And the further up the income ladder one goes, the greater percentage of the total tax burden one shoulders. According to the IRS, in 2007 the top 1 percent of taxpayers paid more than 40 percent of all federal income taxes. That’s more than the bottom 95 percent combined paid.
Going back to the poll, Gallup also found that, “slim majorities of both lower- and middle-income Americans say they pay about the right amount of taxes, while upper-income Americans tend to think they pay too much.” And as the numbers show, those bigger earners are correct. They do pay too much.
At some point, “the rich” will simply decide enough’s enough. They could choose to work less and earn less, or retire completely and concentrate on sheltering their assets. Or they might opt to move to a country with a friendlier tax climate. This tax-driven migration happens all the time as the successful flee high-tax states for more tax-friendly climes.
The federal government can’t continue to play Robin Hood, taxing from the few and handing goodies to the many. If our policy punishes success, we’ll have fewer successful entrepreneurs. And the resulting weaker economy means less revenue for the government. Ironically, one of the surest (and least desirable) paths to a smaller government is an economy destroyed by high taxes on the successful.
But there’s a way to keep the golden goose at home and producing: A flat tax, one that applies the same, low rate to everyone regardless of income. Democratic government works only when almost everyone is required to ante up something. It’s time to take the free lunch off the menu for everyone except the truly poor.