A common response to my post showing that The Rich Pay for the Federal Government was that the rich also get more benefits from the federal government. Let’s go to the numbers. Here’s a chart showing federal spending categories for 2007. (Click to expand.)
Social Security, the biggest category, doesn’t benefit the rich at all because net Social Security payments are heavily biased against the rich. According to Eugene Steuerle and Adam Carasso of the liberal Urban Institute a two earner couple earning $230,000 a year (thus putting them at the mean household income for the top 20%) and scheduled to retire in 2030 will pay $227,886 more in social security taxes than they receive in benefits (in present value).
Defense is the next biggest category. To me a lot of "defense" spending doesn’t benefit anyone but let’s be generous and say that the rich benefit from military spending in proportion to their income share which for the top 20% means 55%. Thus $301b.
Medicare benefits the rich less than the poor since they are healthier (plus they must pay higher premiums) but let’s say that Medicare benefits the rich in proportion to their population. If we say the top 20% are rich and assume that this is the same in the 65 and older category then 20% of Medicare goes to the rich. $78.8b.
Medicaid doesn’t benefit the rich. The rich do use unemployment insurance but at far lower rates than the poor. Does welfare benefit the rich? Not directly but maybe from the warm glow. I don’t think the benefits of charity are what most people mean when they say that the rich benefit from the federal government but who knows. Let’s again be generous and say that the warm glow goes just to the rich and that it is worth 20% of the benefit to the poor. $73.4b
Everything else includes the example that people always seem to mention first, roads! Alas, the entire transportation budget is just $77 billion, not much there even if a lot of it goes to the rich. By my judgment a lot of "everything else" has low value but again let’s be generous and say that the rich benefit from everything else in proportion to their income share (.55). $233b.
Excluding the national debt gives us a total of $687 billion out of $2597 billion going to the rich or 26%. If we assume that the division of the national debt is the same as for the government as a whole (since this is just past expenditures) the percentage is still 26%.
Thus in a generous accounting the rich get 26% of the benefits of federal spending and pay 68.7% of the costs. In percentage terms the rich get about 37 cents on the dollar.
Alternatively stated about 63 cents of every dollar in taxes paid by the rich is transferred down. Given that the median voter is a taxeater not a taxpayer we should not be too surprised, although this is a smaller number than I would have guessed before I did the calculation. From an efficiency point of view we should be happy that the rich don’t get too much – transferring resources creates a lot of waste but transferring resources from the rich to the rich is especially wasteful.
The basic point is clear; In the United States, one can argue for taxing the rich on the ability to pay principle but not on the benefit principle.
Addendum: Thanks to Ted Frank for catching a math slip-up on my part which I fixed raising the total to 26%.
← Previous Comments
John,
We agree that the protection of the right has value. It is like a ticket to a Bruce Springsteen concert. Everyone who attends the concert gets to hear the music. But the seats at the front are worth more than the seats at the back. So you pay more.
Similarly, the protection of the right to achieve one’s full potential is worth more to some that others. That is, if you have more potential, you have more to gain from the protection. Ergo, you should pay more for that right. Anything else would be communistic.
Rich,
While I accept the premise that the wealth of some will increase without government, I reject the premise that the wealth of the nation will always increase as the size of government declines. Were that true, Somalia would be the wealthiest nation on earth.
The US disproves your point. At the end of the 19th century, the US government was tiny compairing to today’s standard and the US was a relatively minor country. By the end of the 20th century, the government was huge and the US was the only superpower, economically and militarily. Maybe it would have been even moreso, had there been less government, but maybe not.
JP (and Rich Berger implicitly) ask:
“a good approximation of the total value of government , (including all tangible and intangible costs and benefits of regulation), is the present value of lifetime wealth
I don’t understand the reasoning behind this statement.”
a) Without government, we would, by definition have anarchy. Hobbes called this the “war of all against all”. See the posts at 8:41:59 AM, 8:44:06 AM and 9:20:13 AM for some more detail. The bottom line, is that everyone has subsistence income and wealth, at best. In fact, a lot of people would not even have that.
b) With government (at least the one we have now), we have the wealth and income we have now (by definition).
Hence, subtract a) from b) and you get Tyler Cowen’s conclusion: namely the net value of government is the present value of lifetime wealth.
QED
Obviously, this means that wealthy people benefit much more from government, as it now exists, than poor people.
Of course, one could pick and choose certain functions of government to change ‘on the margin’. This might help or hurt various groups of citizens, depending on which functions one changed. I don’t doubt that we could make changes that make the wealthy (even) wealthier, at least in the short run, if those were your preferences and you didn’t give any political power to average citizens.
