Greenfaucet.com - Global Market Commentaries

By Chip Hanlon, greenfaucet.com

"Looked at another way, the top 1% paid about the same as the bottom 95%."

Most of us have seen these sorts of breakdowns on who really carries the nation's income tax burden, but a recent summary of these statistics from Vince Farrell is worth seeing them again:

We really can't complain. Candidate Obama said he was going to raise taxes on the rich, and that is what he is doing. If you make more than $250,000 a year, mortgage interest deductions and charitable contribution deductions will be limited. Tax rates are going up. You can bet the law of unintended consequences will go to work big-time on this one. I have read that some 70% of incomes at that level are attributable to small-business owners. The image is of fat Wall Street cats rolling in ill-gotten gains, and the reality is a bit different. Dis-incentivizing the core of America's entrepreneurial class is fraught with danger.

Incomes at $200k and above (the data is not broken out at a $250k level) number about 3.8 million returns. In 2006, that group paid $522 billion in taxes, or 62% of all personal taxes paid. The top 1% of incomes, $388k and above, paid $408 billion, or 39.9% of all personal taxes. This group earned 22% of all income. Looked at another way, the top 1% paid about the same as the bottom 95%. The goal is to raise through various measures some $630 billion in new revenue. The numbers do not work. The top 25% of taxpayers, incomes above $62,000 a year, now pay 86% of the tax bill. The trend is for the very few to be paying the freight for the majority, and that is fraught with danger on several levels.

Those lousy 1%-ers... at 40% of all taxes paid, they're just not paying their fair share!

"Fraught with danger," Farrell rightly emphasizes twice. Indeed. Yet, ironically, it is those who expect to benefit most from the Obama economic plan--the 95%-- who stand to get hit the hardest. After all, how do you expect to eat if the 1% can no longer afford to pick up the tab?