What Does It Mean for The Wealthy to Pay Their Fair Share of Taxes?
This topic has come up recently across several forums, so I though I would start on specifically for this subject.
The question comes up when mainly Democrats and some Independents complain that the wealthy do not pay their fair share in taxes. The rebuttal ranges from they already do to why should they pay any taxes at all (or something close to that).
I find that last argument coming from conservatives the most baffling of all because they are the ones that complain that "nobody should get a free ride". The irony is, of course, is that when the wealthy pay no taxes (and many often don't) they ARE getting a "free ride" at societies expense.
FACTS FIRST:
1. The current top marginal tax rate is 37%, but few wealthy people pay that.
2. In 1913, the top rate was 7%
3. In WW I, it was 77%
4. In WW II, it was 94%
5. From 1945 to 1981, it ranged from 70% to 91%
6. Reagan lowered that to 50% and then 28%
7. Clinton raised it to 39.6% in 1993
8. It has ranged from 37% to 39.5% since then.
So, in the 112 years we have had income taxes, it has been 50% of higher for 70 of them (62.5%)
EFFECTIVE TAX RATES
Median Income: Between 1951 and 2023 the rate varied from 11% to 15% (1981). It is currently at about 13%.
Top 10%: Between the same dates the effective tax rate varies from 37.5% in 1951 to 26.5% today.
Top 1%: Between the same dates, the ETR dropped from 43% in 1951 to 27% today.!
INEQUALITY
The Income Gini index is a non-linear scale that measures inequality from 0 to 1.
The GI for:
1951 = .376
1986 = .419
2023 = .485
I said this index is non-linear, here is what I mean. The move from .376 (which is considered Low to Moderate inequality, to .419 (moderate inequality) is 11%, but up to .485 (high inequality) is 53%.
The take away from all those FACTS is that:
1. The effective tax rate for those near the median income has been relatively constant
2. The effective tax rate for the top 10% has steadily been getting smaller
3. Counterintuitively, as the rich kept getting their tax cuts, income inequality skyrockets.
Democrats understand this "unfairness", conservatives do not.
Now, the floor is open.It doesn't seem counterintuitive that inequality increases when one stops redistributing the nation's wealth.
The only "fair" tax for the rich would be what the poorest pay, but that wouldn't work, so the best option is the fairest unfair rate. Via a progressive tax structure. right?
If the 1951 Gini number indicates a"fair" income tax rate for the rich, the number was around 17%. (Isn't the 42% ETR inclusive of all taxes paid?) What is it today? (Google says it was 23% in 2022)
But, those numbers are just for illustration, not argument. Is their trend accurate? Is the change in the ETR for the rich, since 1951, really only +/- 5% (or so)?
The rich currently completely support the tax burden of over half of American taxpayers. What was that number in 1951?
A fair unfair share should be based on needs, not wants. That has also changed since 1951. So has the substance and accumulation of wealth.
What is your idea of a fair rate for the rich?
GAFair. What is "fair"?
When we go to the grocery store for a loaf of bread, we don't take our tax return to pay according to what we earned. Same for a new car; the price is not dependent on earnings. Same for a house or a hamburger at McDonalds.
Whatever it is that we're buying the price remains constant for everyone. We don't charge more for having dark skin. We don't charge more for being female or for being young or old. We don't pay more because a product is easily affordable (although we may be charged less as a compassionate move for a very few transactions).
So what is a "fair" price for being an American citizen, living in the US? Whatever that figure is, it is the same for everyone, unchanging because of skin color, sex, age, religion or anything else. Including the wealth of the person.
So. That's "fair", answering the question asked. Can we sustain our nation charging everyone the same amount, whether $1,000 per year or $100,000? The answer is "No", We cannot keep the country functioning that way - in order to have a country at all requires the wealthy to pay more, for it is not possible for the very poor to do so.
How much more? Whatever it takes...to maintain the country. Not to provide endless charity - that comes from greed. While I believe a case can be made for a temporary safety net, that does not mean a lifetime of charity or even a couple of years. While I believe that a reasonable case can be made for providing total support for those truly unable to support themselves that does not mean supporting people that refuse to put forth the effort to do so themselves. It does not mean supporting those that don't like what it takes and refuse the make the sacrifices necessary. It means helping that small minority that truly cannot provide for themselves.
So. It is not "fair" to require some to pay more for the exact same product, but it is necessary if we are to have a country. What is NOT necessary is the nanny state we have become, with over half our nation feeding at the government trough of charity.
