In the stagnant days
of the Carter administration, when inflation was approaching 13.5% and interest
rates were peaking at 21.5%, income was more evenly distributed than in any
period in 20th-century America. Since the days of that equality in misery, the
measured income of the top 1% of income tax filers has risen over three and a
half times as fast as the income of the population as a whole. ...
While income
distribution has become a source of protest and political debate, any analysis
of taxes paid in high tax-and-spend countries shows that the U.S. has the most
progressive income tax system in the world. An inconvenient truth for the advocates
of higher taxes on America's rich is that big governments in developed
countries are funded not by taxing the rich more than the U.S. does, but by
taxing everybody else more.
To vilify success and
the rewards it garners is an assault not just on capitalism but on liberty
itself. As Will and Ariel Durant observed in The Lessons of History (1968), "freedom and
equality are sworn and everlasting enemies, and when one prevails the other
dies . . . to check the growth of inequality, liberty must be sacrificed."
Nowhere is the
political debate over income inequality more detached from reality than the
call for the top 1% of American income earners to pay their "fair share."
The Organization for Economic Cooperation and Development (OECD) data on the
ratio of the share of income taxes paid by the richest taxpayers relative to
their share of income show that the U.S. has the world's most progressive tax
burden.
The top 10% of
earners in the U.S. pay 35% more of the income tax burden than in Sweden and
22% more than in France. These figures—from the 2008 OECD publication
"Growing Unequal?"—include all household taxes imposed on income at
the federal, state and local level, including social insurance taxes.
In an eternal irony
unique to large welfare states, it is the expansion of government in the name
of the poor and middle class that always costs poor and middle-class families
the most. When the U.S. collects 16.1% of GDP in income taxes, the top 10% of
taxpayers pay 7.3% and the other 90% pick up 8.9%.
In France, however,
they collect 24.3% of GDP in income taxes with the top 10% paying 6.8% and the
rest paying a whopping 17.5% of GDP. Sweden collects its 28.5% of GDP through
income taxes by tapping the top 10% for 7.6%, but the other 90% get hit for a
back-breaking 20.9% of GDP.
If the U.S. spent and
taxed like France and Sweden, it would hardly affect the top 10%, who would pay
about what they pay now, but the bottom 90% would see their taxes double
