Not Surprising: Top 3% of Income Earners Pay Most Taxes in This Country

New IRS findings confirm that wealthy Americans are job creators, pay too high of taxes each year.

 

We are told to bemoan the 1% and wealthy Americans for making too much money and for not contributing their fair share, but did you know they contribute the most in taxes? Color me shocked.

 

Income taxes are the federal government single largest source of revenue, and the top 3% of income earners contribute the most. Bloomberg Quint looked at 2016 tax returns to demonstrate this. Among the statistics that stick out, the top one percent paid 37.3% in taxes, while the top 50 percent of taxpayers paid 97% of total income taxes. They found the following:

 

  • The top 1 percent paid a greater share of individual income taxes (37.3 percent) than the bottom 90 percent combined (30.5 percent)*.*
  • The top 50 percent of all taxpayers paid 97 percent of total individual income taxes*.*
  • In other words, the bottom 50 percent paid 3 percent*. Which small percentile of tax payers also paid 3 percent or more? You might have guessed it. It is the top 0.001%, or about 1,400 taxpayers. That group alone paid 3.25 percent of all income taxes. In 2001, the bottom 50 percent paid nearly 5 percent whereas the top 0.001 percent of filers paid 2.3 percent of income taxes.*

 

For fiscal year 2018, which ended September 30th, the Congressional Budget Office (CBO) reported that the individual income tax is expected to bring in approximately $1.7 trillion (or half of all federal revenues) in revenue. The current tax structure is progressive in nature, meaning those who generate more income pay a higher share in income taxes and vice versa.

 

Despite left-leaning outlets suggesting the rich don’t create jobs or rich people have little to do with job creation — they tell us government creates jobs!— the evidence points to the contrary: The top income earners are the biggest job creators in this country. In fact, as part of the greater system of “trickle-down economics” overall, job creation at the hands of wealthy Americans works very well. Take that!

 

Remember: The government doesn’t create jobs nor should it be tasked with such a responsibility. Their only role is to create a pro-business environment for businesses to flourish and job creation to be seen through private enterprise.

 

As Ben Shapiro quips, facts really don’t care about your feelings — especially with respect to wealth generation in the U.S.

The AHCA CBO Report Isn’t Worth The Paper It’s Printed On

The nonpartisan Congressional Budget Office released its highly anticipated report on the House-passed American Health Care Act (AHCA), and it’s going to take health insurance away from millions of needy Americans. At least according to every media outlet and any politician needing a fresh drum to beat.

The CBO found that 23 million Americans would lose their insurance over the next ten years under the ACHA. The CBO also found that premiums would rise, particularly in states that choose to opt out of Obamacare regulations.

As for the cost, the CBO found that the ACHA would reduce the deficit by $119 billion over ten years. This figure is particularly good news to congressional Republicans, as Senate rules require at least $2 billion in savings to pass the bill through reconciliation. Democrats would be powerless to filibuster the legislation, as only 51 Republican votes would be needed.

What mainstream news outlets fail to report, however, is that  the CBO report isn’t worth the paper it’s printed on. (Nor are the two previous paragraphs for that matter.)

That doesn’t stop the ACHA’s detractors from seizing the opportunity to attack.

The #CBOscore makes it perfectly clear: unless you’re a healthy millionaire, #Trumpcare is a nightmare,” Senate Minority Leader Chuck Schumer tweeted.

Senator Kirsten Gillibrand also took to Twitter to use the CBO to attack the bill. “If the AHCA becomes law, up to 23 million Americans could lose their insurance. Think about that for a second. It’s unacceptable.”

Susan Collins, the moderate Maine Republican, wasted no time in releasing a statement knocking the bill as hurting the most disadvantaged Americans. “Unfortunately, the CBO estimates that 23 million Americans would lose insurance coverage over the next decade,” she said.

Time and again, the CBO releases numbers on major legislation, and one party or another is handed a cudgel it can use to beat the other party over the head. After all, these are hard numbers! Facts! And from a non-partisan office!

For those with memories, however, the CBO report should be met with only the slightest interest, and given little weight.

First of all, the report is scoring a bill that will never see the light of day. The Senate is certain to rewrite much of the bill before it can garner 51 votes.

But more importantly, the CBO is about as reliable as Al Gore’s extended 10 year weather forecast. I’m not even sure they believe it.

Recall the 2010 CBO report on Obamacare. They predicted that 21 million people would enroll in insurance exchanges by 2016. That number was increased to 22 million after the Supreme Court found the Medicaid expansion unconstitutional. By the end of 2016, only 10 million had enrolled in the exchanges, and it was unclear how many of those were originally insured before Obamacare was passed.

The CBO also projected insurers would see huge profits (they’ve lost billions), Medicaid spending would go down (it’s higher), and GDP would grow by an average of 3.2% in the years following Obamacare’s passage (not even close). Forbes published a good summary of the missed forecasts here

In short, Obamacare projections were a huge bust.

