I’m sure there are many terrible burdens that come with living in the highest income households in America, but, luckily, thanks to the vagaries of the U.S. tax code, paying the highest tax rate isn’t one of them.
David Leonhardt’s most recent New York Times column lays out the details.
In the first paragraph, when I said “highest tax rate,” I should have said “highest effective tax rate,” which refers to the rate — as a percentage of its gross income — a household actually pays in taxes to all levels of government, local, state and federal. But, of course, that’s exactly the number we should look at, rather than assuming that a progressive income tax structure would guarantee that the richest pay the highest rate, because the effective rate shows what a household paid after all the deductions and other elements of the tax code that shelter a portion of income from taxation.
And those shelters are a lot more valuable and a lot more utilized by people who make enough to be taxed in the higher brackets.
OK, I buried the lead, as we say in journalism, which refers to failing to disclose the main point of an article in the first paragraph. If you click through the top of the Leonhardt column, you will see that the 400 wealthiest households not only found a way to get their actual tax bill, as a percent of their income from all sources, below the mere billions in the 99th percentile, or the 90th, but even, believe it or not, below the median.
But wait, I still buried the lead. According to Leonhardt’s column, the 400 highest-income households pay a lower overall tax rate, taking into account all forms of federal, state and local taxation, than do those households in the bottom zero to 10 percent.
It’s hard to figure out how that could work. But Leonhardt derives this fact from a not-yet published book, called “The Triumph of Injustice,” due for release next week. Authors Emmanuel Saez and Gabriel Zucman are professors at the University of California, Berkeley. Leonhardt says both profs have “done path breaking work on taxes.” Saez has been named the top academic economist under 40. Zucman has been nicknamed “the wealth detective,” presumably for his ability to figure out how and where the wealthiest hide their do-re-mi.
Not hard at all, at least for part of it.
Some many state and local taxes are regressive, tobaco, alcohol, the sales tax, car license, on and on.
The miniscule tax rate isn’t even the best part. The real win is in convincing the masses that this tax structure is critical to the functioning of our society; that any changes to the tax code that increase tax collections from the wealthy risk causing economic calamity.
Again, the uncomfortable facts:
There is a positive relationship between progressive taxes and economic strength.
The gap between the classes widens. Why do I feel like I’m reading a Charles Dickens’ novel? Like “A Tale of Two Cities”? I once worked with a co-worker who claimed that this was what the United States was coming to and I didn’t take him seriously at the time. Now I wonder . . .
Leonhardt is a respected journalist who has written extensively on economics. But, as a columnist, he is expressing opinion — in this case, his perspective on tax rates. In short, an opinion on economics, often called an “inexact science.”
Black, a respected journalist in his own right, is expressing his opinion on Leonhardt’s opinion. Fair enough. Opinions are a healthy essential in our system – particularly exposure to varying opinions.
Another – differing — opinion of Leonhardt’s opinion comes from James Freeman, another journalist specializing in economics and assistant editorial page editor at the Wall Street Journal:
https://www.wsj.com/articles/new-problems-with-elizabeth-warrens-inequality-math-11570573868
Unfortunately, this article is behind a paywall.
You must be a subscriber.
Some background on Freeman:
“James Freeman is assistant editor of The Wall Street Journal’s editorial page and author of the weekday Best of the Web column and newsletter. He writes about business, finance and taxes among other issues, and is a contributor to the FOX News Channel. Before joining the Journal in September 2007, he served as investor advocate at the U.S. Securities and Exchange Commission, where he encouraged the transformation of financial reporting technology to benefit individual investors.”
——–
Note that while the WSJ’s news staff is highly regarded and relatively unbiased, their editorial staff is another matter altogether.
And they are owned and controlled by News Corp (aka: Rupert Murdoch).
One of George Bush’s rivals for the Republican nomination was Steve Forbes, best known for the magazine, but politically, for touting the flat tax. The flat tax briefly became a marketable idea in the mainstream media because it had a look of fairness, and offered the hope that it could resolve the tension between conservative and liberal tax policy. Then people started to realize that it only looked flat if you just included certain taxes. That kind of ruined the scam, so idea was excised from Republican discourse.
If you added up all the kinds of tax people pay, you saw the pronounced regressive tilt in the system, which the rich had been hoping you wouldn’t notice. The last thing they wanted was for the public to demand any real flatness in the system.
