Only The Rich Pay Taxes Update - Road to the Middle Class

Stephen Moore, boss of the Club for Growth, writes that he talked to his pal at the Treasury, and the latest results are about to come out. The new numbers will hit a major milestone.

The 2006 numbers will show, for the first time, that the top one percent of federal income tax filers will be paying over 40 percent of federal income tax. The bottom 50 percent pay three percent. In other words, the rich pay the overwhelming share of the income tax.

In 2005, the rich earned 21.20 percent of the income and paid 39.38 percent of the income tax. The bottom 50 percent paid just under four percent of the income tax burden.

As the graph below shows, the share of tax paid by the rich has been going up for the last decade.

Income Tax Share

The other two lines on the chart show the top income tax rate—which has been going up in Democratic administrations and down in Republican administrations—and the top capital gains rate. If the amount of tax paid by the rich responds to changes in the top marginal tax rate then it is almost certainly responding to the cap. gains rate, which is a tax on profits.

Moore says that two-thirds of the returns of the top one percent are from small businessmen and women.

Many liberals, of course, are outraged that the rich have been getting so much richer. But in a capitalist system like today’s, where startling changes and inventions are changing the market place you will see startling profits, just like the late nineteenth century when Rockefeller amd Carnegie made fabulous fortunes by lowering oil prices by 90 percent and steel prices by two-thirds.

And with the low tax rates on realizing capital gains, the rich are willing to expose their profits to the taxman.

Sen. Barack Obama, of course, wants to change all that. And change, have no doubt, is what he will get.

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Christopher Chantrill blogs at www.roadtothemiddleclass.com. His Road to the Middle Class is forthcoming.

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Faith & Purpose

“When we began first to preach these things, the people appeared as awakened from the sleep of ages—they seemed to see for the first time that they were responsible beings...”
Finke, Stark, The Churching of America, 1776-1990

Mutual Aid

In 1911... at least nine million of the 12 million covered by national insurance were already members of voluntary sick pay schemes. A similar proportion were also eligible for medical care.
Green, Reinventing Civil Society

Education

“We have met with families in which for weeks together, not an article of sustenance but potatoes had been used; yet for every child the hard-earned sum was provided to send them to school.”
E. G. West, Education and the State

Living Under Law

Law being too tenuous to rely upon in [Ulster and the Scottish borderlands], people developed patterns of settling differences by personal fighting and family feuds.
Thomas Sowell, Conquests and Cultures

German Philosophy

The primary thing to keep in mind about German and Russian thought since 1800 is that it takes for granted that the Cartesian, Lockean or Humean scientific and philosophical conception of man and nature... has been shown by indisputable evidence to be inadequate.
F.S.C. Northrop, The Meeting of East and West

Knowledge

Inquiry does not start unless there is a problem... It is the problem and its characteristics revealed by analysis which guides one first to the relevant facts and then, once the relevant facts are known, to the relevant hypotheses.
F.S.C. Northrop, The Logic of the Sciences and the Humanities

Chappies

“But I saw a man yesterday who knows a fellow who had it from a chappie that said that Urquhart had been dipping himself a bit recklessly off the deep end.” —Freddy Arbuthnot
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I mean three systems in one: a predominantly market economy; a polity respectful of the rights of the individual to life, liberty, and the pursuit of happiness; and a system of cultural institutions moved by ideals of liberty and justice for all. In short, three dynamic and converging systems functioning as one: a democratic polity, an economy based on markets and incentives, and a moral-cultural system which is plural and, in the largest sense, liberal.
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The incentive that impels a man to act is always some uneasiness... But to make a man act [he must have] the expectation that purposeful behavior has the power to remove or at least to alleviate the felt uneasiness.
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The recognition and integration of extralegal property rights [in the Homestead Act] was a key element in the United States becoming the most important market economy and producer of capital in the world.
Hernando de Soto, The Mystery of Capital

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