Every April, Americans spend more than 7 billion hours filing taxes and roughly the same amount of time arguing over them, almost entirely on the basis of several common myths. Here are the five most consequential.
Myth No. 1: The Rich Don’t Pay Their Fair Share
This is the most repeated claim in American tax politics and one of the least supported by actual data. The top 1 percent of earners take in 22 percent of total income and pay 40 percent of all federal income taxes. The top 10 percent earn about half the nation’s income and pay 72 percent of its taxes. The bottom half of earners, collectively, pay roughly 3 percent of the tax revenue. The United States, in fact, has the most progressive income tax system in the developed world.
Myth No. 2: We’ll Fix the Budget Deficit by Taxing the Rich
We simply cannot. The collective net worth of every American billionaire is estimated at somewhere about $8 trillion. The projected federal deficit over the next decade alone approaches $25 trillion. Even a one-time total confiscation of every billionaire’s wealth wouldn’t come close, and you only get to do it once.
Veronique de Rugy, Ph.D., is a senior research fellow at the Mercatus Center at George Mason University. She has testified numerous times in front of Congress on the effects of fiscal stimulus, debt, deficits, and regulation on the economy. Previously, de Rugy has been a resident fellow at the American Enterprise Institute, a policy analyst at the Cato Institute, and a research fellow at the Atlas Economic Research Foundation.
