Friday, September 30, 2011
The Idea of the "Fair Share"
We’re hearing an awful lot about the “wealthy” paying “their fair share” where taxes are concerned. Pres. Obama and his Progressive and liberal Democrat brethren have perfectly coordinated their talking points to affect a campaign of undefined and reckless class warfare against the productive class, doing so for the sole purpose of political gain. Expectedly, Mr. Obama presents a Janus face: denying out of one mouth that he is utilizing class warfare; demonizing the producers out of the other.
In announcing his new, but all too familiar, deficit reduction plan on September 19th, Mr. Obama said:
“This is not class warfare, it is math...All I'm saying is that those who have done well, including me, should pay their fair share in taxes...We can't just cut our way out of this hole... It is only right we ask everyone to pay their fair share...We can't afford these special lower rates for the wealthy. We can't afford them when we are running these big deficits... Middle class taxpayers shouldn't pay higher taxes than millionaires and billionaires. That's pretty straightforward. It's hard to argue against that...” Of course, an honest man would admit that the federal government is spending way, way, way beyond its means. An honest man would admit that the federal government has gone far, far, far beyond its constitutional mandate in providing special interest programs that would be better suited for private sector benevolence organizations. An honest man would acknowledge the fact – the fact – that the federal government, now hijacked by the political correctness of Progressivism, has ventured into social engineering via its “social justice” campaign and departed, to a great degree, from the vision of federal government established by our Founders and Framers.
But, that would be an honest man and honest men. We, here today, are dealing with opportunistic politicians, whose primary goals are to retain power (and by any means possible) and to “fundamentally transform the United States of America.”
Which brings me back the points I want to address: What is anyone’s “fair share” of taxes when our tax code is not only a progressive tax code (oh, the irony), but rife with special interest exemptions, limitations and write-offs? Who decides what constitutes someone’s “fair share”? And for that matter, who defines who is “wealthy” or “middle class” or “working class” or “poor”?
In reality, determining someone’s “fair share” tax burden should be a simple matter. First one determines a percentage at which any American should be taxed. Then that amount should be adjusted for basic necessities and those who exist below an agreed upon poverty line. Then that percentage should be applied to all Americans...period. This is about as fair as it gets. Ten percent of an income is ten percent of an income, regardless of whether that income is $32,000, $150,000, $500,000 or $1,000,000,000. This approach is known as the Flat Tax approach, which would completely replace the tax system as we know it. Undeniably, it treats everyone equally. It is blind to success or failure, race, gender, religion and political affiliation, among other things.
Then there is the notion of scrapping the current tax system and establishing a system based on consumption. As we are a consumption-based society, this seems the most beneficial system where gleaning government funding is concerned. The idea is to eliminate payroll tax deductions and, instead, assess a consumption tax – or national sales tax – on everything that is sold. For argument’s sake, let’s say a 20 percent national sales tax was assessed on everything that we buy, minus a stipend for basic necessities and those below the poverty line. Regardless of what is purchased – or who was purchasing it – 20 percent would go to the federal government. If someone who makes $32,000 a year buys a television, 20 percent goes to Uncle Sam. If a billionaire decides to buy a yacht, 20 percent goes to the feds. Each is taxed an established percentage on his or her purchases. Everyone is treated equitably.
The consumption tax is an attractive alternative to the special interest manipulated progressive tax system in that one doesn’t need to be a US citizen to pay into the system. People who are here illegally – as well as those doing business in the United States, those traveling across America on tourist visas or those here on the infamous student visas, they all pay into the system, thus, we have more people than just the citizenry paying into the system. It brings a twist to the issue of illegal immigration, but that’s another topic.
Here, from an actuarial novice, are two more equitable ways than the special interest friendly progressive tax system to assess taxation in the United States; two ways to more equitably determine a “fair share,” where taxation in the United States is concerned.
But, when one removes the ability for politicians to manipulate the status quo for their political benefactors, especially where finances are concerned; when the system is purged of procedures and loopholes that allow for the legislated manipulation of finances for special interest groups, well, the inside the beltway establishment – on both sides of the aisle – simply cannot have that.
As Andrew C. McCarthy writes in The National Review:
“What I’d like to home in on is the single number the president and his diminishing ranks studiously ignore – the ‘x’ in the equation that never quite gets a value assigned. ‘Fair share’ – what is it?
“Want to make a cable-news Democratic party-strategist squirm? Ask her what she means by the ‘fair share’ that must be paid by the rich. (No point further tarrying over what she means by ‘the rich,’ since we already know they are billionaires and millionaires who jump about in corporate jets while somehow making only $200,000 a year.) In response to the ‘fair share’ question, you will hear how Bush single-handedly destroyed the economy. You will hear about the diabolical Republican plan to desert the elderly, starve the young, and exploit everyone in between. You will hear a vague concession that ‘the rich’ must be allowed to keep some semblance of their wealth – enough, at least, to keep them in the game of ‘paying it forward’ to future generations of government wards. But what you won’t hear is a number.
“This week, I had the pleasure of watching the Fox Business Network’s Stuart Varney expertly press the Obama Left’s glib evaders on the subject. How much is a ‘fair share,’ he doggedly inquired? A quarter? A third? Should the rich have to split their take 50-50 with Leviathan? Or is their success such a blight on social justice that the government (and the Teamsters, and the teachers’ unions, and the basket-case blue states) should get something much closer to all of it?
“No answer. They cannot answer it.”
When one takes into consideration that an estimated 47 percent of Americans pay no federal income tax at all (they are subject to states taxes, sales taxes etc., a degree of taxation much less than the federal income tax) the issue of determining “fair share” is aggravated to a new level.
According to a 2010 report by the Tax Policy Center, a non-partisan Washington DC research organization:
“About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability.”
And a separate analysis by the consulting firm Deloitte Tax indicates that:
“In recent years, credits for low- and middle-income families have grown so much that a family of four making as much as $50,000 will owe no federal income tax for 2009, as long as there are two children younger than 17.”
Then there is the matter of the wealthy and super wealthy paying a graduated amount of taxes, both in personal income tax, as small business and corporation owners and in capital gains taxes.
Via a 2010 report by the Associated Press:
“It is a system in which the top 10 percent of earners – households making an average of $366,400 in 2006 – paid about 73 percent of the income taxes collected by the federal government.
“The bottom 40 percent, on average, makes a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.
“‘We have 50 percent of people who are getting something for nothing,’ said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.”
Yet, with all of these points taken into consideration, we have a president and the leaders of the Progressive faction of the Democrat Party insisting that “we can't just cut our way out of this hole” and that “it is only right we ask everyone to pay their fair share”; we have Progressive elitists at the reins of power who are seeking to divide the electorate into so-called “haves” and “have nots,” simply for political gain and to the detriment to the country.
How, with a straight face, can Mr. Obama and his Progressive spendthrifts deny the fact that they are executing a class warfare propaganda campaign against not only the wealthiest among us, but the moderately successful, given their claim that anyone amassing an income in excess of $200,00 annually is “wealthy.” There is a gigantic gulf between a small business owner who makes $200,000 a year and Warren Buffett or Jeffery Immelt.
Atlas is shrugging...and he is disgusted.
It is time to ask, “Who is John Galt?”
FamilySecurityMatters.org Contributing Editor Frank Salvato is the managing editor for The New Media Journal. He serves at the Executive Director of the Basics Project, a non-profit, non-partisan, 501(C)(3) research and education initiative.