Tick - Tick - Tick
The Economy Bomb
Legislative attacks on America's most successful, productive and prolific taxpayers represent a ticking time-bomb for our economy.
October 30, 2010
John GaverPublishers note: This article is an annually updated feature of Action America, beginning with this article's first publication, in 2000. Each year, we update it with the latest tax collection data and links to recent legislation and news items, related to this developing threat to our economy. This year, we have a lot of new information. Please note our extensive use of links to unimpeachable sources.
An insidious, creeping cancer is eating away at our economy. Not only the Income Tax, but other legislative and regulatory attacks on success are forcing many of the people who pay the lion's share of taxes, to leave the United States and because of some of that legislation, those producers are now taking all of their wealth with them, thus very disproportionately reducing the tax and investment base in the United States.
That's a pretty bold statement. But I'll back it up. However, before I go into the details of this virtual economic time bomb, I want to make sure that we're all on the same page. So let's establish a few basic facts, about taxes and taxpayers, as a foundation.
The top-earning 1% of US taxpayers pay more than one third (38.02%) of all federal individual income taxes collected. (Source: IRS)
The top-earning 1% of US taxpayers earn just over one fifth (20.0%) of all federally taxable individual income. (Source: IRS)
The top-earning 1% of US taxpayers pay more than half again (50.6%) more of the total individual income tax load than they did when President Reagan left office (1989 tax year - 25.24% of tax load). (Source: IRS)
The top-earning 1% of US taxpayers are facing frivolous lawsuits in phenomenal numbers, simply because our lax tort laws make them easy targets of opportunity.
The top-earning 1% of US taxpayers are in more danger of government seizure (forfeiture*) of their private property than ever before in our history, due in part, to the Patriot Act.
The top-earning 1% of US taxpayers are Leaving the USA at the highest rate in history. (Source: INS/Census Bureau & Zogby International estimates)
The facts cited throughout this article are based upon statistics and calculations derived from data released by the US Internal Revenue Service, the US Census Bureau and other reputable sources (note: we realize that considering the IRS to be a reputable source is reaching). Links are provided to the source data, throughout this article. We ask you to note the impeccable sources of the statistics presented here, since it is the integrity of those sources, as well as their variety, that seals the case.
We invite you to follow the links provided and see for yourself. The facts are real and cannot be denied. Examine the numbers, use your own assumptions and do the math for yourself. When you recalculate the numbers, using your own assumptions, you will see just how serious the problem really is. It's real and it's daunting and it could very well spell disaster for the US economy, if certain positive actions are not soon taken.
The percentages cited above are not some bureaucrat's pie-in-the-sky projections, but rather, they are the totals of actual IRS receipts, that are released every year by the IRS, roughly 18 months after the close of each tax year. A link to the file on the IRS web site, containing the raw IRS data for this year (in Excel format) and an explanation of it can be found in the the companion article to this article, "1986-2008 IRS Collections Data by Income Category".
Let's start by looking closer at some of that IRS data and see how those numbers work out.
There were roughly 140 million tax returns filed in 2008. (Source: IRS)
The IRS collected $1.03 trillion in personal income tax in 2008. (Source: IRS)
The top-earning one percentile of taxpayers (1.4 million taxpayers) earned 20% of the income earned in 2008. (Source: IRS)
The top-earning one percentile of taxpayers (1.4 million taxpayers) accounted for $392.1 billion in income tax paid in 2008. (Source: IRS)
Based upon that IRS data, the top-earning one percentile of taxpayers (1.4 million taxpayers) paid over one third (38.02%) of the $1.03 trillion in total individual income tax collected by the IRS in 2008. We invite you to do the math for yourself ($392.1 billion / $1.03 trillion).
Based upon that data, the top-earning one percentile of taxpayers (1.4 million taxpayers) paid almost double their share of taxes (1.9 times) in relation to their share of income earned in 2008. Do the math (38.02% of taxes / 20% of income).
The top-earning one percentile of taxpayers (income over $380,354 in 2008) paid in excess of 50% more of the total tax burden than they did when President Reagan left office. At that time their share of the tax burden was only 25.24%. Do the math (38.02% / 25.24%). (Source: IRS)
What's wrong with making the successful pay more tax?
Many people who look at the above statistics and see that the top-earners are paying far more than their share, will immediately say, "So, what's wrong with making the people with the most money, pay a higher tax rate? After all, they can afford it."
Regardless of the fact that the successful, by and large, have "earned" their success, many people seem to think that the successful have, in some way, committed some horrible sin, by achieving more than their less industrious counterparts. Those people ignore the fact that while they were out having a good time, the successful were going to school, working hard and sacrificing, in order to generate the income that improved their lifestyles. The result of ignoring that fact, is that those people think that since the successful have more money than them, the successful should be forced to pay a larger proportional share of the tax burden, as penance for the perceived "sin of success".
