Federal Income Tax Burden by Income Group

This info is from the Federal Reserve Bank of St. Louis. Link: Tax Burden at FRED for entire article. It, and the "Jeffersonian" quote from 1817 highlights the debate about "fairness" that underlies the other debate about the size of government currently raging in the USA. It is this debate and struggle that is the root of the uncertainty that is one major cause of the slowness in our economy.  Debt can only be eliminated with inflation or taxes. Spending in the long term therefore can only be offset by inflation or taxes. In either case, when government takes from one to give to another--it should be no surprise that the one who is burdened by the "taking" resists and is reluctant to "invest".

Note that the tax rate % for the highest 5% and the highest 20% has remained about the same since 1980.

Note also that the tax rate % for the other (lower) 80% has declined signficantly--with the lowest 20% actually getting more $ back from the government than they paid in. Nearly 40% are paying nothing.



Thomas Jefferson (1817) A TREATISE ON POLITICAL ECONOMY

"To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, ‘the guarantee to every one of a free exercise of his industry, and the fruits acquired by it."

Until this uncertainty is eliminated or reduced by a clear message sent by a national election, it is quite possible that economic activity may be sub-optimal.

This economic commentary is related to politics (political economy) and is the sole responsibility of the author and no other. It is not to be considered financial advice or a solicitation for political support.