The U.S. tax code allows deductions. ProPublica's report provided no evidence that the ones used by the nation's wealthiest were illegitimate. (Think business expenses and charitable donations, not offshore bank accounts.) No one in this country pays more income taxes when their homes or investment portfolios go up and they haven't sold. More to the point, no one calculates their "true tax rate" by dividing their annual income taxes by their net worth. Yet ProPublica's chief, Richard Tofel, called this news release "the most important story we have ever published." That says a lot, if not what he intended. The real goal, of course, was to stoke outrage against wealth accumulation and provide cover for those in Congress pushing for confiscatory tax rates. But do the rich pay their fair share? That depends on whom we call rich and what we call fair. But everyone should be aware of the basic facts. According to the National Taxpayers Union, the top 1% of income earners pay more than 40% of all income taxes, the top 5% pay over 60% and the top 10% pay more than 70%. Some will insist that "the rich" should pay even more of the total. And we could have that argument. But let's be clear... The idea ProPublica is promoting - that the rich pay little or nothing in federal income taxes - is a myth. The IRS reports that the very top earners pay an effective income tax rate of 32%. Some look at billionaires and insist that no one can spend that much money. But there is more you can do with a fortune - ethically and legally accumulated - than spend it. You can help other people and organizations, give to worthy causes, and invest it for productive use. Our capitalist system connects owners of wealth and people with good ideas. That creates jobs, improves our standard of living and enriches us all. (It also generates many trillions in tax revenue.) Academics and journalists don't get this. Or worse, they do, but still believe that large fortunes ought to be confiscated by the government for the "public good." There's a reason this is unconstitutional. Our free market system incentivizes working, saving and investing. And it has helped make us the richest nation in the world. By the way, you might be surprised to learn - from a global perspective - just who is rich and how much is a fortune. If you make $32,000 a year, you're a global one-percenter. And if you have $4,210 to your name, you are richer than half the world's residents. Let the confiscation and redistribution begin... Good investing, Alex |
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