Saturday, October 23, 2010

Tax History and Future Taxation

As the 2010 Elections come to a close you are very likely to hear a great deal about taxes.

Some facts to balance the rhetoric…

In 2008, the US Federal Government took from its people about $2,500,000,000,000 in taxes.

Of that tax money:
The top 1% of wage earners paid 38.02% of taxes.
The top 5% of wage earners paid 58.72% of taxes.
The top 10% of wage earners paid 69.94% of taxes.
The top 25% of wage earners paid 86.34% of taxes.
The top 50% of wage earners paid 97.30% of taxes.
The bottom 50% of wage earners paid just 2.7% of taxes.

Now, if you listen to the Liberals, they will make it seem like until you get to the bottom 50%, these are all fat cats that live on cigars, scotch, and caviar.

Here are some other facts from 2008:

The top 1% that paid 38% of the taxes earned over $380,354 a year
The top 5% that paid 59% of the taxes earned over $159,619 a year
The top 10% that paid 70% of taxes earned over $113,799 a year
The top 25% that paid 86% of taxes earned over $67,280
The top 50% that paid 97% of taxes earned over $33,048
The bottom 50% that paid 3% of taxes earned under $33,048

Oh, and about 36% paid no taxes at all in 2008.

How did we get here, particularly considering the Constitution limits (the way the Constitution was written, if a tax could not be apportioned among the states or based on the census information for each state, it was unconstitutional) direct taxation? Simple, the politicians amended it with the 16th Amendment.

As with any amendment, in order to amend the Constitution, a super majority of ¾ of the states (36 of the 48 states at the time of passage of this amendment) would be required to ratify an amendment. Pennsylvania was not one of the states to ratify the 16th Amendment. Pennsylvania’s legislature didn’t even consider it.

Go Pennsylvania!

Anyway, the original proposed tax in 1913 had a sliding scale from 1% to 7% for taxpayers that made in excess of $500,000. As it originally stood, less than 1% of all wage earners paid income taxes.

With the passage of the 1916 Revenue Act just three years later, it was more than doubled with a sliding scale from 2% to 15% making the threshold for the 15% bracket a person having $1,500,000 in income to qualify. The 1916 Revenue Act also brought in an estate tax and “excess” business profits tax.

As a side note, isn’t it reassuring to know that the Federal Government has the discretion to decide how much profit you can make before it is “excess” profit?

In 1917, a taxpayer earning $40,000 in income faced a 16% tax rate and an individual with $1,500,000 in income faced a 67% tax rate.

In 1918 yet another expansion of taxes was passed moving the bottom rate to 6% and the top rate to 77%.

In five short years, the top rate went from 7% to 77%.

Does that inspire trust in you?

Didn’t think so.

If nothing else, it is a perfect example of the lunacy of United States tax policy and the inability of the few to manage effectively what they take from the many. 7% to 77% in five years and now they directly take from you over $2.5 trillion dollars a year…well, from 64% of you anyway.

Our situation is worse today as demonstrated above and looks to get worse in the future as demonstrated below with the expiration of the Bush tax cuts.

The expiration of the Bush tax cuts translates into a very large tax increase in the very near future…next year to be exact. Because of the failure of this Democrat-controlled government to renew the 2001 and 2003 tax cuts, taxes will be raised on virtually all Americans.

Based on the tax tables freely available on the IRS website for form 1040s, if we return to the 2000 levels:

A single person, making $50,000 a year will see a $1,350 tax increase.
A married couple, making $50,000 a year filing jointly will see a $1,512 tax increase.
A single person, making $75,000 a year will see a $2,303 tax increase.
A married couple, making $75,000 a year filing jointly will see a $3,074 tax increase.
A single person, making $100,000 a year will see a $3,053 tax increase.
A married couple, making $100,000 a year filing jointly will see a $3,824 tax increase.

So, when a politician says they are against the “Bush Tax Cuts” understand that what they are saying is that they are in favor of raising most of your taxes by hundreds or thousands of dollars a year – even if you are a family making $25,000 a year (taxes will rise by $715 annually.) They are using the boogey man of Bush to invoke your distaste for the name and hoping that it will spread to contaminate the policy.

Many of you against the Bush tax cuts are objecting to it because you now have developed an acute sensitivity to the debt and deficit.

