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Tax the rich – Run the numbers on taxing the millionaires in the United States

This is a rehash of my April 2011 post. Since we’re taking about the “Buffett Rule” I thought it appropriate to duplicate this post.

We got a bunch of traffic and very few comments on the previous post … let’s see how this one does.

I heard a radio ad today [April 13, 2011] promoting Gov. Dannel Malloy’s (D-Conn.) budget plan which mentioned some sort of “Do the Math” website. OK, let’s do some federal math. If you confiscated every dime from US taxpayers with returns that showed an adjusted gross income (AGI) of more than $1,000,000, how many days could the federal government operate?

Baselines: I’m using AGI figures from the 2008 tax year to run the federal government during 2009, when there was a $3.55 trillion budget and a $1.42 trillion deficit. I know, my dates are a bit off when it comes to budget cycles, but stick with me on this.

So, if you outright took every single dime from the individuals and families who had an AGI of more than $1,000,000 – those rich bastards – how many days? How many days could we run the federal government?

Calculating in your mind are you? Those millionaires .. there are a bunch of them and they are living the good life aren’t they?

Tax the rich!

There were quite a few “millionaires” back in 2008. As a matter of fact, more than 321,000 returns were filed with adjusted gross incomes of $1 million or more. The problem is, even if we confiscated every single dime they made in 2008, the federal government would only be able to operate through April 11. That’s 111 days.

Keep in mind, this is only the federal government, with absolutely no consideration at all for states, local municipalities or cities. They would have to get there money elsewhere since the feds took it all.

So, why don’t we grab more? Let’s say we confiscate every single dime from individuals and families who made more than $200,000 in 2008. How many days could we run the federal government? Certainly, we’re casting a very wide net that includes people who are making really good money, so we should be able to run the federal government in 2009 with plenty left over.

Not so much. Those 4.75 million individuals or families won’t be able to cover the tab. Take it all and you can run the federal government through Sept. 10. Only 253 days.

Other Notes

  • Those 2008 millionaires – all of them – could barely pay off 75 percent of the 2009 federal deficit of $1.42 trillion, let alone anything else.
  • We’d have to confiscate more than half of every dime earned by individuals and families in 2008 who made more than $100k, and every single dime of those making $200k to fund the federal government in 2009.
  • My numbers come straight from the IRS website, which only lists income up through 2008. I’d be happy to run the same numbers if someone can point me to 2009 IRS figures. (2010 won’t be available quite yet I assume.)
  • “Millionaires” in 2008 made up a whopping .2 percent – that’s point two percent – of wage earners, and contributed 24 percent of the $1.032 trillion of income tax collected.
  • Those earning more than $200k in 2008 made up 3 percent of wage earners, and they contributed 52 percent of the income taxes collected in 2008.
  • Those earning more than $100k in 2008 made up 12.7 percent of wage earners, and they contributed 75 percent of the income taxes collected in 2008.

Your comments?

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22 Responses to "Tax the rich – Run the numbers on taxing the millionaires in the United States"

  1. Dimsdale says:

    It sounds like we are approaching Thatcher’s “running out of other people’s money” point pretty quickly.  Soak them any harder, and you have nobody pulling the cart.  If you are in the middle class, you should be getting uncomfortable right now.
     
    The rich are useful to the Dems in that they pay most of the taxes (except when they don’t, like the billion or so Buffet owes the gov’t), and they provide a nice scapegoat for the ritualistic class warfare vote drive of the DNC.

  2. JBS says:

    “Tax the rich” plays off a psychological ploy he Dems like to use to divide and confuse people. Basically, the Dems want everyone — except the “rich” — to believe that the “rich” aren’t paying their share, that there is uncountable money that the “rich” could pay to the government, and that is if the “rich” paid that money to the government in the form of taxes, the rest of the people — the 99% — wouldn’t have to pay anymore taxes. Really confused logic.
    Running the numbers demonstrates that the answer to the country’s fiscal problems are not solved by confiscating from the “rich”. Tax the “rich” lets the Dems hide behind their old play of divide and confuse, point and blame, name scapegoats, and continue spending as usual.
    The answer is to get the 50% of the people who are not paying any taxes to pay their fair share. There is certainly more of them than there is of the “rich”. A flat tax would go a long way to solve that Democrat ploy.

    • stinkfoot says:

      Class envy and nothing more.  Every time I hear Obama people talk about “millionaires and billionaires” I cringe because I know I’m a spectator to propaganda that reflects contempt for the very people they are going to such lengths to portray themselves as advocating.  It seems to me to be a tactic calculated to soften opposition to higher taxes for everyone based on the premise that some phantom unfairness is finally being made just.

      It’s not at all positive- about building anyone up- or empowering them to build themselves up.  It’s about justifying the destruction of the free market… something that if left alone could work.   The current administration is not about getting anyone to feel good about themselves and it has nothing to do with empowering anyone… it’s about getting the people to cede their power to the government on the premise that the fed on steroids will right all this injustice they are going to such lengths to ensure we’re angry at.

      Make no mistake- the government doesn’t just want to confiscate from the rich… they want to confiscate from everyone making an honest paycheck.  They’re counting on regular folks not doing the math and accepting the premise of fairness at face value…

    • NH-Jim says:

      Ditto, very well said!

