Stephen Moore, senior economics writer for The Wall Street Journal, and I'm proud to say former GMU economics student, wrote "The U.S. Tax System: Who Really Pays?" in the Manhattan Institute's Issue 2012 (8/12). Let's see whether the rich are paying their "fair" share.
According to IRS 2007 data, the richest 1 percent of Americans earned 22 percent of national personal income but paid 40 percent of all personal income taxes. The top 5 percent earned 37 percent and paid 61 percent of personal income tax. The top 10 percent earned 48 percent and paid 71 percent of all personal income taxes. The bottom 50 percent earned 12 percent of personal income but paid just 3 percent of income tax revenues.
Some argue that these observations are misleading because there are other federal taxes the bottom 50 percenters pay such as Social Security and excise taxes. Moore presents data from the Tax Policy Center, run by the liberal Urban Institute and the Brookings Institution, that takes into account payroll and income taxes paid by different income groups. Because of the earned income tax credit, most of America's poor pay little or nothing. What the Tax Policy Center calls working class pay 3 percent of all federal taxes, middle class 11 percent, upper middle class 19 percent and wealthy 67 percent.
President Obama and the Democratic Party harp about tax fairness. Here's my fairness question to you: What standard of fairness dictates that the top 10 percent of income earners pay 71 percent of the federal income tax burden while 47 percent of Americans pay absolutely nothing?
President Obama and his political allies are fully aware of IRS data that shows who pays what. Their tax demagoguery knowingly exploits American ignorance about taxes. A complicit news media is only happy to assist. We might ask ourselves what's to be said about the decency of people who knowingly mislead the public about taxes. Of course, I might be all wrong, and true tax fairness dictates that the top 10 percent pay all federal income taxes.