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Trickle-Down Taxation

Thursday May 17th, 2012   •   Posted by John C. Goodman at 9:00am PDT   •   8 Comments

The Alternative Minimum Tax was imposed in 1969 because 115 households investing in municipal bonds reportedly paid little or no federal income tax... On Jan. 1, 2013, it is set to hit 27 million more—raising an estimated $120 billion, according to the Obama 2013 budget. In 40 years, a tax on 115 households will have grown to threaten 31 million.

The personal income tax… began in 1913 with a top rate of 7% and hit only those with a taxable income of $500,000 or more. (According to the Bureau of Labor Statistics inflation calculator, that would be $11.5 million now.) Today, roughly half of American families pay the personal income tax.

More on this taxation controversy in The Wall Street Journal.

*Originally found in NCPA’s Health Policy Blog

Featured Image:
Photo via the Escape Artist


8 Responses to “Trickle-Down Taxation”

  1. Sharon says:
    May 17, 2012 at 9:44 am

    I’m interested in seeing the other half pay something.

  2. Stephen says:
    May 17, 2012 at 7:46 pm

    Most of this is from the government’s voracious appetite for more revenue so they can exercise more power and control under the guise of “helping”. Therefore they are forced to reach down further and further into the lower income ranks for more revenue...while fostering crony capitalism, cronyism and enabling graft and corruption because of the viscous power cycle.

  3. Jerome Bigge says:
    May 21, 2012 at 9:24 pm

    The reason for the decline in the number of taxpayers is due to The Great Recession which has effectively reduced the number of people actually earning incomes high enough to be required to pay federal income tax. However, some major corporations now can avoid paying federal income tax because of deductions and allowances set up by the Bush administration. GE for example not only didn’t pay federal income tax in 2011, it got a “refund” back from the IRS too. In the case of the people not paying federal income tax, their incomes are generally too low (relative to their deductions) for there to be anything to tax. Then the rich can avoid the income tax by taking their income in the form of capital gains, which has a tax rate of 15%. Also income derived from this source is not subject to the payroll tax either. This is how a burger flipper working at McDonald’s can pay a total higher tax rate than Mitt Romney. The burger flipper pays payroll tax and federal income tax (not a great deal, of course), but it means that not everyone is taxed the same percentages upon the same total level of income.

  4. Roger Henson says:
    May 22, 2012 at 11:43 am

    We look back fondly at the wonder years of America’s most stable and egalitarian era. Doctors lived in neighborhoods with teachers; dentists with sheet metal workers, and only one parent worked. Businesses boomed and unemployment was low. GDP was like China’s is today, and the Greatest Generation valued truth, science, innovation, and cooperation. And to think that tax rates graduated all the way to 93% for the extremely wealthy.

    But Americans, including many of those wealthy, knew that such wealth was was more a product of luck than work, although it took both to climb there. We had all just come from a war mentality, and a great depression before that, so that most believed that survival required cooperation, that America advanced by the sacrifices of its citizens for the common good of all. We valued and gave to our neighbors in need. It wasn’t “communism”, and it wasn’t “class warfare”. It was Americanism and it worked.

    What happened to us? Where are the Americans? How did we get to the point where one percent of Americans own forty percent of all cash and capital, and then politic for even more tax breaks and fortune? How did we allow 93% of that top one percent to inherit their wealth rather than work hard for it, and exclude those who work hard from the upward mobility they desire? What happened?

  5. Roger says:
    May 24, 2012 at 5:58 am

    The “government” isn’t some distant dictator. I’m tired of hearing the misinformationists who claim to know the insidious thoughts and intentions of the “government” as if it were one entity with a singular mind. WE make up the government. WE determine it’s agenda. The government politicians and bureaucrats respond to us; our complaints; our desires. (I use “politicians” and ” bureaucrats” in the most positive sense.)

    It’s true that some politicians represent the very few, their own wealthy patrons, but isn’t it amazing that those same politicians are the ones that perpetuate this myth of the government’s voracious appetite for MORE revenue so it can wrest control from us. That’s just ridiculous. More to the point is that responsible representatives that you and I elect who are responsive to their constituency, try to balance the revenue side of the budget with the spending side which provides the services that We The People have demanded.

    If you want more control over this government, I suggest you advocate for reversing Citizens United and limit the influence of the wealthy few over the rest of us. That would be a good first step on the road back to actual democracy.

  6. joe4liberty says:
    May 24, 2012 at 2:04 pm

    Sharon, be careful what you wish for. The fact that you are being robbed will not be lessened by robbing those who are not currently being so taken advantage of. The solution is not to steal from the half that is keeping their money, but to let our half keep our money as well... think of the jobs that would be created!

  7. David Theroux says:
    May 29, 2012 at 5:23 pm

    Roger, A better question is how did we get to a point where the government can claim the private property of each and every citizen and then imprison them if they oppose such expropriation? How also did we get to a point when “progressives” can advocate control over each and every thing that we do regarding food, shelter, clothing, land, water, money, employment and business, family and children, education, healthcare, etc., etc.? This authoritarian mindset that is rooted in envy and ignorance is the basis for oppression.

    Against Leviathan: Government Power and a Free Society, by Robert Higgs

  8. David Theroux says:
    May 29, 2012 at 5:43 pm

    Roger, By definition, we are never the government because the government imposes its edicts on us by force. Any government is always some individuals who use coercive power to rule others, and if you do not comply, lethal force will be applied. And to impose such power, government officials must instill an ongoing climate of fear to keep the citizenry in line.

    “Fear: The Foundation of Every Government’s Power,” by Robert Higgs (The Independent Review)

    And as Lord Acton noted, “Power tends to corrupt and absolute power corrupts absolutely.” For this reason, America’s Founders sought to radically limit the power of government to an absolute minimum, but today such limits are ignored and enormous injustices and economic and social harms have resulted.

    “Government Protects Us?”, by Robert Higgs (The Independent Review)

    Beyond Politics: The Roots of Government Failure, by Randy T. Simmons

    Crisis and Leviathan: Critical Episodes in the Growth of American Government, by Robert Higgs

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