in the top half of the income spectrum earn 87% of all income, yet pay 97.3% of all taxes. That means 50% of all wage earners pay just 2.7% of all IRS receipts.

You had better hope they don’t all want to go out to dinner.

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