Government Watch / Politics

Dems’ Narrative on Rich Not Paying Their Fair Share Collapses (Again)

rich

Democrats continue to kick around various spending proposals which could end up costing taxpayers as much as $5.4 trillion over the next decade, even without which the country is set to run a budget deficit right around $3 trillion for the second consecutive year. To justify this extraordinary fiscal expansion, they have continued to point fingers at a familiar scapegoat — the wealthy — claiming America’s budget woes would evaporate should they simply pay their “fair share.” But the latest data on federal revenues clearly puts the lie to this claim.

The most recent budget data from the nonpartisan Congressional Budget Office (CBO) estimates federal revenues for the 2021 fiscal year will exceed $4 trillion, an 18 percent increase relative to the previous year. Though total federal revenues decreased somewhat last year due to the pandemic, dropping from $3.46 trillion in FY 2019 to $3.42 trillion in FY 2020, this year’s increase more than makes up for that decline.

What’s more, the revenue increase is driven largely by taxes paid overwhelmingly by the wealthy. According to the CBO, 97.4 percent of the revenue increase relative to last year comes from corporate taxes and individual income taxes. The individual income tax, in particular, skews overwhelmingly wealthy, with the top 1 percent shouldering just over 40 percent of the income tax burden. Meanwhile, the major federal revenue source that is structured less progressively, the payroll tax, actually saw a $2 billion decline in receipts compared to FY 2020.

Those figures contradict the progressive claim that the only thing standing in the way of their agenda is a tax code that doesn’t adequately tax the wealthy. For years, Democrats have blamed the 2017 Tax Cuts and Jobs Act for cutting individual income tax and corporate tax rates. But even fresh off a recovery from a global pandemic-induced recession, this latest data shows that revenues from those areas of the tax code remain sizable indeed. Corporate income tax revenues are right around the level the CBO was forecasting for this year prior to the passage of the TCJA, and individual income tax revenues are even higher.

This also should make taxpayers skeptical of Democratic proposals to track down a supposedly enormous amount of tax revenue currently going unpaid, known as the “tax gap.” President Joe Biden has claimed that the tax gap is many times larger than the IRS says it is, going on to say that his agenda can be paid for if only the tax cheats could be hunted down. Never mind that doing so may involve snooping on your bank account, Biden’s claims of an enormous tax gap were always suspect, and now they are even more so.

This obfuscation is all meant to cover a simple truth — progressives can’t come close to funding their expensive, expansive agenda off the backs of the rich. Though estimates of the wealth held by America’s richest denizens can appear staggering, it represents little more than grocery money to the enormous money churn that is the federal government.

Even setting aside the Build Back Better agenda, the federal government is set to run a deficit of over $12 trillion over the next ten years. Even if the federal government confiscates every cent of billionaire wealth in the country, it would not be enough to cover the federal deficit (let alone the $28 trillion national debt) for even the next three years. Taking into account longer-term trends, like projected Social Security insolvency and spikes in the cost of Medicare, billionaire wealth represents a drop in the bucket.

Then consider that progressives are nowhere near the level of federal spending they want to achieve. Between the $32 trillion plan for Medicare-for-All, the Biden administration’s agenda, and the indeterminate but likely massive cost of a Green New Deal, the idea that these things could be funded solely by taxing the rich is a pipe dream.

It’s good to see tax revenues recovering, if only so that the debt burden passed on to future generations grows at a slightly slower pace. But Americans should also take care to note the lesson being presented here: The rich can’t help you dig out of the fiscal hole progressives want to put you in.


Reprinted with Permission from - Inside Sources by - Andrew Wilford

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Frank Wyrick
4 months ago

Something that has been touted in the past is a flat tax. That seems to be the fairest way to spread the burden. No loopholes. The very wealthy will find every loophole to their advantage. How about the millions that Joe Biden and his family have made off foreign governments and corporations?

