The Top 1% Pay Their Fair Share

America’s hatred of the ultra-successful…

Photo Courtesy of James Duncan Davidson

By: Hayden Cunningham

This month, Jeff Bezos used part of his $200 billion net worth to board a rocket ship and briefly go into space. Bezos is one of several billionaires to recently express interest in space travel. While the feat is groundbreaking and the beginning of private space travel, thousands of Twitter accounts mocked him for using his wealth to blast off into the sky.

Throughout history, the richest people of society have enjoyed the benefits of a service or product before it became affordable to the public. Richard Branson, Jeff Bezos, and Elon Musk have continued to use their wealth to fund space programs. In the long term, this is a great thing. The wealth used to fund space travel will eventually create an affordable system for the middle-class in decades to come.

The problem we see in today’s society is a hatred for the billionaire class. Jordan Peterson accurately describes this as a “hatred for competence.” Instead of applauding a person’s efforts to accumulate wealth, they are condemned for being too successful.

The American Dream was never about becoming rich. in the early to mid 1900’s the goal of American life was to have a nice home, a reliable car, a steady income, and a family. People at the time wanted their basic needs met because life until then was unpredictable. People also valued family over career. The dream wasn’t just about wealth and job success, it was about building a home and strengthening relationships.

The youngest generations have many individuals who think they’re entitled to becoming rich and famous. Society will promote seemingly random people into stardom. This is seen on YouTube, TikTok, and in the music industry. As a result, a growing number of millennials and Gen Z are angry that they too cannot experience fame and luxury. When they don’t become famous, they blame the system instead of the luck of life. This is why socialism is so appealing to them. Instead of viewing the suburbs as a place you can own a home and live in safety, it is seen as boring and ordinary.

We live in the best time of human history. If you live in the United States, you are living a better life than almost every human-being in the history of the world. People take that for granted.

If you make more then approximately $34,000, you are in the top 1% of income-earners in the world. The median income in the United States for one individual (2019) is $30,000. In American society, that money is nothing luxurious compared to other Americans. However, it is important to have gratitude for this country and understand that most people in the world live a much harder life.

But what about the top 1% of American income-earners? As of 2020, the annual income required to be in the top 1% is $538,926. There are approximately 1.4 million individuals in the top 1%.

Bernie Sanders has made his career of attacking the rich. If you watched a Sanders debate and played a drinking game where you took a shot every time he says “top 1%” or “pay their fair share,” you’d have alcohol poisoning. The hypocrisy is obvious: Sanders is part of the top 1% and owns three homes.

Politicians like Sanders, Joe Biden, and Alexandria Ocasio-Cortez demand that the rich pay more in taxes than they currently do. This push for tax increases is a way for them to pay for expansive government welfare policies. AOC has even demanded rates as high as 70% be implemented for the richest Americans. So, how much are they currently paying?

In the table and chart below, you can see the percent of federal income tax paid by income bracket. The top 1% are currently paying 40% of all federal income taxes. The top 10% are paying 71.37%. The top 50% of taxpayers pay 97% of all federal income taxes.

National Taxpayers Union Foundation
National Taxpayers Union Foundation

This is already a large amount. The 1.4 million Americans in the top 1% are paying 40% of the share of federal personal income taxes. But it gets worse. What about net taxes? Those in lower tax brackets receive government subsidies, tax refunds, welfare, etc. Here is a chart of taxes paid (From a 2013 report from the Congressional Budget Office) when you factor these government transfers in:

Congressional Budget Office

That’s right. The bottom 50% of income-earners are paying an average tax rate of 4%, but taxpayers in the lower quintiles are paying negative taxes because they receive more money from the government than what they pay. According to the Congressional Budget Office, “Households in the top 1% of the before-tax income distribution had an average tax rate of 34%.” The top 20% of Americans are paying virtually 100% of the net taxes.

To repeat: the top 20% of Americans are paying 100% of the net taxes.

IRS

Our country has one of highest progressive tax rates in the world. The United States does not have a revenue problem, we have a spending problem. Increasing taxes on the wealthiest Americans is not going to fix that. Instead, it’s going to hurt the economy.

Jeff Bezos is worth $209,000,000,000. Do you think all that money is sitting in his bank account? Of course not. His net worth includes all of his assets. He also employs over 1.3 million people. That is over a million paychecks given out every two weeks to help people make a life for themselves. Bezos is not a perfect person, and there are many valid criticisms. But his success has permanently impacted the lives of others.

When the government tells Bezos or any other billionaire business owner that they now need to pay a 70% tax rate, they now have less of an incentive to grow their company in the United States. That means less American jobs. There are a long row of dominos that begin to fall when you handicap the wealth of our economy’s most successful people.

The Heritage Foundation explains that in the 1920s, tax rates were as high as 71%. The rates were cut down to 24%, and the economy grew by 59%. By the 1930’s, the highest tax rates went up to 63%, which made the Great Depression harder to stop. When John F. Kennedy and Ronald Reagan both lowered top tax rates under their presendicies, they saw high economic performance. While tax rate is not the only factor in economic cycles, it does have a huge effect on the country’s economic performance.

Opponents of the rich will argue that it is immoral to have that much money. Perhaps that is true, but the government does not have the authority to make that decision. If society wants to pressure the rich to be charitable, that is perfectly fine (and should be done). If you want to close legal loopholes that the rich use to avoid taxes, that is understandable as well. But stealing money from someone who earned it and redistributing to those that didn’t is more immoral than owning any amount of money.


AOC bizarrely explains her tax proposals

We have a group of people in this country that pay zero taxes, but we accuse the group paying all the taxes of “not paying their fair share.” The rich are obviously paying their fair share…and then some.

Americans need to stop having a hatred for competence. A lot of people saying “eat the rich” are also the ones making bad life decisions and bad financial decisions. It’s easy to place frustration on someone else. Our generation has a serious problem with this. They aren’t mad at the rich, they’re mad at themselves for their bad life decisions. It’s time to stop blaming others for their success and start making decisions that can increase the chances of a better life.

The Brookings Institute lays out their “success sequence” life plan to help those in poverty. If you finish high school, get any full-time job, and don’t have children before marriage, you have a 98% chance of living above poverty.

Of course there are privileges that help some people become rich more than others. But that is the luck of life; some people are born into poverty and some are born into wealth. Proper personal choices are still required to have success. A study done by Harvard showed that “growing up in a high-income family provides no insulation” to wealth disparities. The data showed that black children who grew up in wealthy families still had “a strong likelihood of ending up at the bottom of the income distribution.” What type of life you were born into will have a huge effect of your future, but how you live can be just as important.

It’s not difficult to make a good life for yourself in this country. Satisfaction of your life depends on who you compare yourself to. Stop looking at the life of the hyper-successful who worked incredibly hard and had a lot of luck on the way. Understand that living in this country is a privilege. We have economic mobility unlike any other country. But that mobility is contingent on smart life choices. Work hard, be smart, make wise financial decisions, and you will be successful. Until then, remember that there are 7 billion people in the world and most live a life much harder than your own.

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