Being Right: Paying Their Fair Share



Kyle Gavin

Tax reform has been at the forefront of political discourse for the last couple of months due to the release of Mitt Romney’s tax returns, the advent of the Occupy Wall Street buffoons and President Obama’s repeated calls to make “millionaires and billionaires” pay their fair share. This issue was at the crux of Obama’s State of the Union address two weeks ago when he called for the implementation of the “Buffett Rule.” The Buffett Rule calls for a minimum 30 percent marginal tax rate on individuals making over one million dollars per year. The impetus for the Buffett Rule occurred in August when billionaire Warren Buffett claimed that he pays a lower marginal rate than his secretary. This claim, that Mr. Buffett has been making for a couple of years now, appears to be dubious.

According to Forbes magazine, Buffett’s secretary likely makes between $200,000 and $500,000 per year, so this idea that some downtrodden secretary is paying more than fat cats such as Buffett is ludicrous. The Wall Street Journal confirms this, since their newspaper re­ports that the average tax rate for individuals who make more than $10 million dollars per year pay an average tax rate of 26 percent, whereas the average middle class person who takes home between $50,000 and $75,000 per year pays an average rate of 11 percent. Second of all, when Buffett says that his tax rate is 15 percent, he is misleading people because he ac­tually pays a lot more than that. Before he gets a dime in dividends from stock in companies that he owns, those companies must pay the 35 percent corporate tax rate. This means that taxing capital gains, which is how Buffett derives most of his income, is a form of double taxation.

The idea that “the rich” do not pay their fair share in taxes needs to be called out for the lie that it is. First of all, 47 percent of Americans do not pay any federal income taxes. The top one percent pays 40 percent of all federal income taxes. The top five percent pay 60 percent of all federal income taxes and the top 10 percent pay 70 percent of all federal income taxes. Our tax system can­not get any more progressive. Instead of 47 percent being envious of our most successful citizens, shouldn’t they be grateful that they live in a country that allows 47 percent of its citizens to live off of the other 53 percent?

The only way that this problem can be resolved is by tying the right to vote at the federal level to paying fed­eral income taxes. The resolution is simple: if you are not contributing by paying federal income taxes then you have no say in how those revenues are spent. Why should an individual on welfare be allowed to vote for a politi­cian who says, “I am going to tax this rich person more in order for you to get more generous benefits, and you do not have to pay a single cent?” This plan is not calling for the poor to pay more than the rich. It just says that everyone benefits from government services, so everyone must contribute something or they will not be allowed to vote. Even if a person’s contribution is as low as one dollar, he can still vote because he has some skin in the game. The current model is flawed because if you have nothing invested in the system, then you do not care how the government decides to waste money. This plan might seem harsh and some people may consider it to be un-American, but it is necessary to restore the proper incentives back into society. It may even force Occupy Wall Street to, as Newt Gingrich is fond of saying, “get jobs right after they take a bath.”

Contact Kyle Gavin at [email protected].