Category: Income Tax

So, how many millionaires are there in America anyway? That’s a fair question, right? Some people of a certain political persuasion believe that the solution to our economic crisis is to ask the very wealthy to cough up more dough. Repeat this mantra- “if we collect more tax revenue, the deficit will eventually disappear.”

Did you know that more than a third of the income tax returns that are filed end up in not having to pay taxes at all during the course of the year or what is paid in is refunded back 100%? This is especially true for senior citizens who rely solely on monthly social security payouts for income. That means that a little more than 60% of us are paying for everyone’s needs in America . In the interest of full disclosure, the quarterly estimates I begrudgingly pay don’t come back to me or at best are used to help reduce the estimated amount I owe for the first quarter of the next year. And I am not in a bracket that is going to put a dent in the deficit.

Continuing with this disclosure business, I am not an economist nor even a licensed accountant. In the early 1970’s, I was required to take a class in Economics at Northeastern Illinois University in order to fulfill the obligation for a more well-rounded education. A not-so-bad looking blonde lady professor was the teacher who tried to pour ideas about bell curves, trends and consumption- the consumer type, not the disease- into our minds in class. What made it a challenge- for both her and my classmates- was that she was cross-eyed, like Ben Turpin. (If you don’t know who Ben Turpin was, forget it.) She’d ask a question to elicit whether we were reading our textbook at home or wherever. If she was looking in your general direction, you were in trouble. You weren’t sure if she was calling on you to speak up or the person one row behind and to the right. Each time a bunch of hands were raised, she’d say, “you!”. And you’d hear for the next two minutes, “who, me? No, you! Who, me? No, him. Alright, then you speak up….” We learned more about diplomacy and tact in that class than how to balance a budget. Maybe that is what’s missing now.

So, how many millionaire are there in this great country of ours? I asked this question on the Internet and found several answers depending from which the year the statistics are taken. It is probably a safe bet to say that there are at least five million households with more than a million in cash in various banks. I’m excluding those who are on the bubble because their wealth is mostly in property equity.

Let’s say we ask these 5 million rich dudes to donate an extra 1,000 dollars to the tax coffers. What does that do? It brings in an extra 5 billion in cash. Wow! But that is not going to do much for closing the gap on a 4 trillion dollar deficit. What if we gave them all a free supper and raised the ante to 10,000 dollars each? No one likes to cough up so much extra like that but it still will not make a dent in their lifestyle, right? Besides,we only need to stroke them for a couple of years. Just to try to stabilize the economy and bring back confidence to our global partners that this is a great place to invest in. We gain an extra 50 billion in cash but still a mere speck of a dent.

What if we increased the pool of givers and asked those making over 250,000 dollars a year to give one thousand extra dollars to the tax coffers? You are still adding less than 100 billion dollars to federal revenue.

Some people argue that the extra revenue should come from businesses that shelter their income from taxes. Yes, there are a handful of global corporations that stiff Uncle Sam but still not enough to dent the deficit. Bottom line, any extra revenue generation is just going to go into some legislator’s pork barrel project anyway.

Unless you ask 100 million Americans to give big chunks of money the next couple of years in addition to what they are currently obligated, it is not going to do much to narrow the deficit. It seems plain simple to me that the major effort to reduce the deficit is to tackle it from the other side- cutting spending without choking those of us who need the services that are provided by the Federal Government.

A lot of tax-paying Americans- those that don’t give a penny should keep still- would be more amenable to tough compromises if we were all on the same playing field. This means that no government workers including legislators, judges and even the President should have special health care benefits and pension plans. We should all have the same. You cannot expect those with better perks to wisely make decisions that concern the Economy for the rest of us. It’s called conflict of interest, otherwise. What affects our pocketbooks have to affect theirs. And no legislator should be allowed to vote on raising his or her own salary. Any vote on salaries should not be instituted until one term of office following the one being voted on. No one has ever put a gun to the head of a legislator and forced them to run for office. When the rest of us suffer financially, no one in public service should demand or even expect to receive improved benefits.

When do I pick up my Nobel Prize in Economics? Or tell me that I am an idiot and give me concrete examples and no political talk. Thank you.