This shouldn’t be a surprise. Predicting with any accuracy the individual choices of tens of millions of Americans, each faced with a different set of circumstances, economic incentives, and health status, is the task for only the most foolish or most arrogant.

While the CBO may be a non-partisan office, its task relies on the technocratic and managerial assumptions that underlie every liberal effort at central planning. “If we just pass this law, 21 million more people will have healthcare,” is a common refrain that’s been used to sell Americans one crappy government program after another.

In truth, we are tinkering with a system that comprises one-fifth of the U.S. economy which no one truly understands. Not Paul Ryan. Not Chuck Schumer. Not Donald Trump. And certainly not the CBO.

To be sure, there are issues with the ACHA

But this CBO report is useless.

Now count how many times you hear the “fact” that Republicans are going to throw 23 million people off of their health insurance.

 

Just a Quick Reminder: Our Debt is Yuuuuuge

With all of the attention given to the presidential elections, it’s easy to forget that the U.S. just ended the 2016 fiscal year. This means it’s time for the annual examination of how much more debt we have!

According to the newest Treasury Department figures (H/T to The Washington Examiner and CNS News), total U.S. debt held by the federal government was $19.573 trillion on October 1. That’s an astronomical amount of debt, quite a bit larger than our current Gross National Product.

As the Examiner and CNS pointed out, and the Treasury numbers confirmed, U.S. debt technically jumped more than $1.4 trillion in the last 12 months. That’s thanks to the Treasury Department temporarily not taking on more debt via use of “extraordinary measures.” Those measures staved off a debt increase from March 2015 through early November — and then the debt jumped hundreds of billions of dollars within a month.

Looking at the Fiscal Year 2016 debt in context to our larger debt picture, the Congressional Budget Office (CBO) projected in August that the annual deficit would be about $540 billion. That’s larger than immediate prior years, but lower than what we’ll see over the next decade. (The deficit and an increase in the national debt are two different things, thanks to how the federal government does its accounting.)

Contrary to liberal tripe about the feds needing more taxes, CBO projects that government revenues via taxes, fees, etc. will rise over the next decade as a percentage of GDP and continue to be above the 50-year average. The real culprit for our growing debt, spending, will go up even more — well beyond the 50-year norm — putting the U.S. at an even worse fiscal position than we’re at now. CBO projects we will add nearly $8.6 trillion to our debt by 2026.

But even this scary scenario, which would likely impact our economy’s growth, doesn’t tally up the worst of it all. The big-picture analysis most often cited by media outlets is the “baseline” projection by CBO — the optimistic one. In the August projections, CBO gave a list of alternative fiscal scenarios that could play out, depending on the decisions politicians make. A quick tally of those scenarios shows that the debt could be as much as $2.755 trillion higher than the positive projections, or $792 billion lower.

Short version: We don’t need more taxation. We need more economic growth and less spending. However, neither party wants to effectively reform the entitlements (Medicaid, Medicare, Social Security, food stamps, and other parts of the budget that don’t get annually approved by Congress) that are the major cause of our budget increases in recent years, and are projected to, for the most part, rise in cost. And effective tax reform is nowhere to be seen.

CBO Tells Congress That Should Obamacare “Work”, It’ll Drive Up Costs

There is a new pro-Obamacare ad out by a group called “Americans for Stable Quality Care.” You can see the ad here.

The ad asks “what does health insurance reform mean for you?” One of the points is “a focus on preventing illness before it strikes.”

There’s a problem with that.

According to the Congressional Budget Office, preventative care will drive up the costs of Obamacare.

Doug Elmendorf, the CBO Director, responding to Congressman Nathan Deal, wrote that

Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

Elmendorf went on to write

Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness. An article published last year in the New England Journal of Medicine provides a good summary of the available evidence on how preventive care affects costs.3 After reviewing hundreds of previous studies of preventive care, the authors report that slightly fewer than 20 percent of the services that were examined save money, while the rest add to costs.

Now, lest anyone think either Elmendorf or I am knocking preventative care, we are not. Elmendorf notes that, “just because a preventive service adds to total spending does not mean that it is a bad investment. Experts have concluded that a large fraction of preventive care adds to spending but should be deemed ‘cost-effective.’ He’s right.

There’s just one problem that Elmendorf alludes to. The CBO cannot really score the run up in costs of preventative care under H.R. 3200, the Democrats’ healthcare legislation.

Assuming Obamacare is successful at increasing preventative care, the program will escalate costs. Then, also as Elmendorf alludes to, the government is going to have to decide who gets preventative care and who does not, if they want to contain costs.

In other words, we will get escalated unknown costs or we will get rationing, but most likely we will get both.