But if the question is simply “Who benefits from [our] government?”, then the answer is very straightforward: those who currently have the most wealth, at least if one measure benefit financially.
Alex reminds me: “Student, please consult the title of this blog.”
I assume this is in reference to my looking at total lifetime benefits from government as opposed to some type of “marginal” benefit. Is that right?
Well, there are virtually infinite margins one could change when it comes to regulations, rights, etc. In fact, it’s not even clear that many of them can be reduced to a scalar or vector space.
Furthermore, it’s not clear that Alex himself was doing a marginal analysis when he reported calculated the TOTAL government spending in various categories. He never once used the word “marginal”, in fact. However, let’s give him the benefit of the doubt, and assume he was merely using the total benefits that he reports as proxies for the marginal benefits that he really meant to discuss. Apparently, he is therefore assuming that marginal benefits are proportional to total benefits. Economists do this all the time (although not necessarily with good justification).
Would it be fair for me to do exactly the same thing as Alex?
Okay, then, assume the “marginal benefits” of government (on some hypothetical margin of rights, regulations, transfers, taxes, etc) are proportional to the total benefits.
The total benefits are great for wealthy people than poor people.
Hence, the marginal benefits are greater for wealthy people, too.
QED
a) Without government, we would, by definition have anarchy. Hobbes called this the “war of all against all”. See the posts at 8:41:59 AM, 8:44:06 AM and 9:20:13 AM for some more detail. The bottom line, is that everyone has subsistence income and wealth, at best. In fact, a lot of people would not even have that.
b) With government (at least the one we have now), we have the wealth and income we have now (by definition).
Hence, subtract a) from b) and you get Tyler Cowen’s conclusion: namely the net value of government is the present value of lifetime wealth.
This seems to assume that the current government is the cause of the current levels of wealth. All we can say with complete confidence, however, is that the current government is consistent with the current levels of wealth.
If we were all forced to carry around 50-pound weights wherever we went, young, strong adults would fare better than children, the old, and the infirm. Young, strong adults would be able to accomplish more than other people. But that would not mean that the 50-pound weights are responsible for the greater accomplishments of young, strong adults.
jp, slave morality is correct. It is frightening how jealous and resentful these people are, even presumably educated people. Many seem to assume that say, doctors and lawyers, are this elite society who feast on the poor and middle class. They don’t seem to realize that most doctors and lawyers come from middle class backgrounds, that most will never make more than six figures in a year (and that a large chunk of their salary goes towards their crazy student loans), and that the vast majority work 60-70 hour workweeks, and sometimes more, to make their comfortable but not extravagant salary. The fact that these people want to bury “the doctors and lawyers” for the misdeeds of the “rich” is proof that they have no idea about which they speak.
Slave morality indeed.
Randy,
I do not agree that it could be done.
I submit to you that you benefit from the public subsidizing the education of your physician, your accountant, your attorney, etc. Were public schools effective (something for another post), you would benefit from the public subsidizing the education of children of those who could not otherwise pay for an education. How do we figure out what the individual benefit was from Reagan standing in Berlin and telling Gorbechav to take down that wall?
These benefits are indirect. Other benefits are so indirect that it is impossible to quantify their costs.
Were you able to quantify ALL the benefits a person receives from ALL public spending, sure, we could figure our the benefit side of taxes accordingly. But we can’t do it.
JP,
I think we can say, with the utmost confidence, that the laws of the US, that is the government, is the cause for the country’s great wealth. One of the greatest things our government (mostly at the state level) has done is allow for the “corporate shield.” Without it, shareholders would have unlimited liability. Take away corporations and this country would be nothing.
I still don’t see why the extremely large benefit/cost ratio from property protection laws – i.e. for what we spend, individuals receive a lot of consumer surplus – means the rich must pay so much above the odds on other social spending that has nothing to do with property protection. (Again, this is from a benefits point of view, before we account for equity.) One way of interpreting Tyler’s comment is an attempt to move the debate on from seeing “government” as an institution which can be scaled up or down, but is homogenous in its nature. We should be seeking to unbundle the different products we get in our analysis, like any good economist would.
Do rich people have a higher life expectancy? If so, wouldn’t they actually benefit disproportionately from Medicare?
