Fleischer: Define “fair share”

posted at 1:38 pm on April 13, 2009 by Ed Morrissey

Barack Obama insisted during the presidential campaign that he would adjust American tax policies so that the rich paid their “fair share.”  He defended himself against charges of redistributionism, claiming that all he wanted to do was to restore balance to the tax code and help lower-end wage earners get a break.  Ari Fleischer looks at the actual data on revenue sources from the Congressional Budget Office and comes to a much different conclusion about Obama’s policies — and the danger of excessive exemptions:

A very small number of taxpayers — the 10% of the country that makes more than $92,400 a year — pay 72.4% of the nation’s income taxes. They’re the tip of the triangle that’s supporting virtually everyone and everything. Their burden keeps getting heavier.

As a result of the 2001 tax cuts enacted by a bipartisan Congress and signed by President George W. Bush, the share of taxes paid by the top 10% increased to 72.8% in 2005 from 67.8% in 2001, according to the latest data from the Congressional Budget Office (CBO).

Contrary to the myth that Mr. Bush cut taxes only for the wealthy, the 2001 tax cut reduced taxes for every income-tax payer in the country. He reduced the bottom tax rate to 10% from 15% and increased the refundable child tax credit to $1,000 from $500 per child, both cuts that President Barack Obama says we should keep. In so doing, millions of lower income taxpayers were removed from the tax rolls, shifting the remaining burden to those at the top, even after their taxes were cut.

According to the CBO, those who made less than $44,300 in 2001 — 60% of the country — paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax. They paid less than 1% of the income tax burden. Their share shrank even when taking into account the payroll tax. In 2001, the bottom 60% paid 16.3% of all taxes; by 2005 their share was down to 14.3%. All the while, this large group of voters made 25.8% of the nation’s income.

When you make almost 26% of the income and you pay only 0.6% of the income tax, that’s a good deal, courtesy of those who do pay income taxes. For the bottom 40%, the redistribution deal is even better. In 2001, these 43 million Americans, who earn less than $30,500, made 13.5% of the nation’s income but paid no income tax. Instead, they received checks from their taxpaying neighbors worth $16.3 billion. By 2005, those checks totaled $33.3 billion.

We noted this problem during the campaign.  The Tax Foundation did an analysis of the effects of the tax policies espoused by both presidential candidates in October.  McCain’s proposal would have exempted almost 40% of Americans from paying federal taxes, while Obama’s made it almost half:

Why is this a problem?  It makes half of the nation dependent on the other half, and not just in “refundables”.  If we’re really talking about “fair shares,” then every citizen would pay some part in funding the government that represents all of us.  Without that, the people who wind up paying federal income tax have a good argument for “no representation without taxation,” as the policies enacted by Congress get funded entirely by the tax-paying class and increasingly for the benefit of the non-taxpaying class.

I suspect that’s by design and not by accident.  After all, how much easier does that make it for politicians to promise all sorts of benefits to voters, who never have to share in the cost?

I have no problem paying taxes, as long as they’re reasonable and my fellow citizens share in the burden as much as they share in the benefits of our nation.  The kind of disconnect shown in this article and the CBO analysis is dangerous for rational self-government.


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Comments

Make it simple… make all tax credits non-refundable

Canadian Imperialist Running Dog on April 13, 2009 at 1:40 PM

The only fair way to do this is that everyone gets the same amount. I read that Jennifer Anishole skanks about 27 million dollars a year. She should be able to live on $500,000. a year easily. Just like the CEO’s will be required to do. I mean it costs about ten dollars to see a movie. That’s alot of money to watch a lot of crap. It does not cost a lot of money to be a skank, even a good one.

bloggless on April 13, 2009 at 1:45 PM

why do I even strive to make more money when they just take more of it away?

deidre on April 13, 2009 at 1:46 PM

No representation without taxation.

MarkTheGreat on April 13, 2009 at 1:47 PM

T minus 2 days and counting.

dmann on April 13, 2009 at 1:47 PM

Sounds pretty racist to me.

jukin on April 13, 2009 at 1:49 PM

So Ari’s complaint is that Obama is going to continue the Bush policies of increasing the tax burden on the wealthy and increasing sinecures to those who are burdens on society?