John S.
4 months ago

I am an individual with some means — I don’t consider myself “privileged,” to use that woke word; I inherited a good portfolio from my father-in-law, and I work with a good financial planner to ensure that it remains invested well.

After college I worked for a year or two before the inheritance came through, so I certainly understand what it’s like to be in the working world. I also have humility for the wealthier folks who were signing my paycheck, paying the mortgage for the apartments they were kind enough to rent to me, and so forth.

Maybe this doesn’t make me “woke,” but I think people of lesser means should be the ones to pay the taxes, so that people like me can go on creating jobs. The more I spend on travel and entertainment, the more money goes out into the economy. So why shouldn’t I receive more of it?

Kim
4 months ago
Reply to  John S.

“…I think people of lesser means should be the ones to pay the taxes…” This is NOT how you win friends and influence people!

John S.
4 months ago
Reply to  Kim

Great, another “soak the rich” liberal. Sure you’re on the right site?

Kim
4 months ago
Reply to  John S.

Not, not a liberal. Far from it. I’m all for a fair tax system, and I do think wealthy people pay more in taxes than they should. It’s the way you presented your point that sounds elitist.

PaulE
4 months ago
Reply to  John S.

As someone who actually worked, built several successful substantial businesses and created my own wealth, I have to say you come across as somewhat tone deaf and more than a bit entitled to put it mildly. You equate working for a couple of years before you got access to your father-in-law’s inheritance as conveying some understanding for others in terms of different financial circumstances, but as Leona Hemsley once said “Only the little people should pay taxes”. That didn’t go over well either.

Is our tax system dysfunctional to a degree? Sure, but the chief imbalance, from the taxing perspective, is that over 50 percent of the population pays effectively zero federal taxes, while receiving the vast majority of benefits from the government. Spending is of really no consequence to these people, because others pay for it. So they see nothing particularly wrong with politicians pitching ever more spending year after year. To put it in simple terms, they have no real skin in the game, so ever-escalating government spending doesn’t directly impact them.

The solution is quite straight-forward. Do away with the so-called progessive tax system and institute a straight across the board 10 to 12 percent flat tax (not a fair tax or VAT as both are just another form of stealth progressive taxation) on all income above an initial $20,000 per year to shield the truly poor somewhat. Then go to zero based budgeting at the federal level for everything. The the entire public would then be on the hook for having to pay for everything the federal government spends and you’ll see how fast the vast majority of people demand deep cuts or even elimination to most federal programs. Nothing focuses the mind of the public like them realizing that they are on the hook for having to pay the bill the politicians are running up. Oh and I mean real cuts by the way, not the phony lower rate of inflation increases built into the government’s budget process.

We would end up with a vastly streamlined federal government and everyone paying real attention to what the government is asking us to finance, via all our taxes, each and every year. The politicians would hate it of course, but they are employees of the people and if they don’t like it, they are free to get a job in the private sector if they can. The overall economy would be in better shape, with better incentives for business and job creation. Plus we would get to keep more of our money, because the tax system would be truly fair with everyone having skin in the game.

John S.
4 months ago
Reply to  PaulE

Appreciate your perspective Paul. Nothing against working folks, it’s just that most of them can’t spend the kind of money that creates jobs. I feel I “pay my share” by injecting significant stimulus into the economy. Others can pay their share by being taxed. This system makes sense to me.

Max
4 months ago
Reply to  PaulE

Agree totally with your third paragraph, it would make life easier.

John S.
4 months ago
Reply to  Max

Thanks Max. Glad someone gets it.

Frank
4 months ago
Reply to  PaulE

You said it very well. Another benefit of a flat tax is that the IRS could be cut drastically saving millions of dollars annually.

ShellzNcheez
4 months ago
Reply to  John S.