“Hence, subtract a) from b) and you get Tyler Cowen’s conclusion: namely the net value of government is the present value of lifetime wealth.” This is terrible logic, which excludes among other things all technological and medical change. It is like saying, “what is the value of penicillin? A rich person is worth more so should pay more for a penicillin shot.” Now, compare an 80 year old millionaire living alone to a 10 year old middle class child and tell me again, who will derive greater economic benefit from the shot? It is not a function of wealth.
“One of the greatest things our government (mostly at the state level) has done is allow for the “corporate shield.” Without it, shareholders would have unlimited liability. Take away corporations and this country would be nothing.”
Sorry but this is false. There have been many sole proprietorships and general partnerships that have generated above average wealth. Every member of a professional partnership, even if the liability is limited for their colleagues’ acts and omissions, incurs the risk of unlimited liability for their own acts and omissions. Yet they are often quite wealthy. Every citizen incurs the risk of unlimited liability when they drive a car. yet wealthy people drive a car. The value of the statutory limitation on liability can be easily replaced with a liability insurance policy and, for the risk averse, an excess policy. The long tail risk of a greater liability is sufficiently low that most people ignore it. You also overlook the fact that the unlimited “liability” is itself a creature of government. You speak as if it were a natural condition. So you cannot speak of the limitation on liability as if it were a naked benefit. It merely limits the cost of the imposition of liability.
“Do rich people have a higher life expectancy? If so, wouldn’t they actually benefit disproportionately from Medicare?”
No, because they can replace it. As Alex wrote, read the title of the blog. The marginal utility of Medicare is much greater the less you have.
Just on the anarchy argument, with due respect, much of the government’s spending and taxx collection is for the elderly and sick. It’s not plausible to contend that if that were to stop, the wealthy would be at danger of attack by anarchic mobs of elderly and sick such that the wealthy need to buy them off out of fear. As for defense, come on. Our wealth lies between two oceans. Mexico and Canada are not attacking us. We do not need a major defense budget to protect wealth here. There is no plausible case that the stationing of troops overseas, e.g., in Iraq or N. Korea, benefits the rich or that the rich as a group support the war. Support for militarism tends to come from segments of the population not defined by wealth for reasons that are noneconomical in nature. The military budget is not an economic benefit to the society at large or its wealthy members, it is an economic waste in large part because it vastly exceeds what is needed for our own security interests. Certain peole who are the recipients of military spending benefit but they tend not to be rich.
ASOE,
Also, I do not believe that humans will long live without some form of governance, so I am not sure how we can posit that the situation would stay the same. I would guess that if you removed all government institutions, you would some time after get something that resembled a feudal society. I am not going to guess how long it would take. That would be very dependent on the culture of the people in question. There would be different winners and losers, but I suspect many of today’s winners would manage to stay winners. I believe, for a time, overall wealth would decline, as you have said, but not be virtually eliminated.
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So, Alex, I look forward to your next post following the logic of your last two to the obvious policy implication: letting in so many low-skilled illegal immigrants who, and their children after them, will tend to be net drains on the taxpayers doesn’t make economic sense for America as a whole.
“he is therefore assuming that marginal benefits are proportional to total benefits. Economists do this all the time (although not necessarily with good justification).
Would it be fair for me to do exactly the same thing as Alex?”
ASOE, the answer is no.
Alex is talking about taxing and spending. You are talking about total benefits, including intangible, from the totality of government.
Spending and monetary benefits received have a proportional relationship. You will not increase the amount spent on anybody by decreasing spending. Therefore it is a reasonable assumption that proportionately cutting all taxing and spending will proportionately reduce monetary benefits received. A wealthy person who receives 37 cents in benefit spending for every 1 dollar of taxes will save 63 cents for every dollar of spending cut.
On the other hand, the relationship between government spending and overall benefit is unknown, and need not be proportional. It may very well be that marginally reducing taxing/spending will increase overall benefit to the wealthy. Certainly they benefit monetarily, so your assumption is that intangible detriments outweigh these. That is an untestable assumption and you have given no basis for it.
One more reason why “follow the money” will work and why determining the subjective value of government is unnecessary; the correlation between those who are net collectors of rent payment from the government (see the graphic) and those who believe that government has considerable value is very strong. And not surprisingly, the correlation between those who are net payers of rent to the government and those who believe that the government is a necessary evil at best and a psuedo-criminal organization at worst is also very strong. Are there exceptions? Sure. But people can be counted on to rationalize their interests. We can proceed from that point. And following the money will take us to the respective interests.
Alex, I like your story.
