The Wealthiest 5% Pay 40% Of All Federal Taxes


Americans “want to make sure that middle-class folks aren’t bearing the entire burden and sacrifice when it comes to some of these big challenges,” said President Obama said in a new conference earlier this month. “They expect that folks at the top are doing their fair share as well.”

But what is that fair share when the top 1% of American households by income are paying 22% of all federal taxes (not just income taxes) and the top 5% are paying 40% of all taxes?

As matters stand, the top 1 percent of American households paid 39 percent of income taxes in 2009, according to the most recent data compiled by the Congressional Budget Office, and the top 5 percent of taxpayers paid 64 percent.

But income taxes, taken in isolation, do not tell the whole story, because lower-income Americans do pay payroll taxes. But even taking into account all forms of taxation, the top 1 percent still paid 22 percent of federal taxes while earning just 13.4 percent of household income. The top 5 percent paid 40 percent of all federal taxes, despite earning only 26 percent of all income. No matter how you slice the numbers, it’s hard to understand why anyone would think the wealthy aren’t already shouldering a burden commensurate with their blessings.

Our friends on the left would have us believe that the nation’s fiscal problems stem from not adequately taxing the most prosperous citizens. But those citizens are already paying an inordinate chunk of the total tax pie.

Is the problem really a paucity of taxation? Or do we simply have more government than we can afford?

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • sbark

    At present the Free Stuff voters are getting their goodies at a 100% discount—no wonder useage is rising. Its on a perpetual Black Friday sale……with the govt then borrowing, now 16.5 trillion, to make up the price diff………..
    To slow down useage, consumers of the Free Stuff will have to see a “price hike”, but that is impossible politically, as that is the only reason for the existence of the Dem’cat party………as the supplier of free stuff with the power that then comes with it.
    Its going to take a flat tax concept……where the free stuff recipients see a “price hike” in their consumption……….and then a reduction in use
    ……..good luck with that…….Sandra Fluke wouldnt get her rights to birth control

    • Roy_Bean

      At some point Heidi/Harry/Barry and the democrats are going to crash the economy. I am almost at the point of saying go for it. Let them do what ever they want, let the economy crash, the sooner the better. At this point the only way to disprove their lies is to let it happen.

      • $8194357

        FORWARD to globalism “is” the agenda, IMO.

  • kevindf

    “Fair” is a weasel word.

  • $8194357

    And when they take it all?
    it will still never be enough.

  • Neiman

    All the above must be a lie, it must be, because Lord Obama has told us and more than 50% of the people accept the absolute fact that, the rich do not pay enough, they have tax shelters, deductions and many ways of not paying their fair share.

    Besides, if you are in favor of redistributive justice like the liberals, who ya going to get that money from to redistribute, poh folk?

    Even as poor man, I will never understand how the liberals think super taxing the so called rich will produce jobs or stimulate the economy. If Lord Obama and the Left want true economic Justice, tax everyone the same amount on every dollar earned, no deductions for anything – just X percent on EVERY dollar earned. I assure you the rich will still pay most of the taxes and the poor the least, by great margins; and to me that is justice, everyone treated equally.

  • Harold

    I would advise any small business to liquidate their business as soon as they can and get on all the free stuff that is coming our way from Obama and democrats. No use in working to build a business if your not going to get anything from it. Join the other side and sit back and enjoy the goodies.

    • Neiman

      In California businesses are fleeing like rats fleeing from a sinking ship, which California ship is sinking. So, maybe we can modify your advice by saying, liquidate or if you like building a business and hiring people, move out of state or even the country.

      • $8194357

        And Americas debt is sinking her by design as well, IMO..

      • Your brother in Christ.

        Which businesses have fled like rats fleeing from a sinking ship?

        Where did they go?

        • Neiman

          I don;t have a list and don’t have the time to get you one, but it is well known California is losing businesses in big numbers, it is in the news almost daily and with recent changes in state laws, increased taxes, more restrictions on businesses through the cap and trade scam, they are fleeing to Texas, Nevada and other business friendly states, as they should.

          • Your brother in Christ.

            Friend, I have no doubt that some business are closing shop in California and moving to other states.

