Who pays for government and socialistic rants

Randall Hoven says Tax Demagogues Are Lying Liars, in One Graph. He provides a CBO graph on average federal tax rates by income quintile from 1979 to 2007 that shows that the historical trends in tax rates by income group. In addition to the tax rates trends, there is the other side of the issue: what income have the tax rates generated for governance?

“total federal revenue in 2007, well after the Bush tax rates were in effect, was 18.5% of Gross Domestic Product. The 1960-2000 average was 18.2% of GDP. All that tax rate-cutting, and still the actual revenues collected were above the historical average.”

At the highest income levels, the tax rate does ease from its progressive trend. That is because the personal income at those levels tends to come from sources other than wages. Those sources, such as capital gains, are taxed before they get to the end recipient.

Another of these socialistic rants is about how the poor are getting poorer and the rich are getting richer. The problem with this is that there is a floor but no ceiling when it comes to income. No ceiling means it is always possible for the rich to climb higher. The floor means that the poor will have to really dig to get lower. They way they dig is to convince others to provide their income for them. That is in the form of loans such as caused the mortgage boom or in the form of government handouts which impoverish the society as a whole. Either way, the walls of the pit are not stable and will cave in eventually.

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