Here’s one for you:
The Land of Fairtax has a simple production function: one grock combined with one maston creates one grock-maston unit, or GMU, which is very tasty. Sadly a grock or maston alone is inedible. Fortunately, there are 100 grocks and 101 mastons scattered about the land. Sadly, the people of the land don’t bother to search for them and risk starvation – there’s no incentive since whenever one is found, anyone else can just come and take it away anyway. Wisely, the people institute a government with a single function: enforce property rights. Finders are keepers, under penalty of death to any stealers.
Highly incentivized, the people of Fairtax joyously rush out and collect all the grocks and mastons. Each person is strong enough to bring one to the grand market, where trades are made. Interestingly, the price for mastons drops to just barely above zero – apparently there’s an excess supply. Meanwhile, owners of grocks do very well indeed, capturing nearly all the gains from trade. Some citizens complain, but Al-Taba, the wizard of the land pointed out that that the grand market is always just and fair – how can it not be? Those people with a higher “instinct-for-grocks† quotient, or IQ, are obviously more worthy and justly deserve to get most of the wealth of society.
Meanwhile, on the island of Cantabridge, the people studied the situation in Fairfax with interest and concern. They also want to produce and consume yummy GMUs and liked the property rights idea – it clearly helped provide strong incentives. However, with the grocks and mastons all hidden behind a veil, each person worried that he or she might end up on the “excess supply† side of the market and be very poor. So, they decided that their government should have not One, but Two functions: protect property rights and transfer a 20% of the wealth from the richest people to the poorest. They all agreed and indeed, after hunting for grocks and mastons, one side did end up in slight surplus (which side has been lost to the sands of time). After the market clearing trades, the “rich† gave 20% of their wealth to the “poor†. Most people were satisfied, although some on each side of the exchange grumbled.
Then the wizard, Al-Taba, sent a carrier pigeon with a query. It said “I wonder who benefits from government?† The Cantabridgians responded (by carrier pigeon): “We all do. Without it, we’d probably starve†. But Al-Taba, replied in the margin of the first note: “No, no, no, fools. By ‘government’, I only mean the transfer function, not the property rights function†. Then he did some arcane calculations.
After 2 days and 2 nights, he emerged and proclaimed “Behold, I have the answer! The poor benefit from government, not the rich!†
At which point, a humble student listened, learned and turned to his girlfriend saying “I don’t think you contribute exactly as much money to our relationship as I do, here’s a new accounting and you owe me $43.17†.
Randy,
If economics were the key to figuring out how people voted, i.e., they vote with their pocketbook, there would be no way that Republicans could have won so many elections since 1952. There has to be something else at play.
What a bunch of Hokum!
None of this has anything to do with reality.
“Benefit” has to do with appropriations of revenues only to the extent that it impacts the appropriators’ motivations.
The true reason for the viability of “progressive” (scaled) taxation is summed up in the old English maxim: ” The art of taxation is to pluck the most feathers from the geese with the least squawks.”
The least economically “feathered” of our geese would not only squawk, but peck, viciuosly, at our political class at the conscious loss of much of their less adequate covering. Those birds more densely endowed can “take it” in losing some of their more adequate covering, and so tend not to be moved to much more than cackle a bit – it does not mean the same thing to them as it might to the less feathered.
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Reimannian and Allan,
There is also extensive literature on people’s willingness to rationalize their interests. Its a foundation of the psychiatric profession. Also, both Republicans and Democrats fall into the category of those who are net rent collectors and believe that government has value. That’s why they vote and seek office. They don’t argue over whether or not the government has value, as long as the revenue keeps flowing there is no doubt that the government has value to the political class, they only argue over how the rent collections will be distributed among them.
ASOE, in addition to my previous post, note that in your example as in life, without property rights there could be no transfer. If the size of “government” were cut 50%, it would be insane to cut property rights 50% as the “government” might well collapse entirely. However, note also that we are talking only about the federal government, which could go away entirely and not deprive us of property rights.
Also, are you familiar with behind-the-veil experiments? They do not come out the way you might expect.
TGGP — Thanks for all the information you have provided. By way of returning the favor, I think you would enjoy reading A Constitutional View of the Late War between the States, by Alexander Stephens (the one-time Vice President of the Confederacy). Used copies (especially of vol. 1) are pretty easy to find. It contains a lot of interesting evidence regarding how the federal government was viewed in the early years of the USA. An overview of it is provided in Edmund Wilson’s Patriotic Gore, which is available in paperback.