That’s about the time they started ramping up the confusing propaganda attacks on the corporate income tax and the estate tax, claiming that both should be eliminated, or at the very least, radically cut. We began to notice the coordinated barrage of terms created and poll-tested by Frank Luntz — the “death tax;” “double taxation;” “job-killing tax.”
And this became the Republican Party’s overriding priority; to solve the single most pressing problem in American society — the only one worth talking about, really — which was that the rich were so tragically overtaxed.
In 2016 the Republicans gained control of the White House and both houses of Congress, and they passed the tax bill that struck a mighty blow for their vision of a just society. That has been their only major legislative victory in at least a decade. But it’s the one they really, really wanted.
When Rachel Maddow discovered and then disclosed Donald Trump’s 2005 tax returns, we learned that he paid $38 million in federal income tax on about $150 million in income. That’s a 25% effective tax rate. I checked my return for last year and I paid 7.6% on something less than what Trump earned. So he not only paid about $38 million more in taxes than I did, but he paid three times the tax RATE than I did.
I’ve never been a fan of Marx’ progressive tax system because it’s not fair. With a flat tax of say, 10%, the more you make the more you pay. People making 100,000 a year would pay $10,000, while a person making $50,000 would pay half that, or $5,000. Paying an increasing rate as your income increases is overkill and unfair.
If the purpose of taxation is to pay for the cost of government, then paying a certain percentage of your income is certainly a way to do it. I actually favor a consumption tax instead of an income tax which is a tax on labor. When the government tried to impose an income tax to pay for the Civil War, the Supreme Court of 1861 ruled it unconstitutional.
But eventually the envious collectivists came to power and professors can now write about how unfair it would be if everyone paid the same percentage of their income to pay for the cost of government.
People who favor of a graduated or progressive tax system have a social engineering objective rather than simply paying for the costs of government.
Since Trump -claims- to be a billionaire, $150 million is probably a small proportion of his real income. Can you say ‘Cayman tax shelter’?
“I’ve never been a fan of Marx’ progressive tax system because it’s not fair.”
Just to clarify: Karl Marx did not “invent” the progressive income tax. The first progressive income tax was imposed by the undoubted Bolshevik William Pitt the Younger in 1798, some 20 years before Marx was born.
Taxes have long been based on wealth. Capitalist folk hero Adam Smith regarded the idea that the wealthy should pay more in taxes as a no-brainer.
The wealthy will always pay more in taxes. If we eliminated the income tax and simply used a sales tax, the wealthy would still pay more than anyone else because they spend more. This wealth envy from the left is so unattractive.
The wealthy would pay less as a percentage of their income.
The disdain of the right for the less fortunate is troubling.
In fact, the wealthy spend a much smaller proportion of their total wealth than the poor do. The poor spend nearly all of their income on immediate needs, while the wealth invest a large proportion of it, which takes us back to tax shelters.
So is the attitude of entitlement of the faux-aristocratic. As long as we pretend to be a democratic society (with a lower-case “d”), there’s nothing at all positive about oligarchy.
DT, hate to break this to you but social engineering is the objective of the constitution: perhaps some of this this looks familiar, “form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity,” And it isn’t authored by Karl Marx.
Dennis, the “promote the general welfare” clause is often misinterpreted by lefties to mean the duty to maintain some citizens as wards of the state.
“Promoting the general welfare” is an expression seen in the written constitutions of many countries. As a guideline, it describes the duty of government to create and maintain an environment that promotes health, safety, morality, peace, and overall well-being of the people. However, the founders did not envision a “Welfare state” as lefties understand it.
SCOTUS found in Jacobson v. Massachusetts, “it (the “welfare” clause in the Preamble) has never been regarded as the source of any substantive power conferred on the Government of the United States or on any of its Departments”.
“However, the founders did not envision a ‘Welfare state’ as lefties understand it.”
Do we really need to go there? If we pretend that the “Founders” spoke with a unified voice, we see that the voice created a Constitution that protected slavery and denied equal rights to women. The Founders, as creatures of their time, envisioned a government of property-owning white males.
Essentially, going by a few stray words or out-of-context quotes from the Founders ignores the fact that the world we live in today is radically different from their world , and we really have no clue as to what they would think about 21st century current events.
