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At What Point Does Atlas Shrug?



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During the presidential election campaign many were dumbfounded upon hearing for the first time that at least a third of Americans pay no income taxes whatsoever. The Tax Foundation notes that in 2006, 45.6 million filers (33%) paid no income tax whatsoever. Under current law, in 2009 47 million filers–representing approximately 96 million individuals– will pay no income tax.    The Foundation maintains that under Obama’s tax plan 63 million filers– representing 44% of all returns– will pay no income tax. In contrast, in 1985, just 16.5% of filers paid no income tax.     It appears Obama wasn’t kidding about redistributing the wealth, although he appears to be somewhat late to the game.   At the other end of the spectrum, IRS data show that in 2006 the top 10% of all filers ( $109,000 and above in taxable income) paid 71% of all income taxes. The top 25% ( $65,000 and above) paid 86% of all income taxes.   Exempting huge swaths of the populace from the income tax burden while piling that burden on a shrinking cohort is a prescription for economic, political and social dysfunction.   Eventually, even fans of steeply progressive taxation might be compelled to ask, “Do the top 25%  of filers really access/consume 86% of all government services?” Obviously, the relationship between government and citizen isn’t a retail one, but we shouldn’t be surprised if the imbalance displayed by the above figures begins to prompt such unvarnished questions around kitchen tables across the country.   Sure, many of those who don’t pay income taxes still pay excise, payroll, etc. taxes. But income taxes represent the biggest tax bite by far. The anger and resentment at bailing out Wall Street, Detroit, etc. isn’t going to be dampened by the belief that nearly half of Americans won’t be doing much bailing at all.



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