            But it is an overestimation on your part to say “In California businesses are fleeing like rats fleeing from a sinking ship, which California ship is sinking.”
            If you wish to reconsider your statement, please feel free to do.

          • Neiman

            No, I’ll stand pat

    • $8194357

      Grandma always used to say…
      To many folks in the wagon
      and not enough pulling it..

    • JustRuss

      I’ve already made the switch! I can’t quit my job yet though, have to get fired if I want back on unemployment.

  • geoff

    I only have one question. When the wealthy have had enough and cash in (leave the country). Will the rich then have to be redefined as anyone making more than $60K per year. Just wondering when the line get’s re drawn.

  • Guest

    That says more about extreme income inequality than it does tax burden. The richest 400 americans have the same net worth as the bottom half of the all Americans combined.

    You guys are like slaves rushing to defend plantation owners.

    • geoff

      If you took 100% of all the so called wealth’s money and give it to the poor. Within 5 years the so called wealthy will have all their money back and the poor will be poor again. Just look at what happens when people win the lottery. Within 5 years most of them have lost it all.

    • Thresherman

      I recieve fair and just compensation for what I do and unlike you, I do not look with envy on those who have taken more risks or have invested more of their time and capital to achieve greater gains. I too could have opted for taking more risk and spent more time away from my family but instead chose a differnt path and am content with with where I am. Frankly, if anyone is laboring under a delusion, it is you. We have wasteful bloated govenment that is ripe with fraud and greed and instead of demanding that it get it’s affairs in order, you think that their are entitled to ever increasing amounts of the citizen’s money. Because of the refusal to pass a budget. let alone operate under a balanced one, we have lost our credit rating and are paying a trillion dollars in interest eacha dn every year. Yet a simpleton like you thinks that we can solve that by making the rich pay a little more. Have you ever seen a Democrat willingly restrict spending to the amount of revenue? Lord knows that the GOP isn’t a lot better, but at lest they are willing to try and are then villified by those who fatten themselves at the public trough and whom you support.
      We are not slaves rushing to defend the plantation owners, instead we have an outlook that you simply are too dense to appreciate. You think that the government is entitled to whatever it wants, a level of greed that is unsurpassed by anything in the private sector, while we believe the government needs to be forced into restraint lest it bankrupt the country through it’s sheer folly.

      • yy4u2

        Well said and thanks for posting.

      • Guest

        How profoundly amusing that you’re argument consists mostly of calling him stupid despite your total lack of understanding of the issues. The budget was balanced and the nation on the road to paying off its debts until Republicans decided the rich were paying too much and exploded the deficit. Too blame the fiscal mess on people who did not cause it and cannot afford to bear the brunt of fixing it show a total lack of empathy and proves you’ve been brainwashed into attacking those who only want the system to be fair. You think that the left solely wants to vilify the rich, when all they want is that simple goal, yet you fight it tooth and nail. Even basic fairness dictates that the ultra wealthy should not be paying a smaller percentage of income in taxes than the poorest. Please kill yourself, as you are the type of person who is exactly wrong with this country.

