What does that mean? Typically, in the United States, it means that rich people making more than about $500,000.00 a year pay most of the taxes. How much is most? The top 1% of earners in 2008 ended up paying 38% of the tax income.
How is that fair? They can afford it, oh yeah.
So the government becomes primarily dependent on that rich 1% for most of the government income. Just think, if they doubled the number of people making over $500,000.00 and exponentially increased the number of poverty level families in the US they could increase tax revenue by 38%! Make the rich, richer and make the poor, poorer and increase the tax revenue!
Making the rich, rich and poor, poor is exactly what the current tax strategy in Washington is designed to do.
In order to increase the GNP you have to increase the number of people with disposable incomes who spend money. That is what increases the GNP, people spending money; money that they actually have, not money that they borrow.
Henry Ford did more to improve the standard of living in the United States and increase the GNP than any other historical figure. Ford did it by increasing the wages of unskilled workers to the point where they flooded the economy with money making Ford a billionaire along the way.
The way to increase the GNP and the tax base is not to raise the taxes on the rich. The way to increase the GNP is to increase the amount of money the average person earns.
Congress can do that tomorrow. Double the minimum wage, make all employers provide health insurance for all employees (even part time), make health insurance part of the unemployment package, change SSI to be a retirement plan only and make a bachelor’s degree at any state university free for any citizen student that can earn admittance.
Will they do it? Not a chance because the politicians don’t have the guts or business savvy that Henry Ford had.