Has our nation evolved into two Americas?

Published 10:07 am Friday, January 4, 2013

By Robert N. ‘Bob’ Holt

As we begin another new year, it seems that we have become two Americas. This transition occurred slowly yet steadily. We now seem to have “givers” and “takers.”

The givers are defined as those who have been relatively fortunate in life. They go to work, provide for their families, support schools, value education, behave themselves, keep up with current events, pay their bills, pay their taxes, and volunteer in and contribute to programs assisting others.

The takers may be unemployed, usually the result of their own choice. They tend to be supported by numerous government assistance programs such as unemployment compensation, food stamps, Medicaid, housing assistance, and educational loans and grants.

Some of those who are convicted of crimes fall within this category. Rather than support schools, they are a drain on educational resources. They do not monitor local, state, and national news opting instead to watch movies on their big screen TV or play video games. They tend to have a “you owe me” philosophy.

Researchers tell us that close to half of U.S. families pay no federal income taxes. For the typical tax year, the top 1 percent of U.S. wage earners pays 37 percent of the total federal income taxes received.

For the top 5 percent of wage earners, that figure is 59 percent; it represents 70 percent of total federal income taxes received for the top 10 percent of wage earners. If half of our families pay no income taxes while the top 10 percent of wage earners are paying 70 percent of the total income taxes received by the federal government, it seems difficult to make the argument that they are not paying their “fair share.” Also, the top 25 percent of wage earners pay 87 percent of all federal income taxes received.

Some people receive a federal income tax refund for money they did not pay into the system. The Earned Income Tax Credit will be the topic of next week’s article.

Basically, it provides tax credits, which produce a tax refund far beyond money withheld from employers for most people in this category. In essence, a qualifying person has a negative tax rate since they receive back more than they paid in.

The federal government now has a $16.4 trillion debt and 48 million citizens on food stamps. We have 12 million people officially unemployed, but 22 million actually unemployed or underemployed. Our budget deficit this year alone is already over $1 trillion.

Why are we in the drastic situation? Simply put, no Congressman wants to be the person to propose legislation reducing benefits even though everyone who follows finances knows we have promised much, much more in benefits that we can possibly pay in the future.

The only way to correct this situation is to be honest with the American people, overhaul the income tax code (my favorite is the flat tax), and return government assistance to those who truly need it as opposed to an entitlement culture that we have had for the last three generations beginning in the 1960s.

ROBERT N. “BOB” HOLT, a Franklin native, is a professor of business management and real estate at Southwestern Community College in Sylva, N.C. His e-mail address is hrobert@vt.edu.