        • Thresherman

          Ah yes, another liberal knucklehead who confuses a selective memory with a self proclaimed informed view. The only reason that there was a balanced budget was because the GOP controled both houses of Congress during the last 6 years of the Clinton Administration. Also conveniently forgotten is that during this time the Democrats fought tooth and nail keep to spending in excess of revenue. And when did the budgets start to fall out of balance after that? Why it was when the Democrats and Tom Daschle took control of the Senate after the 2000 elections. I would also like to point out that the so called Bush tax cuts were the result of a compromise with the Senate Democrats who declared that Bush’s original proposal was to generous to the rich and that the compromise that was reached would guarantee that the rich would pay their fair share. Got that? The tax plan that you now claim favors the rich was touted by Democrats as making the rich continue to pay their fair share when it was passed. In 2008 when the Democrats took total control of both Houses of Congress and the Presidency was the start of largest budget deficeits in the history of the country. Spending shot through the roof with no regard to fiscal responsibility. Massive supposed one time expenditures were quickly baseline budgeted so that each year they now contribute over half a trillion dollars in spending. Billions upon billions were wasted on green energy companies teetering on the edge of bankruptcy just so Obama could shove millions in to the pockets of his cronies. Strange how you on the left never object to the way these people amassed their fortunes.
          You then state that basic fairness requires that the ultra wealthy should not pay a smaller percentage than the poor. Since you fail to cite an instance to support this trumped up claim, I will assume that you are referring to one of the two usual lies put forth by the left. But first I would point out that the poorest do not pay income tax at all and sales and sin taxes are leveled on the poor at the same rate was the wealthy. The first is the deception that wealthy pass less tax because their capital gains are taxed at 15 percent while most of us pay that much or more. What you liberals always leave out is that capital gains is a tax on investments made with money that already had income tax taken from it. I would think that “basic fairness” would also require that you compare apples to apples rather than oranges. The second is that wealtly like Mitt Romney only paid an effective income tax rate of 12%. Left out is the fact that the only reason some wealthy pay these rates is that they contribute over 20% of their income to charity. Are you saying that we should eliminate charitable deductions? That would be an interesting point as the poorest are the ones who benefit the most from the results of charitable giving and that would diminish greatly if the deductions were eliminated.
          Lastly, I find it hilarious that you wish that I would kill myself. I can find no greater proof that you that you operate from a basis of hate than this, that you desire another human being kill himself because he exercises his right of free speech and you disagree with it.. How pitiful that you have allowed your humanity to sink to such a grotesque level.

          • Guest

            Clearly you learned your history from foxnews. Please educate yourself so you don’t look so foolish if you ever venture from your mother’s basement. The graph on page 6 destroys pretty much everything you said. Spending dropped from nearly 24% of GDP in 1985 to 18% in 2001 and that trend started well before the Republicans were in power. What happened over next eight years during the Bush administration? Revenue took a huge dive while outlays jumped back up to record highs. President Bush took the country from a surplus to a trillion dollar deficit. A favorite parlor trick of Republicans is to blame the tripling of the deficit in 2009 on Obama when a huge part of that year’s budget was set in place during the Bush’s last term. Moreover, despite the dire economy, Obama has managed to take that 1.43 trillion dollar deficit to a project 900 billion deficit in 2013. On the specific issue of responsibility of the tax breaks, it’s extremely disingenuous of you to think that the rich are paying there fair share because Republicans were in control of the House and there was a Republican in the White House. Democrats hardly claimed it was making the rich pay there fair share; they held press conferences showing a millionaire would receive the equivalent of new Porsche while the middle class would receive the equivalent of a new muffler. You’re ramblings are scattered it’s hard to even effectively counter them. The stimulus was not a handout to green companies, in fact the largest part of it was tax cuts to indivduals and small businesses. Your argument that capital gains should be taxed at a lower rate is meritless. Yes a corporation paid tax on the earnings, but you could make similar claims about all taxes. A sales tax is paid by the consumer, yet a corporation will still pay tax on it’s income. An employee will still pay income tax, and yet pay a tax when he spends it through a sales tax. Taxes are essentially leveled at transfers of money, and there’s no legitimate reason why any one should be favored over the others, especially when one is used by one class of income to dodge its tax responsibilities. Encouraging investment is just as important as encouraging higher salaries or more sales. Your argument that Mitt Romney paid a low rate because of things like charity deductions is extremely funny, as Mitt Romney purposely did not take large charitable deductions to make it appear that he paid a higher rate than he actually does. Lastly, I am extremely disappointed you chose to hack out a delusional response instead of taking responsibility and ending your life. How pitiful that the likes of you are allowed to spread your misinformation for the world would be much better without you. How pitiful that the likes you are sinking humanity to such a grotesque level.

  • chris

    This kind of message is one of the reasons why republicans had lost. YOU CONTINUE TO VICTIMIZE THE ULTRA-RICH! I don’t know if you guys have noticed, but the top 1% are doing just fine and in fact they’ve been doing better than any other time in history. If you look at the statistics, you’ll see that the rate at which
    corporate tax has fallen, at least since 1979, has almost a direct relation to the rate at which the gap between the rich and poor grows. That’s right, there has been a trend of growing income inequality in America, and it’s only getting worse. Wages for the middle class are stagnating while those at the top 1% have grown by several folds. Your theory of supply-side economics is failing miserably, in fact it has become a theory of “winner takes all”.

