Today, the top 1% of income earners paid 38% of all federal taxes in 2008, while the bottom 50% paid only 3 percent. Forty-nine percent of U.S. households paid no federal income taxes at all.
Understandably, I get confused when President Obama talks about fair. We all should be confused. In a 2008 interview on ABC News Charlie Gibson pointed out, “when the [capital gains tax] rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?”
Obama replied his only reason was for purposes of fairness. But today’s budget deficit is unfair to all Americans; it puts us and all future generations at risk. This begs the question: Should the thrust of U.S. tax policy be to maximize revenue or should the thrust of policy be what President Obama has defined as fair? Do we want a competitive economic environment or do we want to live one generation away from the problem Greece is facing now? Eventually, the bill will have to be paid. And we are reaching the point where the options of how to handle the situation will be forced upon us (à la Greece) if we do not act in a responsible manner for all involved. Let us focus on fiscal responsibility, closing loopholes in the tax laws, reducing the federal budget deficit and implementing programs that re-tool our citizens. This focus will enable all of our society’s members, regardless of their financial situation to benefit from those who want to work hard, who want the opportunity to pursue the American Dream.
All comments and questions are welcomed.
Suzanne M. Antonelli, CFP®