Taxing the rich
John Edwards wants to tax the rich (well, except anyone named Edwards) into oblivion. Hillary Clinton already threatened wealthy donors that she was going to take things from them and give those things to the poor. Obama just keeps chanting “tax the wealthy” over and over like a parrot.
Well, according to the Wall Street Journal editorial board, President Bush has set the “tax the rich” bar pretty high;
Last week the Congressional Budget Office joined the IRS in releasing tax numbers for 2005, and part of the news is that the richest 1% paid about 39% of all income taxes that year. The richest 5% paid a tad less than 60%, and the richest 10% paid 70%. These tax shares are all up substantially since 1990, and even somewhat since 2000. Meanwhile, Americans with an income below the median — half of all households — paid a mere 3% of all income taxes in 2005. The richest 1.3 million tax-filers — those Americans with adjusted gross incomes of more than $365,000 in 2005 — paid more income tax than all of the 66 million American tax filers below the median in income. Ten times more.
For the political left and most of the media, this means only that the rich are getting richer, so of course they’re paying more taxes. And it is true that the top earners have increased their share of total income. Yet, as the nearby table shows, the rich showed more rapid gains in reported income shares in the 1990s than in the first half of this decade. The share of the richest 1% jumped to 20.8% of total income in 2000, from 14% in 1990, but increased only slightly to 21.2% in 2005. This makes it hard to pin their claim of “rising inequality” on the Bush tax cuts, though the income redistributionists are trying. By this measure, the Clinton years were far worse for “inequality.”
The chart they’re talking about is here;
 Chart from Wall Street Journal
So, in fifteen years, the wealthiest Americans income grew 15% of all taxable income, but their share of the income taxes increased 21%. So how does this “tax cut for the rich” song play in light of these hard facts? I suspect it will be largely ignored – afterall who needs those inconvenient facts getting in the way of the usual baseless rhetoric? If the Democrats ever accepted the truth about the economy, they’d be Republicans.
Statistical data can be accumulated, read and intrepreted in many ways. These data assume that all households are equal. A household with adjusted gross incomes above $365,000 are treated the same as households with AGI of below the median. A better way to compare the data would be to calculate the total AGI and the per cent of tax paid by total dollar income brackets and not by households. The household data would be only to compare the number of households falling into these brackets.
Well, David, you would be right, except that the standard Democrat line to counter the argument that revenues have increased since the 2001 tax cuts is that the percentage of the tax burden has shifted to the middle class. That’s the reason Democrats have been using to justify taxing the wealthy more heavily. This clearly shows that the percentage of the tax burden has shifted to the upper-income households – which I’m pretty sure is the objective of this particular method.
The income taxes need to be higher on the wealthy–the poor already pay Social Security and Medicare taxes on ALL of their income, and when they retire, if they’re lucky enough to receive social security or medicare, it’s at a lower monthly rate than rich people who pay taxes only on the first $90,000+ of their earnings. And those folks don’t even need the money!
And poorer people pay sales and use taxes on a greater percentage of their income, because they have to spend it to survive. So again, without the higher income tax, the poor are paying a greater percentage of their income in taxes than the rich.
And the truly rich must remember that they didn’t get rich on their own. They received a lot of money or labor from the poor and middle classes! They deserve to pay more!
The labor from your “poor and middle classes” has already been compensated in the form of wages – what possible benefit do the “poor and middle classes” derive from the wealthy being taxed into poverty? You write like you believe that taxes are penalties on the wealthy for their condition. No one “deserves” higher taxes, for pete’s sake.
We should forget for the monent about Democratic, Republican, left, right, ideology, etc and have the comparable data before we draw conclusions or posture the answer.
Jonn wrote: We should not, however, forget that story isn’t completely about the numbers – there’s a reason for that particular methodology. And that reason is specifically about Democrat, Republican, left, right, ideology, etc….
Didi, I would argue they did in fact earn it on their own, the wage they paid for labor was based on the value the laborer provided, just like what I would pay for anything else of value (a robot, an ear of corn, etc). Unless the poor or middle classes provided their labor as risk capital (instead of a wage) then there is nothing else owed them, and they hold no claim on what the capital provider eventually earns. Unfortunately we live in a society where income is taxed in large part for the purpose of redistribution, thus effectively creating a claim on what another man earns by government fiat. Taking from someone who creates value and giving it to someone who has not earned it is not only theft, but it’s not a very good way of incenting anyone to create more. Does either side really ‘deserve’ this??