Thursday, January 06, 2005

Soaking the rich only works if they don't get out of the rain

The Wednesday, December 29, 2004 issue of THE SOVEREIGN SOCIETY OFF-SHORE A-LETTER carried some interesting analysis of IRS data on how much of the income tax burden is borne by the highest income Americans. The 1% at the top in income paid 33.71% of all federal income taxes in 2002 (the most recent year for which this data is available), but they only accounted for 16.12% of income earned. Compared to a flat tax rate on all taxable income, the top 1% paid 2.09 times their fair share. The last time the ratio was that high was 1996 when it was 2.01. It went down slightly until 1999 and has climbed steadily since 2000. So much for the "rich" getting off light under Bush, by this measure they fared better in Clinton's second term.

The article goes on to note that, according to the Census Bureau, 363,000 citizens and permanent resident aliens left the US permanently in 2002. Not all of them were among the 1,283,000 who comprise the top 1% of earners, but doubtless some of them were. Of course, the Sovereign Society has an axe to grind since it shows people how to invest overseas, retire overseas, acquire second passports and dual citizenship, etc.

The point of going through this? Soaking the rich only works if they have no chance to get in out of the rain. If they have to go to some other country to be safe and dry, many of them will. This is one of the reasons why there are limits to how much revenue you can squeeze out of the most productive class.


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