Those who have had the means, the support and the opportunities to obtain wealth have no clue how expensive it is to be among the working poor. We spend approximately 50% of our monthly income on housing alone! Fewer choices and far less assets mean higher rates on bad loans, higher insurance premiums, and a constant defensive position against predatory business practices that would financially devastate us. Point in case, not one but TWO late fees on the electric bill-with the second being $39! One fee for paying after the due date, the other for paying after the billing date. It’s like living on a razor’s edge every single day, month after month, year after year. No or very poor access to health care. No access at all to the justice system. Lawyers are so well-paid we can’t even come close to retaining their services. Our income is devoted to the “job creators” who at best ignore us or worse, prey on our vulnerabilities then have the unmitigated gall to condescend. But that’s still not enough?! When we get a share in the power that comes with having options and the opportunities and quality of life that power brings then talk to me about what is fair to pay in FEDERAL INCOME taxes. Don’t forget, we pay sales tax at the same rate. I don’t want handouts (don’t qualify anyway) but enough is enough. We’re feed, fined, and taxed to death as it stands. We simply can’t support the “job creators” AND the freeloaders at the same time.

Jim Yowell
4 months ago

Congress has passed AT LEAST 3-4 “infrastructure bills” since Obama, costing TRILLIONS & TRILLIONS & TRILLIONS of dollars!

*MY* first question before ANY of them were voted on is simple…

“Where did all the TRILLIONS of dollars collected in tarrifs, duties, fees, gas taxes, etc, that was supposed to maintain our infrastructure go!!!

Now here they are talking yet another “infrastructure bill” despite something like 4-5 TRILLION supposedly spent on it since Obama…..

My NEXT question…

Where did THAT money go?!?!?!?!?!?!?!

Government “Stimulus Bills”
(What are they stimulating?)
°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°°
It never ceases to make me MAD AS HELL when the government starts with “what are we going to do, or how much are we going to spend?”…..

Instead of “Where in the CONSTITUTION does it give us THE AUTHORITY to do what we’re about to do / spend!”

What not only makes me mad as hell, but never ceases to amaze AND sadden me is the American people gushing rhapsodic over whatever new power the governemnt has just SEIZED, or how much money the government has decided to “spend.”
* * * * * * * * * * * * * * * * * * * * * * * * *
So, the government has decided it needs *ANOTHER* THREE TRILLION DOLLARS “pumped into our economy”… In addition to the *TWO TRILLION DOLLARS* they’ve already spent! (most of which is going to THEIR pet projects… Including those measures that make voter fraud easier)????

MY question is simple….

Since the government doesn’t have *two freaking pennies* to rub together, where in the HELL do you think the money is coming from?!

Don’t get me wrong… In times of “National Emergencies” there are SOME things the Federal Government “might” be able to do easier LOGISTICALLY than the individual States (although I have my serious doubts about even that), but spending money is NOT one of them!

How could they?! It’s not THEIR money, and they couldn’t care less how much is wasted!

For GODS SAKE people, every single dollar the federal government puts “into the economy,” MUST FIRST BE TAKEN *** OUT OF THE ECONOMY!!! ***

*OR* they have to BORROW IT.

Today our government has over 29 TRILLION DOLLARS of *actual* debt, and over 125 TRILLION DOLLARS of “unfunded liabilities” coming due in the next 10-15 years that the government HAS *NO* WAY TO PAY! (hence the term UNFUNDED!)

By the way… We were paying OVER ONE BILLION DOLLARS *A DAY* just in INTEREST on that debt, way back 2-3 years ago, when it was “only” 22 TRILLION dollars

So every time the government talks about “stimulus” you MUST understand their definition!

What they’re “stimulating” is THEIR ABILITY TO BE REELECTED!

Every SINGLE DOLLAR they put into a “stimulus bill,” must first be TAKEN from a working American, American business both big AND small, or borrowed which adds to the debt!

A debt that must be repaid… Just NOT BY THEM!

It must be repaid by the same people and businesses they’re STEALING THE REST OF THE “STIMULUS” FROM!

