Taxes: How Some Don't Pay Their "Fair Share"

Taxes are a continual topic of debate.  The progressive tax code of our country is adorned by some and despised by others.  The ambiguous term "fair share" is debated time and time again.  The timely arrival of some recent reports only adds fuel to the fire discussing taxes and "fair share."

The continuing discussion over individuals and families paying their "fair share" of taxes got some good analysis recently.  BRUCE BARTLETT, a brilliant economist, analyzed the most recent reports and found some interesting contents.

In many cases, the numbers speak for themselves.  Today, the top 50% of income earners pay 97.11% of the taxes collected.  This does not account for the redistributive effects of tax credits and payouts to the bottom 50%.  As discussed in Base-less…Boehner Shows His True Stripes, the top earners pay 106% of the tab and the bottom -9.1% when these factors are also included.

Conservatives always point out, correctly, that the share of taxes paid by the wealthy greatly exceeds their share of aggregate income. In 2011, the top 1 percent earned 18.7 of all adjusted gross income and the top 5 percent earned 34 percent.

While the top is paying the bills, the redistributive effect is well documented in the article as well.  Notice, in the Share of Income Table, the Income After Taxes and Transfers compared to Market Income.  The lowest quintile earns 2.3% of the income, but after taxes and transfers, actually ends up with 9.3% of the income.  Meanwhile, the highest and fourth quintiles incomes decrease dramatically when accounting for these same factors.  This shows the great redistributive effect of our tax system.

As discussed in The Welfare State: Increasing Government Dependency, government dependency is on the rise in America.  Bartlett arrives at the same conclusion.

Between the fourth quarter of 2008 and the fourth quarter of 2011, the percentage of Americans participating in transfer programs rose to 49.2 percent from 45.3 percent.

There is one key portion that needs pointing out; previously, the top 1% paid a larger share of the taxes.  According to an unsourced expert:

The I.R.S. data are for shares of federal income taxes and income by percentiles and include new figures for 2011. The wealthy pay the vast bulk of federal income taxes. But as one can see, there has been a sharp reduction in the share paid by those in the top 1 percent of taxpayers ranked by adjusted gross income, since 2007.

The continual argument of fair share, really does not make sense.  It is a blatant fact that the same, hard-working individuals are carrying the vast majority of the tax burden.  It also becomes clear that redistribution of taxes have become excessive.  Obamacare, along with numerous other tax law changes will only further this redistributive affect over the coming year.  Look for reports in 2014 that will show the further growing effect and burden on American tax payers in the top quintiles.

For more information, visit Bartlett's full article here:  Who Pays the Taxes and Gets the Benefits.

The Welfare State: Increasing Government Dependency

The welfare state is not just the state of our country, but the people who live in it and several actual states.  Many people rely upon these benefits for good reason (disabled, elderly, children, etc.) and no one argues that point. Welfare has spiked the last five years unlike any other time in the history of our country.  Not only are large amounts of people on it, but the duration and amount being received have gotten excessive.  For many, it has become a way of life, not just a helping hand in a time of need.  This is the state of welfare, as we now know it.

Unemployment spiked in 2008 due to the financial and housing meltdown.

Five years later, we still have high unemployment and much more debt to boot.  Government reporting standards have changed in order to sugar coat the real numbers, especially under President Obama.  The true measure of unemployment is the U6 measure; it is defined as:

• U-6, total unemployed, plus all marginally attached workers, plus total employed part-time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Thus, it accounts for the unemployed and under employed.  This measure still has our unemployment rate at 13.2% today as opposed to the 7% being reported by the administration.

Welfare pays out too much, taking away the incentive to find a job.

A  2012 report highlighted how people on welfare are now taking in more than the median household in America.  Why work if you can live better than the median family in America?

