The Taxation Myth

The 2011 list of billionaires is out. What do you need to know? Bill Gates is worth $56 billion. Warren Buffett is worth $50 billion. Larry Ellison (Oracle) is worth $39.5 billion. Christy Walton (Wal-Mart) is worth $26.5 billion. Sheldon Adelson (Sands Casino) is worth $23.3 billion. Charles Koch (Koch Brothers) is worth $22 billion. His brother David is worth the same.

Not all of these guys are bad people. They are making astronomical amounts of money though. ALL of their fortunes grew this past year. To put it in better perspective, it would take 440,000 people making $50,000 a year to equal either Charles or David Koch's fortune. It would take 1,120,000 people making $50,000 to equal Bill Gates. Remember, there's a few billionaires in this country, but only 310,000,000 people total (at least I think, we'll see with the census). Basically, you have nothing in common with these people economically, nothing at all.

This is what makes the right-wing story that 35% of all income in this nation is government "handouts." Aside from the fact that the story is proven wrong, and the number is at most 10%, the way the right-wing is trying to use it is alarming. They are now using it to illustrate a stupid, and frankly useless, point.

Today, more than 97% of federal income tax receipts are paid by the top 50% of income earners.

The bottom 50%? They pay less than 3% of the taxes, making it a truly privileged class because many of its members get to live at the expense of others.

Those in the bottom 50% make only 13% of the nation's wealth, so they can hardly afford to pay a higher share, not to mention that the nation's top 400 earners make as much as the bottom 50% (or 150,000,000 people). They also are ignoring the simple fact: of course they are paying more raw dollars, they have more.

Let's consider it for a moment. For the most part, these folks pay under the 15% "capitol gains" rate, while average Americans are paying in the 20%'s. They have lobbyists and donate massive amounts of money to get legislation that allows them to shield much of their money from taxation. So let's use someone making $1 billion this year, mostly under the capitol gains rate. They figure out how to exempt $200 million from taxation, meaning they are only being taxed on $800,000,000. If that is taxed at 15%, they are paying $120,000,000 in taxes. A person being taxed at 25%, making $100,000 a year, an "upper middle-class" person, is paying in $25,000. It would take 4,800 people at this rate to pay the same as the one person making $1,000,000,000.

When you consider this, and the fact that we now have 8.4 million families who are worth $1 million, it's easy to see how the wealthy pay more in raw dollars by such a high amount. Yeah sure, they pay a lot more than all of us do, in raw dollars, but they get to exempt hundreds of millions of dollars from taxation, they basically pay a lower rate than the rest of us, and they get to pass their wealth on to their "heir," who basically never has to earn anything, with very little taxation. Is this fair? Is it good for the economy? When considering questions of taxation, one must ask themselves what harm is done by these people paying the rates they did in the 1990's? Is the deficit being caused by us receiving Medicare, Medicaid, and Social Security, or is it caused by their corporate welfare, tax cuts, and tax havens? Sure, in reality, the answers are complicated, and not in black and white. At the same time, just because these people "pay more," does not mean they are being a fair partner.