Nashvilel City Paper

If you don't pay taxes, you don't get tax relief

Commentary By Steve Gill Critics of the proposed Bush tax cut by the “government-can-spend-your-money-better-than-you-can” crowd contend the tax plan is simply a “tax cut for the rich.” Like defining the word “is,” the strength of that claim depends on defining “rich.”

The fact is the Bush tax cut plan provides a tax cut to every age group, and for every income level. It provides tax relief for all taxpayers. And therein lies the root of the dissatisfaction of those on the left. Tax relief will only flow to those who pay.

Not surprisingly (except perhaps to those who believe government has a right to all you earn) income tax cuts will be limited to those who pay income taxes. It seems elementary – people who don’t pay taxes won’t get a tax cut because THEY DON’T PAY ANYTHING! People who HAVE overpaid, will get a cut. It is not that complicated.

Nevertheless, opponents of the plan to return some money to those who overpaid in the first place have determined that lies told loudly will defeat the truth. They claim the wealthy will get an undeserved tax break, while the poor will receive no tax cut whatsoever. That is not really true, and it is certainly not accurate.

The truth is that the income taxes paid by the wealthiest half of income earners in this country equals almost the entire income tax burden. While the wealthiest half of the country get virtually all of the tax cut, the wealthiest half also pays almost all of the income taxes. Thus, by that definition, paying income taxes at all places you among the wealthiest half of earners. But does that really make you “rich?”

The following chart breaks down the tax burden borne by different income tax brackets, and reveals that the “rich” are paying an inordinate share of the tax burden.

Adjusted Gross Income Range Percent of Total Returns %of Total Income Tax Paid

$0 to $25,000 49% 4.0%

$25,000 to $50,000 25.1% 13.0%

$50,000 to $75,000 12.7% 10.9%

$75,000 to $100,000 5.8% 10.9%

$100,000 to $200,000 5.0% 18.3%

$200,000 to $500,000 1.3% 14.1%

$500,000 to $1 million 0.2% 7.5%

Above $1 million 0.1% 18.3%

Data source: Preliminary IRS Data for 1998, SOI Bulletin, Spring 2000

The bottom line is taxpayers with an adjusted gross family income of $50,000 or more are basically among the top 25 percent of earners, and are presumably the “rich” that liberals want to punish by denying tax relief. While those within that income group might strenuously deny the “rich” designation, they inarguably pay roughly 83 percent of all federal income taxes. Clearly that is more than a fair share of the overall tax burden.

Or maybe you think the “rich” label properly starts at about the top 10 percent to 12 percent. In that case, a family earning $75,000 or more would meet your definition. Families at that level or above pay roughly 70% of the total income tax burden – certainly much more than a fair share of the overall tax burden. (Keep in mind that two public school teachers earning $38,000 each would meet that definition of the “rich” who liberals complain are not paying their fair share!)

Finally, perhaps we should narrowly define “rich” as the wealthiest 400 taxpayers in America. Surely THEY should be punished for not paying their share and deserve no tax break.

But according to a recent article in the “Washington Post,” the wealthiest 400 taxpayers in the country pay more income taxes than the bottom 40 MILLION! In fact, the taxes paid by that group alone would fully fund the entire budget of the state department, including about 30,000 federal employees. Obviously, a very few are being counted on to pull a very large wagon.

Under the Bush tax cut plan, tax cuts will go to ALL who pay taxes, with many taxpayers being removed from the income tax rolls altogether. People who do not pay income taxes, will not get a tax cut. That is not unfair, it is simply a recognition of reality – you cannot reduce the income tax burden on those who already pay nothing. Screaming loudly, and misrepresenting the facts, won’t change reality but it can obscure it unless taxpayers demand a truthful and honest debate of the issues.

Steve Gill is the morning radio talk host on Nashville’s Supertalk 99.7 fm.

-- Anonymous, April 10, 2001