The unsustainable federal income tax gap

David Harsanyi sees the same kind of serious implications in the iniquity of the federal tax code as DocZero and wonders how this administration could have let this happen.  After all, Joe Biden insisted that paying federal income taxes was “patriotic.”  In fact, Biden actually insisted that low taxes were unpatriotic, which means that the progressive tax system’s increased progressivism over the last few years is creating a lot of unpatriotic Americans — at the expense of the few:

According to the Tax Foundation, this year the top 10 percent of earners are on the hook for around 73 percent of all the income taxes collected by Washington.

On the flip side, nearly 50 percent of households — because they don’t make enough or have various deductions — do not pay any income tax whatsoever. (Your payroll taxes “fund” your own stake in Social Security and Medicare.)

If there’s a smoother way to spread the wealth, I’d love to hear about it. But if government is a force of righteousness, a wondrous $3 trillion gift that saves lives and imbues America with hope, why is it that so many of her citizens aren’t fully invested in the magic?

To be fair, as burdensome as income taxes seem to everyone, most of us are disconnected from the genuine and growing cost of government. Tax payments have been declining for the majority of Americans (good for the economy and your freedom) while government spending is increasing.

Now, I hate people who are richer than I am as much as the next guy, but how long can we keep relying on the wealthy?

Not for very much longer, and in fact that time may have already expired. The Obama administration seems perplexed at the continuing drag on jobs in their so-called recovery, but it’s not terribly difficult to see why we’ve gone the longest time in a post-war recession without a significant uptick in employment. Barack Obama keeps increasing taxes on those people with the capital to invest in the market, and sends signals that more taxation on that group is coming. Instead of investing the money, they’re sheltering it instead.

Barack Obama came to office in part on his populist ranting about how his predecessor gamed the tax system in favor of the wealthy, but that’s just demagoguery:

The total income taxes paid by the top 1 percent of earners as a share of GDP has doubled since the early ’80s. At the same time, the bottom 95 percent of earners pay a significantly smaller share. I’m not an economist (sorcerers!) but this strikes me as an unsustainable policy.

It’s true that President Barack Obama has come up with more than $3 trillion in new taxes during his short tenure, but that’s not enough. Paul Volcker, the president’s informal adviser and former Federal Reserve chairman, recently broached the idea of “value-added tax,” a consumption tax embedded into everything you buy, and a new carbon or energy tax.

It’s entirely unsustainable, but the VAT would make the situation worse. A VAT acts as a brake on consumption by making everything more expensive. It eats into the buying power of the middle class far more than it does the wealthy, who have a much higher level of disposable income. Liberals like to call state-run lotteries a “regressive tax” on the poor, but at least the lottery is voluntary. The long-term result of a VAT will be lower consumption, which means fewer jobs, and that would hit the working and middle classes hardest.

We need comprehensive tax reform in this country, and these numbers show it. If paying income taxes is the Great Patriotic Duty of all citizens, as Joe Biden insisted, then it needs to include all citizens.  In the meantime, though, we need to end the class warfare through tax policy that is keeping our economy moribund more than two years after the start of the last recession.  If we keep demonizing those with the means to invest, we’re never going to get this nation back to work.

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