Fuck you Ari. Where were you during the Bush years?

Kasper Hauser on April 13, 2009 at 1:50 PM

This is why I prefer a flat sales tax. Everyone needs to contribute to the system, even if only a token amount. One pays the sales tax based on their consumption, and all of the drug dealers, hookers, and cash only proprietors would be paying, unlike now. People who invested would not be taxed until they spent their dividends/interest/cap gains on goods.

The tax should be no higher than 10%. We would need to limit congressional borrowing, so they would have to live on that 10%, and cut programs in order to stay in budget. The only exceptions to the borrowing limit I could accept are disasters and war.

Vashta.Nerada on April 13, 2009 at 1:50 PM

FAIRTAX.ORG

The Fair Tax is probably one of the best solutions available. Instead of sitting pretty and trying to figure out some progressive tax code every year, and every budget. Send the message out that everyone will be paying a “consumption” tax.

It taxes everyone: the person who’s working under the table, to the billionaire and even the drug dealers who go out and buy Mercedes to scoot around in.

It’s one of the best solutions to come out in a long time, second only to the rifle. :)

ayrab on April 13, 2009 at 1:51 PM

I haven’t really read much about the “Fair Tax” that I know Huckabee supports, but would this be a good thing for everyone to pay their “fair share?”

deidre on April 13, 2009 at 1:51 PM

The best answer to this political and economic climate is self-employment and self-determination.

Dr. Manhattan on April 13, 2009 at 1:51 PM

Pay no taxes, cast no vote.

dmann on April 13, 2009 at 1:54 PM

Huckabee will run on the Fair Tax — and win.

marklmail on April 13, 2009 at 1:55 PM

After the revolution: you don’t pay net taxes, you don’t vote.

rgranger on April 13, 2009 at 1:55 PM

The only fair tax is any form of a Flat Tax.
When one pays at a lower income the same Rate as someone at a higher income. The person at a higher income level pays monetarily more than one at the lower income but the rate is the same. This model also is fair by making it easier for people to move up the economic ladder.

lwssdd on April 13, 2009 at 1:57 PM

Ok, say we all paid income tax on every dollar earned. The new sub-low income bracket would be 5%. If you made $25,000 last year you’d owe $1,250. You’ve paid your ‘fair share’. At what level would we then tax the rich? If everyone starts paying income tax, will 35% at the top be acceptable? 20%?

Acting as if every move of the tax scales is a matter of life and death is kind of silly. on both sides, its given oversized weight in debate relative to its actual implications. sooner or later they’ll look at you and say, ‘fine, you got your concessions, everyone pays…now its all going up’. then what?

ernesto on April 13, 2009 at 1:57 PM

The battle against Socialism will be constant as long as there’s progressive taxation.

jacrews on April 13, 2009 at 1:58 PM

After the revolution: you don’t pay net taxes, you don’t vote.

rgranger on April 13, 2009 at 1:55 PM

One other proviso.

Anyone who’s primary source of income is govt, doesn’t get to vote either.

MarkTheGreat on April 13, 2009 at 1:58 PM

Tax the Poor! Buncha freeloaders!
Seriously.

Ironically someone wrote a while back that if all the abortions in America had been allowed to live, the income they would’ve generated as tax payers would have offset the deficit. But that was before Porkulus and his kids.

Iblis on April 13, 2009 at 1:59 PM

The best answer to this political and economic climate is self-employment and self-determination.

Dr. Manhattan on April 13, 2009 at 1:51 PM

Hear, hear.

Gilda on April 13, 2009 at 1:59 PM

why do I even strive to make more money when they just take more of it away?

deidre on April 13, 2009 at 1:46 PM
——-
Shrug, baby, shrug!

Mew

acat on April 13, 2009 at 2:00 PM

Ok, say we all paid income tax on every dollar earned. The new sub-low income bracket would be 5%. If you made $25,000 last year you’d owe $1,250. You’ve paid your ‘fair share’.