    You can say that I’m envious all you want and that it’s all our (the 90%) fault that we don’t make millions a year, but another unfortunate reality is that the great American hope of upward mobility has also died out, so now it’s harder than ever to make the American dream. People who are already rich will stay rich while people who are poor will stay poor. America, and the world at large, has become a generational plutocracy, a dual economic system of haves and have-nots. It’s time to stop apologizing for top elite and to take back the middle class.

    • Neiman

      You Leftists demonize the rich, hating them for their success and determined to make them pay for you to redistribute according to your Marxist agenda. You ue them to divide Americans into two camps hating the other.

      • chris

        Let me throw that back at you and say that you award the rich for their success, and you are determined to punish the not-so-wealthy with your trickle-down economics. It’s time to close corporate tax loopholes and reverse the downward trend of corporate tax rate.

        I’m not against successful people. What I’m against is successful people getting an unfair advantage over everyone else, and how it damages the opportunities of everybody else.

        • JustRuss

          Second part of your argument is good enough to convince me you aren’t crazy and brainwashed. Unfortunately I had to read the first paragraph which convinced me of your denial of reality before I got there.

          I’m not against poor people (I’m close to being one of them), What I am against is poor people taking advantage of everyone else and how it damages the drive to succeed at anything but being a leach.

          The Left continues the march toward government reliance right along with falling corporate tax rates. They blame all the ill’s they create on the small bits of conservative they allow as a token of bipartisanship, and use those ill’s as further excuse to increase government reliance.

          There is a middle of the road option available, I agree that there is a systemic problem, but I disagree that your way will EVER work except to bring the country down in flames. But most on the left would rather see the country dissolve so they can “rebuild” it.

          Like it or not, American has been the greatest and most free country, the land of opportunity, for 200 years. What the left proposes will lead us to be just like everyone else, in the interest of fairness.

          • chris

            Thanks for your level-headed response. I understand the talking point that the poor just want handouts and they’re lazy, and whatnot. But I think the reality is the opposite way around. Most of the middle class work harder than the ultra rich and they spend more of their hard-earned dollars on taxes than the rich. That’s why it’s called the “working class”. The ultra-wealthy mostly sit back while someone else does all the work, and they find ways to not contribute to society by bribing the government to give them tax breaks and relax the regulations which are meant to curb runaway greed. If you want to talk about wealth distribution, talk about how all the liquidity has distributed to the rich while people like you are suffering.

            I suggest you to read a new book, called “Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else”.

          • AV

            A wealthy person has much more reliance upon the govt, than a poor person.

            What does a poor person need the govt for? She has little of value, for the govt to protect on her behalf. Probably not a heavy user of the govt’s roads. Receives no govt bailouts. Not a heavy user of the legal-system, unless she ends up on the wrong side of it…

            Though, maybe she can get some food-stamps.

            Bush’s tax-cuts, and the subsequent financial-crisis made perfectly-clear who the real moochers are.

        • Randy G

          The U.S. pays one of the highest corporate tax rates in the world now Chris. A huge reason for outsourcing jobs. Do you work for a poor man? Or work at all?

          • chris

            Actually the ultra-rich, like Mitt you-know-who, end up paying no corporate taxes because they just hide their money off shore. They pay around 13% of “multinational” taxes. That’s why closing loopholes is a big part of the solution:


            I work for a small IT consulting company.

          • Randy G

            All for closing some loopholes. If rates were lower those ultra-rich you hate would keep that money here, as it is why would anyone?

          • chris

            So you suggest lowering the corporate rate to 13% to compete with the Bahamas? How about the American people lower their salary expectation to levels of India so jobs can move back to America? I prefer that the government simply not encourage outsourcing.

          • Randy G

            Obama and his crew are moving us in that direction now, India might look good in four more years.

          • chris

            No, neolibralism and globalism is moving us in that direction.

          • kevindf

            Corporations don’t pay taxes, their customers do.

        • Neiman

          So tell us comrade, when these people get their taxes raised, won’t they do one of two things or both: (a) Raise prices on their goods and services, driving up the cost of living for everyone and negating any benefits from the taxes? (b) Stop hiring people and with the Obamacare tax, even cut everyone they can back to part-time, thus driving up unemployment and hurting those not so wealthy people you pretend to care about?

