In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom…
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Image of the Day: More Economic Freedom = Higher Standard of Living

In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom, which shows that Joe Biden has dragged the U.S. down to 22nd, our lowest rank ever (we placed 4th in the first Index in 1995, and climbed back up from 18th to 12th under President Trump).  As we noted, among the Index's invaluable metrics is how it demonstrates the objective correlation between more economic freedom and higher citizen standards of living, which this graphic illustrates:

 …[more]

May 19, 2022 • 12:53 PM

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The Rich Don't Pay Their "Fair Share" of Taxes ... They Pay Too Much Print
By Timothy H. Lee
Wednesday, April 11 2018
[T]he wealthiest 40% of American households essentially pay the entirety of American income taxes, which themselves account for the largest source of federal government revenues.

Do wealthier Americans pay their fair share in taxes? 

The straightforward answer is "no," although for a very different reason than most people probably assume. 

The reality is that the rich pay more than their fair share by any reasonable definition of "fair." 

And here's a new kicker:  Following comprehensive tax cut and reform legislation passed by Congress and signed into law by President Trump, wealthier Americans will pay an even higher proportion of the nation's taxes. 

That's the main takeaway of a new report from the left-leaning Tax Policy Center, comparing income tax estimates for 2017 and 2018. 

The report offers additional value by not only highlighting income taxes paid by each of five taxpayer quintiles, but also the income earned by each quintile. 

So let's first talk about the notorious "1%." 

American households falling within that category, which includes filers earning above approximately $730,000, will pay a staggering 43% of all income taxes received by the federal government.  That compares with the 38% proportion they paid in 2017. 

Meanwhile, that top 1% earns just 16% of the nation's total income. In other words, their share of income taxes paid is nearly three times their share of income earned. 

Is that fair? 

Now expand the relevant segment to the top 5% (households earning $310,000 or higher).  They pay 62.9% of American income taxes, yet only earn 28.6% of American income.  And that 62.9% of income taxes paid stands higher than the 59% for which they accounted in 2017. 

So much for the "tax cuts for the rich" slogan affixed to the tax reform bill by Nancy Pelosi, et al.   

Broaden the examination to the top quintile, covering American households earning above approximately $150,000.  They pay an astounding 87% share of income taxes received by the federal government, whereas last year they paid approximately 84%.  Meanwhile, that quintile's share of national income stands at just 52.2%. 

Now let's look at the other end of the income spectrum. 

The bottom quintile of households earns 4.4% of the nation's income, but accounts for a negative 2.5% of income taxes paid.  It's a negative number because those filers receive payments for such things as the earned income tax credit.  For 2017, by comparison, that number was a smaller 2.1%. 

How about the bottom two quintiles, accounting for income from $0 to $48,000?  They earn 13.1% of the nation's income, but a negative 4.5% of income taxes (again because of benefits received through the income tax regime).  In 2017, that number was a smaller -3.2%, so the tax reform legislation resulted in more payments received, not taxes paid. 

The entire bottom 60% of households, which covers income from $0 to $86,000, accounts for 27.3% of the nation's income, but negative 0.2% of income taxes paid. 

Accordingly, the wealthiest 40% of American households essentially pay the entirety of American income taxes, which themselves account for the largest source of federal government revenues. 

So the next time you hear someone claim that "the rich don't pay their fair share," respond that they're right - but only because their share of income taxes paid dwarfs their share of income earned. 

That's not the end of the positive news, however. 

The Congressional Budget Office (CBO), hardly a redoubt of supply-side conservatives, has raised its forecast of American economic growth as a consequence of the tax cuts, as summarized by The Wall Street Journal with a nice reference to our friend Dan Clifton: 

You probably didn't read anywhere else that CBO says the tax cut will help the economy grow faster - to 3.3% this year and 2.4% in 2019.  The last time the economy grew that fast was 2005.  This produces more revenues than CBO previously estimated, and Dan Clifton of Strategas Research Partners calculates that by CBO's estimates the tax cut has already paid for about 30% of its static revenue losses. 

So the tax cuts are not only boosting economic growth, but are making our income tax regime more steeply progressive, not less. 

That's a result even class warriors and Occupy Wall Street should welcome. 

Quiz Question   
How many days does it take the average U.S. household to consume as much electrical power as one single bitcoin transaction?
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Notable Quote   
 
"The trial of former Clinton campaign attorney Michael Sussmann crossed a critical threshold Friday when a key witness uttered the name 'Hillary Clinton' in conjunction with a plan to spread the false Alfa Bank Russian collusion claim before the 2016 presidential election.For Democrats and many in the media, Hillary Clinton has long held a Voldemort-like status as 'She who must not be named' in scandals…[more]
 
 
—Jonathan Turley, Shapiro Professor of Public Interest Law at George Washington University
— Jonathan Turley, Shapiro Professor of Public Interest Law at George Washington University
 
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