@ Huben
Nice example of reasoning from a faulty premise (survivorship bias – only the wealthy who remain citizens are included in the data set). What’s your deal about emigration, anyhow? Seems like your answer to everything lately is to introduce a false choice of either accepting the status quo or emigrating. Can you think of no other alternative? Or perhaps you think the status quo cannot be improved in any way?
Allen,
Re; “…there is no question that everyone benefits one way or another…”
Of course there is a question. You rely on the assumption is that only government can provide certain services and that assumption is in error. Mandatory monopolistic provision of a service is only of certain benefit to those who run the monopoly. Those who use services, even the ones they do use, would very often be better off if allowed access to competitive sources. One more time, the government has no right or justification to claim that the services that it mandates constitute a benefit. The claim is nothing but propaganda. If they want to prove that their services have value, they will have to eliminate the mandate and the monopoly.
Randy,
I really on no assumption. Your premise is not that government programs provide no benefit, but that the private sector could provide those benefits more efficiently. And your conclusion is that we should have a smaller government. While your premis is debatable point, it does not undermine my argument a whit.
oops. “Really” should be “rely”.
The point has been made but has apparently sailed over the heads who are insistent that we “just give the oppressed poor a break” that at high enough tax rates, the poor will simply leave. Seems pretty market-friendly to me.
Apparently tax rates are not too high as this isn’t happening.
I have a suggestion for the rich who think they pay too much in taxes: go buy your own island a la Richard Branson. You won’t owe anyone a dime. Build your own infrastructure, security, etc. See how that suits you.
Meter,
Suppose, just suppose, that the rich don’t actually pay the taxes they turn in to the government. Suppose that they simply adjust prices in order to collect what they turn in and that all taxes, regardless of surface form, are actually paid as hidden sales taxes. Suppose that you’ve been the victim of a first rate confidence job. How would that effect your thinking on the value of so called “progressive” taxation? I mean, if there really was no such thing as progressive taxation?
Underlying most of the arguments I see here is this assumption: the rich actually deserve their money. People accumulate wealth and leverage high incomes by means of educational opportunities, capital, social class and luck, for which they can claim negligible personal responsibility. Since the distribution of wealth is effectively arbitrary, protesting “unfairness” to the rich of progressive taxation seems beside the point.
Porita: “People accumulate wealth and leverage high incomes by means of educational opportunities, capital, social class and luck, for which they can claim negligible personal responsibility. ”
That’s not at all the way it happens in the U.S. A small few may inherit their wealth. But most earn their riches through hard work, good decision-making, and assumption of risk.
Social class was an important determinant of wealth accumulation decades ago, but no more. Read The Millionaire Next Door by Stanley and Danko if you need proof.
You may count inherited intelligence as luck, whatever that means. You may also count being born into families that teach solid work ethics as luck. Or perhaps you mean that being born into the U.S. as opposed to sub-Saharan Africa is luck. However you wish to define luck, there are many millions in the U.S. who had the same opportunities, but who were unable to work hard enough, to make the right decisions, and to accept the risk of entrepreneurship. The U.S. economy rightfully rewards those who seized the opportunities provided them. Most of the rich most definitely deseve their money.
John,
“But most earn their riches through hard work, good decision-making, and assumption of risk.
Social class was an important determinant of wealth accumulation decades ago, but no more. Read The Millionaire Next Door by Stanley and Danko if you need proof.”
A book of anecdotes is not proof. If you want to read a better book that explains why you are wrong, try Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb. Luck is the predominant factor in wealth accumulation, particularly high levels of wealth. Taleb specifically addresses and deconstructs the Millionaire Next Door. Just because some people succeeded doing a certain thing does not mean a) there are not others who failed doing the same thing or b) what they did caused their success.
I think it is safe to assume, based on the real world actions of the politicos, that talk of “income distribution”, helping the “underprivileged”, etc., etc., is nothing but the method of a confidence game used to get stuff.
Randy — If “stuff” includes the pleasure of wielding the power to take from A and give to B, while telling yourself a fable about serving the public, then I wholeheartedly agree.
The article does understate the positive externalities of some of these programs here.
For example, Medicaid is ruled to produce no personal benefits for rich. But everyone is better off when children are vaccinated against a disease or when we treat infectious diseases and prevent them from spreading.
Or take unemployment insurace. It could be argued that the federal guarantee of an income allows people to prolong their search for a job until they find one they are suited to, rather than taking the first offer. The result is a more efficient allocation of labor and, in turn, a Pareto improvement that benefits the rich and the poor.
This is not necessarily a “generous accounting” of the benefits.
