EDITORIAL: Time for wage earners to settle up with insatiable Uncle Sam

Tuesday is tax day, the deadline for millions of U.S. wage earners to settle up with the federal government. It’s rarely a pleasurable experience.

The National Taxpayers Union reports that Americans in 2024 spent the equivalent of about $464 billion in time and treasure complying with the U.S. tax code. That alone should be an impetus for Congress to tackle tax simplification above and beyond the modest steps forward achieved through the 2017 Tax Cuts and Jobs Act.

As billions roll into Washington, this would also be an opportune time to consider perhaps the most persistent myth about the nation’s hemorrhaging balance sheet: That soaring annual budget deficits and a national debt that fast approaches $37 trillion are the result of an inadequate tax system that fails to separate enough Americans from more of their own money.

The facts tell a different story. Just 25 years ago, total federal revenue was $2.03 trillion annually. That number hit $5.08 trillion in fiscal 2024 and is projected to reach $6.83 trillion in fiscal 2029. In other words, revenue is on a steady upward trajectory, set to more than triple over a three-decade span.

Federal income tax collections typically make up about 40 percent of revenue for Washington. When it comes to individual taxpayers, the IRS tax code is highly progressive. In 2022, the Tax Foundation notes, the top 1 percent of taxpayers paid an average rate of 26.1 percent, six times higher than the average rate of 3.75 percent paid by those among the bottom half of wage earners. The top 50 percent of taxpayers paid 97 percent of all federal income taxes.

In addition, foundation numbers reveal, the top 1 percent of filers cumulatively earned 22.4 percent of total adjusted gross income on all returns but paid 40.4 percent of all federal income taxes. In contrast, those in the bottom half of filers cumulatively brought home 11.5 percent of total adjusted gross income but accounted for just 3 percent of the government’s total income tax take.

And contrary to perceptions fanned by progressives who yearn for more of other people’s money to spend, “rich” wage earners today pay a larger chunk of their earnings to the federal government than they did in 2001, prior to passage of both the Bush era tax cuts and Donald Trump’s tax reform during his first term. The share of adjusted gross income reported by the top 1 percent, the Tax Foundation notes, grew from 17.4 percent in 2001 to 22.4 percent in 2021.

The American tax code already hits wealthy wage earners the hardest. And Washington doesn’t have a revenue problem. It has a spending addiction that ever-higher taxes will only enable.