Buried in Title X — Strengthening Quality, Affordable Health Care For All Americans, Subtitle H — Provisions Relating to Title IX, Section 10907 — Excise Tax on Indoor Tanning Services in Lieu of Elective Cosmetic Medical Procedures, of the recently passed Patient Protection and Affordable Care Act is a new tax on tanning salon services. Dubbed “the Caucasian tax,” it imposes a 10-percent tax on the amount paid for indoor tanning services.

Besides the other new and increased taxes in the 2,409-page healthcare bill, there are a number of other federal taxes that Americans are already saddled with, from the excise tax on gasoline to the taxes on airline tickets. And then there is the additional state tax burden (only Alaska, Florida, Nevada, South Dakota, Texas, Washington, New Hampshire, Tennessee, and Wyoming have no state income tax and only Alaska, Delaware, Montana, New Hampshire, and Oregon have no general state sales tax).

The federal taxes that people are the most familiar with are those that are deducted from their paychecks. Employees pay Social Security taxes of 6.2 percent (matched by their employers) on the first $106,800 of income and Medicare taxes of 1.45 percent (matched by their employer) on earned income of any amount. The other tax withheld from paychecks is, of course, the income tax.

The federal income tax is the tax that infuriates Americans the most, just as the federal agency that Americans loathe more than any other is the Internal Revenue Service. Aside from the amount of the tax — which is now measured in the trillions — the federal tax code is also too complicated, too intrusive, and costs untold hours and dollars in compliance and enforcement costs. There are no letters more dreaded than those from the IRS.

But other than the inconvenience of keeping records and filling out income tax forms, many Americans don’t actually pay any income tax at all. This is because of our highly progressive income tax system. A progressive tax system — one of the planks of the Communist Manifesto — is one in which the tax rate increases as the taxable amount increases. Since the beginning of our current income tax system in 1913 — thanks to the adoption of the Sixteenth Amendment — the United States always has had a progressive tax system.

The income tax began with a 1 percent tax on taxable income above $3,000 followed by a series of surcharges of up to 6 percent applied to higher incomes. The maximum rate of 7 percent was applied to taxable income over $500,000. The current tax brackets are 10, 15, 25, 28, 33, and 35 percent. The maximum rate of 35 percent is applied to taxable income over $372,950. If the “Bush tax cuts” are allowed to expire at the end of this year, then the two highest brackets would return to 36 and 39.6 percent in 2011.

But it’s not just the tax brackets that make the income tax so progressive. Tax credits like the child tax credit and the credit for child care expenses contribute to the progressivity of the tax code because they are lowered or eliminated above a certain income threshold.

Because of the progressive nature of the tax code, the liberal idea that the rich aren’t paying their fair share is ludicrous. Consider the example of a typical man with a wife and two children. For the tax year 2009, he could make $50,249 and still pay nothing in federal income taxes. From an income of this amount, this man subtracts $11,400 for his standard deduction and $14,600 for his four personal exemptions. Although this leaves a taxable income of $24,249 and therefore a tax liability of $2,799, the tax due is reduced to nothing thanks to a $2,000 child tax credit and an $800 “making work pay” tax credit.

Some tax credits, like the earned income credit, are refundable; that is, you still get the credit even if you don’t owe any tax. This means that some Americans can get a tax refund above and beyond what they had withheld from their paychecks. Let’s reconsider the family in the example above. If instead of making $50,249 the man made only half of that ($25,124.50), he would still receive the same standard deduction, personal exemptions, child tax credit (now in the form of the additional child tax credit), and “making work pay” credit — plus an earned income credit of $4,248. The result is a tax refund of $7,048 even though this man neither had any tax withheld nor owes any income tax.

Since most Americans don’t make over $50,249 a year, who in America is paying the taxes? According to IRS data from 2007 — the most recent year available — the tax burden of the top 1 percent of taxpayers (in terms of adjusted gross income) exceeds that of the bottom 95 percent of taxpayers. The top 1 percent paid 40.4 percent of the total income tax paid while the bottom 95 percent paid 39.4 percent. Those in the top 5 percent paid 61 percent of the taxes. Americans who earn the top 50 percent of the income pay over 97 percent of the taxes. Conversely, the other half of American wage earners pays less than 3 percent of the income taxes.

The rich are not only paying their fair share, they are paying the share of a great many others as well. The United States relies more heavily on the top 10 percent of its taxpayers for revenue than does any other country. The income tax is a vast income redistribution scheme that exists because tax eaters, those who receive more in benefits than they pay in taxes, together with the government bureaucrats who rely on their votes to stay in power, plunder taxpayers, those who pay more in taxes than they receive in benefits. It is because tax eaters greatly outnumber taxpayers that candidate Barack Obama could run commercials openly boasting that no taxes would be raised on any American making under $250,000.

The solution, of course, is not to raise the taxes on the poor or make taxes flatter or fairer, but to abolish the whole rotten system and strictly limit government spending to only what is constitutionally authorized. Thus, as egregious as the new tax on indoor tanning services is, it is not what is in the healthcare bill that is the problem; it is the fact that there is a healthcare bill in the first place.

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rprew said:

God warned men of the evils of government and taxation And he will take your fields, and your vineyards, and your oliveyards, even the best of them, and give them to his servants. And he will take the tenth of your seed, and of your vineyards, and give to his officers, and to his servants. And he will take your menservants, and your maidservants, and your goodliest young men, and your asses, and put them to his work. He will take the tenth of your sheep: and ye shall be his servants. And ye shall cry out in that day because of your king which ye shall have chosen you; and the LORD will not hear you in that day. 1 Samuel 8:14-18

April 07, 2010

Al said:

Paine 1 Samuel 8:14 was in Paine's Common Sense as well.

