E-Newsletter No. 27 ______ March 2016
During the Democratic Party presidential candidates’ debates, there has been a lot of talk about how the amount of taxes paid by the country’s wealthiest citizens is not enough, and that they should pay their “fair share”. Unfortunately, none of the candidates have specifically defined what amount or level of taxes would be fair (only that it’s not enough). And unfortunately, with the Left’s (Progressives’) spending plans, it appears that no amount could ever possibly be high enough. And unfortunately, we cannot even afford our current level of spending, so the federal government continues to rely on annual deficits and an increasing amount of debt that is being pushed onto future generations.
We have included the following link to an interesting five-minute video that attempts to answer the question of whether the rich pay their fair share of taxes.
https://www.prageru.com/courses/economics/do-rich-pay-their-fair-share
The question has two parts – who is rich? and what is fair? Contrary to many people on the Left, our Editorial Board members are not envious of successful people. (We applaud successful people). Nor do we feel that the issue of [the fact of] ”income inequality” needs to be “fixed”. We continue to believe that our country’s citizens should be free to make as much money as they can (or want to) as long as they are not doing anything that is illegal.
So the question is – What is “fair” (for everybody – now AND in the future). The video puts forward one possible answer – that the portion of the population that makes 10% of the country’s income should pay 10% of the country’s taxes, and that the portion of the population that makes 20% of the country’s income should pay 20% of the country’s taxes, and so on. We disagree with this simplistic answer, because we feel that each American citizen should strive to be a self-reliant person, and no individual / family should pay federal income taxes until they have earned an amount that is at least equal to the applicable federal poverty guideline amount. We also believe that progressive income tax rates continue to be appropriate (at least for the near future) and that tax rates should not be decreased until the country’s cumulative debt amount has been repaid.
The video also discusses payroll taxes for Social Security and Medicare. Unfortunately, it does not discuss the fact that an employee’s wages are first taxed for Social Security and Medicare, and then those wages are taxed again for federal income tax purposes. The video also does not discuss whether these socialistic programs should ever have been implemented to begin with, because they represent an over-reach by the federal government, and they are no longer affordable (as currently constituted) due to changes in the country’s demographics. It is immoral that we, as a country, have pushed the financial obligation for these programs onto future generations. These programs need to be fundamentally transformed over a multi-year transition period, and the payroll taxes that are paid each year for these programs should count towards satisfying a portion of a person’s / family’s total tax obligation for the year.
Hillary Clinton has said that if she were to be elected, she would not increase taxes on any family making less than $250,000 per year. So how is she going to eliminate deficit spending, begin to repay the country’s debt, and raise enough taxes to pay for the new programs that she is proposing? Well… She (or Bernie Sanders) is simply going to get the money from the Top 1%. However, as noted in another Prager University video entitled “How to Solve America’s Spending Problem” increasing the amount of taxes on the Top 1% is not a sufficient (or viable) answer. The amount of the deficit that is projected for the current fiscal year in President Obama’s latest budget is $616 billion (another $2,000 per citizen). Even if the federal government were to take 100% of the earnings of everyone who makes more than $1 million, this would only raise federal tax revenues by $600 billion, so this wouldn’t even get us out of the hole for the current year. Pandering career politicians (in both parties) have never been any good at simple math, nor at being straightforward with the country’s citizens. It is true that the federal government could go ahead and take this action, and within a few years, the number of viable businesses in the country would decrease significantly (and the number of employees who earn a living wage would also decrease significantly). We cannot tax ourselves into prosperity.
Our Editorial Board believes that the only thing that is “fair” is to have each citizen assume personal responsibility for their own life (including their own food, shelter, utilities, continuing education, healthcare, retirement, etc.). The federal government needs to reverse course, and stop trying to assume all of the roles that properly reside with civil society. We need to shrink the size of the federal government, and have it re-focus on its responsibilities that were laid out in the Constitution. Common Sense tells us that these self-evident truths are just as true today as they were back in 1776.
US Debt Clock – – February 1st – $58,727 per citizen / March 1st – $58,980