Since you have just defined “fair share” as 5%, you have answered your own question.

Acting as if every move of the tax scales is a matter of life and death is kind of silly.
ernesto on April 13, 2009 at 1:57 PM

Spoken like someone who has never paid taxes.

This attitude explains why you can’t understand why other people think increasing taxes is a bad idea.

MarkTheGreat on April 13, 2009 at 2:00 PM

After the revolution: you don’t pay net taxes, you don’t vote.

rgranger on April 13, 2009 at 1:55 PM
One other proviso.

Anyone who’s primary source of income is govt, doesn’t get to vote either.

MarkTheGreat on April 13, 2009 at 1:58 PM

I second that motion!

ayrab on April 13, 2009 at 2:01 PM

A tax is a debt. Oprompta wants 49% of the economy to fund the other 51%. Once that happens, there’s no going back, as the minority will never be able to outvote the majority.

Akzed on April 13, 2009 at 2:03 PM

The numbers are even worse than most people know.

One major flaw of Democracy is that eventualy the people will vote in politicians who use funds from the Public trust, to BRIBE them.

Obamas Tax Cut for 95% of the people is a prime example of this…

So, we find ourselves in a situation where 48% pay no support to the state… and yet it takes about 30% of registered voters to elect someone…

Hmmm… I’ll bet its getting close to 30% of “taxpayers”, though Income Credit and such, now get MORE back than they pay in… it would be interesting to see the actualy stats on that…

Romeo13 on April 13, 2009 at 2:04 PM

Changing the point the tax is collected makes sense to me – don’t tax what I *earn*, tax what I *spend*.

This immediately rewards savings, although it means a heck of a lot of H&R Block types will be unemployed.

The only problem I see is that this kind of tax plan is *very* regressive. A pack of smokes, for example, would cost the same whether I’m on welfare or a 7-figure CIO. …

Mew

acat on April 13, 2009 at 2:05 PM

George Bernard Shaw – A government which robs Peter to pay Paul can always count on the support of Paul.

marklmail on April 13, 2009 at 2:06 PM

Somewhere I remember studying something about “equal” treatment/protection – not “fair.” The definition of fair is completely arbitrary.

Roc on April 13, 2009 at 2:07 PM

OT:
Since the media will have 24 hour non-stop coverage of Obama’s puppy Tuesday, what will he be trying to hide during this time?

faraway on April 13, 2009 at 2:11 PM

This attitude explains why you can’t understand why other people think increasing taxes is a bad idea.

MarkTheGreat on April 13, 2009 at 2:00 PM

Its not that i can’t see the cons in raising taxes…its just that its often discussed in a vacuum. as if tax implications arent influenced and offset by other economic factors. this leads to an absolutist view of the issue when in fact sliding the scales incrementally has never led to economic collapse. and i wound up paying about $15,000 in income taxes this year, as a college student working full time.

ernesto on April 13, 2009 at 2:13 PM

A tax is a debt. Oprompta wants 49% of the economy to fund the other 51%. Once that happens, there’s no going back, as the minority will never be able to outvote the majority.

Akzed on April 13, 2009 at 2:03 PM
———
Depends on what the minority use as ballots.

acat on April 13, 2009 at 2:14 PM

Its not that i can’t see the cons in raising taxes…its just that its often discussed in a vacuum. as if tax implications arent influenced and offset by other economic factors.
ernesto on April 13, 2009 at 2:13 PM

Just like a liberal, trying to create a false complexity to hide their real goal.

Regardless of what else is happening. Higher taxes result in lower economic activity. The more the tax is raised, the greater the depression of economic activity.

Period.

There is no discussion on that point.

Yes, there are times when rising economic activity can disguise the damage that raising taxes does, but had taxes not been raised, there would have been even more economic growth.

