No
matter where we find ourselves on the map that describes the landscape of
political philosophy, most of us have at least some libertarian tendencies. We do
not like to be told what to do. Nevertheless, every April we are reminded of
just how much we dislike being told what to do when we get the bill from those
who presume to tell us. The hole where our checking account used to be reminds
us that tax season has come and gone again.
Of
course tax season never really leaves us. It is with us in every purchase we
make, every paycheck we receive and every hard-fought gain that we achieve. We
are surrounded by entities grasping for our wallets and the money that leaves
our hands finds its way from around the corner to around the world as it pays
for the upkeep of unelected money-spenders from the smallest incorporated
hamlet to the largest military bases of “our” international empire.
When I
say “we” in reference to taxes, I am referring to the 59% of us who actually
pay the bill. You read that right, and if you are among that number you have
already done the math which reveals the 41% of us who pay nothing. You may not
be aware that the IRS paid out $105 billion in refundable credits to those 58
million non-payers. Twenty-six million
who paid no taxes received $56 billion in “refunds” through the Earned Income
Credit. Twenty one million non-payers received $27 billion from the Refundable
Child Credit.
“It
makes me want to storm the castle with pitchforks and burning torches,” a
friend quipped recently after filing his income tax. Indeed the tax issue has
become a perennial political football, but it would behoove us to know which
goal posts we really want to run for. The real numbers do not concur with the
political rhetoric and the populist notion that the financially successful must
be punished for not paying their fair share. These numbers are from the Tax
Foundation, which uses the government’s own data to compile statistics.
Warning: Fact can be detrimental to our
favorite paradigms. Here are the numbers…
The
effective tax rate of people making more than $250,000 a year was 23.4% and
those people paid 45.7% of all taxes. The effective tax rate of people making
more than $50,000 was 14.1% and they paid 93.3% of all taxes collected. The effective tax rate of people making less
than $50,000 a year was 3.5%. That is correct. The largest group of taxpayers
had an effective tax rate of 3.5% - and they paid 6.7% of all taxes collected.
Unfortunately
for all of us and particularly for retirees, this is not the worst of it. The
government also conjures a hidden tax which affects the purchasing power of
every American. Inflation has robbed the dollar of about half of its purchasing
power in the last 20 years and we are on course to continue this trend for the
next 20. Every time the Fed adds to the money supply, the value of our money
decreases, but government must fabricate some way to pay its enormous bills.
Our tapeworm economy is saturated
by government from the smallest to the largest components. Every hamlet wants a
city hall stuffed with officials. Every county wants the same. In most cities
in Georgia if you live in a city you get to pay city as well as county taxes. The
states are flush with departments and agencies that must be paid for. The
federal government itself has become one of the largest segments of the economy.
Meanwhile, as government strangles the economy with taxation and regulation,
the ranks of those dependent on the state continue to grow, which in turn inflates
the size of the state again. The result is an increasing tax burden levied upon
a decreasing segment of the population.
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