          On the other hand, if they keep more of their money, won’t they buy more goods/services, more stocks to fuel the economy and hire more people to staff their growing businesses?

          So, it is unfair Comrade for people to succeed and pay the same taxes on every dollar of income that everyone else, in the Middle Class pay, except of course the bottom 50% of the country that pay nothing?

          Is it good for America for you Marxist folk to engage in class warfare? Did it work out very well for the Soviets or Cuba, or The PRC until they opened their doors to capitalism?

          • chris

            What you’re arguing for is supply-side economics: give them more money and they’ll eventually lower their prices and give us more jobs. If this theory were true, it should have been working by now, because corporate profits are at an all-time high. How many breaks are you willing to give them in order to be convinced that their ever-increasing profits do not translate to more jobs and better wages for the little people? Where have Bush’s tax cuts to the rich gotten us?

            Let me give you an alternative theory: empower the middle class so they have more purchasing power. We are the real job creators.

          • Neiman

            Do they or do they not raise prices and cut costs when their taxes are raised? Is that a false idea? Will or will they not cut more employees to part time to avoid the Obamacare taxes? Will or will not all of that increase in taxes cost jobs, or will they say “hot damn, we get to pay even more taxes in percentage and gross dollars, let’s hire more people and pay the higher wages and doggonit let’s make them all full time so we can pay for their health insurance?”

            How do you help the Middle Class? (a) Take away the incentive to get rich and build companies and help others prosper. Keep them in the Middle Class (b) Pulling those that have succeeded down, punishing them for succeeding.

            How is it giving the rich a break when they pay both a higher tax rate and pay 40% of ALL taxes? You want to punish success and that is Communism.

          • chris

            “Do they or do they not raise prices and cut costs when their taxes are raised?”

            Let’s look historically. In the 1970s corporate taxes were pretty darn high and prices were low, but as the corporate tax rate got lower and lower, prices have only increased. Clinton raised taxes, and the economy only got better, while Bush cut taxes for the rich, and things got worse. Today, we should be seeing a booming economy because taxes are lower than ever and corporate profits higher than ever, but that’s not happening.

            “How do you help the Middle Class? (a) Take away the incentive to get rich and build companies and help others prosper. Keep them in the Middle Class (b) Pulling those that have succeeded down, punishing them for succeeding”

            Maybe you’re not aware yet, but raising the taxes of the ultra-rich isn’t as bad as you think. They barely feel it. they can still have their yachts and their summer homes in Morocco, but maybe they can’t buy their own Island off of Colombia. On the other hand, the money gained from the extra tax means better schools, better roads, more investments in science, etc. In other words, a better life for the little people.

            “How is it giving the rich a break when they pay both a higher tax rate and pay 40% of ALL taxes”

            It’s because the rich have so much money, that even paying 10% of taxes is more money than you’ll probably earn in your lifetime.

          • Guest

            I don’t know how you maintain the patience to try and persuade those who are so determined to fight for the interests that are so totally opposed to their own.

          • chris

            It takes practice.

          • Neiman

            It is stupid and simplistic thinking like this that is destroying our country.

            Let us look at Bush: (a) He got hit with the Enron and other corporates messes, then 911 and then a three front war against terrorism. (b) These were economic catastrophes for the nation, then stupidly the Congress and Bush allowed the dang government to grow at a record pace, with no cuts offsetting the big spending. (c) Income into the Treasury with lower taxes did work, it was increased many fold, just not enough to offset the stupid spending the GOP mainly, but also Democrats allowed to grow unchecked. (d) So it wasn’t the lower taxes, they worked quite well, it was out of control spending and growing the dang government.

            It is the same with you liberals mostly, but also too many conservatives, you don’t look at the whole picture, just a the part that you twist to your advantage. It is like deifying the ultra liberal FDR for saving the country from the Depression, which he did not,; it was WW-II and all that war materials industry that saved our bacon so to speak. But, you liberals look at all his socialism programs and say, see how he saved the country, no such dang thing.

