Hillary Clinton complains that the rich in the United States aren’t paying enough in taxes:
“The rich are not paying their fair share in any nation that is facing the kind of employment issues [America currently does] — whether it’s individual, corporate or whatever [form of] taxation forms,” Clinton told an audience at the Brookings Institution, where she was discussing the Administration’s new National Security Strategy.
I think she’s right. Based on Mrs. Clinton’s 2007 tax return (the most recent I could put my hands on quickly), the Clintons paid roughly a quarter of their income in taxes. A quick back-of-the-envelope calculation tells me that’s about $2 million dollars less than would have been owed had they not taken allowable deductions. We are required to report our income and pay taxes on it at the rates prescribed by law. We are not required to take the deductions from income that the law allows in reporting our income.
What is the barrier to Mrs. Clinton paying more taxes?
Update
It has been brought to my attention that I sometimes don’t connect the dots enough on my posts. This post is not just a “gotcha”, however appropriate that might be. The larger point I’m making here is that getting the truly rich to pay a larger share of taxes is significantly more complicated than it sounds. It can’t be accomplished simply by raising marginal rates, as the example of the Clintons clearly demonstrates. They are able to avoid taxation by hiring experts, exploiting the tax codes, even getting the tax codes changed in their favor.
What raising marginal rates really accomplishes is causing the less-than-rich to pay more of their income in taxes. It would take a much more basic change in our system of taxation to accomplish anything else.
Sigh, et tu Dave.
Steve
Agreed. People need to start thinking about tax deductions and tax credits as what they are: spending. Without them, rates could be lower. Corporate tax rates could be 24% and revenue neutral if you eliminated all the deductions.