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Happy Birthday "Kempt Roth"
According to Americans for Tax Reform, a nonpartisan coalition of taxpayers groups opposed to federal and state tax increases, last week was the 20th anniversary of the passage of the Kempt Roth tax relief plan. The group calls this former President Ronald Reagan's greatest domestic achievement. Grover Norquist, president of the group, says Kempt Roth was a "genuine restoration of America's tradition of lower taxes and free enterprise at a time when she needed it most. The prosperity of today's scale could never have existed without the passage of Kempt Roth."
Recalling 1981, Norquist reminds us that as Reagan became president, inflation ran at 13.5%, industrial production had dropped severely, interest rates soared to 21.5%, and tax margins had reached 70%. As Norquist sees it, Reagan's bold agenda sought deep across-the-board tax cuts, spending cuts, massive deregulation of industry and sound monetary policy.
The democrats have all but convinced us that the program was a disaster since whopping federal budget deficits were produced, but what they forget to admit is that the "whopping federal budget deficits" occurred because they failed-that is, the democrats who controlled both houses of Congress-to cut spending, which part of the implied bargain. So, short-term, things took some time to develop, but by the end of the Reagan presidency in 1988, America was on its way to the longest peacetime economic expansion in history, creating over 20 million new jobs in the process.
At the bottom line, the Americans for Tax Reform say the just-passed 20th anniversary of the passage of Kempt Roth which lowered personal tax rates by 30% across the board reversing oppressive bracket creep, and the 70% brackets that burdened taxpayers throughout the '70s, marked the seminal moment in the economic turnaround of the American economy, which then directly led to today's prosperity.
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In the meantime, with all the talk of tax-cuts and the current tax cut proposals recently passed by the new administration, who is paying all the taxes anyway? Well, it should be no surprise you and most recent statistics reveal that the higher your income, the more taxes you pay. If that makes you say, 'Of course, how else would you have it?' then why isn't it also logical that when it comes to refunds, the more taxes you pay, the larger your refund should be?
At any rate, according to estimates by the joint committee on taxation, the top 1% of the nation's taxpayers this year will pay about 23% of federal, income, payroll and excise taxes. The highest 5% pay 41% of all federal taxes, and the top 10% of earners pay 53% of all the taxes.
Where are you in the percentages? According to the Joint Committee on Taxation, to qualify for the top 1%, your income level needs to be a little over $340,000. To be the top 5%, your income needs to be slightly more than $145,000 and to be in the top 10%, you have to earn a little over $107,000.
So, once again, the important fact here is when you consider who is bearing the tax burden in this country, the top 10% of wage earners those earning a little over 107,000, wind up paying 53% of all the taxes. You may say that's the way it should be-my only point is, that's the way it is.
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Finally, how's the economy doing? It's strictly so-so for now, but I can't get it out of my head that the combination of Fed rate cuts, tax cuts and real estate refinancing will finally begin to take effect as we move further into this quarter and especially so as we enter the fourth quarter. As stated previously in this column, I think the bears are running out of time, but we'll all just have to be patient, and let the slow process of the various monetary policy moves take effect. In the meantime, don't let the "gloom and doomers" get you down.
(Tom Butenhoff is a First Vice President with J. E. Liss and Company, Inc.
in Milwaukee. The views are his, and not necessarily those of Liss
Financial Services or the Job Connection/Hiring
Network.)