Wednesday, January 4, 2012
A One-Hit Wonder
By Ralph R. Reiland on 1.3.12 @ 6:07AM
Obama's tax-the-rich tune has gotten old real fast.
"The Macarena" was ranked "The #1 Greatest One-Hit Wonder of All Time" by VH1. The Spanish dance song by Los del Rio became a big international hit in 1995 and 1996. And then it was old.
After 100 listens, Los del Rio needed something new. It didn't come and they were gone.
I wonder if the same thing is going to happen after hearing President Obama say 100 times that "the rich" aren't paying enough taxes and that everyone else is being economically exploited.
The line appeared to sound good to a lot of people the first few times. But will it still play after it's the persistent focus of Obama's stump speeches for nearly another year?
In any case, if we're going to be talking about who's earning what and who isn't paying enough until November's presidential election, it seems like a good idea to see how income and the tax burden are actually distributed.
The latest official numbers we have are from Internal Revenue Service reports for calendar year 2009.
The IRS reports show that the top 1 percent of income earners, those making $343,947 and over, earned 16.9 percent of the nation's adjusted gross income and paid 36.7 percent of all federal individual income taxes.
Mr. Obama doesn't mention it in his speeches, but the Internal Revenue Service's 2009 tax data show that the top 5 percent of the nation's income earners paid a far larger share of total federal individual income taxes than the bottom 95 percent of earners.
The top 5 percent, making $154,643 and over, earned 31.7 percent of the nation's total adjusted gross income and paid 58.7 percent of all federal individual income taxes while the bottom 95 percent of income earners received 68.3 percent of total income and paid 41.3 percent of all federal individual income taxes.
The bottom 50 percent of income recipients earned 13.5 percent of the nation's total adjusted gross income in 2009 and paid 2.3 percent of total federal income taxes collected.
President Obama also doesn't mention what the allegedly "unfair" super-top earners pay. The same IRS data show the top 0.1 percent of income earners (the top 10 percent of the top 1 percent of earners) earned 7.8 percent of the nation's total adjusted gross income and paid 17.1 percent of the nation's total federal individual income taxes.
"The average income for a tax return in the top 0.1 percent was $4.4 million in 2009, while the average amount of income taxes paid was $1.07 million, indicating an average effective individual income tax rate of 24.3 percent," reports the Tax Foundation. Furthermore, "this very top income group has a lower average effective income tax rate than the rest of the top 1 percent of returns because these extremely high-income returns are more likely to have income from capital gains and dividends" -- income that "has already been taxed once by the corporate income tax." In other words, the aforementioned 24.3 percent tax rate considerably understates the actual income tax rate paid by the top 0.1 percent of income earners.
In a sidewalk discussion on income and taxes with "Joe the Plumber" during the 2008 presidential campaign, candidate Obama said, "I think when you spread the wealth around, it's good for everybody."
Clearly, we already do spread it around -- lots of it. A debate on where to draw the line should be a rational discussion, considering incentives, efficiency, American competitiveness and impacts on economic growth, so that what results is "good for everybody."
To read another article by Ralph R. Reiland, click here.
Posted by Brett at 10:20 AM