            I am not against cutting their loopholes and off-shore tax advantages, and I am comfortable that being wealthy they will pay most of the taxes in gross dollars. But, it is unfair and unjust to make them increasingly pay higher taxes in percentage, just because they succeed.

            A flat tax for everyone, closing the loopholes, deductions and various tax advantages would do wonders; but, that cannot happen because it is through tax policies that the State controls the people, it is the source of their power and no politician will voluntarily give up power and the perks that come with it. The almost sole justification for all elected officials is to spend our money.

          • chris

            Actually, ignoring all the other factors, it’s pretty much common knowledge that the Bush tax cut didn’t work as well as Bush had expected. It certainly helped out the rich, but it didn’t create economic boost it was supposed to have. A GOP member had even admitted to that:


            Clinton, on the other hand, had raised taxes and also increased government spending, and yet the economy grew faster than during Bush’s terms. Plus, income inequality and the national debt were lower than normal.

            A flat tax? Let’s assume there is a 25% flat tax code with no deductions. If you make some quick calculations, you’ll see how, for a person making 30,000$ a year, the difference in paying 25% tax and paying 15% tax plus deductions in a progressive code, would determine if he could live on his own or if he would have to move back into his parents house (assuming he’s that lucky). However, for a person making 150K a year, the difference between paying a 25% and 28% tax, which is what a single person in that tax bracket actually pays, is not significant at all, because a few hundred dollars difference every month is pocket change. Now, for a person making 250k a year, the difference between 25% and 33% is even less significant, because that 1000$ or so difference a month could easily be blown on a few bottles of 25-year-old cognac without a second thought. Do you see how a flat tax code would actually be a progressive tax burden, depending on how much money you make? It could easily move 40% of the country out on the street while the rich would simply use the additional money to add another Roles Royce to the collection.

          • Neiman

            I get sick and tired of your nonsense every time, because you are dishonest.

            I argued much greater income into the Treasury under Bush by lower taxes, it is the truth and it worked. It was a 3-front war on terrorism, Enron, 9/11 and growing government that undermined the growth in gross dollars increase in the Treasury..

            You Clintonistas choose to forget it was a GOP Congress that dragged him kicking and screaming into cutting government and he benefited from the false dot com boom and because of Reagan, able to cut military spending and close bases. As I said before, you liberals play games, on either side of the equation you refuse to tell all the facts thus promoting a lie.

            At 25%, if I make 25k, I take home 15,609.00, about average for now. At 100,000k it equals about $75,000k take home. The first guy paid about $9000. the next guy $25,000. That is the difference, it doesn’t matter who feels it the most, if I want to minimize my pain, get an education, work my ass off or stop bitching about inequities.

          • Guest

            What the hell are you talking about? The Bush tax cuts passed in 2001 and revenue dropped the next three years. Moreover, growth rates of GDP, investment, and other key economic indicators like employment growth during the 2000s were below average. Please rely on something other than Limbaugh to get your information

          • jl

            “Clinton raised taxes.” I guess you forgot how he cut the capital gains tax. “Bush’s tax cuts to the rich.” Keep repeating that Liberal mantra. Again, all brackets received cuts, not just the rich. “Raising taxes of the ultra- rich isn’t as bad as you think.” That’s not the point. The point is- is it fair? “Most of the middle class work harder than the ultra-rich…” Non-verifiable and a gross over-generalization. You could say the opposite and be right, also. Nice try, though. “Spend more of their hard-earned dollars on taxes than the rich.” No, they don’t. Did you flunk math? If Bill Gates paid, say, only 1% in taxes that would still be more in dollars than a lower income earner at, say, 15%. Remember, many of the “ultra-rich” (definition?) you talk about got that way because millions of people like you and I voluntarily handed over several hundred dollars to buy one of their products that made our life better. So they do well by making us “more well” and they should be penalized more for this? No.

          • realitybasedbob

            “Bush’s tax cuts to the rich.”

          • guest

            CBO says US likely to fall off ‘fiscal
            cliff’ if Bush-era tax cuts allowed to expire

            Published May 22, 2012


            WASHINGTON – A new government study released
            Tuesday says that allowing Bush-era tax cuts to expire and a scheduled round of
            automatic spending cuts to take effect would probably throw the economy into a

            The Congressional Budget Office report says that the economy would shrink by
            1.3 percent in the first half of next year if the government is allowed to fall
            off this so-called “fiscal cliff” on Jan. 1 — and that the higher tax rates and
            more than $100 billion in automatic cuts to the Pentagon and domestic agencies
            are kept in place.