That is a fact that few economists challenge. (the few that do aren’t regarded with much respect by other economists)

MarkTheGreat on April 13, 2009 at 2:17 PM

It is not merely the quantity of taxes nor the disproportionate paying that gets to me. It is the junk I see my taxes going toward! And the fact that Congress spends more every year, with increasing deficits, with nary a thought to paying down our debt in order to be truely prepared for the future. Instead congress ignores illegal imigration, sleeper cells, tort reform, and exploding future ‘entitlement’ costs.

AnotherOpinion on April 13, 2009 at 2:20 PM

why do I even strive to make more money when they just take more of it away?
deidre on April 13, 2009 at 1:46 PM
——-
Shrug, baby, shrug!
Mew
acat on April 13, 2009 at 2:00 PM

As long as the Socialist’s can buy enough votes from the Dumb masses they won’t care what happens.

But threaten their vote-buying money supply for even a day… week or even a month and the producers of this country will get their attention.

Galt2009 on April 13, 2009 at 2:21 PM

Sigh. Anybody want to see how to eliminate poverty, have lower taxes across the board and eliminate about half of the government (the part that spends about 4% of GDP each year trying to eliminate poverty?)

See here.

The best part is that if those aren’t things you’d like to see happen, you’re more than welcome to use the tool at the site to design and test drive your own income tax code for the U.S. Enjoy!

ironman on April 13, 2009 at 2:23 PM

Fair share?

“When I use a word it means just what I choose it to mean, neither more nor less,” said Humpty Dumpty. “The question is,” replied Alice, “whether you can make words mean so many different things.” “The question is,” replied Humpty Dumpty, “which is to be master — that’s all.”

Through the Looking Glass by Lewis Carroll

Wethal on April 13, 2009 at 2:23 PM

I agree with “No representation without taxation”, but if you exclude from the voter rolls folks who get most or all of their income from the gov’t, even if they pay taxes, you’ve just excluded most (if not all) members of the military.

LibraryGryffon on April 13, 2009 at 2:31 PM

It seems like there is more representation for those who aren’t part of the taxation (the paying part, not the receiving).

Over30 on April 13, 2009 at 2:36 PM

Remember, Wednesday is Tea Party Day, to let the government know what we think of their taxes on their overloaded golden goose, the American Taxpayer….

taxdayteaparty.com/

DL13 on April 13, 2009 at 2:40 PM

and i wound up paying about $15,000 in income taxes this year, as a college student working full time.

ernesto on April 13, 2009 at 2:13 PM

Um, that would be on a net income of about $75,000 (after all deductions). So you must have a pretty sweet job, not just a poor working college student.

You do realize that when taxes were cut under Reagan and Bush, that revenue increased.

Do you think it is a good idea for so many to pay virtually nothing in taxes?

rbj on April 13, 2009 at 2:49 PM

Why is this a problem? It makes half of the nation dependent on the other half, and not just in “refundables”.

Really, it makes half the nation dependent on the top 10%. So let’s strip away the income of the top 10%, shall we?

hawksruleva on April 13, 2009 at 2:53 PM

Sales taxes, particularly large ones, do much more to encourage illegal activity than income taxes, because there is a lower threshold to cheating. A personal income tax makes it an all or nothing personal responsibility, a sales tax can be a one time thing. Its like the difference between driving without a license and speeding.

The only fair tax is any form of a Flat Tax.
When one pays at a lower income the same Rate as someone at a higher income. The person at a higher income level pays monetarily more than one at the lower income but the rate is the same. This model also is fair by making it easier for people to move up the economic ladder.

lwssdd on April 13, 2009 at 1:57 PM

…not to mention removing the corrupting nobs and buttons out of the reach of congress (provide you make it an amendment rather than a law).

Count to 10 on April 13, 2009 at 2:53 PM

You do realize that when taxes were cut under Reagan and Bush, that revenue increased.

Do you think it is a good idea for so many to pay virtually nothing in taxes?

rbj on April 13, 2009 at 2:49 PM

Be careful with that one — revenue didn’t go up until the second tax cut with Bush (I think that was the one where rates were cut, while the first was more of the deduction/credit crap). People like to use the fact that revenue went down after the first cut to argue against the second cut.

