Monday, April 7, 2008

“… from each according to his means.”

If congress has a bill that needs to be disguised from the public, they are masters of coining titles so that the public is confused into thinking the legislation is worthwhile. Actually, this ploy may be useful to finagle the law passed other legislators who generally don’t take the time to read what they are inflicting on an unwary public. Some examples that come to mind are the Energy Security and Independence Act which provides neither security nor energy independence, and the Campaign Finance Law which may have been better titled the Incumbent Protection Act.

Anything that has to do with redistribution of wealth is a prime target for inventive titling. Those among us that actually pay taxes are generally tapped for more and more money to give to the "more unfortunate among us"; to use standard Democrat phraseology. It matters not that more than 44 million adults pay no income taxes at all, that’s 40% of the households in the country; not a penny. Inevitably the government still goes back to the well where people who worked hard, made sacrifices, delayed gratification – reside, to finance ever-increasing programs to redistribute their wealth. To liberals, there is no limit to their generosity when giving away other people’s money.

The highest 10% of income earners paying taxes pay 71% of income tax revenue received by the federal government. To further put this in perspective, 40% pay 99% of the total income taxes collected. If 40% pay no taxes at all, that means 10% of us pay at most 1% of income taxes. Where does all the money doled out by the government for one welfare program or another come from you may ask? Well, if you followed this simple arithmetic it is clear that 40% of us are supporting the give-away of billions to at least 59% of the total population. Is this a great country or what?

Ari Fleischer wrote last year:

"According to a recent study by the nonpartisan Congressional Budget Office, those who make more than $43,200 (the top 40%) pay 99.1% of all income taxes, the taxes that support our troops in Iraq and Afghanistan, and, for example, fund the federal portion of transportation, education, environmental and welfare spending.Those who made more than $87,300 in 2004, the top 10%, paid 70.8% of all income taxes, an increase from their share of 48.1% in 1979. Think about it. Ten percent pay seven out of every 10 dollars and their share of the burden is rising."

Ari Fleischer also observed with respect to just payroll taxes:

"Top earners, on the other hand, pay payroll taxes so their money can be redistributed to others. According to the CBO study, the top 20% of workers, those with incomes over $64,300, pay 44.2% of the payroll tax. … In return, when it's time to retire, lower-income workers typically receive more in Social Security benefits than they paid in, while the wealthy, who paid the most in taxes, simply can't live long enough to get back what they paid. For much of the middle class and the wealthy, Social Security isn't a retirement program -- it's another program that redistributes their income."

Where do you fall in these income ranges? If your family income is $43,700 or even $87,300 do you think you are "rich"? The Democrats think you are, or at least they say they think you are when they wish to criticize the "Bush tax cuts".

Of course, to hear the liberals, socialists and their allies in the news media; the "rich" i.e. the "fortunate 40%", are not paying enough. So if and when taxes are reduced there is a hue and cry that only the "rich" will benefit. It’s never explained that a tax reduction only applies to those really paying taxes.

All of which takes us to the delightfully named "Earned Income Tax Credit" (EITC). If you didn’t know better and took the title at face value, you would think this was a plan to extend a credit to those paying taxes; not so my dear.

The EITC program redistributes money from those who pay income taxes to 22 million families and individuals with incomes less than $36,348. These workers not only don't have to pay any income tax under current tax laws, they are given a government check as a gift from the other tax payers. Broad marginal income tax rate cuts and continual expansions of the earned income tax credit (EITC) for non tax payers has created a situation where fewer people are paying more and more of the income tax. When the lowest tax rate was cut to 10% from 15% by President Bush in 2001, several million additional people were excused from paying any income tax.

The Earned Income Tax Credit is couched so as to be described as a "tax credit" but it is a credit given to those that pay no taxes. In reality it is a tax-free grant of money to those that qualify, single individuals, single parents and parents with "qualifying children". A qualifying child can be under age 19 at the end of the tax year or under age 24 if classified as a full-time student for at least one long semester or equivalent.

It is also not necessary for someone to be a parent to be able to receive a "credit". Persons without qualifying child can also get the government handout as long as they are not claimed as a dependent by someone else. In this category the claimant must be over 24 years old.

Today, the EITC is one of the largest welfare programs in the United States.

I believe that it is appropriate to help people in need under some circumstances. But why can’t congress call a shovel a shovel; are they worried they won’t be able to sell it to the 99% of workers who will foot the bill? By the way, if one doesn‘t pay any taxes, what is the "earned income tax" against which the "credit" is applied?

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