Yet others, are suffering under the left-wing, media-fostered delusion that the most successful people don't pay tax. Of course, this delusion is solidly disproved by the actual IRS data, that shows that the top-earning 1% pay almost 40% of the taxes that are actually collected.
But the important point is that such arguments are not only absurd, but completely immaterial. The fact that some people even raise those arguments serves to show just how totally uninformed of the real problem now facing the United States, are many people, including many in the halls of government.
The problem to which I am referring, is a direct result of the position in which the successful now find themselves. These successful people, who are made up of the educated, the entrepreneurs, the risk-takers and the job-creators, are being systematically backed into a corner by our government. The most productive members of our society are:
paying almost double their share of taxes,
facing frivolous lawsuits by the greedy, in ever growing numbers (yes, the poor can be greedy, too),
losing any semblance of privacy in their business transactions,
having their business dealings saddled with onerous Patriot Act and Sarbanes-Oxley Act requirements that often take so much time and cost so much money that otherwise profitable deals end up costing money, if they happen at all and
having their property confiscated (forfeited*) by the government, at an ever increasing rate
Everything for which those top taxpayers have worked so hard, is now being threatened by the same government, whose job it is to protect all of its citizens from just those types of abuses.
Don't get me wrong. I'm not trying to make you feel sorry for all those "poor mistreated millionaires." Frankly, I don't care what you think of them. That's because what you or i or anyone else "thinks" of them doesn't matter.
I'm just trying to get you look at the situation from the point of view of the people whose response to all of this success-punitive legislation, will shape our economy, in the near future.
You see, if you understand their motivation, then you will understand that what our government is doing in this regard, can only make the situation worse. You'll realize that the successful see all of this, not just as an attack on success, but as an attack that is getting worse, by the day and that threatens everything for which they have worked so hard to achieve.
In fact, since the original publication of "Tick-Tick-Tick - The Economy Bomb", in 2000, more oppressive legislation aimed squarely at top-earning taxpayers, has made matters even worse. But to make matters far worse, Obama is now promising to further punish the successful, with even more taxes, to fund his social programs.
But, before you start shedding crocodile tears for those poor top income earners, there's another thing that an understanding of the successful should tell you. They have both the wherewithal to thwart such attacks and the entrepreneur mind-set to carry it off.
Remember that these people are almost all problem solvers. They didn't get to where they are by giving up, whenever things get a little tough. To them, these new legislative attacks represent only a speed bump on the road to even greater success. They will do what successful people always do, when faced with a problem. They will simply shift gears and veer off in another direction.
It is, however, the direction that many of our top taxpayers are now headed, that make these continuing attacks on success, a real threat to those who have not achieved such a level of success. The direction though, isn't a rhetorical direction. It's a physical direction and that direction is largely south. But it could just as well be east, west or north.
The successful are leaving.
The point is that our most prolific taxpayers are leaving. You see, it's this natural response of the successful, to the problems that our government is creating for them, that represent a ticking economic time bomb, for the rest of us and indeed, for the entire US economy.
So I ask you, considering all of the attacks on success, should we then be surprised if our top-earning taxpayers, facing an untenable situation, take the only legal route left open to them, for protecting everything for which they have worked so hard? Now, I'm not asking if you think that their actions are right or fair - only if we should be surprised, when people who are attacked, take the only remaining legal way out?
It's the same thing that's happening with Californians, moving to other states, but on a national level. Government created conditions in California have become so punitive that many of those who can afford to leave, are moving themselves and their businesses to other states. Of course, as we are all seeing, that exodus of wealth only serves to make matters worse for those who remain in California.
But while the main-stream media is making a big deal about people moving from California, to other US states, they're ignoring the fact that large numbers of wealthy US citizens are leaving the USA for other countries that offer the kind of freedoms that we used to have.
Many of our most productive citizens have already reached what I call their "government abuse threshhold" and chosen expatriation, as their last remaining legal option for protecting all that they have worked so hard to acquire. We're talking about ordinary people, who are just trying to protect what they have earned, just like the people leaving California.
However, besides punitive levels of taxation on upper income earners, there are many other governmental assaults on success. The USA Patriot Act, two-thirds of which has absolutely nothing to do with fighting terrorism, created numerous privacy and financial problems for all Americans. While the Patriot Act seriously hurt the rights of all US citizens, it was the successful, whose rights were impacted most.
Other oppressive measures, aimed at top taxpayers were hidden in other unrelated bills, such as the Homeland Security Act, the Health Insurance Portability and Accountability Act, to name just two of the worst. In fact, before George W. Bush left office, he signed into law, the first ever US "Exit Tax" (hidden in the benign-sounding, Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) - H.R.6081 and today, we're looking at the complete government takeover of healthcare, which will be paid for on the backs of our most productive citizens... well, at least on the backs of those productive citizens who remain.
It can't be denied. Successful Americans see these measures as direct assaults on everything for which they have worked so hard and they are leaving the USA for more wealth friendly climates, at the highest rate in history.
Much much more at link! You should read it!http://www.actionamerica.org/taxecon/ticktick.shtml