No Runny Eggs

The repository of one hard-boiled egg from the south suburbs of Milwaukee, Wisconsin (and the occassional guest-blogger). The ramblings within may or may not offend, shock and awe you, but they are what I (or my guest-bloggers) think.

We’re #1!

by @ 5:30 on December 2, 2008. Filed under Economy, Taxes.

One of Barack Obama’s primary campaign positions was that he was going to realign income taxes so that the “rich” didn’t get by without paying their fair share.   In an October, 2007 Democrat debate, Barack Obama said:

There has to be a restoration of balance in our tax code. We are going to offset some of the payroll taxes that families who are making less than $50,000 a year get a larger break. I want to make sure that seniors making less than $50,000, that they get some relief in terms of the taxes on their Social Security. Those kinds of progressive tax steps, while closing loopholes and rolling back the Bush tax cuts to the top 1 percent, simply restores some fairness and a sense that we’re all in this together.

“Fairness” – did anyone ever bother to ask Obama  what he was  basing his fairness on?

Throughout the campaign it appeared clear that Obama felt the United States was too independent.   He made clear that he had a vision for the US that looked more like the rest of the world, especially Europe.  

OK, let’s use the rest of the world as our “fairness” test for progressive taxes.   Typically when one thinks progressive taxes, one thinks of Canada, England and Europe in general.   The assumption is that the more socialism a country has the more “soaking of the rich” occurs to support those government programs.

I found an interesting analysis today.   The Organisation for Economic Co-Operation and Development (OECD) did an analysis of the progressive nature of taxes in their 24 member countries.   Member countries include most of Europe, Canada, Japan, Australia, Korea and Mexico.   The analysis looked the top 10% of households in each country and determined the amount of the country’s income that was reflected in those households and the % of income taxes that those same households paid.  

It turns out that while the top 10% of US households have a bit more (but not the highest concentration) of income, 33% compared to the OECD average of 28%, those same households pay 45% of their income in taxes compared to the OECD average of 32%.  

OK, given all the countries involved, maybe a comparison to the entire OECD is “fair,” let’s look at a peer.   The UK has 32% of its income in the top 10% households (1% less than the US) yet only takes 39% of it in taxes compared to the US’s 45%!   To add insult to injury on this analysis is that included in “taxes” is Social Security type taxes which at higher incomes, is actually regressive because it caps out.

It turns out that the US collects more income taxes from the top 10% of income earners than any other country!   The US comes in second to Ireland for most progressive income tax system.  

I’m all for making the US #1. Productivity, average income, philanthropic activity are all good  statistics to be #1.   However, being #1 in the world in taxing  our most successful, especially when we’re already #1before the expiration of the “Bush tax cuts” or any imposition of “fairness” by the Obama administration, is not something we should be proud of.

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