An Ipsos Poll released last week suggests that Americans believe the U.S. tax system is "unfair." The poll reported that many feel the rich do not pay enough, leaving the tax burden on middle- and even lower-class families and workers.
No one likes to pay taxes, but is it unfair? Last I checked, the rich paid most of the taxes here in the United States. Still, people continue to complain about tax cuts and breaks for the wealthy.
Sure, the rich are going to get more money back, but they also pay more. Doesn't a bigger tax break make sense?
I once read an analogy - which is currently available at Snopes.com - that puts the U.S. tax system into simple terms. Suppose that every day, 10 men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh would pay $7; the eighth would pay $12; the ninth would pay $18. The 10th man would pay $59 because he's the richest.
Now, let's factor in these so-called tax cuts for the rich.
One day, the restaurant owner decides to show his gratitude to the men by cutting $20 off of their bill. Now, dinner for the men only costs $80. The first four are unaffected; they still eat for free. But $20 divided by 6 people is $3.33, and if that is subtracted from everybody else's share, then the fifth man and the sixth man would end up being paid to eat their meals. So the restaurant owner divides the "refund" among the men who paid according to how much they paid.
Now, the fifth man joined the first four in paying nothing; the sixth man paid $2; the seventh paid $5; the eighth gave $9; the ninth put in $12 - leaving the tenth man with a $52 bill and a savings of $7. If one were too look at simply how the $20 refund was divided amongst the men - not in relation to what they had paid - things could seem a little unfair. After all, the first four men got nothing, and the last man got more than one-third of the total refund. But in perspective to what they paid, the refund was very fair.
Now, there is another side to the issue that is often overlooked.
What kind of people make up this rich upper class here in the United States? Author Thomas Stanley's "The Millionaire Next Door" suggests that members of the rich upper class might not be what they are perceived to be.
In his book, Stanley paints a portrait of the average millionaire living in the United States - home owners, living below their means, working 45 or more hours a week and tending to be entrepreneurs or self-employed. The overwhelming majority of people in this wealthy class did not inherit their money; they earned it through frugality and good, old-fashioned hard work.
These people are not working lavish jobs. They are welders, paving contractors or rice farmers. Surprisingly, many of the millionaires here in the United States are either laundry facility or trailer park owners.
This is a far cry from how the wealthy tend to be portrayed. In fact, people who actually earned their fortunes in these ways should be commended for their labor and thrift.
So the question for those who complain about tax cuts for the rich is this: Should this kind of person be taxed more heavily? And if so, why? Why should these hard-working people have to shoulder more of the tax burden simply because they worked hard and succeeded when others did not?
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