“Suppose, just suppose, that the rich don’t actually pay the taxes they turn in to the government. Suppose that they simply adjust prices in order to collect what they turn in and that all taxes, regardless of surface form, are actually paid as hidden sales taxes. Suppose that you’ve been the victim of a first rate confidence job.”
I assume all of the above and more: that tax shelters and such allow the rich to vastly underreport.
I assume all of the above and more: that tax shelters and such allow the rich to vastly underreport.
Tax shelters are used only by the super-rich. The “average” rich (like me and a lot of the people I work with) basically just suck it up and pay. The only deductions I can take are for charitable donations and my mortgage (which is quite modest).
Greg says,
“Even in during the Cold War with the Soviet Union, who was really going to be affected by a communist take over. The poor and lower middle class lives would not change that much. It is the wealthly and large property owners who fear being replaced.”
If we judged how well the poor and middle class would do in a communist take over in the U.S. by how well these classes have done under communist takeovers in other countries, this statement is not only false, but obviously false. Accordingly, since to be charitable, I have to assume you wrote this post in haste or while on drugs.
Why focus on just federal taxes? According to this chart — http://graphics7.nytimes.com/images/2003/01/20/business/21DOUBLE.chart.jpg — “Taking all types of government taxes into consideration, the tax burden, as a percentage of pretax income, is roughly the same for all income groups.” That’s probably an exaggeration, but not by much.
Also, government-created barriers to entry limit competition, thereby benefiting the already-haves. 13 of the top 15 best-paying jobs on Forbes’ latest list are in the very-regulated medical field (the other two are airline pilot & CEO): http://articles.moneycentral.msn.com/CollegeAndFamily/MoneyInYour20s/BestandWorstPayingJobs.aspx
cliff: “A book of anecdotes is not proof. If you want to read a better book that explains why you are wrong, try Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets by Nassim Nicholas Taleb. Luck is the predominant factor in wealth accumulation, particularly high levels of wealth. Taleb specifically addresses and deconstructs the Millionaire Next Door.”
I’ve been out of town, and I apologize for not responding sooner.
Why do you feel that The Millionaire Next Door is just a book of anecdotes? Stanley and Danko included quite a number of statistics. By 1996, they had been interviewing and studying wealthy Americans for a couple of decades. Their statistics and observations were based on more than just anecdotes.
Can you explain how Taleb deconstructs the Stanley and Danko book? I haven’t read his book, but I did read one excerpt. His argument was that if wealth could be acquired by hard work, frugal living, and assumption of risk, then we would have many more millionaires, for hundreds of thousands have read The Millionaire Next Door. Taleb’s argument trivializes working hard, living frugally, and assuming risk. Those requirements for wealth are simple to write down but not so easy to execute.
I agree that luck may play a role in amassing huge levels of wealth. But who can know whether it was luck or simply good decision-making that enabled Sam Walton, Fred Smith, and Ray Kroc to build their fortunes?
I do not understand why so many people commenting on this blog feel that the rich are not paying their fair share. Below what level of income should one not be required to pay taxes? No matter how you break it down, 58% of all tax revenues are wealth transfer: Social Security, Medicare, Medicaid and Unemployment and Welfare. Given that the top 10% pay 57.4% of all income tax (average income $339k) and the top 20% (averaging $231k) pay 68.7% vs. the 4.9% payed by the lowest 40% of taxpayers by income, it seems to me that the rich really are paying their fair share. I have no problem with that (I’m in the 4th quintile, together the 4th and 5th quintiles pay 85.6% of all income tax.)
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And who is John Galt anyway.
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Recently I have learned about the problems our nation has, regarding our deficit.
I believe this was caused by borrowing money that we know we don’t have. The recession has been a big part of this. I know there are other parts to this too. Looking back the economic growth under George Bush did not generate nearly enough tax revenue to pay for his agenda, which included tax cuts, the Iraq, and Medicare prescription drug coverage. Hear is wear the problem is; our government is spending money on all these programs such as Medicare, social security, the universal healthcare along with stimulas packages. We don’t have money for this! It this keeps up the deficit is going to get bigger and our nation won’t be a nation any more!
Action must be taken to control the deficit and keep it from growing. I have multiple ideas for this. The government can form two different taxes. Taxes for the middle and upper classes. The reason I don’t mention the lower class is because for them it’s already hard to stay finically stable in this economy as it is. It needs to be a fair amount and instead of spending it on these programs it needs to go toward the deficit. The national deficit is about 13.8 trillion right know. if could get the deficit low enough and not spend money that is not ours, the deficit will stay low and the economy will strengthen.
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