Yes, the Democrats are the worst, but the Republicans have their faults as well.

It’s only the fact that the Democrats ARE SO FREAKING BAD, that the Republicans are even remotely tolerable to me!

They ALL think THEY know how to spend YOUR money better,

And if they’re wrong, its NOT a big deal! After all, it’s YOUR money they’ve just thrown away… IT’S *YOURS*!

PaulE
4 months ago
Reply to  Jim Yowell

Here are the answers to your questions:

“Where did all the TRILLIONS of dollars collected in tarrifs, duties, fees, gas taxes, etc, that was supposed to maintain our infrastructure go!!!

That money was diverted by various federal government agencies, at the direction and approval of the various Cabinet level heads to fund projects that have nothing to do with the original purpose those funds were collected to support. As an example, highway fees where redirected to fund building and maintaining golf courses, parks, schools in certain cities, etc., while the roads were left to crumble.

As to the new Infrastructure bills you ask “Where did THAT money go?!?!?!?!?!?!?!”

That money is controlled being exclusively controlled and dispersed by Secretary of Transportation (that’s right Mayor Pete is in charge), who will decide which projects have merit and deserve funds. As it looks right now, three Democrats controlled states (California, New York and Illinois) will get at least 40 percent of the total funds at this stage. I expect the vast majority of the money will go to Democrats controlled states, with little being allocated to any Republican run states.

As for stimulus bills that have been passed, what they have stimulated is INFLATION. By printing or borrowing trillions of dollars and shoving it into the economy (for really no sound reason), what you have is a now devalued dollar chasing too few goods and services. The end result in the highest level of inflation in 40 years. Econ 101 on full display for everyone to see. Oh and by the way, some Democrats are now starting to float the idea of yet another massive stimulus bill that they might try for in a few months. Nothing like handing out more money as the elections get closer to try and buy votes. Yes, most of them do understand they are stoking inflation big time, but they care more about ensuring they cover all their bases for re-election than whether they drive inflation even higher.

Kim
4 months ago
Reply to  Jim Yowell

It is frustrating, isn’t it, Jim, to see all our hard-earned tax dollars being frittered away by politicians creating projects for their districts and like-minded enterprises. When I lived in the deep blue state of Maryland during the Obama years, I remember a county government employee asking us what their (our) share of the stimulus should be used for. Instead of working on any of the suggestions we offered, which would have benefited most residents, that money conveniently disappeared.

A few years before that, I asked why the contractors were replacing a perfectly good sidewalk around a school where I leased space. One answered, “If we don’t use the money, we won’t get as much next year.” Disgusting!! That’s they type of mentality that make conservatives’ blood boil. Career politicians, especially the ones who never worked in the private sector, just don’t get it.

JC
4 months ago
Reply to  Jim Yowell

The gov’t has only 2 jobs:1) protect our our God given rights under the Constitution and 2) defend its citizens.They are not in the banking, lending business.If only we could get back to what the Founders intended.

Nelson
4 months ago

The IRS needs to be abolished Segregation of income classes needs to stop Income Tax being used as a political tool needs to stop The only way to stop the excuses of the rich not paying their fair share is for Congress to pass the Fair Tax Bill With the Fair Tax Bill EVERYONE pays a national sales taxThe national sales tax will collect tax payments that are being avoided under the current tax system due to so many transactions with cash Just two Examples: Illegal drug sales and Prostitution Any transaction at any location in the US would have be subject to the national sales tax

PLGJ
4 months ago
Reply to  Nelson

Nelson, I agree with you that the IRS needs to be abolished. However, the only way that can be done is to repeal the 16th Amendment. Washington is unlikely to do that.

