Derek Thompson tweets that 7,000 families making $1m or more a year did not pay any income tax. Which sounds pretty damning. Given the existence of the AMT, though, I wonder how they got away with it? It’s less damning, it seems to me, if they did it by putting it into an account that they will later pay taxes on. For instance. It’s iffier if they avoided paying taxes because they got rebates for being Good Citizens, however defined through incentives thought to be a good idea. It depends on the incentives, I’d guess, though I am still inclined not to look on it favorably.
Of course, what makes me grit my teeth is that these factoids become used to advance the notion that the rich are not “paying their fair share,” which in turn becomes an argument for raising taxes on the wealthy. Given our deficit, and our financial obligations, I don’t oppose raising the taxes on the wealthy. I think everyone’s taxes will need to go up, but particularly the wealthy. But the main problem I have with using this data as the rationale is that you are effectively saying “Since Person A didn’t pay enough taxes by way of hiring all the right tax lawyers, Persons B-E should pay higher taxes.”
To the extent that it’s used simply to advocate closing whatever loopholes are being exploited, I’m supportive. But that’s why the specifics are so important. Why aren’t they paying tax? Will they be paying taxes in the future?