Count to 10 on April 13, 2009 at 2:56 PM

It’s about politics. People making over 150,000 a year typically vote Republican. Your small business owner, someone who works their way up through a company. Of course Democrats want to tax them to pay for their welfare state programs….

The uber rich rich on Wall-Street? Probably votes Democratic anyway..and he’s not going to be affected by a 4% tax increase.

It’s not about fairness. Everyone knows you don’t make poor people wealthy by taxing the rich. It’s about politics. Strangely it’s worked for them lately..

therightwinger on April 13, 2009 at 3:08 PM

TEA PARTY!

GarandFan on April 13, 2009 at 3:09 PM

I’d like to see some breakdown of the numbers based on Obama voters vs. McCain voters and their tax burdens.

It sickens me that Democrats are basically buying votes buy promissing to take money from the “rich” and give it away via social programs to people who don’t pay taxes

Scrappy on April 13, 2009 at 3:10 PM

In about 5 to 10 years the baby boomers will be getting to retirement age. That will include a lot of taxpayers who now make over $92,000. How will the democrats fund all this spending when a large part of the population has their income cut in half. With careful spending and no children to support and educate, I could live on half our income.
Like it or not a lot of us baby boomers are going to have to live on less.

jeannie on April 13, 2009 at 3:13 PM

My wife and I are residents for the purposes of taxation, but not residents for any other purpose, that is, we pay both income and payroll taxes, but do not qualify for most government programs. Moreover, we do not get to vote at any level and, thus, are unrepresented. We have no problem with this situation since we knowingly entered the country (legally) under non-immigrant visas and we intend to become permanent residents and, when we qualify, citizens. While we are content to share in the burden of supporting the government that guarantees freedom for the West (at least for the moment), I do find it disconcerting that the number of individuals who are exempt from taxation and yet continue to exercise influence on policy is increasing. Prior to Machiavelli, every wise man who carefully considered the nature of politics indicted democracy because as the rule of the many it was the rule of the poor and, thus, the rule of the uneducated and the ignorant. The Founders, wisely, created not a democracy but a republic, one which contained sufficient structural checks to protect the productive class from the pillaging of the unproductive class. Sadly, progressive reforms that have decreased the constitutional distance between the people and the federal government have eroded these dams and dikes. Should the number of tax exempt individuals ever become sufficient that they can fearlessly plunder those who pay taxes, I fear we will see a tsunami of the poor that will sweep away all that makes America exceptional in the best sense of the word.

msyb on April 13, 2009 at 3:22 PM

Sales taxes, particularly large ones, do much more to encourage illegal activity than income taxes, because there is a lower threshold to cheating.

Ummmm, no

That is wrong on so many levels. We have no income Tax here is Washington State, with businesses collecting the Salestax. People don’t buy software or computers to pay their taxes, they don’t withhold, they have privacy from the State and much lower costs overall. The advantages of a Sales Tax or Fair Tax or whatever are not just in income but savings in lost time, privacy and increased Bother.

GunRunner on April 13, 2009 at 3:48 PM

I’ve just heard a Rush Limbaugh caller, call and accuse him of dividing the country. What a joke! Here is the real division right here. We need a tax system where everyone has a part, or else this division will only get worse.

Christian Conservative on April 13, 2009 at 3:51 PM

What would happen if everybody refused to make the effort to earn money?

SeniorD on April 13, 2009 at 3:55 PM

Combine a true flat tax (everyone pays 10% of their income regardless of what they make) with the repeal of federal withholding and the moving of Tax Day to November 4th or thereabouts, and watch Congress suddenly find religion in terms of fiscal responsibility. Imagine the throngs of pissed off people, just having written a check for 10% of their yearly income, heading into the voting booth.

Of course it will never happen. The Democratic Party can’t win on anything but class and race warfare, so the only way they can win elections is to increase the proportion of moochers to producers.

Here’s another idea. A lot of kids take part time jobs at 16. Since they technically have no vote, they should be exempt from paying taxes until they do. Give them two years of tax-free earnings then pull the rug out from under them at 18. It might teach them a badly needed lesson about the overreach of government into their paychecks.

