What’s to stop a large bloc of voters from joining forces to create laws so that they get a free ride, that they, in effect, make everybody else pay their way? That’s a rhetorical question, incidentally. The answer, for democracies has always been well known. Further, there is no way for the answer to be anything but obvious.
A CNN story that “47% will pay no federal income tax” admits an “increasing number of households end up owing nothing in major federal taxes, but the situation may not be sustainable over the long run” (emphasis mine). They continue, à la a standard course in civics:
A key reason why there is a zero-liability group at all is because the U.S. tax system is progressive. Those who bring in more money pay more than those lower down the income scale to support government functions such as national defense and social safety nets like Medicaid for those in need. That progressivity can be dialed up or down.
“Some think it’s too progressive. Some don’t think it’s progressive enough,” said Roberton Williams, a senior fellow at the [Tax Policy Center].
President Obama falls into the latter camp. He has proposed increasing the income tax burden on families making more than $250,000 and individuals making more than $200,000, while offering new measures to reduce the tax bite for most Americans making less…under Obama’s budget, he would keep the ranks of the non-payers higher than they would otherwise be.
To the source! One can navigate directly to the IRS site (link), where many helpful statistics are compiled. Shown for your pleasure is the “Total income tax share (percentage)” by year for the bottom 50 percent of taxpayers. I have shaded the Republican and Democrat presidencies using the standard red and blue.
In 1986, the bottom 50% were paying about 6.5% of all federal taxes. In 2006, it was already down to just under 3%. The new rate, in 2009-2010, will be something around 1%. Crudely (and linearly) extrapolating from this trend, by 2024 the bottom 50% will pay absolutely nothing. It’s worse than that, of course, because many in this group will receive a “rebate”, i.e. a gift called “earned income tax credit”, id est free money.
Pause and ponder this: half of all Americans will let the other half pay all the federal expenses of the other.
Let’s look at the other breakdowns. This plot is the same, but for the bottom 50%, 75%, etc., up to the bottom 99%. Except for a slight reversal at the end of the Clinton years, the bottom 99% have been paying less and less and less. By 2006, the bottom 99% of Americans were paying about 60% of all taxes.
And what does that imply? This picture. It shows the percent of taxes paid by the top 1% of all earners. Reagan kept their burden hovering around 25%. The big jump for these generous folks, as it turns out, started under Bush the Elder, increased until a later-year-Clinton reprieve, and then continued its inexorable climb under Son of Bush. Obama has promised to continue the Bush clan’s enlightened thinking. Again, crudely extrapolating the trend puts the top 1% paying half the bill by 2020, though it’s true Obama has promised to redouble his taxation efforts, so maybe 2015 is a better guess.
I’m sorry to point out the obvious, but this kind of fun just cannot last. Even if we confiscated all the dough from the top earners, it would not be enough to fill the growing (growling?) federal stomach. Politicians are leery of pointing this out, however, because the implications are not pleasant to that bloc of voters we talked out, the ones who demand ever-increasing government gifts.
I have no long-term solution, except to suggest a way to address the inherent unfairness of the situation. When your aunt sends you a pair of socks for the Federally Recognized Holiday of December 25th, you are expected to reciprocate with a thank you note. Common politeness and decency insists on this.
Therefore, the half of Americans who receive the yearly (free) present of a Government with all its trappings, should be required to write those of us who paid for it a thank you note. Each free-riding citizen would receive a random name and address of a taxpayer and must, by midnight of April 15, dispatch a polite letter thanking its addressee for the largess, and long may it continue, etc. Any failing in their courteous duty would be forced, as the rest of are, to pay taxes for the following year.
Naturally, we would pay for the envelope and postage.