Uncomfortable Truths for the Budget Debate

Who Pays Income Taxes and how much?

Tax Year 2008

Level of Wage Earners   Income     % of Collected Income Taxes

Top1%                               $380,354                         38.02
Top 5%                              $159,619                         58.72
Top 10%                            $113,799                         69.94
Top 25%                            $ 67,280                          86.34
Top 50%                            $ 33,048                          97.30
Bottom 50% below          $ 33,048                              2.7
Source: Internal Revenue Service

As the debate over the debt ceiling and budget drones on, here are some truths you should be aware of.

1) In the mid 1960’s, Lyndon Johnson declared “war on poverty” and instituted his progressive Great Society program. At the time he instituted these policies, the number of Americans living in poverty was 14%. Most of those programs are still in place, plus numerous others. Collectively the country has spent untold trillions of dollars in instituting those programs. 45 years later, the number of Americans living in poverty is 14.3%. The number of poor has actually gone up. And you want to know why we are broke!!!

2) 50% of working Americans pay NO federal income tax, and the number is rising. The top 10% of wage earners pay 70% of all income tax collected by the government. The top 1% pays 38% of all taxes collected by the government. So excuse me when I hear Barack Obama talk about “shared sacrifice” that I don’t cry too much. It appears that the lower 50% of wage earners make out like bandits paying nothing. The system can’t go on like this. Everybody should pay something or the system will collapse under its own weight as the ever increasing number of workers who pay nothing demand government services paid for by a shrinking portion of the population.

3) I attended a Senate Bill 5 debate with Representative Bob Hagan speaking on behalf of those who oppose SB 5 and Republican Chairman Mark Munroe speaking for those in support of the measure. What was interesting was the audience. There were several university professors in attendance, plus some teachers, plus some other public employees…all of whom make pretty good livings from the public treasury. The university people I found particularly interesting because I know for a fact several of them in attendance make upwards of close to $100,000.00/year plus benefits with very little employee contribution, if any. Hagan claimed he represented the poor and downtrodden and elderly, and that I didn’t live in his district so he didn’t have to respond to my questions. What he failed to tell the folks is that every time a public employee gets a raise, the poor and the elderly pay the bill either through increased property taxes, increased sales taxes, and/or increased local income taxes. Public employees making in excess of $65,000.00 getting pay raises and benefits to the point that taxes have to be increased helps the poor and the downtrodden how?

4) Also in attendance at the SB 5 meeting were several small businessmen from the downtown area. They asked how Governor Kasich can say he is for creating jobs when he is eliminating government jobs downtown. What is disturbing is that these folks just assume that jobs are created by the government. They don’t realize that it is the private sector that actually creates jobs to pay for the government jobs…not the other way around. Where did these folks learn the wrong assumptions? The fact they even think that way is scary. I admire their courage and risk taking, but you can’t rely on government as a source of wealth because sooner or later, it will run out of other’s people money….as is happening in the United States right now.

5) The press is making much about a report showing the disparity of wealth between whites and minorities is at an all time high. But the press is not reporting two important back stories: 1)the country is still primarily white, and the white population is aging. Seniors, contrary to conventional wisdom, constitute the wealthiest segment of American society because of accumulated income and their houses being paid for. 2) The exact opposite applies to minorities, especially Hispanics, who are younger than the general population, and more likely would have suffered from the financial debacle of 2008. It is NOT because of an increasing disparity of incomes.

Bobby Jindal, Governor of Louisiana, said the other night that when government creates a job, it takes money from the country. When private business creates a job, it gives money to the country. True words. We should take some lessons.