Simplified Discussion of American Politics

I wrote this article a while back but never posted it.  In reading it today I find it even more fitting of our current scene so I'm posting it now unchanged from when I originally wrote it.

I recently had a discussion about the current state of politics which I would like to simplify here for sake of discussion.

As I listen to politicians running for various levels of government one tune seems to echo in nearly all their speeches, they seek to provide solutions for all our problems be it high costs of heating our homes in the winter, rising fuel costs, high health care costs, rising food costs etc etc etc.  The old argument of a chicken in every pot is continually being made only with substitutes for the chicken.

Being a conservative the first questions that comes to mind any time I hear about new programs being proposed are how much will it cost and who's going to pay for it.  This line of questioning made me start to break down the numbers as if we were in a micro community.  I'd like to share that part with you.

Let's first assume we live in a society of 100 people, that way each "person" could represent a single percent of our real life society.

Next we need to break down which of those 100 people pay taxes and how much each pay.  To start I submit data from  They report that  in 2006 we had 136 million tax returns filed.  15 million households for whatever reason did not file at all.  Of the 136 million tax returns filed, 43.4 million faced either a zero tax liability or a negative tax liability meaning they received either all of their money back or in some cases received MORE then they put in back.

To simplify this let's equate each household as a single person to make it easier.

Total starting point is 151 million households (136 + 15), that's our 100 number.

9.9% (the 15 million) don't file at all.  We'll need to round that up to 10.  So right off the bat, 10 of our 100 people do not file any taxes.  Leaving the other 90 to pay for everything of which another 43.4 million get everything they pay back.

28.7% (43.4 million) either don't pay anything at the end of the day or get more then they pay back.  Rounding off that puts 29 people into the pay nothing or get more then they pay back group.

So already 39 people of our 100 pay nothing toward all the things in life we expect from our government placing the burden 100% of the remaining 61 people.

Next we need to look at what percent of the tax bill is paid for by each percent of the society.  You can find that information here

Also income tax makes up 23% of the total GDP so let's use an easy number of $1,000 as the total GDP.  That means the total tax bill is $230 

  • The top 1% pay 35%  So if we make the total amount paid $80.50 of that total $230.
  • The top 10% pay 65% so that would put 9 people at paying $7.66  each (65% - the 35% the top 1 pay gives 30% of $230 divided by 9)
  • The top 25 pay 83% (83-65= 18% of $230 divided by 15 people) putting them at $2.76 each.
  • The top 50 pay 96% of the total tax bill (96-65 = 31% of $230 divided by 25) putting them at $2.85 each
  • The bottom 50 pay only 4% and with only 11 of the bottom 50 paying anything that puts them at 84 cents each.

Now we as a society continue wanting the government to provide more and more for us.  We want health care covered by the government for instance so let's look at that based on the numbers above.

For starters we need to look at what percent of the GDP healthcare costs actually make up.  I found that information here, they report that it is 16% of the GDP and expect it to rise to 20% within the next 10 years.  For this debate let's use 16% which taken from our $1,000 figure puts us at a number of $160 for health care.

  • If we break it out the same way the top person will pay 35% of that or another $56.
  • Next 9 people pay 30% so they'd pay $5.33 more
  • Next 15 pay 18% so they pay $1.92
  • Next 25 pay 31% so they pay $1.98
  • Next 11 pay 4% so they pay .58 cents
  • And the final 39 either pay nothing or get money for simply being there.

So of us to have Universal health care the top 1% would be expected to pay an increase of 69.5% more in taxes.  What then happens when the top 1% choose to pack up and leave because too much of their wealth is being taken from them?  Now the $136.5 burden they carry shifts downward to the remaining 99 people.  And when the second highest income group starts leaving, that's another $12.99 put on everyone as each one packs their bag for a lower income country.  Don't think it could happen?  How many people do you know who have moved to NH from MA or elsewhere because taxes were too high?  I'm one of them having lived in NY and CT.  I was taxed at a very high rate falling into the upper rungs of the tax rates so I packed my bags and moved to NH.  And I'm not even the top 1%

On last thing I'll leave you with to think about here is just how much income it takes to be considered  part of each group.

  • The median household income in this country for 2006 is $48,201
  • The bottom 20% earn $19,178 or less
  • The top 20% of households were those earning $91,705 or more
  • $60,000 or more puts you in the top 40%
  • The top 5% are any earning $157,176 or more

Given that the average household income in NH is $60,489 (data found here) that means we'd fall into the top 40% meaning we'd fall into a group that could potentially see a 69% tax increase should we assume the full costs of the nations health care.  Are we ready for that?  And when the top 1% start leaving or sheltering their incomes how much more will we pay?

Something to think about!