“Essentially, going by a few stray words or out-of-context quotes from the Founders ignores the fact that the world we live in today is radically different from their world , and we really have no clue as to what they would think about 21st century current events.”
The meaning of those “few stray words” has been addressed, and put into context by the SCOTUS, as I noted, sir. Another favorite canard I see used among the left is the notion that because it’s the current year, we should ignore the Constitution. Sorry sir, that’s not going to happen without a lot of very unpleasant attendant consequences
While we can understand the inchoate anger the left feels with the restraints the Constitution places on their agenda, the fact remains that without the Constitution, there is no unifying foundation; without a unifying foundation, there is no United States.
You noted what is called “dicta,” language that is unimportant to the holding of a case.
“Another favorite canard I see used among the left is the notion that because it’s the current year, we should ignore the Constitution. ”
Funny how I have never heard this “canard” in all my years moving in left-wing circles. It certainly is a “canard (defined as an unfounded story or rumor)” that leftists believe that. Perhaps it’s because of the fantasy that some nebulous ideas that what the Founders intended should continue to be our lodestar? That only works if we ignore that the whole thrust of American constitutional jurisprudence was changed by subsequent developments (like, say, the Civil War amendments).
“While we can understand the inchoate anger the left feels with the restraints the Constitution places on their agenda, the fact remains that without the Constitution, there is no unifying foundation; without a unifying foundation, there is no United States.”
Tell that to the President who thinks Congress has no right to impeach him, even though the Constitution very clearly gives it that power.
“You noted what is called “dicta,” language that is unimportant to the holding of a case.”
I see, so the SCOTUS adds superfluous language in it’s decisions to fulfill a minimum word count? No.
In fact, dicta contained in a judicial decision, while not as seen as setting legal precedent, is added to clarify the author’s personal opinions that underlie the legally binding decision, which is exactly what you complain the founders failed to do. That is to say, your argument is self defeating and ill considered.
Justice Harlan was a great jurist (one of the top, in my opinion), but he was not a Founder.
How is it “misinterpreted”? Got something to support that, like perhaps Bill and Ted’s phone booth that will bring those founders back for a discussion? So, reducing pollution is not for the common welfare? Providing back stops like unemployment insurance, assistance etc. is not for the common welfare? Setting safety standards for food and medicine etc, are not for the common welfare? Licensing drivers is not for the common welfare, need we go on? Whose welfare is it than?
Dennis, I cited a related SCOTUS decision. Not sure what more you could want.
Perhaps I missing something, but the decision you cite- Jacobson v. Massachusetts- upheld the authority of states to enforce compulsory vaccination laws. This seems to counter your argument regarding the general welfare clause in the constitution.
The income tax is only a tax on labor if your income only comes from labor. For the wealthy their income is mainly the return on capital investments, not wage income. Capital gains taxes are for the most part flat taxes, which helps explain why people who mainly get income from capital are able to have a lower tax rate than people who mainly get income from wages. Why does our tax code preferentially treat income from capital over income from labor?
Another area that is alarmingly untaxed is the wealth transfer of capital assets. Upon the death of the owner the capital assets are “stepped up” to the current value so the person inheriting does not have to pay any capital gains taxes at all. This is why an estate tax is necessary. I would be fine with eliminating the estate tax if we also eliminate “step up basis” on capital gains.
“alarmingly untaxed”
I must say sir, I’ve never seen those two words put together like that before. The effect is quite disturbing.
George Washington could have said them.
The Articles of Confederation didn’t allow him to levy the funds necessary to pay his troops — he had to beg the States for funds.
That nearly cost us the Revolution.
Shhh…conservatives don’t want folks to know all their ideas have been tried (the Articles are basically their fever dream of utopian society) and failed miserably…
If you had read anything Washington wrote (see especially his farewell speech) you’d know that were he be alive today, he would most likely be a libertarian. Government as seen by Washington and his contemporaries was about representation, but not economics as it exists in the current year.
Welfare, bailouts, redistribution, high taxes to support government programs would not even be a consideration. The founders knew we had to pay our war debts, and saw that as a legitimate reason to levy a tax; as did the vast majority of new Americans.
But in the absence of such a national crisis, the historical writings of Washington & the founders assure us that they would fight for reducing the burden and influence of government on our lives.
Counterfactual.
