Ask any Democratic Presidential candidate about taxes and they will surely tell you the rich are not paying their fair share. They decry Bush’s tax cuts as being tax cuts for the wealthy, claiming they need to be rolled back in order to institute new social programs. The universal health care programs outlined by Clinton, Obama and Edwards all had as its source of funding, a rollback of the Bush tax cuts. Obviously those who would benefit from such a program applaud the idea that they will receive new entitlements from the government without any additional tax burden. After all, top Democratic officials with the help of the media have largely convinced the American people that their is a rising income inequality in this country, and those at the top end of the income spectrum are not paying as much as they did during the Clinton years.

Luckily for top Democrats, the majority of their voters do not read the Wall Street Journal, and even fewer understand the concept of how lower taxes could possibly increase revenues. Monday’s Journal summarized a report from the Congressional Budget Office which appeared to have been largely ignored by the media. The report illustrates that those in the highest income brackets actually paid more in taxes after the Bush tax cuts than they had prior to them.

Last week the Congressional Budget Office joined the IRS in releasing tax numbers for 2005, and part of the news is that the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%. These tax shares are all up substantially since 1990, and even somewhat since 2000. Meanwhile, Americans with an income below the median — half of all households — paid a mere 3% of all income taxes in 2005. The richest 1.3 million tax-filers — those Americans with adjusted gross incomes of more than $365,000 in 2005 — paid more income tax than all of the 66 million American tax filers below the median in income. Ten times more.

Notably, however, the share of taxes paid by the top 1% has kept climbing this decade — to 39.4% in 2005, from 37.4% in 2000. The share paid by the top 5% has increased even more rapidly. In other words, despite the tax reductions of 2001 and 2003, the rich saw their share of taxes paid rise at a faster rate than their share of income.

The average family of four with an income of $40,000 saw its income tax liability fall by about $2,052 a year from the 2001 and 2003 tax cuts.

These are figures which you will not hear about in a Democratic debate, nor will you read about them in the New York Times. It is much easier for those who advocate for higher taxes to simply continue the rhetoric that the Bush tax cuts were only for the wealthy and the middle class did not recognize any advantage. The truth is advantages were recognized across the board, including revenues collected by the Federal government.

High tax rates on income and capital gains serve as a deterrent for people to invest. As indicated in the article, “when the top income tax rate was 70%, the richest 1% paid only 19% of all income taxes; now, with a top rate of 35%, they pay more than double that share”. The reason for this is very simple, yet somehow many are still unable to grasp it. When making an investment what you are really doing is putting money you already have at risk in the hopes of earning more. If you know the government will take 70% of whatever you earn, the risk of investment is no longer worth the potential reward. Similarly, when you owe 70% of your earnings in taxes, it is more advantageous for you to keep your money in tax shelters, or pay thousands of dollars on accountants who can find loopholes which will help you lower your tax burden.

It has been proven time and time again that lower tax rates increase tax revenues. Democrats continue to ignore these figures while pushing their lies on the American people that the rich simply do not pay their “fair share”.

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Dumb Dems, Features, Liberals, Media, Politics, President Bush, Taxes