Do the Rich Pay Their Fair Share? | 5 Minute Videos | PragerU

Do the rich pay their fair share of taxes? It's not a simple question. First of all, what do you mean by rich? And how much is fair? What are the rich, whoever they are, paying now? Is there any tax rate that would be unfair? UCLA Professor of Economics, Lee Ohanian, has some fascinating and unexpected answers.

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Script:

Here’s a question you’re likely to hear whenever the subject of taxes comes up: Do the rich pay their fair share?

There are two parts to this question: Who is rich? And, what is fair?

Let’s start with who is rich:

Nearly everyone assumes that a person who is among the top ten percent of all income earners qualifies as rich.

But according to 2011 data, a top ten percent household makes around $150,000 or above in gross annual income -- that’s income before deductions and taxes. Now, $150,000 is a nice living, but it certainly doesn’t make you rich.

OK, then. What about the top 5%?

You get into this percentile if your household makes around $190,000 or above. That’s a nice bump. But it hardly puts you in the rich category.

How about the top 1%? That’s $500,000 or above. A great income, but remember, most people only get to that level after many years of hard work and, quite possibly, the accumulation of serious debt to fund their education or build their business.

Of course, there are people who make more than $500,000. And there are some who make many millions, even billions. But the number who do is very small.

Now, let’s talk about fair.

Fair would seem be that the group of taxpayers who earn 10% of the country’s income would pay 10% of the country’s taxes; the group who earned 20% would pay 20% of the taxes and so on.

But what If I told you that, according to IRS data, the top 10% of all earners -- the people making $150,000 and above -- pay 71% of all federal income tax while earning only 43% of all income. If anything, the top ten percent pay more than their fair share. So, as it happens, do the much reviled top 1%. They earn 17 percent of all income, but pay 37% of all federal income taxes.

And what about those at the other end of the income scale, the lower earners? Are we squeezing them? Hardly. Those who make $45,000 or less, 47% of all earners, pay little and often no income taxes.

Ah, but what about payroll taxes -- the money we pay to fund Social Security and Medicare? That takes a bigger bite of the paycheck of lower earners than higher earners. Isn’t that unfair?

[rturner]

One thing is certain...the more your salary increases, the more you're bothered by how much of it you don't get.

[thetayz]

The worst part is, whichever side of the fence you are on in this debate over fair taxes, it hurts to see the government generally piss it all away and still have a massive deficit. If we can't control our irresponsible spending, no amount of taxing the 1% will make up for the shortfall.

[adrianfisher]

Politicians love to use the term 'fair share' when talking about taxes because it allows them to sound good and caring without having to explain what they mean. That's part of the problem.

[smurfk]

Sweedish people being like "hey, who's flag is that?".

[ponsoke]

Hey, those of Prager U, can you start leaving links in the description for people to go and investigate themselves.

[rickjobs]

I think it's really not the wealth. People are just pissed at government waste.

[butcher]

I always found it so infuriating how those who dont pay taxes are the most upset about the whole thing.

[FoxElliott]

What about big companies like Google, who evade taxes legally by putting their "base of operations" in a place off-shore with 0% tax?

[pelonp]

It's not that people care about poor people, they just really hate rich people

[alexandrujuncu]

Did anyone notice that the Swedish flag is..not the Swedish flag?

[EngineeredTruth]

_$45, 000 or less does pay not income tax._ *That's just 100% incorrect.* I was buying into this video, until I saw that. Clearly, on a W-2 the federal & state government withholds and I def pay around 20% - 25% of my income in taxes. 

[gmanplaysgames]

one misconception here guys, is that Social Security payments are put into a pot you get to pull from when you retire. Social Security is funded by the working taxpayers today paying for people that are currently retired, and operates on the assumption that when those working people (us) reach age 65, that the working-age people then will p[ay for it, trouble is Social Security, when first founded, there were about 30 working people to every 1 retiree, but that ratio is now less than 3 to 1, and lifespans have also increased significantly, so more people are living to retirement age, living longer after reaching retirement age, and there are less people paying in relative to the number of people pulling money out. this is a MASSIVE PROBLEM.

[silvergirl]

I agree with this except for I always remember paying taxes no matter how little I’ve made. I remember almost crying after getting my first paycheck.

[miamalaeb]

I think everyone should not pay more then 30% takes no matter how much or little they earn

[cheyennealvis]

They pay more than their fair share. One of their accountants in the Cayman islands told me

[Guitaroverkill]

What’s unfair is being self-employed and start out paying 15.3%. Once the Federal and State taxes kick in, you’re paying 40%. So, all workers that work for someone else, who didn’t have the balls or the brains to start their own company, stop complaining about who’s paying the most taxes. And please show me where all the loopholes are, that people keeping saying there are, to avoid taxes.

[curtiscarpenter]

Having a tax incentive put in place for higher earners and giving a tax break to lower earners to narrow the gap to create more equality. A equality driven society.

[Agrahararecipes]

Totally and completely agree. I have been trying hard to make less. However in Canada (where I live and pay taxes) my taxes are used to help others, so I dont feel as bad. But the best bet is to make just enough and live a happy frugal life.

[ythehunter]

You don't even know the Swedish flag, let alone their tax rates...

[gamingbtc]

The rich should have express lanes at grocery stores, special parking spots and fast lanes on roads, for how much they contribute to society with 47% of income earners just leeching off them, but complaining the whole time.