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When it comes to paying taxes, I remember an antidote told by a radio preacher in the 1970's. It seems that a middle-aged couple came in to see their pastor about a problem they were facing. They said that years ago, when they were first starting out in marriage, they decided to give a 10% tithe to the Church. They recollected that at that time, such a tithe was not very much money, because their income wasn't very much, but over the years, their income had grown to the point that their tithe was now quite a large sum, and they felt it was becoming a burden on them. The minister sat back in his chair and thought for a moment, and then leaned forward and said that he thought that he had a solution to their problem. "Let's get down on our knees right here, and pray that God will return you to an income which will reduce your 10% tithe to an amount you feel comfortable with! " he said. The couple looked at him and then looked at each other in horror. After a few seconds, one spouse said "thank you, Pastor, I think we can see our problem now," and they got up and left.
The moral of the story is that the more income you have, the more money you have left over after fulfilling your obligations, whether it be your voluntary gift to the Church or your required federal tax payment, even under our progressive tax system. If you think you are paying too much of your income in Federal taxes, find a way to make less money so that the percentage and amount you pay will be lower. A person with a $1 million Adjusted Gross Income pays less than $370,000 in federal taxes and he would be left with more than $630,000, since the top rate at which he pays is 37%, and he would pay that rate on only a portion of his AGI. If a person only made $50,000, he would have less than $50,000 left over even if the top rate at which he had to pay was only 10%. Which person would you rather be?
In the 1980's, Ronald Reagan ruined the federal government's ability to collect the amount of money that it needed to fund the programs that it found necessary to run. At the end of World War II, the federal debt stood at an all-time high. Every presidential administration between 1952 and 1980 managed to lower that national debt as a percentage of GDP. Since Reagan's big tax cut, in which the top marginal rate was reduced from 70% down to 45%, the federal deficit has increased almost every year to the point that the national debt now stands at more than $39 trillion.
In 1980, the top 1% of incomed people paid an average of 45% of their total income in federal taxes. Thanks to Reagan's influence in significantly dropping tax rates, that top 1% paid only 32% of their total income in federal taxes in the late 1980's. The only way to reduce the National Dept is to return to the more progressive federal tax rates that existed before Reagan, especially because even with such higher tax rates, the higher one's income, the more money that person will have left over after paying taxes. Blessed are those who pay the highest taxes, they will have more money left over than those who pay far less, even if the top progressive rate is returned to the 70% range, or extended above 90% where it stood before 1960.
JOHN SILVERSTRIM
South Williamsport
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