AS the rich get richer ... more of their riches enrich the federal government.
Indeed, if more people were in the 1 percent class despised by the class-envy crowd, more money would be flowing to Washington to fund government programs desired by that crowd. Instead, they'd prefer to have fewer 1 percenters, paying ever higher tax rates.
Internal Revenue Service figures cited by The Oklahoman's Chris Casteel show that incomes reported on just 2,405 individual tax returns in Oklahoma accounted for 18 percent of total federal taxes owed in the state for 2010. The figures also show that the top 2 percent of Oklahoma filers earned nearly a quarter of all income in the state, yet they owed 44 percent of federal income taxes.
This group had adjusted gross incomes of more than $200,000. Widening the group to include those with incomes above $100,000 yields a figure of 43 percent of the income and 68 percent of the taxes.
“The rich” in Oklahoma are paying less in federal taxes now than they were before the Bush-era tax cuts and less in state income taxes than they were before recent tax rate adjustments. Restoring the federal rates to the previous level and/or reversing the state tax cuts would indeed bring more money into government coffers.
But this wouldn't change the tax dynamic. The rich would continue to make the most money and pay the most taxes, despite the relatively small size of the group. The non-rich would continue to pay little or no federal taxes and too much in state taxes. The government would get richer, yes, but the people who benefit from voluntary contributions made by the rich would suffer.
This would particularly harm the 36 percent of Oklahomans who owed no federal income taxes in 2010. The class-envy crowd is OK with this because its true motive is to punish the rich and enrich the government. Even under the best scenario, government isn't as efficient in managing resources as the private sector, including nonprofits that must maintain the trust of donors.
We mention the above statistics simply to note that the rich are already paying most of the taxes and the non-rich are paying relatively little (or nothing) to support federal government functions. That's less true in Oklahoma: The top income tax rate kicks in at a relatively low income level — something that needs to be addressed.
Raising taxes on the rich doesn't make the tax system more fair. It makes it more punitive. In the end, most Oklahomans have a sense of how much government they think they need and how much of a sacrifice they're willing to make to pay for it. This may help explain why there was no groundswell for a state income tax cut in Oklahoma last year.
The federal scenario is different: The Bush-era tax cuts benefitted far more than “the rich” and the definition of “rich” is quite elastic.
Justifying a federal tax increase based on fairness is bogus. A truly fair system would tax every income level at the same rate. Justifying a tax increase based on the need to bring in more federal revenue is folly. It would lead to even more unsustainable spending levels.
So what's left in the tax-hike justification arsenal? Nothing but this: Envy of the very small group of people paying a very large share of the taxes.