Big news is about to break. The father of Anna Nicole’s baby? No,
that’s not it.Stupid remarks by radio host Don Imus about people’s
appearance? Sadly ironic considering how he looks — but no, that’s not it.

    Wait, tax day is coming. That’s right, lost in this blizzard of
whether or not Jennifer Aniston and Vince Vaughn are together, there’s
that scooping sound of the government removing money from your pockets.

    Congressional Democrats have been in the process this past week of
releasing some ideas they have about changing the tax code. Here is a
surprise; they do not want to renew President Bush’s tax cuts, and they
may even see the need to raise taxes.

    I’m going to go way out on a limb here and say the increase will be
on the “wealthy.” Why attack those high-living slackers? The best
reason probably is there’s not nearly as many of them and they only
have one vote. Corollary to that is there’s a lot more people that
don’t make as much money and are interested in seeing taxes taken from
someone else. They also have one vote.

    Democrats say tax cuts go disproportionately to the rich. And in
the strictest sense, that’s probably true.

    Tax collections however are up with tax cuts, with progressive cuts
until 2010. The death tax or as some refer to it the estate tax, which
conveniently manages to tax money when you make it and again when you
give it away has been steadily going down as well. In 2010, we’ll see
the lowest point for the reductions in estate and income taxes.

    I pointed out tax cuts are in the strictest sense,
disproportionately affect the wealthy. Why isn’t that bad? First, the
wealthy tend to buy things that others make or sell. This supports
people and small business and has a multiplier effect on the dollars as
they are exchanged down the line.

    During the Clinton years, we had a luxury tax on things like
expensive cars and yachts. After a while, it was discovered that the
tax, instead of bringing in more money, was putting people out of business.

    Much to the surprise of proponents of high taxes, tradesmen
actually made the things these people were buying. Shipyards along the
Atlantic Northeast were having a hard time staying in business, because
the wealthy folks just went some place else to buy their boats. So
instead of raising tax collections, we had people making less money and
paying less tax. So that idea quietly slipped away into the night.

    The reason the disproportional benefit of tax cuts falling on the
wealthy is OK is because they pay the lion’s share of the taxes and
spend most of the money others use for wages.

    Last year Bruce Bartlett of the Heartland Institute did a study on
the 2003 tax year. It showed the top 1 percent of taxpayers paid 34
percent of all federal income taxes. The top 5 percent paid 54 percent
and the top 10 percent paid 65.8 percent. The top 25 percent of all
taxpayers in the United States paid almost 84 percent of all federal
income taxes collected.

    When Ronald Reagan took office in 1980, the top income tax rate was
70 percent. The top 1 percent paid 19.3 percent of the taxes. After
Reagan’s first tax cut in 1981 reducing the top rate to a still
whopping 50 percent, the percentage of all taxes paid by the top 1
percent rose. They had more money to spend, and they spent it. They
also invested and bought things that would make more money.

    By 1986, the top 1 percent were paying 25.7 percent of the income
taxes. When the top rate was cut from 50 percent to 28 percent, the
amount paid by that 1 percent went up again.
When we look at these figures, we see that tax cuts cannot help but
disproportionately affect people with the largest incomes. But in the
end, they also pay a disproportionate share of the tax burden, because
they accumulate more wealth, pay more taxes on it, and create more
capital reinvestment.

    At the same time, the number of Americans that pay no tax at all
continues to go up. The last figure I remember seeing from around 2000
showed the percentage of Americans that pay no taxes or receive all of
their taxes back on the federal level was almost 32 percent. I’m sure
that number has risen significantly.

    Why do the taxers continue to make points about how unfair tax
costs are to the poor, when examination shows the opposite? Because
it’s in their interest to promote class-envy and use that class-envy to
get votes.

    Also, a lot of people who like high taxes don’t like capitalism. I
would say, they don’t understand capitalism but for the most part
that’s not true. They don’t like it, because capitalism is at its
essence about the one thing taxers don’t like: choice.
Taxing is about power. Power best flows from monopoly. Capitalism
encourages choice. Choice is the sworn enemy of monopoly. Taxers, by
their nature, want government as a monopoly. If you are the only
service station within 20 miles, you not only make more money, but you
have a lot of power over what happens. When somebody opens up across
the street a lot of questions you didn’t care about before become
important; like if your customers are happy.

    The taxing elite prefer a citizenry with no choice. To have a small
group of producers with little political power despite their resources
because their small numbers are easily outweighed by a much larger
number of voters who are led to believe producers aren’t paying their
share.

    The one quote I would leave us with this tax season is, “No nation
in the history of the world has ever taxed itself into prosperity” —
Abraham Lincoln.