Thinking Out Loud: Tax Day: A Post Mortem

“April is the cruelest month.”  – T.S. Eliot, “The Wasteland”

Well, millions of Americans have sent their checks to the Internal Revenue Service to pay their federal income taxes.  Time for a post-mortem.

“The rich don’t pay their fair share of taxes.”  The top 1 percent of the wage earners in America will pay almost as much in federal income taxes as the bottom 95 percent.  Nearly half of that bottom 95 percent will pay no federal income taxes.

Let’s put it another way.  The top 10 percent of income earners pay approximately 71 percent of all federal income taxes, yet they earn just 45 percent of all federal income. By comparison, the bottom 50 percent of income earners earn just 12 percent of income, but pay only 2 percent of federal income taxes.   The rich aren’t paying their fair share?

“The rich have rigged the system in their favor.”  Around 60 percent of the federal government’s non-interest spending (the interest paid on our $17 trillion national debt) goes to transfer payments to the poor and middle class. Spending on the 10 largest means-tested programs — that is, programs for the poor such as welfare, food stamps, housing subsidies — has increased from about $4,300 per person in 1980 to more than $13,000 per person today in inflation-adjusted dollars.  If that is rigging the system, the poor and middle class should hope the system keeps being rigged.

“Income inequality is getting worse.”  Depends on how you look at it.  Here is a staggering number: 86,429,000 Americans will pay taxes this year, while 147,802,000 American will receive government benefits, and the percentage of those Americans who honestly deserve those benefits is small.  In fact, that 147,802,000 number does not include military veterans or those that are truly disabled, or even those who have earned benefits through a lifetime of hard work.  So for every one hard-working taxpayer, 1.7 Americans are receiving benefits.

Who is rigging the system?  Job safety in America is at an all-time high, thanks to our switch from an industrial economy of hard manual labor and dangerous machine labor, to an information and service economy, where we mostly sit in front of computers or behind counters.   Also, today we have more safety rules than ever, and myriad agencies to enforce them.  Yet more people are retiring because of work-related disabilities than ever—a record 8,733,461 workers took federal disability insurance payments in 2012.  Interestingly, the most frequent disabilities are “back pain” and “neck pain,” which are also the hardest ailments to verify.

“Your tax dollars at work.”  Speaking of “The Wasteland,” last year the National Institute of Health spent $398,000 of your tax dollars to test condoms on male prostitutes in Mexico.