An “Inconvenient” Truth

By far the most terrifying blog you will ever read.

With the 2024 Election on the horizon and a lot of rhetoric being thrown back and forth regarding taxes.

I thought I’d share a few “inconvenient” tax truths:

Raising taxes doesn’t really change anything.

Since 1945 fed tax revenue as a percentage of GDP has never been higher than 20%.

Then the highest marginal rate was 94% and tax rev as a % of GDP was 19.8%.

Today the highest marginal rate is 37% and tax rev as a % of GDP is 16%.

A 57% increase for a 4% difference (math not mathing).

Why?

When you raise taxes people figure out ways not to pay it — they leave, they make less, (they hire guys like me) etc.

The wealthy pay the majority of the taxes.

While there is likely more instances of tax evasion among wealthy inviduals

The data shows that:

The top 50% of income earners accounts for 98% of tax revenue AND

The top 1% of income earners accounts for roughly half of that (45.6% of total tax rev).

While wealthier households can certainly “afford” to pay more… this idea that they don’t pay anything is 🐂💩.

Inflation is a greater concern for lower and middle income households than taxes.

In our progressive tax system (where tax rates go up with income) the brunt of the tax burden goes to the wealthy, leaving working class households with a relatively small tax liability.

However, when food, gas, and healthcare prices go up everybody feels that… and arguably those with less margin (working class households) feel it more.

Since 2020 prices have gone up 22%.

If the average family was spending $6K per month then they need $7k today.

An extra $1000 makes a big difference if your average monthly aftertax income is only $7k.

It makes a much smaller difference if you’re taking home $15K.

Enjoy your Labor Day,