  3. sammy22 says:

    It is a Repub ploy, and certainly one on this blog, to play the game that “tax the rich” means confiscate their wealth. That precludes any “conversation” about why shouldn’t someone like Romney pay a higher effective tax than around 15%, while common, run-of-the-mill wage earners are taxed at a considerably higher rate.

    • GdavidH says:

      “why shouldn’t someone like Romney pay a higher effective tax than around 15%”

        Umm, Hmmm, let me see…..

      Because that is the rate for his investment income, that has already been taxed once at the higher rate for earned income. 

    • Dimsdale says:

      I never see Democrats proposing a wealth tax….

    • NH-Jim says:

      Sam, be careful of what you wish for.  “Taxing the rich” argument is directed at the capital gains rate that they pay although everyone forgets that it applies to all.
      A capital gains tax affects everyone.  For instance, your parents leave their house and property to you in their will.  No matter how modest it may be, that is capital gains income (death tax), taxed again after they paid all those years on it.
      A capital gain is the difference between what you paid for an investment and what received when you sold that investment.
      Investments include mutual funds, bonds, stocks, options, precious metals, real estate, and collectibles. If you sold an investment for more than what you paid for it, then you have a gain.
      If, as the Democrats desire, the C.G. rate is increased from 15% to, say, 30%, then get your check book out because this will apply to everyone.

  4. sammy22 says:

    That investment income, GdavidH, is what comes into the pocket of the investor. What has happened upstream has no bearing (in my opinion) on how that income should be taxed for the receiver. And, johnboy111, the post is NOT discussing spending, only the old story of “taxing the rich”.

    • Dimsdale says:

      An “old story” that Øbama and the Dems tell on a daily basis.  When “the rich” are defined as being not just wealthy individuals, but small businesses that file as individuals, and “fair” gets a fair definition, and the fact that “the rich” pay the bulk of the taxes, then we can have a discussion about who should be taxed more.
       
      The only fair tax is a flat tax, but I am sure the tender sensibilities of the social justice crowd will still sing the same song.

      • JBS says:

        A flat tax IS the way to bring equity to the tax law situation. Approx 26 countries use a flat tax system and they have seen their revenues from taxes increase. (That our CongressCritters can’t be trusted with the extra money is another matter.) While many are arguing about the percentages in our current tax scheme, this arguing would disappear with a flat tax. It’s noteworthy that as more countries adopt a flat tax, no one is or has adopted our complicated scheme!
        Anyone not receiving the underlying message that “tax the rich” is code for, “they are rich, they are evil and got the money illegally, they won’t miss some of it if the government confiscates it” misses the point that all taxes are confiscations form the people and, that the government, in this case the Dems, is trying to pander to the masses that prosecuting the rich will somehow make things better for everyone. Weird logic based on a myth evolved into propaganda promoted by dishonest politicians, i.e. Øbama
        Get the 50% who don’t pay anything to pay their fair share!

    • JBS says:

      Do you receive interest income on savings? On money in a mutual fund? Do you own stocks or bonds that have appreciated? A 401k or a SEP? Buy/sell commodities? Invest in a business venture? Sell something for more than you bought it for? We all want whatever we buy to be worth more later (except consumables)! Did you keep that money, that investment income?
      Those are all forms of “capital gains.” Your capital ($$$) invested worked for you and was paid interest, dollars and cents. And how did you come to have this money to invest in the first place? Most likely, you earned it and were thus taxed (first time) at an earned income rate. Shouldn’t anyone who earned money be able to invest their money and follow the rules for how it is taxed (second time)?
      “Tax the rich” is a political propaganda ploy. Class warfare, divide and create discord,  paraded as political theater. Pandering for votes. Sad.

    • Steve M says:

      The point of this post – using absurd suggestions that would never pass like collecting every dime from those earning $1 million or more – is to clearly point out that even if you increase the taxes by 20 percent on the wealthy, or increase the capital gains tax from 15 percent to 35 percent – you would not EVEN PUT A DENT in the annual deficit we’ve had for the last four years, let alone help fund health care or infrastructure programs. It would make liberal/statists happy for about 10 minutes, until they realize nothing improved ANYWHERE, then of course, you’d ask for more money from millionaires since it’s the right thing to do per Obama.

      • Dimsdale says:

        Much as you can fill a hard drive, no matter how large it is, politicians can (out)spend a budget, no matter how big it is.

    • GdavidH says:

      Still already been taxed once before. It was taken out of the pocket it already went in and re-used. Facts are facts and emotions are not.

  5. Marilyn says:

    It’s not a tax problem, although I do think the 70,000+page tax code needs to be thrown out, It’s a spending problem.  In President Obama’s SOTU adress,  we are all going to play by the same rules, well, unless you are in manfacturing or green energy, then you get special rules, and money.   Your money, my money .

  6. Tim-in-Alabama says:

    The Democrat idea of “fairness” is that people should pay more taxes. The Republican idea of fairness is that everyone should have lower tax rates. 

    • Dimsdale says:

      Or Dems think the gov’t should keep as much of your money as they can, while Repubs think YOU should keep as much of your money as you can.

      • JBS says:

        That’s the talking point in theory to get elected. I am leery of ALL politicians who will want to “bring home the bacon” to their constituents.

      • Dimsdale says:

        It’s the pols that steal “the bacon” to begin with that I dislike the most!

      • Lynn says:

        I agree Dims, I love bacon and no one is going to steal it from me.  Note to the pols: You can have the turkey bacon.

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