I don't think that it needs to be a lot. But it needs to be something. Enough to make people think that, if, for example, you see people destroying a government building, that those people are destroying something that you paid for. Otherwise, it becomes too easy to just sit on the sidelines while other people destroy our infrastructure.
If you have an investment, you are less likely to cheer its destruction.
But more and more people pay no income tax, so they have little to no investment in society. They do pay sales taxes, property taxes, payroll tax etc. But no income tax, which is the biggest and most visible of all of our taxes. Why? Because politicians can't say "NO" to tax cuts, whether it's for GE or Lucy and Jim down the street.
We started in the 1940's by giving people extra exemptions from income for having children. Then, in 1975, the Earned Income Tax Credit was passed. We crossed the line from giving people a tax break for having children to actually paying them to do it.
This policy was expanded during the Clinton years. The big tax bill passed in 1998 created a non-refundable credit called the "Child Tax Credit". It wasn't refundable, though. That was taken care of 3 years later, with the tax bill known as EGTRRA. Now part of it can be refundable.
What this all means is that, for one thing, our biggest welfare program, the Earned Income Credit, is administered by the IRS, an entity that was set up to collect taxes, not distribute money to people for having children. While it's true that people without children can still get an EIC, the cutoff is very low ($13450), and it's a maximum of $457. For people with three children (up until 2009, you only got credit for up to two children), the income limitation is $48362 (above the median income!), and the maximum credit is $5666.
Biggest welfare program? You betcha. For 2009, over $60 billion in EIC was claimed. That's double what it was in 1997, the year that "welfare as we know it" was ended. In 1997, the bottom 50% of income tax filers made 14% of the total income reported to the IRS, and paid a little over 7% of the income tax. In 2009, the same group still made that 14% share, but paid less than 3% of the income tax.
The bad news is that this indicates a huge income disparity. Half of the households in the US make 86% of the country's income. But they also pay a disproportionate share of the tax. Should the IRS really be in charge of a $60 billion a year welfare program? That doesn't even include the Child Tax Credit, which is available to a lot more people, and amounted to another $28 billion.
This is what has happened over the past few decades.
2010--household with 2 earners, 2 children, total income of $50000, standard deduction.
Tax liability $0. After credits, $34 refund. CO gets $1109. Total $1075
1960--same household, same situation, income adjusted to $6250. Federal tax liability $645. Colorado, $161. Total $806.
This means that there are a lot more people now paying no income tax than there were 50 years ago, by percentage. The income disparity really hasn't changed all that much since then, either. Even in 1960, the bottom 50% still only earned about 15% of the income. But they paid over 10% of the income tax.
So this is why so many of the "53%" are pissed off. This is why we're more driven to go to work than to go downtown and whine about "Wall Street" not giving us money. It's because we're paying a higher share of the tax than before. Even the wealthy, contrary to what you've probably heard, are still paying a higher share of the income tax than they were 30 years ago. Actually, a lot more. But that isn't because their tax went up. It didn't. It went down. It's because everybody else's tax dropped as well.
So maybe they should pay more. Returning to a Nixon era top rate of maybe 70% or so wouldn't hurt the economy. It would only affect the top 1% anyway (ya like that, "99%'ers"?). And frankly, it's just not worth the trouble to collect what little income tax the bottom 50% actually pays. So let's get real.
The income tax for anyone shouldn't be much, but it should be something. Maybe a flat assessment of 3-5% of their income, withheld at the source, whether from wages or investments. That way, they won't even have to file tax returns, which would save both them and the IRS money.
At the same time, let's also stop using the IRS to hand out $90 billion in welfare every year. Want to have welfare programs to help the less fortunate? Fine. Lobby for that, willya? But let's do it the responsible way, with more accountability than just having to submit a form that is easily defrauded, and hard to catch the fraud. There's no reason that anyone should just get $6000 for filing a tax return. You'd suppose that they'd at least have to prove that they exist first.
Once again, I gotta say to the Occupiers--you are not part of any goddamned 99%. I would hazard that most of you are part of the almost 50% that pay no income tax at all. You don't have an ownership stake, so you don't care if you destroy the rest of us. When you fuck with the 53%, you're not just fucking with the wealthy. You're fucking with other people that are also having trouble paying the bills. Other people who also aren't getting free money from "Wall Street".
Most of us just don't bitch about it so much.
2011 IRS Tax Abstract
