Unfair tax burdens must drive better planning and efficiencies in business.
The Merriam-Webster Dictionary describes fair as “marked by impartiality and honesty: free from self-interest, prejudice, or favoritism (a very fair person to do business with)”. It would be hard to describe the new tax policy on high-income individuals as “fair” given facts derived from the IRS.
The top 1% income earners equates to 1.35 million people who will be paying more taxes for no other reason than they have been at least temporarily successful in monetary terms. The 1% group earned 18.9% of the total taxable income in the US in 2010, yet they paid 37.4% of all the taxes.
The bottom 95% (128.3 million taxpayers) earned 66.2% of all the income and paid 40.9% of the taxes. So the top 1.0% of the taxpaying population paid almost as much as the bottom 95%. The top 5.0% paid 59.1% of all the personal income taxes.
So it is not fair, but it is reality. We must drive efficiencies into our businesses to generate the extra cash diminished by these new taxes, and we should be contacting tax attorneys about how best to manage the income in terms of tax management. The new law may not be permanent, but it is indefinite, and now we need to adjust to it.