Imagine a fairy tale where I offer you a choice between two jobs. You can have a tax free job or a job with a 90% tax on its income. You might jump at the tax free job, but a smart person would ask what are the salaries of the two jobs. I’d say the first job pays $52,000, about the same as the U.S.
median salary of $51,939 . You’d think that’s a great deal. You’d be making the same salary several million U.S. households make, but you wouldn’t be paying taxes, unlike those poor suckers. But when you ask how much does the 90% tax job pay, I’d say it pays the same as the average CEO salary at a Fortune 500 company i.e. $13.8 million, which will leave you $1.3 million after you pay your 90% tax.
What is the difference between a taxidermist and a tax collector? The taxidermist takes only your skin.
Mark Twain – Notebook, 1902
Any sane person would happily take the CEO salary, even at a 90% tax, because $1.3M is 25 times more money to live on than the median salary even when not taxed. A normal person would think that $1.3 million a year is more than adequate and should not begrudge the $11.7 million that went to taxes to pay for roads, college, medical research, etc.
The problem is so many whiners like Bill O’Reilly threaten to stop working at a mere 50% tax rate even though he makes around $15 million for Fox News and $24 million from book royalties (50% tax would still leave him around $20 million a year). I’d be ecstatic with a one time payment of that much money. It’s like Stephen King said of rich people:
The majority would rather douse their dicks with lighter fluid, strike a match, and dance around singing ‘Disco Inferno’ than pay one more cent in taxes to Uncle Sugar.
We need to create a tax system that leaves more people with take home pay in amounts that realistically let them live middle class lifestyles. In 2013 a family of four needed a range of $48,000 to $95,000 to meet basic needs (Mississippi vs New York City). The U.S. median was $63,000 which is higher than the median wage (thus a need for both parents to work). The gap between the rich and everyone else is far too great. Taxing people with incomes in the multi-millions at 90% leaves them with millions to live on and puts tens of millions back into society.
One of the criticisms of such heavy taxes is that the CEOs work hard for their money, and shouldn’t have it taxed away. It is true a survey shows CEOs working an average of 58 hours a week. It also true that normal full time employees work an average 47 hour week. In fact 18% of full time workers report working 60+ hours a week. According to the OECD a lone parent with two children in the US requires 50 hours at minimum wage to be above poverty. A better break down by state shows a minimum wage worker who pays the typical 30% of salary to rent, needs to work from a high of 130 hours a week in California to a low of 69 hours in Arkansas in order to make the rent.
This is why I get sick of the rich complaining about working hard and not wanting to pay their fair share. Their money is built on the hard work of the average American. There is no way society can force the rich to have empathy and compassion for those less fortunate, but society can redistribute the wealth from those top earners to everyone else. And let us not forget that those poor CEO’s who make 371 times the average worker’s salary, when taxed at 90% will be making 1.3 million or 25 times the average salary. There is no need to feel sorry for someone 25 times richer than you. They are not going to be hurt by a 90% tax rate.
How the government wastes our tax money is a rant for another time.