"That means some 10 million Americans—or a total of about 161 million—are now getting government subsidies (though the final number might be somewhat lower since some may have been receiving benefits already). Thus, perhaps 52 percent of U.S. households—more than half—now receive benefits from the government, thanks to President Obama." 2014 article in Forbes
https://www.forbes.com/sites/merrillmat … -benefits/I'll get to the "fair" part below.
I will concede the "counterintuitive" comment in that, you are right, it would be expected that has the wealthy pay less taxes, the burden falls on the less wealthy.
The ETR is taxes paid divided by adjusted taxable income. So it is what it is.
What is it today? Depends on which income group you are talking about. As far as 2024 and 2025, today goes, the data isn't available yet.
Is the trend accurate? Again, the numbers are the numbers.
Not sure what your +/- 5% is referencing.
What is "fair" as I will try to explain, encompasses a lot more than "needs".The ETR point wasn't intended to be picky, it was to the point of "income" in the comparisons. It came from a snippet describing the actual rates paid during those 1950s high tax years. It was noted that during the 90+% years, the tax structure reduced the rich's average rate on income to around 17%. Other taxes; state, local, capital gains, et. al, brought their ETR up to the 42% number. Once again, the trend, not the numbers, is the point.
The "5%+/-" was referring to the 2023 number of 23% with the 'Buffet secretary' example of 14% (less than his secretary's rate). The point being a ~5% swing since 1951.
As for the complexity of describing needs, it only becomes complex when wants are rationalized as needs. It's simple. If you need something to survive, it's a need. If you want something to make life better (or easier), it's a want. Easy-peasy.
GANot sure where the 17% ETR comes from. I have it at around between 37.5% in 1951 to 26.5% today. I do, agree however, the trend is important.
Do you have a different source for the 42% number that includes those things you mention. The ETR is just considering federal taxes, which to some extent, includes capital gains, but not other sources of income the rich have that the rest of us do not.
OK, I see what you are thinking of regarding the 5%. When I was doing my research for this, I was under the preconceived notion, based on headlines but not a lot of looking behind the curtains, that you imply with your example. The problem is, I couldn't find it, so I dropped that notion and chalked it up to the problem with using anecdotal evidence.
"Wants" don't factor into my "fairness" analysis.The source was from The Tax Foundation, but it was for my use to affirm a thought, not for a statistical argument. I didn't save the link.
The 1951 17% number sounded like a legit educated guess (by The Tax Foundation) for two reasons. The main one was the mentioned difference in income types taxed. The other was the typically acknowledged use of loopholes and underreporting during those high-tax years.
To the Buffet example, I think I remember some kind of 14% rate being tossed around as his rate. So, 14 to 17 or 17 to 23 was the rationale for the 5% thought.
GA
I always struggle with this concept.
On one side, I wish there was a universal cap on private income, say like capping private income at whatever the government deems to be the universal basic living and luxury incomes. A very socialist idea of me, one I don't take seriously, but an idea I play with nonetheless. It'd require far too much authoritarian enforcement.
On the other hand, if I were grotesquely rich and having to watch millions of my dollars go God knows where into the unqualified hands of God knows who for God knows what reason, I'd actively seek to pay as little as possible and avoid them taking my money at all costs. I'd abuse every loophole, bribe every politician, and move my wealth somewhere I could horde and protect it with near-impunity.
As socialist as it sounds, I believe the solution to taxation is a universal basic income and free healthcare. Housing, medical, food rations (based on modernized dietary standards), electricity, water, gas, etc. all covered by the government and managed by private entities. It'd be an absolute nightmare given the state of reality, but hey, who said we can't hope for utopia within our hypotheticals?
I'm all for eating the rich, because I am not the rich. I'd be all for eating the poor and giving back where I can if I was rich. Too complex of a topic to even begin to break down properly, even our life-long tax specialists can barely grasp it themselves.
At the end of the day, most people are just bad with personal finance management, and no amount of assistance changes it. I recognize that as the roots of why people whinge about tax rates constantly.At least on a theoretical level, I am with you on the universal "basic" income and taxpayer paid necessities of life.
I put "basic" in quotes because that does not mean that is all you can have. Even under that concept, you can earn as much as you legally can; nothing should stop you.
In my view, the taxpayer paid necessities of life makes for a much, much stronger society where even the wealthy would benefit, even though they don't really need it.This hinges on the belief that people will still actively look to work, to produce something, to contribute their share to society.
Personally I find that to be a dream, something that completely false-to-fact. It won't happen. And the more you give out, the fewer people will contribute - in nothing flat (meaning a month or two) the menial jobs will not be done at all. Higher jobs will be done only at the rate people enjoy doing it (some enjoy artistic pursuits, for example, or even building things like houses or cars. The challenge is fun).
