If the rich are so powerful, if they supposedly manipulate public policy for their benefit, why are their taxes so high?
Several years ago at a party, I met a woman who loudly railed against "the rich" whom she insisted "paid no taxes."
I asked, "What percentage of federal income taxes do you think is paid by the top 1%, those earning about $350,000 or more?"
She said, "Probably barely nothing. Maybe 1% or 2%." The answer at the time is that the top 1%, while earning about 20% of the nation's income, paid 40% of the federal income taxes.
Her ignorance is common, particularly among Democrats, who chant that "the rich must pay their fair share" or "the rich don't pay their fair share."
In 2008, Investor's Business Daily commissioned a poll asking what people thought the top 1% paid as a percentage of federal income taxes. Thirty-six percent said 10% or less; 15% said 10% to 20%; and 10% said 20% to 30%. Just 12% knew the rich paid 40% or more.
Today the percentage paid by the top 1% is even higher. In December 2024, the National Taxpayers Union Foundation wrote: "According to the latest IRS data, the top 1% of earners paid 40.4% of all federal income taxes in 2022. ... The other half of earners, those with incomes below $46,637, collectively paid 2.3% of all income taxes in 2021."
A 2024 poll by the Tax Foundation found that one-third of Democrats thought the top 1% "pay only 1% of all income taxes."
For decades, Sen. Bernie Sanders (I-Vt.) has insisted that "the rich" make the rules, call the shots and run the country. In 2018, he said, "We live in a nation owned and controlled by a small number of multi-billionaires whose greed, incredible greed, insatiable greed, is having an unbelievably negative impact on the fabric of our entire country." On his recent "Fighting Oligarchy" tour, he made the same argument.
Question: Why have these greedy millionaires and billionaires failed to apply their "greed, incredible greed, insatiable greed" to prevent an increasing percentage of their income from being taken away from the government in taxes?
The rich can no longer even deduct their state and local taxes from their income. In November 2024, Smart Asset wrote: "The state and local tax (SALT) deduction allows taxpayers of high-tax states to deduct local tax payments on their federal tax returns. The tax plan signed by President Trump in 2017, called the Tax Cuts and Jobs Act, instituted a cap on the SALT deduction. ... Starting with the 2018 tax year, the maximum SALT deduction became $10,000. There was previously no limit. This has left some high-income filers with higher tax bills."
During the 2008 presidential campaign, then-Sen. Barack Obama promised to raise the capital gains rate on the wealthy despite evidence that doing so would generate less revenue. At the Democrat primary debate, moderator Charlie Gibson of ABC News asked Obama: "Bill Clinton in 1997 signed legislation that dropped the capital gains tax to 20%. And George Bush has taken it down to 15%. And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28%, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?"
Obama's answer? "(T)o make sure ... that our tax system is fair."
After he became president, Obama raised the capital gains tax rate. The rich could not stop him.
For a group that supposedly wields so much power, "the rich" sure has lost a lot of battles on the federal income tax rate, on the capital gains rate and on the deduction of state and local taxes.
As for the alleged vice grip Sanders believes the rich maintain over the politicians to whom they give money, Willie Brown, the former long-time and powerful Speaker of the California Assembly, said, "Any politician that can't take people's money and then turn around and screw them doesn't belong in the business."
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