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Saturday, June 03, 2006

Taxing the Wealthy

When a lie is repeated over and over it becomes mistaken for the truth. This is called propaganda. The mantra that tax cuts only benefit the wealthiest 1% and that there have been massive cuts in social programs as a result of the wealthy skipping out on taxes is widespread, especially by the left. Part of the reason for the spread of these lies and misconceptions is due to the complex nature of economics, biased blathering by uneducated reporters and mostly by purposeful distortions of policy by those who benefit from the lies.

Caution: this is a link heavy article as I want to document myself. If you don't like economics or statistics, don't click the links.

First of all, income tax is not a tax on the "wealthy". It is a tax on income. Period. Wealth is taxed when you die. Politicians self-servingly promote the idea that the top 1 percent are dilettante millionaires living off of the backs of the rest of the population. The facts are something different. Of the one half of the 1 percent who are in the top tax bracket, more than two thirds are small business owners. Of all businesses in the US approximately 98% are classified as small businesses that employ less than 100 people, yet they also generate over 36% of jobs. Taxing the small business community to death would harm and halt the economic growth we have seen since the tax cuts were enacted May 28, 2003 when ALL income classes had their tax brackets lowered.

Does this mean that the people who earn more income paid less dollars in income taxes when the rates were reduceded? Yes. But here is the rub. The class warfare warriors focus on dollars of tax relief received instead of the percentage of taxes to income paid. These figures from the Cato Institute give us a real picture of where the tax revenue is coming from. The top one percent make about 17 percent of the money in this economy, but they pay 33 percent of the income taxes. How is that fair? The top five percent make 33 percent of the income, but pay 52 percent of the taxes. The bottom 50 percent pay only five percent of the income taxes In contrast, households earning less than $75,000 received about 70 percent of the benefits from increasing the child credit and 64.4 percent of the benefit from creating the 10 percent bracket on the first $14,000 of taxable income, the Tax Policy Center says. In addition, it says 55.2 percent of the benefit from ending the so-called marriage penalty was received by families earning less than $100,000.

How is our economy doing since the tax cuts? To hear the Democrats in Congress and the leftist moonbats on blogs the US is perpetually about to go into a recession.

Unemployment is at a low of 5% and lets face it 5% of the population is just not employable and will never hold a job.

The gross domestic product growth rate took off immediately after the tax cuts hitting a 20 year high of 7.2% in October 2003 and has continued to grow at a respectable 3 to 4 % average surge in tax revenue since the tax cuts.

The reason we don't see this information published in the MSM is that the MSM is composed of or controlled by left leaning Democrats with agendas. They want to perpetuate and prolong class warfare to regain power and further their Socialistic aims. By repeating propaganda over and over to create unrest and division within the population the politicians hope to gain power. This is a similar technique used by the National Socialist Party in Germany as applied to the Jewish population. Fortunately for us and unfortunately for our current politicians, there is a fatal flaw in their propaganda. Most people aspire to become wealthy and earn high incomes. It is hard to create a complete societal rift and create envy, when people want to become the envied.

But let's look at the real tax on the Wealthy.....the Estate Tax. Here is one description by proponents of the tax.
"The estate tax is the most progressive tax in place in the United States tax code. It is the federal government's only tax on accumulated wealth. It helps reduce concentrations of wealth and power." Redistribution of wealth, isn't that a central tennent of Communism?

More about the Estate Tax in a later post. But consider this, if you or your family have worked hard to create a business, have been smart in your investments, or have just been lucky in owning land in an area that has had huge property appreciation through no effort of your own, why should you be punished and have over 50% of your efforts confiscated by the government and redistributed to others?

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