When President Obama gets up on the stage and berates “some folks” -- his favorite pejorative term -- for not paying “their fair share” in taxes, I like to pretend that he means the people at the bottom of the income ladder. You’ve heard the statistics a million times: 47 percent of Americans pay no federal income taxes at all; 1 percent of Americans pay 40 percent of the tax bill; the top 10 percent pay 70 percent of the tax bill. And so on.
I don't know how the president defines “fair share,” but those statistics seem to suggest that the top earners do indeed pay their fair share, and then some. The same statistics suggest that people at the bottom of the ladder, the legion of citizens who pay nothing, are not paying their fair share.
But when Obama tells you his prescription for a fair tax system, it invariably involves raising the taxes of the top earners, what he chooses to call, in his best class-warfare rhetoric, “millionaires and billionaires.”
I would like to propose a different remedy. I say that we take the current tax system -- progressive taxation, with the biggest earners paying a greater share of their income than the lowest earners -- and turn it upside down. Let’s call it regressive taxation. If you earn low wages, you would pay taxes at the highest marginal rate. As your income increases, your marginal tax rate decreases, and at the very highest income levels there might be no marginal rate at all. Above a certain amount of income every extra dollar you earn would be tax-free.
This would provide myriad incentives for people to work harder and increase their efficiency, pursue promotions, climb the income ladder. It could give the top-income people who provide all the jobs in the private sector the incentive to hire still more people. It could contribute to the rise of a new generation of entrepreneurs, real hustlers who would find it worthwhile to risk their savings on big-bucks projects. Really, I could see the United States attaining full employment under such a tax system. There could be such a colossal labor shortage at home that employers who now farm out jobs to India and China might be forced to import workers from those countries.
I don’t have enough information to say exactly what the tax brackets should look like under this new system. Any numbers probably would have to be tweaked to maintain revenue neutrality -- meaning that the government would continue to take in at least the present amount of tax revenue. And perhaps tweaked again later, as economic conditions change from year to year. But any Treasury Department bureaucrat who is good with a computer and spreadsheet should be able to make the proper adjustments.
With the caveat that the following doesn’t necessarily represent a precise proposal , I will show you approximately how the tax brackets for unmarried individuals might look if they were inverted:
Taxable income Tax
$0 to $8,500 35 percent of income
8,500 to 34,500 2,000 plus 33 percent of the amount over $8,500
34,500 to 83,600 6,900 plus 28 percent of the amount over 34,500
83,600 to 174,400 12,000 plus 25 percent of the amount over 83,600
174,400 to 379,150 17,440 plus 15 percent of the amount over 174,400
379,150 and up 10 percent of income
I confess a partiality for a zero percent tax bracket as well, applying to the marginal income of anyone earning above a certain cutoff. Perhaps $1 million would be the appropriate figure, but I will leave the calculation to the bureaucrats.
I also would impose a special tax on members of Occupy Wall Street who contribute nothing to the economy because they earn no money. Perhaps an annual payment of 40 percent of their assets. Think how many syringes, drugs, bong pipes and other valuable assets would come flowing into the government coffers!
I don’t know whether my proposal would attract favor in Congress. Perhaps in the House of Representatives, perhaps not in the Senate. But the composition of those august bodies is going to change in a year or so, so I will continue to hope.
I suspect that there may be some few people who disagree with my proposal, who would prefer that the achievers and doers in the economy pay more instead of less. I guess it’s just a matter of taste. I, for one, would like to avoid slipping into the Marxist morass that Obama has in store for us.
Arthur Louis's Blog
- February 28
- I was a writer and editor for more than forty years with four newspaper and magazine publishers. I am the author of two non-fiction books: "The Tycoons" and "Journalism and Other Atrocities," and one novel, "The Little Champ," all available on Amazon.com
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