A look back over IRS collections data of recent years shows that when Ronald Ragan left office, the top one percent of taxpayers paid 25.24% of all personal income tax collected and today, that the top one percent pays 36.73%. That's an increase of almost 50%, for our most prolific taxpayers, in just over 20 years.
It's no surprise then that many wealthy US citizens are moving themselves, their tax dollars and the jobs that their investment dollars create, offshore – particularly to countries that welcome their investment dollars and jobs. Countries like Panama (in Spanish), Ireland (1 & 2), Hungary and Spain, to name just a few, have created incentives to encourage disenchanted wealthy US citizens and other wealthy foreigners to bring their money and skills to those countries.
Furthermore, it's a safe bet that very few of those who are leaving are poor. The poor can neither afford to leave, nor do they have incentive to do so. But those who are successful are being demonized for their success and paying more than double their share of tax, based on income. Of course, these are the people who also have the wherewithal to live wherever they choose and as pointed out in my recent article, they're doing that at a sharply increasing rate, since Obama took office.
It therefore becomes imperative that whatever kind of tax reform Congress comes up with, it must create incentives to repatriate as much of that lost wealth as possible.
So instead of driving away more of our producers, job creators and most prolific taxpayers, we should be looking for a way to encourage those who have left, to return, with their hefty checkbooks in tow. Interestingly, such a plan already exists as a bill in Congress. The FairTax (H.R. 25) would turn the United States into a wealth magnet. But the leadership of both parties has managed to keep the FairTax bottled up in committee, while they continue to talk about what income level is high enough to pay more tax, which interestingly, is the attitude that created this flight of wealth, to begin with.
The FairTax now has 80 sponsors and co-sponsors in Congress and based on the 2008 election, it will have more in January. Most tax bills that have ever been signed into law have not had such sponsorship support. It's time for the FairTax to receive a floor vote.
Comments