Taxing the Rich?

We hear a lot these days about making the rich pay "their fair share." And about those nasty Republicans trying to balance the budget "on the backs of the poor and middle class." How does this demogoguery match up with the facts?

Not very well, according to an article on page A12 in the May3 WSJ. The share of all federal taxes paid by the wealthiest 20% has been growing for the past 25 years and at a rate faster than their share of total income. Today this group pays 70% of all federal taxes (including payroll taxes [FICA]).

How about what wealthy Americans pay compared to other socialist countries? Well, according to the Organization for Economic Cooperation and Development (OECD), "the highest-earning 10% of the U.S. population paid the largest share among 24 countries examined," including Canada, U.K., France and Germany. "Taxation is most progressively distributed in the United States," the OECD said.

On the other end of the spectrum, in 2009 51% of U.S. households paid no federal income taxes. How are we going to control federal spending when a majority of voters pay no income tax. In addition, about 30% of taxpayers received money from the government. So the majority has an incentive to vote for more spending.

Don't get too optimistic about deficits going away any time soon.