The New Representation Without Taxation

"A government that robs Peter to pay Paul can always depend upon the support of Paul."

- George B. Shaw

In the late 1700's a cry went up -- "No more taxation without representation". This translates (loosely) to "No taxation by Parliament. No representation in Parliament. Let us run our own affairs." (Reference)

It has been said⁽¹⁾ that democracy will fail when voters discover that the ballot box contains the keys to the treasury. An unconstrained democratic majority can vote itself benefits from a treasury filled by an outnumbered minority.

We are already at the point where 51% of the people pay only 1.5% of the taxes (interpolated⁽²⁾ from Table 1, below). What incentive does this majority have to vote for fairer taxes? None. So, a cry goes up throughout the land - tax the rich! Perhaps all the people who are asking for new taxes should be allowed to send in more money than they are required to send by law. To me, stuck in that middle (too poor to not care about taxes, too rich to be in the majority), there is little difference between being taxed by a king or being taxed by a mob. Yes, quality of life in Minnesota is the envy of many - so much so that our demographic is changing from the sod-busting farmer mentality to an urban entitlement mentality. The people calling for more taxes forget that there is no honor in giving other people's money to charity. If they believe so strongly in programs that are about to become unfunded, then they should send more of their own money and rely less on the guns of the tax collectors.

Ever wonder how you compare to the rest of the taxpayers (am I getting away with my fair share?). Quicken has one answer.

INCOME CATEGORY (2) NUMBER OF RETURNS (3) INCOME INDIVIDUAL INCOME TAX NUMBER OF RETURNS WITH ZERO OR NEGATIVE LIABILITY

Millions Percent Billions Percent Billions Percent Millions Percent

Less than $10,000 19.8 14.1% $84 1.1% -$5 -0.6% 18.7 38.5%

10,000 20,000 23.8 17.0% 356 4.8% -7 -0.8% 16.3 33.4%

20,000 30,000 19.5 13.9% 485 6.5% 10 1.1% 8.4 17.3%

30,000 40,000 16.2 11.6% 565 7.6% 30 3.4% 3.3 6.7%

40,000 50,000 13.1 9.3% 584 7.9% 39 4.4% 1.3 2.6%

50,000 75,000 21.6 15.4% 1,313 17.7% 114 12.9% 0.6 1.2%

75,000 100,000 11.9 8.5% 1,027 13.8% 113 12.8% 0.1 0.2%

100,000 200,000 11.2 8.0% 1,460 19.7% 213 24.1% (4) 0.1%

200,000 and over 3.1 2.2% 1,554 20.9% 377 42.7% (4) 0.0%

Total, All Taxpayers 140.2 100.0% $7,428 100.0% $884 100.0% 48.7 100.0%

Highest 10% 14.0 10.0% 2,982 40.1% 587 66.4% (4) 0.1%

Highest 5% 7.0 5.0% 2,176 29.3% 478 54.0% (4) (5)

Highest 1% 1.4 1.0% 1,146 15.4% 297 33.6% (4) (5)

Table 1. Distribution of Federal Individual Income Tax Liability
Reference: DISTRIBUTION OF CERTAIN FEDERAL TAX LIABILITIES BY INCOME CLASS FOR CALENDAR YEAR 2000
Prepared by the Staff of the JOINT COMMITTEE ON TAXATION (PDF)

INCOME CATEGORY (2)	NUMBER OF RETURNS (3)	INCOME	INDIVIDUAL INCOME TAX	NUMBER OF RETURNS WITH ZERO OR NEGATIVE LIABILITY
Millions	Percent	Billions	Percent	Billions	Percent	Millions	Percent
Less than $10,000	19.8	14.1%	$84	1.1%	-$5	-0.6%	18.7	38.5%
10,000 20,000	23.8	17.0%	356	4.8%	-7	-0.8%	16.3	33.4%
20,000 30,000	19.5	13.9%	485	6.5%	10	1.1%	8.4	17.3%
30,000 40,000	16.2	11.6%	565	7.6%	30	3.4%	3.3	6.7%
40,000 50,000	13.1	9.3%	584	7.9%	39	4.4%	1.3	2.6%
50,000 75,000	21.6	15.4%	1,313	17.7%	114	12.9%	0.6	1.2%
75,000 100,000	11.9	8.5%	1,027	13.8%	113	12.8%	0.1	0.2%
100,000 200,000	11.2	8.0%	1,460	19.7%	213	24.1%	(4)	0.1%
200,000 and over	3.1	2.2%	1,554	20.9%	377	42.7%	(4)	0.0%
Total, All Taxpayers	140.2	100.0%	$7,428	100.0%	$884	100.0%	48.7	100.0%
Highest 10%	14.0	10.0%	2,982	40.1%	587	66.4%	(4)	0.1%
Highest 5%	7.0	5.0%	2,176	29.3%	478	54.0%	(4)	(5)
Highest 1%	1.4	1.0%	1,146	15.4%	297	33.6%	(4)	(5)

Footnotes:

(1) "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy."

- Alexander Tyler, a Scottish professor, 1787

(2) Interpolated? We see that the first three rows provide (-.3%) of the taxes (due to credits and refunds) and 45% of the returns. The fourth row then needs to provide an additional 6% (from the 11.6% in this category) to push us to 51% of the taxpayers. That is, 6/11.6 of the 3.4% contributed by this group.
Thus, we compute this additional contribution as 3.4% × (6/11.6) for an estimated net contribution from the lowest taxed 51% of
(drum roll please)
1.46%

(3) A.G.I.
Adjusted
Gross
Income = Gross income - adjustments to income

where
Gross income = All income from all sources (other than tax-exempt income) that must be included on your tax return.
Adjustments to income = Deductions that are subtracted from gross income in figuring adjusted gross income. They include deductions for moving expenses, alimony paid, a penalty on early withdrawal of savings, and contributions to an individual retirement arrangement (IRA). Adjustments to income can be taken even if itemized deductions are not claimed.