+Walt Armour may have summarized this situation better than anyone, he stated:

Based on data from the Congressional Research Service, cumulative spending on means-tested federal welfare programs, if converted into cash, would equal $167.65 per day per household living below the poverty level. By comparison, the median household income in 2011 of $50,054 equals $137.13 per day. Additionally, spending on federal welfare benefits, if converted into cash payments, equals enough to provide $30.60 per hour, 40 hours per week, to each household living below poverty. The median household hourly wage is $25.03. After accounting for federal taxes, the median hourly wage drops to between $21.50 and $23.45, depending on a household’s deductions and filing status. State and local taxes further reduce the median household’s hourly earnings. By contrast, welfare benefits are not taxed.

SNAP is one form of welfare given out by the states. It is meant to supplement people's incomes for food.

An analysis shows that the average individual received $133.08 in monthly welfare from the program for 2013. In 2009, this amount was $125.31; an increase of 6% over that time. A family of four, on SNAP welfare, would receive $532.32 per month!  This program is meant to SUPPLEMENT people's income, not pay entirely for their grocery bill. At $0.39 per Ramen noodle container, it would cost approximately $140.40 to feed a family of four, three meals a day.  So, it is not like people are going to starve on this amount.  SNAP is just one of the many welfare programs, keep in mind.

During this same time period, the Consumer Price Index, which measures inflation in goods and services rose 7.97%. The numbers are below, for those who will argue inflation the rest of this article:

Series Id:    SUUR0000SA0
Not Seasonally Adjusted
Area:         U.S. city average
Item:         All items
Base Period:  DECEMBER 1999=100

Download:

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec	Annual
2009	122.095	122.598	122.803	123.053	123.427	124.485	124.293	124.620	124.706	124.791	124.788	124.544	123.850
2010	124.987	124.972	125.442	125.620	125.678	125.521	125.536	125.756	125.830	125.969	125.920	126.143	125.615
2011	126.778	127.363	128.585	129.483	129.999	129.846	129.983	130.351	130.635	130.373	130.196	129.844	129.453
2012	130.363(U)	130.829(U)	131.649(U)	131.993(U)	131.902(U)	131.819(U)	131.614(U)	132.203(U)	132.702(U)	132.699(U)	132.212(U)	131.896(U)	131.823(U)
2013	132.272(I)	133.188(I)	133.506(I)	133.430(I)	133.652(I)	133.925(I)	133.944(I)	134.086(I)	134.257(I)	133.964(I)	133.724(I)
U : InterimI : Initial

As previously discussed in BASE-LESS…BOEHNER SHOWS HIS TRUE STRIPES,  the AVERAGE tax bill for the lower 47% of income earners is -9.1%.  Most people would love a 9% bonus annually on tax day.  This welfare system is what we call our current tax code.  It steals from the top and gives to the bottom.

In 2014, Obamacare will further the welfare tax laws to benefit the bottom 47%, yet again.

The 9% refund, previously discussed, is before these credits begin in our tax law. Much of the discussion, thus far, is prior to this monstrosity being in full effect.  Statistics will show, after 2014, the massive wealth redistribution and welfare program we are now running.  Families USA, a liberal organization, charted the welfare package included in Obamacare.  The known part of this welfare package is enormous.  And, keep in mind, no one knows all the impacts of this legislation as of yet.  We only know the general outcomes from common sense and what is already known.

The Brenner Brief recently posted a great article on the state of welfare, and its impact on America.   Welfare Dependency Destroying America takes a little different look at welfare dependency and offers much insight into this lifestyle.

One cannot possibly cover all the welfare programs in a single article.

After all, the state of our welfare system has grown to epic proportions and programs.  Much like Obamacare, we just didn't know what was in it until we read it.  The charges that Republicans or any other group seeking to reduce spending on welfare programs is simply crap.  These programs provide more than just an assist; they are a way of life.  With the recent economic downturn, it will not be surprising to see many maintain their lifestyle on welfare.  Welfare is just like feeding the animals at the zoo; once they taste it, they are addicted and will come back.