Ryan ChartrandWelcome back to school everyone, and I agree, break was way too short. However, spring is upon us now, and we can all look forward to fun trips to the beach, nice hikes up beautiful mountains, and jolly saunters around the main streets of downtown. Of course, it also means that tax time is approaching, and on April 17 the deadline to file an individual return will be at hand.
As college students, we tend to fall on the lower end of the income tax brackets. This means we really don’t pay very much in taxes, but instead benefit mostly off the taxes of others. For instance, Cal Poly is paid in large part by the California state taxpayers, which subsidizes a large part of our education. However, we really should thank the richest Californian taxpayers and more importantly the richest Americans taxpayers for their sacrifice to all of us.
Since America uses a progressive tax system, it is the very wealthy that end up paying the most in taxes. The very rich or top 1 percent of income earners pay more than 10 times what the bottom half of income earners pay. In fact, ever since the Bush tax cuts, the rich have been steadily paying more money. As reported in The Wall Street Journal, Americans who earned more than $1 million in adjusted gross income paid $178 billion or an average of $740,000 per filer in income taxes in 2004, up about one-third since 2002, the year before the Bush tax cuts. Yes, that’s right, the rich paid more money in taxes after the Bush tax cuts than before. Of course, one could make the argument that the rich just got richer.
However, this isn’t true. More Americans filed taxes in every income bracket from $50,000 and up in 2004 than in 2002. While the rich are paying more, the poor are actually paying less. According to the Congressional Budget Office, income taxes paid from the bottom 40 percent of income earners dropped from 0 percent to negative 4 percent between 2000 and 2004, meaning that the IRS actually subsidizes these families. Likewise, the tax foundation headed by Scott Hodge calculated that in 2004 the bottom one-fifth of the population received on average $24,860 in federal spending while paying only $1,684 in taxes, a $14.76 return on every dollar paid.
In fact, the Bush tax cuts have led to a stronger economy. Federal tax receipts have continued to climb and job growth continues to be strong. All of this has contributed to maintaining a low federal budget deficit of about 1.8 percent of GDP or lower than the average for the last 25 years, which is amazing considering the expenses of fighting the war on terror.
Instead of taxing those individuals in the highest tax brackets more, we should be lowering there taxes even further. If the rich get richer, that’s genuinely a good thing, because it means we all do better. This year, Forbes magazine identified 946 billionaires with a 20 percent increase over last year, making it in their words, “the richest year ever in human history.” Generally, those paying in the highest tax bracket, are highly competitive people who got that way by creating new ideas, products and companies. By making new investments and spending their money, they spur on the U.S. economy by creating more jobs and fostering future technological advancements. Even having their money sit in banks allows banks to quickly lend it out for others to spend and invest.
Let’s take a great entrepreneur like Bill Gates, the founder of Microsoft, and Sam Walton, the founder of Wal-Mart. By continually investing in their companies and getting richer, they have supplied millions of jobs to Americans and created world class products. In the case of Sam Walton, his idea of Wal-Mart has given access to low price high quality goods for many Americans, who could not have afforded that standard of living before. In the case of Bill Gates, his software has improved the efficiency of every person who owns a personal computer and changed the way we live our lives.
Without even giving to charity (which they do) or paying taxes, the rich do an invaluable service to our country by spending their money and trying to create more wealth. By simply making new investments, they spur on the growth of new companies and new ideas.
Bill Gates and Sam Walton and those super rich who created new jobs and ideas are genuine American heroes, and we should thank them for making America a better place. If I were to compare Sam Walton to Mother Teresa, I would have to say that Sam Walton fed and clothed more people than Mother Teresa ever did. Don’t get me wrong, Mother Teresa was a wonderful lady and should be sainted for her work, but the world needs more Sam Waltons just as badly as it needs more Mother Teresas.
Brian Eller is a materials engineering junior and Mustang Daily political columnist.