Tough to follow income-tax 'logic'
By Ralph R. Reiland
Published: Sunday, Dec. 16, 2012, 8:56 p.m.
“Why so much fighting about economics?” asked a friend recently. “Economics is just logic.”
Not exactly. The basics are logical, as in reasonable or to be expected. But things get tricky when it comes to applications.
Decreases in supply, for instance, can be expected to raise prices. A freeze in Florida's orange groves will generally reduce supplies and hike prices.
And decreases in demand can be expected to drop prices. Christmas cards are cheap on Dec. 26.
But get past the basics and things get a lot more arguable and less logical.
In the current fight about taxes, spending and “fairness,” there are no clear answers in any introductory economics textbook about what's “fair.”
President Obama regularly admonishes “the rich” for not paying their “fair share” of taxes. Peter Schiff, American investment broker, author, financial commentator and CEO and chief global strategist of Euro Pacific Capital, holds a different view.
“After the tax hikes go into effect, more than half of my total income is going to the government,” said Schiff recently. “Now you tell me, what's ‘fair' about that? I don't care what the majority voted to do. They don't have a right to steal our money just because they voted for it.”
Schiff characterizes the November election as an “auction on the sale of stolen goods.”
Obama doesn't see it as theft via the ballot. “There are a lot of wealthy, successful Americans,” he says, “who agree with me because they want to give something back.”
Conversely, there are “a lot of wealthy, successful Americans” who believe they already give back more than their “fair share.”
Internal Revenue Service data for 2010, as reported by the Tax Foundation, show America's top 1 percent of income earners receiving 18.9 percent of the nation's adjusted gross income and paying 37.4 percent of all federal income taxes — about double their share of total income.
Similarly, the top 5 percent of income earners received 33.8 percent of the nation's adjusted gross income in 2010 and paid well over half the total federal income tax bill — 59.1 percent.
Both groups might argue, contrary to Obama's censure, that they already “give something back.”
In the same way, the top 10 percent of America's income earners received 45.2 percent of the nation's adjusted gross income in 2010 and paid 70.6 percent of all federal income taxes.
In all, the top half of income earners in the U.S. in 2010 received 88.3 percent of all income and paid 97.6 percent of all federal income taxes, while the bottom half of earners received 11.7 percent of total income and paid 2.4 percent of total federal income taxes.
Regarding percentages of income paid in taxes, Internal Revenue Service data for 2010 show the top 1 percent of income earners paying an average federal income tax rate of 23.4 percent, about double the 11.8 percent average federal income tax collected in 2010 on all income from all taxpayers.
The 23.4 percent tax rate doesn't count income taxes at the state level —11 percent in Oregon and Hawaii on incomes over $250,000 and $200,000, respectively, 10.5 percent on high incomes in California.
So, “fair?” What's “fair” about sticking the next generation with $16 trillion in debt, and what's “fair” about means-testing Social Security when that wasn't the deal?
Ralph R. Reiland is an associate professor of economics at Robert Morris University and a local restaurateur. His email: email@example.com
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Panthers free agent safety headed to Steelers
- Upper St. Clair man dies in crash of experimental airplane at Washington County Airport
- Analysis: Steelers could fill needs with free agents while not spending big bucks
- Ordinance requires Pittsburgh government to publish data online
- Mars Area board prepared to reject drilling proposal, president says
- Greensburg man lending his expertise to new cable series ‘UFO Files’
- Steelers to release LaMarr Woodley; Taylor restructures contract
- Police charge Westmoreland County priest in $124,000 theft case
- Memo confirms VA Pittsburgh officials knew of Legionella threat long before made public
- Judge denies former city police Chief Nate Harper’s appeal
- Irish chef takes boiled corned beef and cabbage to task