Guest Editorials are the opinion of the authors, and not necessarily the staff or advertisers of Sierra County Prospect.
Guest Editorial: Jim Reed, Fall River Mills
Top 1% Don’t Pay a Fair Share of Taxes
I keep hearing the same story about the wealthy paying most of the taxes and that I am misrepresenting the facts when I say that the tax burden on the middle class is unfair. It is true that wealthy people like Mitt Romney pay Millions of Dollars more in taxes than the average middle class taxpayer, but he is paying income taxes at a 15% rate when a single hard working taxpayer is paying at a rate of at least 25% on money earned above $34,500. The problem is that stock market income, dividends and capital gains, are taxed at a flat 15% no matter how much income is received, while people working for a living are taxed with a progressive rate that tops out at 35%. Over 13,000 people for the year 2009 reported at least $10 Million in income on their tax returns; most of that income was from investments and was taxed at 15%. Yes, 15% of $10 Million is more dollars that 25% of $50,000, but is that fair?
To be fair we must also look at the payroll tax that pays for Social Security and Medicare. Of the total revenue the U.S. Government receives, 41% comes from individual income taxes and 40% from the payroll tax. The payroll tax, which is matched by the employer, normally is 7.65% of an employee’s pay check (FICA) up to $110,000 in a single year. Once an employee earns $110,000, no further FICA deductions are taken from the pay check; this limit is known as the cap. There is no payroll tax on investment income. Of total revenue received by our government, nearly an equal amount comes from the payroll tax as the individual income tax, but the wealthy pay a disproportionately small part of the payroll tax, a tax that falls mostly on the hard working middle class.
Using dollars to argue the wealthy 1% are being treated fairly in our tax system distorts the overall picture. A single working person earning more than $34,500 is paying at least 10% more in income taxes and 7.65% in payroll taxes than the 1% who are living off their investment income.