COLBY, Kan. - I just read a recent contribution of Rep. Tim Huelscamp (KS-1) in our local paper. He was right when he said we had a spending problem, but he certainly wasn't very coherent in his math accounting for taxes and individual taxes paid.
When he validated that Warren Buffet appeared to only pay 17% taxes on his actual income, he was probably close. But when he claimed that the bottom 50% of earners paid an average of less than 2% of their annual income in taxes, he was a bit lacking in honest assessment of reality.
If you give a kid a $1 bill for carrying your groceries, when he spends it he most likely pays upwards of 6 to 8% in sales tax (that is 3 or 4 times his 2% calculation). If you pay someone enough to incur FICA liability, they in fact contribute 7.65% in taxes and you contribute another 7.65% that could have been given to them, at no extra cost to you.
I don't like to call FICA a tax. It is contribution to a supposedly retirement and disability fund, which you, in fact, should be entitled to if you qualify by reason of age or disability. That 'entitlement' should not be represented in a negative way. In addition to the FICA liability, most of the lower income folks spend the majority of their income for items subject to sales tax.
When it is all figured in, I would estimate that the middle and lower income earners are paying pretty close to Buffet's 17% in real taxes and most of you in the $50K to $100K category are paying more. Those wealthier than that enjoy income from tax free bonds, deferred liability, exempt FICA tax, capital gains rates, and a host of other amenities that lower their tax liabilities.
I don't recall whether I've heard Huelscamp support the 9-9-9 tax plan but I'm sure that or some other version of 'flat tax' will be his program. If you are even in the upper level of middle income, you will pay more taxes under those plans and a very much higher percentage of government expenditures will be assessed to you. Anyone in the $100K category and up will benefit by greatly reduced tax liabilities.
Any way you look at it, if you consider yourself disadvantaged or even average on the economic scale, you will pay more taxes if we institute 'flat tax' or rely more heavily on sales tax to support our government.
When the economists and politicians say they will take care of those inequities by sales tax exemptions and eliminating loop holes in deductible qualifying income, you will have the same mountain of tax forms and litigation we have now. And you can count on the moneyed folks having the advantage once again. After all, they buy their way into the legislative process through political donations that the common folks can't match.
Huelscamp, apparently, enjoys the political support of a great many folks suffering under the illussion that they are above the middle classes. In reality, most of us are losing ground, while the real upper classes are absorbing what we lose and increasing their share of the wealth.