At this point in our species development the concept is unworkable at anything but the smallest level.This hinges on the belief that people will still actively look to work, to produce something, to contribute their share to society.
I don't know of any studies that come to the conclusion that they won't.
In any case, that is not what this forum is about.Studies? No. Just hundreds (thousands) of years of experience. No one will shovel manure if paid to do nothing.
My Estoteric? I think the elephant in the room here is the fact that certain people are getting tax breaks that they shouldn't be getting, and that is diminishing the amount of tax revenue that is coming into the Federal government and state governments.
Now, I can understand the Republicans arguing that corporations should get tax breaks when they faithfully keep their job positions here in the United States and offer all of their employees private health insurance. However, what doesn't sit very well with me is the fact that the Church of Scientology doesn't pay any taxes pursuant to the IRC Section 501(c)(3) religious tax exemption. That's absolutely insane, because they don't worship any god. To add even more insult to injury upon the American people, I have discovered that Satanic churches also get out of having to pay taxes pursuant to that same statutory code.
It doesn't make any sense, because these same people have been known to commit human-rights violations and engage in cruelty to animals and children. They really should be investigated for criminal activity, but none of them should legally be exempt from having to pay taxes. It could explain why the national debt sits at over 36 trillion dollars.That a religion does not worship your god, or something you decline to call a god, is irrelevant and does not make it something other than a religion. You do not get to put your god on a pedestal, you do not get to declare it the only god, you don't even get to define what a god is.
Well, I'm not exactly a religious person myself, but there's one thing you got to admit. Because a number of Republicans on Capitol Hill are devout Christians, it probably drives them all crazy that Scientologists and Satanists get exempt from paying taxes pursuant to IRC Section 501(c)(3) when that same exemption was likely meant for only regular religious institutions at its outset. I'm surprised they never bring it up as an issue. I'm shocked that Mike Huckabee has said nothing about it on his television shows.
Maybe because it represents the "slippery slope" to all religions being taxed.
Personally, I don't mind philanthropic organizations, charities, being tax exempt. And to the extent that church activities can be walled off to that arena, so should they.They are likely all driven as crazy as I am that Christian churches pay no taxes. The biggest business in the world goes tax free.
A co-worker of mine once told me that the Christian churches over in Germany voluntarily pay taxes out of a personal and patriotic sense of duly obligation, even though they are not legally compelled to do so. He told me that most of the German Christian churches feel proud to pay taxes. We need that same school of thought among Christian churches and televangelical ministries over here in the United States. It bewilders me why American Christian churches and American televangelical ministries behave so differently from the ones over in Germany in that regard.
Now, before I move on to my weekend job of accounting, let's start the discussion of fair with this question - is it fair that the widget maker should earn 50 times or more less than the executives given that without his or her widgets, the executives wouldn't get paid a dime?
Let me couch it with these numbers from ChatGPT when I asked
"Thinking about manufacturing corporations in the fortune 500, what is the average pay of a line worker? Of a senior accountant? Of a CFO?"
Line Worker: $47,500 including bonuses and benefits
Senior Accountant: Midrange - $113,000 including bonuses and benefits (2.4 times the line worker)
CFO: Median - $875,000 including bonuses and benefits (18.4 times the line worker)
but not including stock awards, etc.[$950,000]
CEO: Median - $3,800,000 including bonuses and benefits (80 times the line worker) but not including stock awards, perks, and other compensation [$10,486,000]
So given that without the line worker producing the widgets whose salaries the Senior Accountant, CFO, and CEO depend, how is that wage arraignment fair?For wages; we are a economy. In such an capitalistic economy, there IS no "fair" to wages. Instead the value of work (the wage) is determined by competition rather than some person/committee sitting in the bowels of government making arbitrary judgements.
But either way, they have no bearing on the "fairness" of tax rates. Whether a person earns a billion a year or nothing does not determine the fairness of how much is to be paid in order to be an American citizen.
The idea that “many wealthy people pay no taxes” is misleading and doesn’t reflect the reality shown by IRS data. In fact, the top 1% of earners paid over 42% of all federal income taxes in 2020, while the bottom 50% paid only about 3%. The notion that the wealthy are getting a “free ride” ignores the disproportionately large share they already contribute. If this is a “free ride,” it’s the most expensive one in the country. Furthermore, the argument often confuses marginal tax rates with actual effective tax burdens. While top marginal rates were once as high as 91% in the 1950s and 94% during WWII, virtually no one paid those rates because the tax code was riddled with deductions, shelters, and loopholes.