            There’s common agreement that lawmakers will act either late this year or
            early next year to head off the dramatic shift in the government’s financial
            situation. But if they were left in place, CBO says it would wring hundreds of
            billions of dollars from the budget deficit that would “represent an additional
            drag on the weak economic expansion.”

            CBO projected that the economy would contract by 1.3 percent in the first
            half of 2013, which would meet the traditional definition of a recession, which
            is when the economy shrinks for two consecutive quarters.

            “Such a contraction in output in the first half of 2013 would probably be
            judged to be a recession,” CBO said.

            The economy would rebound at a 2.3 percent growth rate in the second half of
            the year, however, under CBO projections.

            At issue is the full expiration of two rounds of major tax cuts enacted
            during the Bush administration and automatic spending cuts on the Pentagon and
            domestic programs that are scheduled to take effect as punishment for the
            failure of last year’s deficit “supercommittee” to produce a deficit-cutting
            agreement last year.

            Last summer’s debt and budget agreement imposed almost $1 trillion in cuts to
            agency budgets over the coming decade and required automatic cuts — dubbed a
            sequester in Washington-speak — of another $1 trillion or so over the coming

            The CBO study came as Capitol Hill is hopelessly gridlocked over spending and
            taxes in advance of the fall elections. The White House and top Democrats like
            Senate Majority Leader Harry Reid of Nevada say they will refuse to act on the
            expiring tax cuts and automatic spending cuts unless Republicans show greater
            flexibility on raising taxes.

            “If Republicans want to walk away from the bipartisan spending cuts agreed to
            last August, they will have to work with Democrats to replace them with a
            balanced deficit reduction package that asks millionaires to pay their fair
            share,” Reid said in a statement.

            Republicans are pressing to deal with the problem now. But they’re not
            showing any more flexibility on tax increases.

            “You can call this a fiscal cliff. You can call it Taxmageddon as others have
            done,” said Sen. Orrin Hatch, R-Utah. “Whatever you call it, it will be a
            disaster for the middle class. And it will be a disaster for the small
            businesses that will be the engine of our economic recovery.”

            The results of the elections will have a lot to do with the ultimate
            solution, but several top lawmakers predict the current Congress will punt the
            issue into 2013 for the newly-elected Congress and whoever occupies the White
            House to deal with.

            “CBO observes that simply extending all of our current tax and spending
            policies will produce unsustainable deficits and debt, which will also send the
            economy into decline,” said Rep. Chris Van Hollen, D-Md., the top Democrat on
            the Budget Committee. “We need to act and we must do so in a balanced way.”

            CBO is the respected nonpartisan agency of Congress that produces economic
            analysis and estimates of the cost of


          • guest
          • JustRuss

            Corporate profits are at an all-time high because we printed a bunch of money. Where did you expect all that money to end up?

          • AV

            It’s more likely to be because private capital-investment, wages & salaries, and R&D spending are below typical levels.

            If money-printing was the problem, then inflation would be high.

          • JustRuss

            Inflation doesn’t happen overnight, it is being kept in check by low interest rates, but those are about to run out.

            I can see the logic in your other responses over the last 2 days and I’m willing to rethink my stance on some economic issues with enough research. However I still believe that cuts to government are far more important than tax increases. We need both, cuts in at least a 2 to 1 ratio, and the cuts need to be passed first to ensure they actually happen.

          • AV

            Yup, I agree.

          • AV

            Why would raising taxes, on a business owner (or highly-paid CxO’s), cause a business to raise their prices? The business doesn’t `see’ these taxes (directly, anyway). And that’d be especially stupid if their competition doesn’t increase their prices.

            Low-taxes on the already-wealthy will only decrease economic mobility, leading to a more stratified society; i.e., classes, and the resentment it brings will lead to more class-war.

