76-11-3
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Taxes
TranscriptA short while ago the morning paper gave a few paragraphs to a news release from the Treasury Department. The headline read, -- QUOTE -- "182 Pay No Income Tax Despite Making $200,000 or More". -- UNQUOTE -- The story itself has become an annual report, it seems ever since an outgoing Under-Secretary of the Treasury -- three days before the inaugural in 1969 -- told a Congressional Committee we faced a possible tax revolt by the middle class because there were, -- QUOTE -- "Many high income Americans who paid little or no Federal Income Tax". -- UNQUOTE -- This it turned out, was a serious distortion of fact. Congress acted like Congress, and in no time at all we had the tax "reform" of 1969 -- probably the worst tax legislation in the memory of any of us. Ever since, those inclined to sensationalism and demagoguery come riding forth at tax harvest time to inflame people's passions, charging there is skullduggery abroad in the land. Despite inflation, the earning level chosen for the stories remains that $200,000 figure. And, as in this most recent news item, the indicated individuals are always referred to as "rich". Now I'll agree that $200,000 is a healthy income but it isn't automatically accompanied by great wealth. Those could be one-time earnings for a golf pro having a hot season on the tournament circuit. Earnings at that level are not uncommon to athletic stars in a variety of sports who will only have a few years of such earnings -- and no allowance is made by the Internal Revenue Service for the shortness of the earning period. In 1969, Congress was provided with an explanation for each one of the cases in the departing Under-Secretary's bombshell. Some had lost law suits that took more than their entire year's income; some had business losses that wiped out earnings -- catastrophic losses such as fire or flood; and a few had earned and paid their taxes in a foreign land. One stuck in my mind. He had reported gambling winnings of $200,000 but he could also prove he lost $440,000 doing the same thing. The head of Internal Revenue Service said the only way they could get at him was to charge an amusement tax! Let's look at this latest news story again. There were 41,361 persons who had incomes of $200,000 or more. Less than one half of one percent -- 182 persons -- paid no tax. Are we to believe that the other 41,179 were smart enough to earn $200,00 or better, but not smart enough to find those illicit loopholes found by the 182? That is, if we assume such loopholes do exist? Why not a story about the fact that a few years ago only three percent of all income taxpayers were up in the surtax brackets and now, due to inflation, more than 30 percent are; not because they are better off financially, but mainly because cost-of-living pay raises put them up in higher tax brackets even though their purchasing power hadn't increased by one dollar? That story might make us mad, but we'd be mad at the right people -- members of Congress. This is Ronald Reagan. Thanks for listening. |
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