Tuesday, December 16, 2008

Socialist Taxation

Wherein income in our nation is redistributed from suckers like you and me, to the wealthy (via Kevin Drum.)

Or to be more precise, Ezra Klein takes issue with Washington Post pundit Robert J. Samuelson's claim that the wealthy pay a burdeonsome twenty-eight percent of all federal taxes:

You often hear conservatives argue that the rich pay a larger percentage of national taxes than they did in the 1970s, and that shows the system's progressivity. But the rich make much more money than they did in the 70s. The question is whether their share of the national income increased faster or slower than their share of the federal tax burden.

In 1979, the top one percent brought home 9.3 percent of the national income -- which is to say, for every $100 paid in wages, $9.30 went to the top one percent -- and paid 15.4 percent of federal taxes. The ratio of tax share to income share was 1.65. Their tax burden was 1.65 times larger than their income share. In 2005, they brought home 18.1 percent of the national income -- it had doubled -- and paid 27.6 percent of federal taxes. The ration was 1.52. In other words, it has gone down. The rich pay less taxes as a share of their income than they did in the 1970s, and they control much more of the nation's wealth.

Ah, but what about the effective tax rate you say? Well:

For the rich, effective federal tax rates fall throughout the century. The top one percent was paying around 45 percent in 1960, and that's fallen to around 37 percent. But the real action has been in the subgroups above the top one percent: The top hundredth of a percent was paying above 70 percent of their income, and now they're only a touch above 40 percent

And now Kevin Drum (linked to above) weighs in, analyzing a WSJ article from earlier this year on the "Fortunate 400":

The top 400 taxpayers, a group so rich and elite that I'd need scientific notation to properly represent their proportion of the population, have doubled their share of income in the past decade or two but have decreased their tax burden by nearly half. Nice work! As you can see, Warren Buffett wasn't exaggerating when he said his secretary paid a higher tax rate than he does. If she pays more than 18% — not exactly a tough hurdle when you figure that payroll taxes already account for about 8% of that — she probably does.

Thanks to decades of anti-tax crusades and seven years of Bush administration tax cuts, the rich have grown richer at an astonishing rate. Clearly, whatever these people are paying Grover Norquist, it isn't enough for the solid work he's done for them.

And back to David Kay Johnston, who Drum links to above, who has this to say:

Politicians like to talk about the income tax when they talk about overtaxing the rich, but the income tax is just one part of the total tax system. There are sales taxes, Medicare taxes, social security taxes, unemployment taxes, gasoline taxes, excise taxes—and when you add up all of those taxes [many of which are quite regressive], and then you look at how they affect the rich and the poor, you essentially end up with a system in which the best off 20 percent of Americans pay one percentage point more of their income than the worst off 20 percent of Americans.

Clearly, Samuelson didn't get Johnston's book.

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