How many times do you hear that we just need to “tax the rich” to help solve the nation’s problems? The implication is that the “rich” are not like you and me and, just maybe, are from another planet.
Well, demagoguery aside, let’s take a more rational approach and examine just who the “rich” really are. Turning again to data from the IRS, the chart below shows two important characteristics of New Hampshire taxpayers by income group. For clarity, keep in mind that a “tax return” equals a household and “exemptions” equal the number of people in that household.
As the chart clearly shows, as income grows so does the percentage of households that file under “married filing jointly” and the number of people per household. In fact, those at the very top, households earning more than $200,000, have the highest married percentage (88.5 percent) and the largest number of people (3.02).
So the next time you hear someone say we should tax the rich (which President Obama identifies as anyone earning over $250,000 a year), remind them that those folks are overwhelmingly families–and the largest ones at that. Why would anyone want to tax large families at higher marginal tax rates? No wonder large families are getting harder to find than the proverbial “needle in a hay stack.”
For those of you who want to delve further into this issue, please check out this summary of research I did for the Tax Foundation many moons ago called “Putting a Face on America’s Tax Returns.” (pdf) In short, the research shows that “the vast majority of taxpayers who face the highest marginal tax rates [meaning high-income] tend to be married couples. But aside from being married, they also tend to be dual-income, residents of high-cost urban areas, older, college educated, and engaged in business activities.”