Percentages are progressive
Monday, July 21st, 2008 By Mike Maurer
Next time you find yourself reading about principles behind tax policy, note the principle of “equity.”
What this usually means is you want to use the tax code to redistribute income. The richer you are, the more you pay. From each according to his means.
What these folks don’t tell you, though, is that this is precisely what a percentage tax accomplishes. Pay 10 percent of your income, rich or poor, and guess what? The richer you are, the more you pay. Earned $10,000? You pay $1,000 in tax. Earned $1 million, a hundred times more? You pay $100,000 in tax, a hundred times more.
What big government folks want is more than that, however. They want an acceleration in percentage, which is to say, not only do you pay more, but the government has a free hand in making you pay more than that still. Earned $10,000? You pay nothing, and in fact we’ll give you some tax credits. Earned $1 million? You don’t really need all that; why don’t we take 40 percent of it?
The Wall Street Journal nails this today, covering one of the most important perennial stories, the income taxes paid relative to income earned. Guess what? The rich pay far more than their share, and you won’t squeeze more out of them. They’ll just leave.
(And for everyone who says, “Gee, you can’t live on $10,000,” fine. Tax the low earners the same as everyone else, but put your redistribution schemes into the expense side of government by writing them a check. That way even the poor will be unhappy when taxes go up, and even the poor will be unhappy when they see how much of their money is spent on things they don’t agree with.)
Tags: income tax, share of income
