Well, we made it through the April 15 income tax deadline. For most, the process was easier than in years past because the vast majority of taxpayers found the standard deduction benefited them more than going through the maddening process of itemizing.
But even though the filing process may have been easier, some still complained about the amount they owed on both federal and state returns.
It’s a safe guess that just about everyone that pays taxes believes they pay too much. And it’s virtually unanimous that everyone believes that anyone who is wealthier than they are should pay more. A lot more.
A recent study by the Tax Foundation concluded that, collectively,
Americans paid more in taxes in 2019 than they will on food, clothing and housing combined. Note that that’s collectively, not individually. But across the board, Americans certainly do pay a lot in taxes.
The Foundation’s research tagged April 16 as Tax Freedom Day. Which means, theoretically, that we’re now working for ourselves. But, in reality, if we factor in all the money we borrow for the year and the future tax liability it creates, Tax Freedom Day would be pushed into early May.
In this toxic environment, it’s difficult to discuss taxation without being considered political. How many times have we heard someone complain that the rich don’t pay their fair share? Or that the wealthy can hire experts to find loopholes that help them avoid paying tax?
Without being political, I refer to a recent study by Deutsche Bank that revealed, in 2016, the top ten percent of wage earners paid seventy percent of all income taxes. Drilling a bit deeper, the top one percent paid more than thirty five percent.
Looking at the percentages from an even different angle, out of the entire U.S. population, fifty percent paid ninety-seven percent of all income taxes. That means that half of the population paid little or no taxes at all.
There are many money issues in our nation that need to be resolved. My concern is that not much is being done to bring efficiency into state and federal spending. It’s easier for a politician to suggest that taxing the wealthy should pay for his or her new pet project.
Right now, for example, rather than really trying to fix the student loan issue, politicians are proposing that the wealthy pay more taxes to relieve the debt burden. In my experience, throwing more money at a problem rarely solves it. The roads in Michigan come to mind.
So, what can be done? Well, the co-founder of Home Depot recently stepped forward and is paying the cost for future Doctors at the New York University School of Medicine. He has donated $100 million to fund the medical school’s tuition.
With a net worth of $3.3 billion, he’s definitely mega-wealthy and certainly in the top one percent. And he’s very hopeful that other medical schools will soon become tuition free. Will he lead the way? Will other one-per centers follow his example? Only time will tell.
So the question is whether we’ll be better served by Uncle Sam taking more money from the wealthy or by letting the wealthy determine how their money should be used.
I know where I’d put my money.