That’s why even Democratic President John F. Kennedy proposed lowering those top rates; the statutory numbers looked high, but they didn’t reflect what people were actually paying. Reagan’s tax cuts didn’t just lower rates; they also closed many loopholes in a process economists refer to as “broadening the base while lowering the rate.”
The broader issue here is the definition of “fairness.” Conservatives often argue that everyone should pay something, in proportion to what they use, not just based on how much they earn. While it’s true that the wealthy may pay a lower effective rate on some types of income (like capital gains), those gains often represent money that’s already been taxed once at the corporate level. Besides, is it really “fair” for one citizen to pay $400,000 in taxes while another pays nothing, yet both get equal votes, access to roads, courts, and the same public services? The fairness argument cuts both ways, and it’s intellectually dishonest to reduce it to “Democrats understand fairness and conservatives do not.” That’s not only inaccurate, it dismisses a wide spectrum of views that value earned success, limited government, and opportunity-driven fairness.
You also mention the rising Gini coefficient, a measure of income inequality, going from .376 in 1951 to .485 in 2023. But inequality is not the same as injustice. What matters more is whether the poor are improving their living standards and have access to upward mobility. In 1950s America, most homes had no air conditioning, limited appliances, and no internet or smartphones. Today, even lower-income families have access to amenities and technologies that didn’t exist back then. The rich getting richer is not inherently a problem if the poor are also getting richer, and in many real-world cases, they are.
Blaming tax cuts alone for inequality oversimplifies a much more complex reality. Globalization, technology, and financialization have all contributed far more to wealth concentration than tax policy alone. A coder in 2025 can sell software to a global audience, and that level of scalable wealth creation simply didn’t exist in 1955. At the same time, low-skilled labor wages have stagnated more because of global competition and automation than because of tax cuts. Raising the top marginal tax rate will not reverse these structural changes.
Even if we taxed the rich at 70% again, it wouldn’t fix the U.S. debt problem because our government’s core issue is overspending, not under-taxation. Conservatives argue that instead of extracting more from the people already paying the most, we should fix broken entitlement systems, reduce waste, and promote growth. Calls for higher taxes often ignore this spending imbalance. What’s more, dismissing conservatives as ignorant of fairness is not only unfair, it’s a lazy dismissal of core beliefs: that success should be rewarded, not punished; that a rising tide lifts all boats; and that voluntary generosity is morally superior to forced redistribution. The floor may be open, but the debate should be grounded in facts, history, and respect for opposing worldviews.I am not arguing that some (.05%) of wealthy households ($200,000+) pay no taxes, my question is "are the taxes they do pay 'fair'".
The idea of "free ride" encompasses much more that just who pays the most taxes by volume. That is what I hope to get at in the discussion of what is "fair".
I am also not arguing about "injustice" to the poor. My argument is whether the amount of taxes the wealthy pay match the benefits they get from the society they live in.
While moving back to the tax structure on 1981 (70%), ChatGPT estimates that would bring in an additional $943 Billion per year (I can provide you the calculations if you want). While it won't bring it to zero, it would cover about 55% of the current deficit (not counting the $460 billion Trump's tax cut will add to the deficit).
Government Overspending - I would argue that it is the People of America who are overspending. The government is simply carrying out our wishes.
My fundamental belief on why the wealthy aren't taxed nearly enough is they receive non-taxed benefits the rest of American do not get and those benefits derive solely from being wealthy.
For example:
1. Their "unearned income" is taxed at a lower rate than labor income is. Why?
2. Wealthy individuals can defer taxes indefinitely through strategies like borrowing against assets, tax shelters, or trusts. Why?
3. They can step-up in basis at death erases capital gains taxes entirely for wealthy heirs Why?
4. Wealth enables entry into exclusive social, educational, and professional circles. These networks yield better job offers, investment opportunities, legal outcomes, and policy influence—regardless of merit. So why shouldn't the ability to that be taxed in some fashion?
5. The wealthy fund campaigns, PACs, and think tanks, giving them outsized sway over legislation, regulation, and judicial appointments. The resulting policy outcomes (e.g., tax cuts, deregulation) often favor capital over labor. So why shouldn't the ability to that be taxed in some fashion?
6. Wealth buys the best legal representation, which leads to: 1) Lighter sentences, 2)
Easier navigation of complex laws, 3) Avoidance of criminal liability (e.g., for white-collar crime). Civil cases (e.g., contract disputes) often favor the side with more resources. So why shouldn't the ability to that be taxed in some fashion?
