3 Things 12-2-24
Thing One
The Fair Share Argument Gets Hit With Facts
The following is excerpted from the Wall Street Journal without additional commentary from us.
“… More than 40% of income-tax revenue is already coming from one filer out of every 100. To understand the 2022 numbers in greater detail, let’s break them out by cohort.
The top 1%: This group includes 1.5 million tax returns with adjusted gross incomes (AGI) above $663,000. These people made up 22.4% of the country’s total reported earnings, yet their share of income taxes paid was nearly double that at 40.4%. (See the nearby chart.) Their average federal tax rate was 26.1%.
To put this in Bernie’s terms, is paying two times more in taxes than your share of income “fair”? We’d say it’s closer to punitive, especially since many of these taxpayers are “rich” for only a narrow window of their highest-earning years.
Between the top 1% and 5%: About 6.2 million returns above $262,000 but below $663,000. These people had 15.9% of total earnings, while contributing 20.6% of income-tax revenue. Average tax rate: 18.8%.
Between the top 5% and 10%: About 7.7 million returns above at least $179,000 but below the previous the top 5%. Their share of earnings, 11.1%, almost matched their share of taxes paid, also 11%. Average tax rate: 14.3%.
Between the top 10% and 25%: About 23.1 million returns above at least $100,000. Share of income: 20.5%. Share of tax: 15.2% Average tax rate: 10.7%.
Between the top 25% and 50%: About 38.5 million returns above at least $50,000. Share of income: 18.6%. Share of tax: 9.9%. Average tax rate: 7.7%.
The bottom 50%: About 76.9 million returns with earnings under $50,000. Share of income: 11.5%. Share of tax: 3%. Average tax rate: 3.7%.
Add all this up, and the top quarter of earners reported 69.9% of all income in 2022 but paid 87.2% of all income taxes. Despite the 2017 reform’s modest cuts in individual tax rates, the tax code continues to soak the upper middle class as well as the rich. And this doesn’t include state and local tax rates…”

Thing Two
A Bad Idea Is A Bad Idea, No Matter Who You Voted For
The article referenced in Thing One clearly argues that the upper middle class and the rich are paying a dramatically disproportionate share of income taxes. And, while it doesn’t say so explicitly, one could infer that there is an argument being made for keeping the rates from the 2017 Tax Cut And Jobs Act (TCJA) in place rather than letting them expire at the end of 2025 and reverting to the higher rates. The party taking power in 2025 seems intent on not letting the TCJA expire but this is quite the irony given the multitude of tariff threats they are making. The most optimistic analysis from the pundits on this subject is that this is just bluster and negotiating tactics. We hope that’s true, but in case it's not, we’d like to share some wisdom from our vaults on the subject:
“…Tariffs and quotas result from protectionism. Protectionism means that consumers pay higher prices than otherwise. These policies in effect amount to tax increases on consumers.
Most of us wear clothes from time to time. Shoes, too. And we watch television, use computers and so forth. Most of that stuff is imported, just like the Olympic clothing. And as consumers we pay higher prices for things when our government protects American manufacturers from having to compete with global competition.
So when protectionism occurs, we "poor consumers" are being choked with higher prices. It's nothing more nor less than a tax increase. Meanwhile, our spendthrift government runs trillion-dollar deficits and adds to our national debt each day. This, of course, is on top of our already too burdensome household debts for home mortgages, credit cards and student loans.
Then the government adds further insult to injury when it makes promises to pay future benefits to public sector workers which haven't been properly funded. This underfunded future payment burden is essentially the same thing for Social Security, Medicare, and Medicaid promised benefits as well.
It's a whole lot easier to promise something than to pay for that promise. And when it's all added together, we end up with a "poor" consumer. And a heavily burdened future taxpayer.
So many obligations and such little economic growth. What a combination!
Add up all of the above and it's easy to see why consumers are now "poor" and becoming "poorer" by the day.
And regardless of whether the "poor consumer" is paying property taxes, state income taxes, federal taxes, gasoline taxes, higher prices for sugar, Olympic uniforms, or ethanol subsidies, it's still coming out of the same consumer's/taxpayer's pocket…”
In other words, a tariff is a tax that is ultimately paid by consumers. So, imposing tariffs has the same practical effect on a consumer's wallet as raising his taxes. Don’t let tough-talking people wearing trendy red hats try to convince you otherwise.
Thing Three
Just A Thought
“The popular phrase, ‘we only live once’ is wrong. We only die once. We live every day. Don’t forget that.” - Unknown
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