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Political rhetoric — tax the rich

November 9, 2011
By Doug Hoffman

These days it is very popular for politicians to look at the wealthy as the solution to our government budget deficits and the cure to all of our problems. There is one reason for this: It will result in votes; it is a good political strategy to get elected. However, behind all of this rhetoric are true hard facts and reality:

The top 1 percent (highest earning) of taxpayers pay 40 percent of all federal income taxes. The trend is upward from 1999, when it was 36 percent and the tax rates WERE HIGHER prior to the Bush tax cuts.

The top 20 percent of taxpayers pay 70 percent of all federal income taxes, and this is also up 4 percent from 1999.

We also hear that the tax code favors the rich. This is also a myth. Fifty percent of Americans pay little or no taxes, and the low and middle income earners benefit greatly from the tax code. Most of the deductions, credits and other tax incentives in our tax code phase out at low levels. The lowest 40 percent of all income earners benefit greatly from the tax code. In fact, they actually pay negative income taxes because they get refundable credits such as Child Tax Credit and the Earned Income Tax Credit.

We often hear that it is fair to raise tax on the rich; they can afford it. Such thinking can be a slippery slope because, technically, virtually anyone can afford to pay more taxes. The ability to pay principle relies completely on subjective judgment of fairness. This gets me back to the political rhetoric and getting elected. Think of it - if I can get the 50 percent of the people who pay little or no taxes to vote for me, we can raise taxes on everyone else! This boils down to wealth redistribution: taking property from someone else and giving it to another. Totally un-American. Our founding fathers warned against this type of abuse of democracy which could destroy our republic.

Raising taxes on the rich hurts workers at all levels, especially low- and middle-income earners. The rich are most likely to invest. Their investment allows new businesses to get off the ground or existing businesses to expand. This creates new jobs and higher wages for all. Taxing more only transfers money to Congress that would have otherwise been invested. Need I say more?!

There is a tax code that can collect more money from the high earners than from low earners without being a barrier to economic growth. Under the flat tax system, a taxpayer who earns 100 times that of another will pay 100 times more tax but faces no disincentive to earn more since he or she will pay the same rate on every dollar earned. Now that seems fair to me! Countries that have implemented the flat tax system have seen substantial economic growth and prosperity compared to nations with the progressive income tax system such as ours.

Remember, the solution is not to tax Americans more; the problem is that our government spends too much!

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Doug Hoffman is a certified public accountant and business owner, and was a congressional candidate in 2009 and 2010. He lives in Lake Placid.

 
 

 

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