April 08, 2010

Mark E. Schmidter said:

... The Health care bill.. "This report, by its very length, defends itself against the risk of being read." Sir Winston Churchill (1874-1965) Prime Minister of England

April 08, 2010

Larry Schanz said:

... More than 50% of the jobs in the US don't pay enough for a family to live on. According to the latest available statistics 50% of income tax returns report an income of under $32,000 per year, less than $15.00 per hour. Some of those are joint tax returns. Where have all the middle class jobs gone with incomes high enough to raise a family?   Outsourced to China and India. While everyone in the lower tax brackets pay the Social Security tax on 100% of their income, those who earn over $106,800 do not pay Social Security tax on earnings over that amount. The chart for 2007 shows that the top 50% had 87.74% of total Adjusted Gross Income. The bottom 50% had 12.26% of AGI.   The top 5% had 60.63% of AGI.  The top 1% had 40.42% of AGI. The top 50% has more than 7 times the income of the bottom 50%. The US cannot keep exporting jobs to Third World counties and maintain a healthy middle class.

April 08, 2010

Libertarian777 said:

aah yes Larry Schanz said: "While everyone in the lower tax brackets pay the Social Security tax on 100% of their income, those who earn over $106,800 do not pay Social Security tax on earnings over that amount. " But you forget the opposite side. Those so-called 'rich' who do not pay social security tax above 106,800 also have their future social security benefits reduced as a result (i.e. they don't use their actual salaries to determine social security benefits). Tax is by its definition, socialist. Redistributing wealth is a marxist ideology. To each according to his need, from each according to his ability. Karl Marx.

April 08, 2010

Paul Beaird said:

Feeble Conservative argument goes against US Constitution Once again, we have to hear a Conservative agree with socialist programs, arguing only that it should be smaller, go slower and be less expensive. If a thief breaks into your house and cleans you out, then proceeds on down the street and misses the real valuables at your neighbor's house, are you supposed to resent him, becuase he didn't cough up his "fair share"? A moral American wants 100% loopholes for everyone. The grown-up in this dispute is the person who recognizes that "earn" is a moral concept. Keeping your life requires work and a focused mind. To take that responsibility and act on it, is moral. For government to subract from what you earn is immoral. The American Founding Fathers knew that. In Article I, Section 9, paragraph 4 of the US Constitution, one finds that they banned government from ANY direct tax on persons. Conservative? If that meant preserving American values, instead of the status quo created by the anti-American Leftists, they would not have abandoned their work to repeal the 16th Ameridment and its federal income tax, long ago. America's moral philosopher, Ayn Rand, argues that the only government consistent with a rational morality is one whose only role is to protect the rights -- the freedom of choice and action -- of human beings. So, we must all ask this question: If the proper purpose of government is to protect our rights against anyone using physical force against us, then, what on Earth are we doing letting that government finance itself by means for forcible taxation? To see Rand's proposal for financing a government limited to Constitutional authorizations only, I point you to her essay "Government Financing in a Free Society" in her little book on morality, The Virtue of Selfishness. Get out of the Conservative, all-too-ready-to-agree, mindset and arm yourself with the ideas needed to be a Radical for Freedom.

April 08, 2010 | url

Bob Homeyer said:

Fair Taxation We need to move to a Consumption Tax. Everyone needs to pay their fair share. 22% would work just fine. 25% of the economy is underground and those tax cheats increase the burden on the rest of the hard working americans. If you can not track the income you should not be taxing it. Everyone has to spend the money and we can pick up the taxes there. To the guy that is complaining about social security stopping at $ 106,800...that is a benefit. You get out what you put in on a sliding scale (in theory). Now if you want to complain about Warren Buffet being in a 15% tax bracket...I can support that one.

April 11, 2010

Jeffery said:

Income and Net Worth At a statistical level, income variation has grown due to gains of higher-income (above median) households relative to the median, rather than losses of lower income households relative to the median, which has been occurring roughly linearly (on a log scale) since the 1960s. Income variation has grown particularly due to increased concentration of income in top earners (top 1%, .1%, 0.01%) at a rate of about 175% since the mid-1980s, while the bottom four quintiles averaged 28%. The causes of this increasing wealth concentration in higher income households are hotly debated. Two of the most important defining factors of economic status in the United States are income and net worth. When considered alone, income (the resources a household or person receives from a job, transfer program, or other source) provides an incomplete picture of economic well-being. Only when the wealth or net worth (the difference between assets and liabilities) a person or household has at any given time is considered in conjunction with income does a better understanding of economic health and well-being emerge.

April 17, 2010

Jeffery said:

Distibution of Wealth It should be noted that the margin of wealth is lowest among the richest. In other words, an additional dollar spent by a poor person will go to things providing a great deal of utility to that person, such as basic necessities like food, water, and healthcare; meanwhile, an additional dollar spent by a much richer person will most likely go to things providing relatively less utility to that person, such as luxury items. From this standpoint, for any given amount of wealth in society, a society with more equality will have higher aggregate utility. The distribution of wealth in the United States has a large positive skew, with relatively few households holding a vast proportion of the wealth. As shown by Larry Schanz above, not only does the top 5% receive over 60% of the nation's income, the top 10%'s net worth would blow your mind. Healthcare laws and tax rates are not hurting these whiners near as much as they like you to think. It's too bad that a good man like Ronald Reagan mistook the rest of the well-off to be like him in his “trickle down” theory. Social justice would not be left to the government to act upon. Keynesian economics served the U.S. well from the Great Depression, World War II, and through the post-war economic expansion of the 1940's – 1970's. Mr. Vance, go ahead and get a tan and have a “free” glass of water, you deserve it.

April 17, 2010