It’s a great sound bite: “The [wealthy/corporations/etc.] should pay their fair share.” Who can argue with that? Particularly if the group who are implied to be not paying their fair share are someone (or something) that isn’t “us.”
So this coming Monday, we’ll explore this concept, in particular with regard to taxation and similar financial policies.
Here are some starter questions to consider:
- What is the “fair share” for the wealthy (let’s say the top 1% of the population)?
- Should this be measured by income? By wealth? By a combination of both?
- What is the corresponding “fair share” for middle- and lower-income families?
- Should fairness of share be measured in individual components (federal income tax, state and local income tax, local property tax, Medicare tax, Social Security tax, unemployment tax, state and local sales tax, excise tax, gasoline tax, etc. etc. etc.)?
- Or should fairness be considered more holistically, either combining all of these contributions into a single bucket or several big buckets (federal, state, local)? Or something else?
- Are income tax rates too low? Are there too many deductions and credits? Are they not sufficiently progressive?
- If we were to adopt ProPublica’s “true tax rate” (which includes annual increase in wealth in “income”—see link below), shouldn’t it be a two-way adjustment (i.e., tax refunds for decreases in wealth)?
I think it would be interesting to play “king for a day:” If you could singlehandedly change the way Americans contribute (financially) to support the services provided by federal, state, and local governments, what would you do?
Here are some resources:
- The ProPublica article reporting on “Secret IRS Files” for several wealthy Americans that has reignited the discussion
- A Tax Foundation study examining 41 countries’ taxation of high income individuals—it is useful in the sense that it attempts to incorporate income, payroll, and consumption taxes, together with social contributions, into their country-by-country comparison
- A Council on Foreign Relations “backgrounder” on a variety of approaches to rejiggering the U.S. tax system, prepared for the 2020 election season.
- Another Tax Foundation piece focusing on U.S. tax progressivity. Unfortunately, it only covers income taxes and not other, typically regressive, elements like sales taxes.