Curiously, this has occurred while simultaneously supporting President Obama as he raised it by $1.4 trillion last year and $1.29 trillion this year.

We are certainly glad that you are now concerned with these items but suggest to you that instead of raising taxes on all of us, how about you step up in support of the wasteful, tax and spend politicians that you vote for and pay for it yourself?

You support the government control of our healthcare. You actually believe that it can somehow cost less to give healthcare to 30,000,000 Americans that don’t already have it. Worse, you believe that the inept, inefficient, bureaucratic nightmare known as the Federal Government can someone manage delivering babies when they cannot even manage delivering the mail.

You support the taxpayer funded bailouts for private companies and looked the other way while they paid us back with our own money.

You support the $787 billion taxpayer funded epic failure that goes by the aliases “stimulus” and “crap sandwich” with its $160,000 per job price tag.

And now you worry about the deficit? Good!

The Bureau of Public Debt’s website states that if you would like to pay more to the government to reduce the debt, you can do so. They are even nice enough to tell you how to make out the check and where to send it to. You can find it by clicking here and going to the bottom of the page.

May we suggest that you harness your newfound sensitivity to our economic future and start paying for the policies of your favorite politicians yourself and leave the rest of us alone – we are taxed enough already!

The Extremists are Coming!

Sad Lack of Tolerance

Mr. Duane Hammet is a union stagehand. His son currently serves this country in the Navy on the USS George H. W. Bush. Mr. Hammet wore a shirt and hat sporting the name of his son’s ship, proud of his son and his service to his country.

For this, he was fired.

That’s right, in these times of economic uncertainty, this man was fired for wearing clothing acknowledging a U.S. naval vessel in service.

Fired, no less, by his union.

After this intolerance was exposed, apologies were offered to the Dad by his union which fired him.

Another shining example of the outright hate and intolerance of the left for any divergence of thought or ideas. You can’t even wear a shirt or hat with the word “Bush” on it without the left taking your job.

Monday, October 18, 2010

Liberal Lilliputians

The Obama administration has been striking out at conservative ideological groups and their involvement in the 2010 elections throughout this entire campaign season.

Their biggest target to date was the Tea Party movement. Certainly, you have read or heard the liberal lilliputians who can’t help but throw the word “teabagger” into every other sentence that comes out of their mouths or nearly every post they make to their blogs.

Now, as the election comes to a close and prospects look bleak for the liberal lilliputians, they have found a new target…the Chamber of Commerce.

They rant and rave about the Supreme Court’s recent ruling in the Citizens United case which, at its core, ruled that non-profit and for profit corporations as well as labor unions could use their money in communication for electioneering. So, groups like the Chamber of Commerce, SEIU, AFL-CIO, PSEAA, Teamsters, etc. could all use their money to electioneer if that is what they choose to do.

Getting back to the liberal’s desire to censor the Chamber of Commerce – the allegation is that foreign funds are being funneled into these groups to help Republicans. The foreign money comes because these groups operate outside of the US and collect dues so that money is poisoning the process. Worse, they argue, there is no disclosure of the donors to these groups which must be nefarious, right?

Absent from the dialogue is the admission that labor groups operate under these very same rules. Labor unions do not disclose their donors. Labor unions dump truckloads of cash into races to elicit a desired result. Labor unions operate outside of the United States.

Anyone read an attack on any of the labor groups using foreign money to influence an election? How about use money from foreign countries or foreign nationals? How about failing to disclose their donors? Calls for the union-endorsed to reject those endorsements?


Here is the deal with the Chamber of Commerce. The Chamber of Commerce has a $200 million budget. They accept somewhere around $100,000 a year from affiliates in other countries. That money is segregated and further, not used in any election efforts.

At the heart of the matter is free speech. Every group is a special interest group. Whether it be a labor union, think tank, or issue advocacy group. There is nothing and there should be nothing standing in the way of American citizens joining together to speak with one voice.

And, if you are going to be critical of this type of advocacy, by all means be consistent. Don’t cherry pick which groups should have rights under the Constitution and which ones shouldn’t. Especially when the only delineation between one group's speech and another group's speech is based on what they are saying.

In America, there should be no room for censorship.


Least of all censorship born of disagreement with the subject matter.

For more on this, read Marc Thiessen’s recent op-ed in WaPo.