          • Neiman

            Taxes increase the cost of doing business, the bigger the business, the more gross dollars paid in taxes, impacts the bottom line and no responsible CEO is going to just absorb the loss, he/she will find a way out, if they cannot raise prices they will reduce their biggest cost and easiest way to cut – employee salaries.

          • AV

            You do realize that businesses pay taxes on gross profit? (Which is after all costs have been subtracted from revenues.)

            So, how does changing this rate directly affect the business?

          • Neiman

            Those costs deduct from those profits, which profits pay dividends to stock holders, like Union Retirement Funds, IRA’s and etc. If you take money from the profits in higher taxes, you will have to pay less per share to the stock holders, which can mean your job, so you cut costs and raise prices to increase those profits to offset those taxes/costs, no?

          • AV

            Publicly-listed businesses are legally required to maximize profits anyway. Therefore, since they already employee the number of staff to maximize profit, firing people will reduce profit.

            The main problem with high corporate tax-rates is that a business may relocate to locations with more favorable taxes; i.e., “comparative advantage.”. Large businesses already play this game with state and local govts, playing them against each other to gain the best deal (with the effect of moving more of the tax-burden on to individuals).

          • Neiman

            You can always cut the number of employees and/or hours to keep profit margins at acceptable levels.

            Your second paragraph, seen as greed by you, appears to be good business sense and if a stockholder I would want the CEO to act accordingly.

        • Wayne

          If it wasn’t for the rich providing jobs and opportunities to others, the others would be living in shacks with obama’s brother.

          • chris

            The rich don’t provide more jobs just because they get richer, they simply have a more lavish lifestyle. However, when you give the Middle Class more money, that does translate to more jobs because it means more clientele and more business and therefore bigger economic growth.

  • RCND

    We created this mess when we went to a “progressive ” tax system and then allowed the words “rich” and “fair” to be thrown around without defining them.

    The progressive tax system took us away from what the true and correct purpose of taxes is … to fund the essential operations of government. Now, taxation is first and foremost the manner to punish achievers, redistribute wealth, and grow government into areas they don’t belong. It also serves the politico on both sides of the aisle well by providing a natural means to vilify classes of people with. It is no longer Emily Post to hate people because of race, religion, sexual orientation, etc (and I am not saying it should be), but it is perfectly fine to hate the so called rich. You can pick any reason why but at the end of the day that hate has its roots in envy.

    So what is rich? How much income, and why that much vs another amount? What is fair when it come to taxes? Why that much vs another amount? These questions are all a matter of opinion and have fueled the hatred which has driven the political discourse of our nation for too long. The progressive tax system has served to facilitate that hatred, with the only ones truly benefiting from that system being the politicians who can use it to win votes and/or grow government as well as accountants and lawyers.

    So how to fix it? Simple. Its time for a flat tax. It is truly the only fair system. That solves the fair share argument, and forces all of us to take a great interest in the expansion of government… because now everyone truly will pay for it. As to what is rich, I say who cares. Most see the rich in reality as anyone earning more than them a year anyways, be it a buck or a million. It won’t matter anyways under a flat tax as everyone will pay the same “fair” percentage, and now we can focus that debate on how much that will be for everyone vs tearing ourselves apart as a nation by turning perceived classes of people against each other while the politicos giggle with glee.

    • chris

      Could a person earning 30k survive paying 25% in taxes, whereas right now he barely gets by paying 15% tax? That would be a cruel world indeed for millions of people.

      • RCND

        Keep the percentage low and have no deductions. There are also different versions of a flat tax which could be negotiated, but the bottom line is everyone benefits so everyone pays. Right now too many are getting a free ride, and those getting that free ride generally take more from government services than those who pay for those services do

  • chris

    Do you know why the wealthiest pay 40% of all taxes? Read this article in Wall Street Journal to find out:

    “Between 1987 and 2008, the share of income controlled by the top 1%
    grew to 20% from 12%. That signals a total share growth of 67%. During
    the same period, their share of taxes went to 28% from 24%, suggesting
    share growth of 17%. In other words, the top 1% share of income grew nearly five times faster than their share of taxes.”

  • HG

    I have a question for government, how much is enough?

    Gov’t confiscated 2.5 trillion (2,500,000,000,000.00) dollars from American’s incomes this year. No corporation even comes close to that amount of revenue.