7. The wealthy benefit enormously from: 1) Publicly funded education systems that produce skilled workers, 2) Transportation infrastructure (roads, airspace), 3) Patent protections and publicly funded R&D (esp. in tech and pharma), 4) Bailouts (e.g., financial crises, pandemic relief). So why shouldn't the ability to that be taxed in some fashion?
8. Real estate, stocks, and art appreciate in value with no additional effort—especially in a system where monetary policy (e.g., low interest rates) inflates asset prices. - No, I don't think appreciation should be taxed until sold
9. Vast fortunes pass on without being earned, often tax-free or lightly taxed.Why?
10. The wealthy can afford to live in safer neighborhoods, avoid polluted areas, relocate due to climate risk, or access private health care. So why shouldn't the ability to that be taxed in some fashion?
IF you can't answer the WHY questions, then they should be taxed on that item, in my opinion.1. Perhaps because it has already been taxed once. By the time it reaches the owner taxes have already taken a big bite. The real question is why we double tax that income, not why we do so little.
3. You mean like not taking half a house the middle class person left to his son? Capital gains like that?
4,5,6,7,8 All come down to the wealthy can buy more than you think they should; therefore they should give up that wealth via taxes. Just another excuse to take what others worked for.
9. Perhaps because others pass on to their heirs just like the wealthy do. That the wealthy pass on more is not a reason to take it away from them.
10. Because you have already taxed it, and at a higher rater than others pay (unfair on the face of it). This is the same as 4-8: they have money and you want it so, might making right, you should take it from them via the tax code. This is no different than deciding that the wealthy can afford a yacht, a Rolls Royce and a mansion. You therefore need to tax the income again that you have already taxed at a rate higher than anyone, so that they can no longer buy those things. And you can keep doing that until they are broke if that's what it takes to get their wealth into YOUR hands instead of theirs.
Bottom line through all of this is that the wealthy have more money than you do, they should not and therefore you should take it away from them because your cause is just. Excuses for wealth redistribution, but without valid moral or ethical reasoning to back it up - just greed. Eso, you asked what is "fair", meaning moral; there is no moral or ethical reasoning that can possibly lead to taking what others have just because it is more than what you have. Playing Robin Hood is NOT moral or ethical, and all the illogical reasoning in the world will not magically make it ethical. Even Christ said to give up what YOU have, not to take what others have. That the rich have trouble getting into heaven is THEIR problem, not yours, and you cannot make the action of taking what they have built into some kind of ethical stance. It is wrong and will remain so.1. How has their "unearned income been taxed once already"? You don't explain that. You didn't answer WHY, just deflected.
3. Nope. You didn't answer WHY.
4 - 8. Another deflection without an answer. And, in any case, I don't give a damn how much they can buy.
9. Well, I guess that is sort of an answer but it overlooks the point that most people don't have the wealth to pass on to anybody.
10. Again, you don't explain how that has been taxed?
Your bottom line is malarky, sorry.Sorry; I missed that you had posted.
To nearly all of this: you tax the rich on every dollar they take in (less the tax breaks you provide to convince to do what you want them to do). Now you want to tax them again, on the same dollar, because they still have enough to give it to you, and you want it. Specifically, I assume your "unearned income" means corporate income. You tax it, then tax it again when the owner finally touches it. Now you want to tax it still more because there is more there than you think they should have.
Example. You ask: "The wealthy can afford to live in safer neighborhoods, avoid polluted areas, relocate due to climate risk, or access private health care. So why shouldn't the ability to that be taxed in some fashion?".
The answer is that you have already taxed that money. That these people still have enough left after your money grab to choose a better neighborhood, to avoid polluted areas, etc. does NOT mean it should be in your hands; it means that even after paying for your greed they still have enough to buy such things. It means that you left them more than you have earned yourself, but it does mean that you should now take away what you left them.
Eso, the proper use of the tax code is not to "equalize" everyone in what wealth they control. It is to gather enough to run the country. If that leaves some with vast amounts of money...well, they earned it, they can spend it.
Unfortunately that concept escapes you and most liberals. If they have money left after you tax them more than any other person in the country, you will tax them more. And more and more every time you find another use for their wealth. They will NOT be allowed to keep or spend what they have earned; you know better than they how it should be spent and therefore have the moral right to take it away from to spend as YOU think is best. Might makes right, and you have the might to take it; therefore you have the right to take it.
I disagree. You asked what is "fair" for a small subset of Americans to pay in taxes: well, it is the same figure that everyone else pays. No more, no less. That they have more does not mean it belongs to you; it is still theirs, theirs to do with as they wish.
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