The American Prospect's Ezra Klein: Do the Rich Pay Too Much?

[flpoljunkie]

THE TYRANNY OF THE INCOME TAX

Picture an upside-down pyramid with its narrow tip at the bottom and its base on top. The only way the pyramid can stand is by spinning fast enough or by having a wide enough tip so it won't fall down. The federal version of this spinning top is the tax code; the government collects its money almost entirely from the people at the narrow tip and then gives it to the people at the wider side. So long as the pyramid spins, the system can work. If it slows down enough, it falls.

That's Ari Fleischer, the president of Ari Fleischer Communications, doing some communicating in today's Wall Street Journal. The op-ed is, for the WSJ, something of a genre piece: The poor don't pay any income taxes. The rich pay too many. "A very small number of taxpayers -- the 10% of the country that makes more than $92,400 a year -- pay 72.4% of the nation's income taxes. They're the tip of the triangle that's supporting virtually everyone and everything. Their burden keeps getting heavier."

Income taxes do tilt upward. But they're the progressive bit of the federal tax wedge. Other federal taxes, like the payroll tax and the excise tax, are not progressive. (And we're not even going to get into state income, which are frequently regressive) That's why CBO calculates something called the "effective federal tax rate." The EFTR is simply a households’ federal tax liability divided by its income. The four taxes that are included in the measure are the income, payroll, excise, and corporate taxes. And they give us a pretty good idea of whether the rich really are overpaying. The following graph matches each income quintile's effective federal tax rate with its percentage of the national income. See if you think the rich are getting a bad deal:



When you look at percentage of total tax liabilities, the rich do in fact bear a heavier burden. But it's because they have so much more money. They are not bearing a heavier burden as a percentage of their incomes. They're bearing it in relation to everyone else's incomes. Indeed, it's only because the sheer levels of income inequality in this country are frankly unintuitive that Fleischer can even write this sort of dreck. People hear that the top 20 percent pay almost 70 percent of the country's income taxes and nod their head. That's unfair! But it mainly seems unfair because people don't know the top 20 percent accounts for almost 60 percent of the national income.

Posted by Ezra Klein on April 13, 2009

http://www.prospect.org/csnc/blogs/ezraklein_archive?month=04&year=2009&base_name=the_tyranny_of_the_income_tax

[Sebastian Doyle]

1. Even if every god damned loophole was plugged, they wouldn't pay "too much".

We need to roll back the tax cuts for the rich. No, not Chimpy's tax cuts. Reagan's. At least. Probably JFK's too.

During the Eisenhower administration, they were paying 91% over 400,000. Whatever that would work out into today's dollars, I'd say that's more than reasonable.

We MUST put an end to perpetual leeches like the Rockefellers, Rothchilds, and the Bush Crime Family. They produce NOTHING. They contribute NOTHING. They start wars to increase their ill gotten gains, and its time this shit stopped.

Does Jenna Bush - or Jeb's crackhead daughter, deserve an easy life because their great granddaddy funded Hitler and pocketed the profits from a German steel mill that used concentration camp slave labor? Or because their granddaddy ran guns & smack for the CIA?

Paris Hilton is just as useless, but at least hotels are a legitimate business.

[damntexdem]

2. The rich pay too much ... attention to their tax rates.

If the economy doesn't recover, they'll have less to pay taxes on.

[DrToast]

3. The word is getting out...

But it mainly seems unfair because people don't know the top 20 percent accounts for almost 60 percent of the national income.

People are starting to take notice of these things now. I guess that's one silver lining to the Wall St. debacle. Personally, I think income inequality is one of the most important issues of our day. It may not be as "sexy" as health care reform, but I think it's just as important.

[Political Heretic]

4. CS Monitor reports that the actual average rate paid after tax excemptions by 5th Quint. is 7-11%

Warren Buffet's Tax rate was 17%, but his own estimation.

[flpoljunkie]

6. Yes, the effective rate drops dramatically when income is unearned, as it's taxed at 15%.

[LooseWilly]

5. Wonderful post.

It's just kind of a shame that learning, and especially learning math, has been considered so un-cool in this country for so long. If it were a math literate country in general, then this sort of analysis wouldn't need to be done over and over and over again to refute Fleischer's bullshit for the public.

[Median Democrat]

7. The President's Former Press Secretary Spinning Away Growing Income Disparities

When were disparities this large? Right before the Great Depression. Coincidence? The reason why the rich pay more taxes is because they make so much more freakin money:

<>

[Lydia Leftcoast]

8. There's nothing as pathetic as a rich person who complains about

being over-taxed. Someone once wrote a letter to the (Portland) Oregonian that began, "I pay over $100,000 a year in income taxes, and I'm not rich." Uhhh, rrrrriiight.

What's even more pathetic are middle-class people who absorb the right-wing talking point: "The Democrats want to take all the money away from the productive members of society (Paris Hilton?) and give it to all the losers (the woman who takes care of your children while you're finding tax loopholes for corporations?)."

They sound like the pre-Civil War plantation owners, who, according to Michael Parenti, did no work whatsoever--they even hired less affluent whites as overseers to manage the business aspects of their plantations and order the slaves around--but one of their favorite pastimes was complaining about how "lazy" their slaves were.

[Prophet 451]

9. New Rule:

Every time someone with a net worth of more than a million dollars complains about the amount of tax the rich pay, the top income tax rate is raised by half a percent.

I'm sick of listening to this shit. If your money is such a damn burden, you're welcome to share it with me. I'll happily pay the 40% tax my country (England) levies on high incomes and still be happy to upgrade from the ten-year-old 14" portable TV.

Rich folks bitching about the tax rate rising by about four percent. Cry me a fucking river.

[FKA MNChimpH8R]

10. To paraphrase Willie Sutton

You tax the top bracket because that's where the money is. Hopefully you tax the living shit out of them.