We always have good — and heated — discussions at Webner family reunions, and this year one of our talks addressed health care and taxes. After I got home I ran across this chart, which was prepared by The Tax Foundation and is based on the most recent IRS data available, from 2007. The chart shows that the top 1% of taxpayers paid a larger percentage of total federal income taxes than the bottom 95% of taxpayers combined! The 1.4 million people who comprise the top 1% of taxpayers paid 40.4% of the total income taxes paid, while the 134 million taxpayers who make up the bottom 95% paid 39.4 percent. The trend lines show that the tax burden on the top 1% of taxpayers has steadily increased over the past 20 years, while the tax burden on the bottom 95% has fallen dramatically. What this chart does not show is how much of the benefits, programs, and services available from the federal government are used by these two groups. Does anyone think that the top 1% of taxpayers consume anywhere close to 40.4% of federal benefits, programs, and services?
I think the trend reflected on this chart raises troubling questions about the future of representative democracy. If individuals pay no taxes, do they feel invested in their government, or do they simply look at it as a source of freebies and entitlements? I’m not sure that paying taxes is the ultimate reflection of civic virtue, but I do think that people tend to take better care of something that they paid for than something they got for free. Furthermore, making “the rich” into a despised minority who must shoulder the lion’s share of the tax burden seems both short-sighted and contrary to fundamental American concepts. Don’t we want to encourage people to invent new products, work hard, accumulate wealth, and invest in new businesses which will employ others? After all, that is what capitalism is all about. Traditionally, Americans have applauded those who, through brains, talent, and pluck, become wealthy. They are not called rags-to-riches stories for nothing.