OPM - One Percenter Edition
The One Percent. The level of income that so many aspire to, and that so many love to despise. Routinely accused of everything from exploiting the masses, to pillaging the treasury, to swimming in vaults full of gold,
or to cackling atop piles of greenbacks.
The reality is that the wealthy stay wealthy by putting their money to work. Even under "normal" levels of inflation, a person sitting on a million dollars in cash will lose $20K of that every year. Someone with a million dollars in cash in January 2021 would have lost $170K of that hoard.
A million bucks ain't what it used to be.
Money can be and usually is put to work in many ways, and I trust that anyone reading this knows that. The convenient lie that many tell themselves in order to justify their envy of the rich is that the riches held by the rich don't do anyone any good, so it's good and proper that those riches be taken by the government to be spent on "the common good."
That convenient lie is abetted by another lie: that the rich don't pay enough in taxes.
The numbers beg to differ. Per the endlessly-useful Tax Foundation's analysis:
If your Federal Adjusted Gross Income (AGI) is over roughly $700K, you are a 1%er. If your AGI is below $47K, you are in the bottom half of earners.
Roughly 1.5 million households earn above the 1% threshold. By contrast, 77 million households fall in the bottom half of earners based on AGI.
The average Federal tax rate paid by 1% households is 25.9%. This is higher than every other income bracket, and eight times what the bottom half of earners pay.
The average dollar amount paid to the US Treasury as income tax by a single 1% household is about $650K, and is one hundred times what a single bottom-half-earner household pays.
The total Federal income tax paid by 1% households is just over a trillion dollars. This is twenty times what the bottom half of earners pay.
The 1% pay 46% of total federal income taxes. The bottom half pay 2.3%. To reiterate, 1.5M American households pay roughly half the total Federal taxes collected every year. 77M households pay almost none of them.
By any measure, the wealthiest in America pay the most in taxes. They pay a larger fraction of their income, they carry a larger share of the tax burden, and they pay more in actual dollars.
In short, the rich not only pay their "fair share" by any reasonable definition of "fair," they pay a whole lot more.
And that's before we dive into state income taxes, local income taxes, property taxes, or sales taxes. The payroll taxes, i.e. Social Security and Medicare, are taken at a flat rate, and only Social Security taxes are subject to a maximum income limit. Since SS is paid to retirees based on past contributions, and since it has been sold to the public as a savings plan*, we can remove SS from the "fairness" argument regarding income, taxation, and fair shares.
Most people are uncomfortable with the notion of brazen and direct theft or robbery. Evolution has wired us that way, at least within the confines of our "tribes," since people who stole from their tribes in ancestral times would be shunned or expelled (if not summarily executed). Beyond that, we've all been taught that theft is bad since we were children. Still, the siren song of Other People's Money is strong, and so we have a growing segment of society that's perfectly content with using government proxies to steal from others so that they or people they favor can be handed Other People’s Money (OPM).
My long-standing views on taxation can be read here.
This ugly covetousness is further reinforced by the people who've figured out that there is money and power in teaching it to the young and impressionable. That is, our domestic socialists, of various flavors. They unabashedly peddle the lies that the rich aren't carrying enough of the load, that the rich got rich by exploiting everyone else, that the rich lack morals or altruism, and that all this and more makes it OK to Robin-Hood their gilded asses.
They conveniently forget that Robin Hood actually recovered money taken by the tax man and returned it to those it was taken from, of course.
What do the rich get for all that money? Does the average 1%er receive a hundred times more government services than a bottom-50%er? Do they get $650K money's worth from the Feds?
Yeah, no.
Next time you hear someone carry on about how the rich are not paying their fair share, send them over here. Many of them do not realize how badly they've been lied to.
The rest? Well, they are just lying to themselves.
* Since I've repeatedly outed SS as a Ponzi scheme and a redistributive tax rather than as a savings plan, I offer this footnote: Fairness complainers have a choice: continue to pretend that SS is a savings plan, in which case they cannot claim that it burdens the working classes more than those who earn above $168,600, or they can admit that it's a form of wealth redistribution, in which case they have to admit that it's a tax. But even then, it doesn't benefit the rich any differently than anyone else. Payouts are based on contributions.
Being a person who is considered rich I’ve always found this highly offensive as I was willing to take risks that most are terrified of. I started a business at 27 from the proceeds of a house I had purchased after I got my first and only other job at Xerox Corp. I was one of the top 20 sales people in the entire country and was making in the low six figures at Xerox. How did that happen? I worked harder, smarter and longer hours than others were willing to do. Got to the office at 7am left at 8:30 to see clients in my territory came back to office at 5ish and knocked out proposals on manual typewriters most nights until 10pm. Went home and repeated the next day. I quit this job, sold my house and started my IT company. I blew through almost all the “house money” over 2 yrs before the company became slightly cash positive.
I worked 6.5 days a week. First in the office to open last out most days 9 at night Monday-Saturday half a day Sunday for 10+ years. In the 44 yrs I owned the company I joked that I had no real vacations because wherever I was I called in for several hours a day and in later years called and emailed. I created 100s of high paying jobs. This was my choice. Most don’t have the fortitude and tenacity it takes to absorb and keep moving forward due to the ongoing abuse one takes in creating and then profitably expanding a business. All this was my choice. I resent the jealousy of those who are unwilling to do the work and attribute my success to luck…luck is what happens when preparation meets opportunity with courage. I nearly went out of business and lost everything twice. I resent the millions I paid in taxes when I sold my business because I know that money will be squandered. I resent all who are jealous of me because they lack the courage to take the risks I did throughout my career. Instead of being admired and held up as an example I am vilified by Washington’s grifting swamp creatures and the tens of millions of uneducated fools in our country.
My sense of fairness argues that any marginal tax rate greater than a uniform percentage tax rate that would raise the same total revenue is a “success penalty”.