TheMightyMonarch on April 13, 2009 at 3:56 PM

What would happen if everybody refused to make the effort to earn money?

Imagine an entire country under the thumb of the UAW and you’ll get an idea.

TheMightyMonarch on April 13, 2009 at 3:57 PM

Who is John Galt

JKotthoff on April 13, 2009 at 4:03 PM

Who is John Galt

JKotthoff on April 13, 2009 at 4:03 PM

He is a fashion designer.

bloggless on April 13, 2009 at 4:12 PM

According to the CBO, those who made less than $44,300 in 2001 — 60% of the country — paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax.

That quote doesn’t seem right to me. I have been and am still in that income range, yet my federal taxes are 25%! (Of course I’m single and have no deductions whatsoever.) I sure would like to figure out how I can be excused from paying any income tax!

The only really fair way to settle the whole income tax “unfairness” is to have as close to a pure flat tax as possible with a very limited number of allowable deductions, and it should never exceed more than 20% for ANYONE. This would also eliminate the 7,000-page tax code and make only a skeleton crew of an IRS necessary. Forbes’ flat tax proposal is a good start to transition to a pure flat tax.

Logic on April 13, 2009 at 4:16 PM

Logic on April 13, 2009 at 4:16 PM

That shows you how many people have dependents and income levels that qualify them for the Earned Income Tax Credit. Who would turn down free money?

mike_NC9 on April 13, 2009 at 4:26 PM

TheMightyMonarch on April 13, 2009 at 3:56 PM

Hear,Hear

mike_NC9 on April 13, 2009 at 4:33 PM

It’s a stupid question: When will anyone who advocates “economic fairness” ever proudly proclaim: “I have now made the world fair enough; so I can stop now!”

That can’t ever happen. Everyone who wants SOME collectivism, will always want MORE collectivism. Because liberalism is the only addiction in the world which has only external costs.

Alcohol rots your liver; cocain dissolves your nasal septum… Every other addiction in the world has personal consequences. But the expression “give ’till it hurts” only applies when you’re giving away YOUR OWN MONEY.

Once someone decides that giving away other people’s money makes him feel better about himself, the “addict” never personally feels any pain; only pleasure — until the entire country hits rock bottom.

logis on April 13, 2009 at 5:25 PM

According to the CBO, those who made less than $44,300 in 2001 — 60% of the country — paid a paltry 3.3% of all income taxes. By 2005, almost all of them were excused from paying any income tax.

That quote doesn’t seem right to me. I have been and am still in that income range, yet my federal taxes are 25%! (Of course I’m single and have no deductions whatsoever.) I sure would like to figure out how I can be excused from paying any income tax!

Dude, you need turbotax ASAP.

If your gross income is $44K, your taxable income is about $40K after just the basic standard deduction. With an AGI of $40K, your federal tax is about $6K or 13.6% of your total income. And that’s assuming you have no deductions at all, which is almost unheard of.

angryed on April 13, 2009 at 6:34 PM

If you want a look at real live liberals arguing that the rich should play 100% of what they earn in taxes, look at the debate I’ve having HERE on the Rotten Tomatoes Off Topic Forum:

http://www.rottentomatoes.com/vine/showthread.php?t=677710

Most of the posters there just can’t see what the problem is with 10% of the taxpayers footing 73% of the tax burden. In fact, they’re MAD that top 10% isn’t paying for EVERYTHING.

manofaiki on April 13, 2009 at 11:06 PM

why do I even strive to make more money when they just take more of it away?

sounds like you’re shrugging, Atlas!
who IS John Galt?

gordo on April 13, 2009 at 11:39 PM

If we’re going to accept that conjuring trillions of dollars out of thin air to fund the Democrat’s wish list, why are we paying taxes at all?

We can become like the old Soviet joke. “We pretend to work, and they pretend to pay us.”

A leftist paradise.

schmuck281 on April 14, 2009 at 6:22 AM