WHO PAYS THE TAXES? – Following up from my previous post today about the outrage and gnashing of teeth on the American left about the just passed tax cuts. People talk about the top 1 per cent – or 5 or 10 or 20 per cent – owning X per cent of wealth in the country. This is irrelevant to the conversation about tax cuts. The tax cuts in question are income tax cuts, which relate to income tax, which relates to income, not wealth. If you want to reduce inequality by taxing assets, i.e. confiscating wealth, by all means, put such a new tax forward, but in the meantime don’t confuse the issues.
The latest data suggests that top 20 per cent of earners already pay 95 per cent of all income tax.
That’s while they* earn 50 per cent on income.
You might not like the way income is distributed in America, but it’s difficult to sensibly argue that the progressive income tax system somehow penalises the poor or rewards the rich, unless you want to expressly argue that the top 20 per cent of income earners should be paying even more than 95 per cent of all income tax – like 100 per cent? – while the other 80 per cent should pay no tax at all.
*not an exact comparison, since it contrasts individual payers with households.