We’re already spreading the wealth around

Barak Obama had an impromptu conversation with Joe Wurzelbacher, a plumber from Ohio. Wurzelbacher is living the American dream. He’s paying more and more taxes and he’s not happy about it. He asked Obama about his tax plan, “your new tax plan is going to tax me more, isn’t it”? Well of course Obama proclaimed. “I think when you spread the wealth around, it’s good for everybody.”

So the government takes money from Joe plumber, redistributes that cash to other people so they have money to hire Joe plumber to do work, and the people end up paying Joe plumber a higher price for the work. That’s not trickle up, it’s trickle back.

Plenty of discussion about this exchange on the Internet the past few days. Scott Johnson over at Powerline (cool new look at their site) has a good post today.

Obama is speaking of the trickle up theory of the American left. They think that if you collect additional taxes from the rich (legalized theft) and redistribute it to the “less fortunate” in life, those who are less fortunate will have more money to spend with, in this case, a plumber named Joe from Ohio.

There are unintended consequences when “the rich” are ripped off, especially when they know they are paying more than their fair share in federal taxes already.

By raising taxes on Joe plumber, Jo plumber needs to make some choices. One solution is for Joe to raise prices to cover the excess taxes he has to pay. He may also lay off workers, cut benefits and/or slow expansion.

Is that clear?

Many Americans are already paying much more than their fair share of federal income taxes. Johnson mentions the most recent tax data released by the IRS and I’ve cleaned up the IRS spreadsheet and put it into terms that are more manageable to understand.

Just how rich are you?

Many people have no idea how rich – or how poor – they are as compared to other American families. The following data is from the 2006 tax year and was derived from IRS data located here. The tax collected – just more than $1.02 trillion dollars – was only from individual federal returns and does not include business taxes. If you have a small business and fill out a Schedule C, my guess is that those tax dollars are included in this 2006 report.

What group do you fall into? To sum up the statistics…

  • If your family makes under $30k, you’re in the bottom half of wage earners, and that group pays 2.53% of federal income taxes collected.
  • If your family makes more than $30k, you’re in the top half of wage earners, and that group pays 97.47% of federal income taxes collected.
  • If your family makes more than $41k, you’re in the top 41% of all wage earners, and that group pays 94.8% of federal income taxes collected.
  • If your family makes more than $50k, you’re in the top third of all wage earners, and that group pays 91.62% of federal income taxes collected.
  • If your family makes more than $75k, you’re in the top 20% of wage earners, and that group pays 82.4% of federal income taxes collected.
  • If your family makes more than $100k, you’re in the top 12% of wage earners, and that group pays 73.61% of federal income taxes collected.
  • If your family makes more than $200k, you’re in the top 3% of wage earners, and that group pays 53.16% of federal income taxes collected.
  • If your family makes more than $500k, you’re in the top 1% of wage earners, and that group pays 35.87% of federal income taxes collected.

There are a couple of things to consider here. First, many working couples in New York City or Hartford, Connecticut could easily be in the top 10 percent of wage earners if – as an example – one was a nurse and the other a cop.

Second, less than 3 percent of the returns filed fall into the category of making $250,000 or more (Obama’s targeted group). Less than 4 million returns (families) – out of more than 138 million returns – are picking up more than 53 percent of the federal income taxes collected.

What it comes down to is the top wage earners are already paying much more than their fair share, and it seems tax payers like Joe the plumber are catching on. Are you?

Data

Others watching Obama try to explain his trickle up theory include Malkin, Hot Air and Vicevich.

Hah! Check out WealthSpreadTM. I can’t believe it’s not earned. Low in transfats, high in taxes. Low-Effort! Butter it up with Wealth and spread it around like you earned it! Made with 100% pure American taxpayer sweat. Endorsed by the cook fringe of the Democrat party. Patented blend to help improve standing in the polls.

4 replies
  1. stevie
    stevie says:

    spreading the wealth of other people while his own is safely tucked away in non-taxable accounts.  msn money 6-9-08 tim middleton

  2. Steve M
    Steve M says:

    @stevie: I'm not exactly certain what you mean. A search for 'obama msn nontaxable accounts' yields not much. Provide a link please.

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