|“Man, I sure need a tax cut — this is an expensive lifestyle.”
Americans dread April 15 more than any other day of the year. That is the deadline for citizens to pony up their income taxes, unless there has been an extension.
No one enjoys paying taxes. Those with more modest income have to send funds to the government, even while payments of some of their bills are overdue. Many of the more affluent dislike their hard earned money going to finance government programs that they do not support.
A common disdain for taxes unites people from different economic levels. As a result, many lower income Americans have lost their sensitivity to the objectives of the graduated income tax policy. Its goal is to require the rich to pay taxes at a higher rate so that the government can afford to finance safety net programs for the less financially fortunate.
The looming deficit has raised the necessity of cutting the budget, but Republicans also want to cut taxes. Their proposal is to cut government programs by $4.3 trillion over the next decade, while still cutting tax revenues by $4.2 trillion during the same period.
President Barack Obama has acknowledged that budget cuts are imminent, but wealthy Americans will be required to pay more in taxes in order to maintain the safety net for the less privileged. A review of tax returns for 2008 indicates that there is a small group of taxpayers, numbering only 140,000, that earn an average income of $6.0 million. This small group pays 18.5 percent of the nation’s income taxes. Their effective rate of taxation is 22.7 percent.
The maximum income tax rate is 35 percent for all income over $373,650. However, the very rich earn much of their income from capital gains that are taxed at 15 percent. They also have the sophistication to take advantage of tax avoidance strategies that reduce their effective tax rates. Americans earning only $34,000 to $82,400 are taxed on that income at 25 percent. That is more than the effective rate for the very wealthy.
In 2008 of the 139,960,580 taxpayers, only 6,998,029 were in the top 5 percent, and they paid 58.7 percent of all income taxes. There is no alternative but to increase the tax assessment on this group, especially the very rich, if the nation is to maintain the cost of health care, education and other necessities of a civil society. It is strange that many Americans who need those resources have identified with the opposing conservatives.
There are undoubtedly numerous explanations for this unusual and politically contrary behavior. One explanation is that some Americans are so ambitious and so competitive that they identify with the affluent, even before financial success has come to them. A good example is the man who wants low tax rates because he is planning to win the lottery.
It is well to note that only 5 percent of taxpayers earn more than $159,619. Ambition to earn much more than that is well and good, but everyone should remember to keep a taut safety net to catch you in case of an unexpected fall.
The affluent should also do well to remember the following biblical edict before they oppose tax adjustments too assertively — “for unto whomsoever much is given, of him shall be much required.” Luke 12:48.