According to data on the National Taxpayers Union Foundation website the top 1% of wage earners in the USA pay about 39.89% of the income taxes collected (I’m using 2006 numbers). These folks have an Adjusted Gross Income of $388,806 or more. The bottom 50% of wage earners who do pay income taxes account just under 3% of the income taxes collected.
I don’t know about you but I think I could live very well on $388,806. In fact, that amount is equal to more than four times my annual gross income. If I made $388,806 this year I could keep my present lifestyle intact and not work for the next few years without a single worry about money.
It is important to remember that some wealthy folks do not pay income tax at all. These folks pay Capital Gains taxes instead. Yes, those “amazing” CEOs who say they want a salary of $1 per year while raking in millions on stock options are moving their executive compensation away from the (higher) income tax rate to the (lower) capital gains rate.
Imagine if you will a world where the top 1% are forced to pay an even larger portion of their earned income in taxes. Do you think they will pay more without complaint? We have already seen corporations move their offices off-shore to circumvent corporate taxes so why not individuals?
Unlike the rest of us the top 1% people can easily afford to take a year off or even drop their salary to $1 and work out a stock option pay plan. Those of us who make under $100K per year can survive a few months without an income but not much longer.
o, think for a moment. What would happen if the top 1% decided to “go on strike” against paying income taxes? How would we make up for that 40% in taxes that is not being collected?