PaulE
4 months ago

Democrats rely on a few key items to gain and maintain political power. Those things are stoking envy in the general population by erroneously claiming over and over again, that someone else who has more than you either achieved that wealth through theft or somehow “not paying their fair share”, leveraging so-called “tax loopholes” to magically attain their difference in wealth, or some other imaginary nefarious means that needs to be corrected by punitive actions by the government run by Democrats. This argument only gains traction with the general public, because of the relative economic illiteracy of a substantial portion of the public. Say thank you the poor quality of the public education system in this country for several decades for making so many Americans vunerable to this messaging.

The second thing that the Democrats leverage quite well is the human desire for supposedly “free stuff”. Free stuff is of course never actually free, as someone has to ultimately pay for the goods or services. The Democrats address this point by erroneously promising to only tax or confiscate someone else’s wealth for distribution to you to get the benefits the Democrats are promising to deliver, if they are empowered to run everything. Again, this argument only gains traction with the general public, because of the generally poor economics education provided by the public education system in this country for many decades in this country. The simple understanding that billions or trillions of dollars in new or expanded benefits cannot be fully paid for by taxing the so-called evil one percent of the population, whose total wealth, if completely confiscated by the government, would only constitute a small fraction of the what these benefits would cost. People would understand the completely nonsensical nature of what the Democrats are selling and would realize that taxes would have to be hiked across the entire population, in one form or another, to pay for this supposed “free stuff”.

So in closing, the Democrats rely on stoking envy and the general ignorance of basic economics by a large percentage of the public in order to gain and maintain political power. They fully understand that the more ignorant the general public becomes over time, the more likely the general public will find their arguments attractive and vote for them. Thus one of the primary reasons to also import several million new, mostly illiterate, illegal aliens into this country is to ensure the Democrats have a substantial voter base that will vote for Democrats. Even if by some fluke a substantial number of American citizens decide to stop voting for Democrats. Democrats are good at covering all the bases, while most Republican politicians in Washington seem content to do little to fight back.

Max
4 months ago
Reply to  PaulE

Again your commentary is right on target.

Jim Yowell
4 months ago

Congress has passed AT LEAST 3-4 “infrastructure bills” since Obama, costing TRILLIONS

PaulE
4 months ago
Reply to  Jim Yowell

And almost all that money was wasted or ended up making political insiders very, very rich. Very little, if any, real infrastructure projects were done. Remember Solyndra, A123 and the other “clean energy” infrastructure plays that the Democrats all hyped and were owned and operated by folks that just happened to be big campaign donors to Obama and the Democrat Party? They all walked away with bags of cash and the American taxpayer was left with the bankrupt shells of the failed companies. That exactly what is going to happen with most of the money from the most recent so-called Infrastructure bill, except on a much larger scale with the American taxpayer on the hook for the all the incurred debt.

Jim Yowell
4 months ago

The top 1% pay 39% of all taxes The top 10% pay 71% of all taxes The top 50% pay pay 97.9% of all taxes The bottom 50% only pay 2.1%of the taxes! This does NOT include the 49% of the people who pay NO TAXES! The percentages get even more one sided when you consider those who “pay taxes” but then get back more than they paid in because of “earned income tax credits”… Another name for welfare. It’s kind of hard to give “tax breaks” to someone who DOESN’T PAY TAXES! As for the trickle down theory not working… The shortest book in history (consists of the title page only) is… “job opportunities from companies owned by the poor.” During the “Reagan years,” the ones liberals say hurt the poor and increased the national debt,  more people moved out of poverty than any time in American history.  More people moved from the bottom income bracket into the TOP income bracket than any time in American history!  More black people moved from the bottom to the top than any time in American history! Even though the Reagan tax cuts increased the tax revenue collected by OVER ONE TRILLION dollars, the National debt DID increase… Because the Democratically controlled Congress spent 2.7 dollars in NEW social spending for every ONE dollar in new tax revenue! ALL of the facts are readily obtainable from multiple GOVERNMENT sites!

PaulE
4 months ago
Reply to  Jim Yowell

Good to see someone else here understands both history and economics.

Bill T
4 months ago
Reply to  Jim Yowell

Can’t help but

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