Does Bill Gates Pay His Fair Share? | Short Clips

you know I've paid over 10 billion in taxes I paid more than anyone in taxes but I you know I'm glad to have pet you know if I'd had to pay 20 billion it's fine ah but you know when you say I should pay a hundred billion ok then I'm starting to do a little math about what I have left over sorry I'm just kidding here's a question you're likely to hear whenever the subject of taxes comes up do the rich pay their fair share there are two parts of this question who is rich and what is fair let's start with who is rich nearly everyone assumes that a person who is among the top 10% of all income earners qualifies as rich but according to 2011 data a top 10% household makes around $150,000 or above in gross annual income that's income before deductions in taxes now 150,000 is a nice living but it certainly doesn't make you rich okay then what about the top 5% you get into this percentile if your household makes around $190,000 or above that's a nice bump but it hardly puts you in the rich category how about the top 1% that's 500,000 or above a great income but remember most people only get to that level after many years of hard work and quite possibly the accumulation of serious debt to fund their education or build their business of course there are people who make more than 500,000 and there are some who make many millions even billions but the number who do is very small now let's talk about fair fair would seem to be that the group of taxpayers who earn 10% of the country's income would pay 10% of the country's taxes the group who earned 20% would pay 20% of taxes and so on but what if I told you that according to IRS data the top 10% of all earners the people making $150,000 and above pay 71 of all federal income tax while earning only 43% of all income if anything that top 10% pay more than their fair share so as it happens do the much reviled top 1% they earn 17% of all income but pay 37% of all federal income taxes and what about those at the other end of the income scale the lower earners are we squeezing them hardly those who make forty-five thousand or less 47% of all earners pay little and often no income taxes ah but what about payroll taxes the money we pay to fund Social Security and Medicare that takes a bigger bite of the paycheck of lower earners than higher earners isn't that unfair consider two points first it's misleading to call the payroll tax a tax it's really an insurance payment the guarantees we receive Social Security and Medicare after we turn 65 second the benefits we receive from Social Security are capped no matter how much we have paid in this means that the payroll taxes of high earners actually help subsidize the Social Security and Medicare benefits that low earners receive at retirement how do all these numbers stack up against other countries the u.s. income tax system is substantially more progressive meaning that income tax rates rise as income Rises than other advanced countries including Germany and Sweden so if you think that our tax system is unfair because it coddles high earners then you must conclude the tax systems in these other countries are even more unfair so how higher tax rates on Americans today well throw in federal tax increases mandated in 2013 and state taxes and top earners face a tax rate of more than 50% in California and New York other states like Maryland and Connecticut are not far behind do you think a tax rate of greater than 50% is fair if so is there any rate that wouldn't be nobody's calling for bake sales for anyone in the top 10% of earners and no one wants to minimize the struggles of those at the lower income strata but to say the rich however you might define them don't pay their fair share is simply wrong finally numerous academic studies including ones that I have done show that when tax rates are too high investment risk-taking by entrepreneurs and therefore job creation all decline and when that happens is the poor who suffer not the rich the rich do fine it may feel good to take even more money from the top 10% but it doesn't do good and it sure isn't fair I'm Leo hanyan professor of economics at UCLA for Prager University