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The real problem with the rich’s “fair share”

My colleague Mark Perry published a really interesting chart today on AEI’s blog showing the taxes paid by the top 400 taxpayers versus the bottom 50% of Americans in 2009. A simple glance dismisses, at least to me, the charge leveled against the rich that they don’t pay their fair share in taxes.

As you can see, the top 400 pay close to the same amount as the bottom 69 million. The tax code certainly should be progressive, but looking at this chart begs the question of how much more is required for the tax code to be fair.

The problem isn’t that the rich aren’t paying their fair share, it’s that so many of them have access to their “fair share” of everyone’s taxpayer dollars — the special deals and privileges that only the well-connected can enjoy. Our anger should be directed at those who leverage their insider access to secure taxpayer money to line their pockets. It’s the one thing the Occupy Movement and the Tea Party activists had in common, and it’s where all free enterprise advocates should focus their energies. After all, were we not bailing out auto executives and their union allies or loaning funds to “green energy” start-ups run by campaign donors, perhaps we wouldn’t need to collect so much tax money to begin with.

By no means do I wish indict all of America’s rich. Many got where they were through old-fashioned ingenuity and hard work. But it is worth pointing out that a level playing field would be much less costly than the system we’re currently supporting. For more on this topic, check out Luigi Zingales’s piece in yesterday’s LA Times.

 

 

 

Arthur Brooks

AEI