If George Washington were alive today he’d be a different person, and react differently to situations than he did in the 18th century.
However, I’ve read more than just his farewell address, including his letters to the States asking for money to pay his troops.
But of course, most of his troops were Lafayette’s French soldiers, paid by Lafayette.
How does taxing the rich jeopardize anything? They are destroying the middle class and keeping 20% of families in poverty to grab more and more of our national wealth. We need Warren’s wealth tax to fund a decent society.
The creation of wealth is not a zero sum game, sir. My success in no way hinders your ability to succeed.
In my experience, those that complain most stridently about perceived unfairness are those least likely to be risk takers themselves.
Wealth creation is not. Wealth distribution is.
So, we’re free to create our own fortunes, but at fortunes whim for unearned windfalls…damn; thats harsh, indeed.
Ah, yes —- the old infinitely expanding pie.
Unless you can prove that your success has expanded the GDP proportionately to your gain, the conclusion remains that you gained at the expense of others — a redistribution of resources. And that of course is the ‘socialism’ that righties always accuse their political opponents of practicing.
“Unless you can prove that your success has expanded the GDP proportionately to your gain, the conclusion remains that you gained at the expense of others — a redistribution of resources.”
You mean to say a distribution of resources according to the effort and personal risk one has put in play. Re-distribution describes an arbitrary doling out of a thing that has already found it’s place. Distribution in a Capitalist system like ours doesn’t follow a five year plan. There are no arbitrary walls or windfalls.
Been saying this for years, but seems lots of folks don’t get the simple math. Long term capital gains 0%,15%,20% based on your income.
So, average worker, pays FICA 6.2% and medicare 1.45% on every $ they earn, that is 7.65%, federal tax brackets are, 10% up to $9.525K, 12% from $9.526K -$38.7K, 22% $38.7K-$82.5K, there are more brackets but the moral of the story is pretty simple, @ $9.526 you basically pay 12%+ 7.65%=19.65% tax rate, Notice Mr. or Ms mega billionaire pays an additional .35% (that’s point 35%) effective tax on their LT capital gains than Mr. Ms making < 10K a year. Make $38.701K and now you are paying 29.65% vs 20% for Mr. & Ms. billionaire, so folks keep voting for those right wing tax cuts for the billionaires, as you can see they really need the tax relief!
The top 1% pay 37% of all taxes, the top 50 pay 97% of taxes. Seems pretty fair to me. Wealthiest earners don’t get their income through payroll. They got it from investment gains that has been taxed multiple times.
TS, if it is so fair then perhaps you can explain why the top 10% have ~ 50% of all the wealth in America? Or perhaps in your mind, what does fair mean? You are aware that through history when wealth gets too far out of balance rebellions occur? You are also aware that under the constitution we are obligated “to promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity” there is no obligation to make sure the rich get richer and the poor get poorer,
Or is it fake Constitution Preamble, and Fake St. Louis Fed reporting?
,
https://www.stlouisfed.org/open-vault/2019/august/wealth-inequality-in-america-facts-figures
Dennis, the answer is simple, they have found success in America. They have a product or a service that other Americans want and are willing to pay for it. Nobody is stopping anybody from coming up with an idea, figuring out how to get it to the masses and prospering from it. It is called entrepreneurship. Folks that take the risks make the money. That is how 10% of the folks own 50% of the money. You may not like it but capitalism rewards those who put it out there. When you decide to be a teacher (a fine profession) you get a health plan, retirement plan and a fixed salary. Good for you but then don’t complain about the “My Pillow” man being rich.
“Dennis, the answer is simple, they have found success in America.”
Or, they inherited it. I suppose that’s “finding success,” but it’s hardly an inspiring story to tell poor people when you’re explaining why you regard them with such contempt.
Forbes study in 2016 found 70 of wealth was created 30% inherited. 70% odds are pretty good. As I stated don’t be mad at the “My Pillow” guy, go out and achieve success yourself. That way you won’t have to worry about what wealthy folks do with their money once they die.
The Forbes “study” was talking about the Forbes 400 billionaires, not all wealth in America, and their definition of “created, not inherited” is pretty loose. I would hardly call Mark Zuckerberg a rags-to-riches story.
I get why the My Pillow guy is our new paradigm. He’s a dedicated Trumpster, who narrowly avoided a big ol’ FTC enforcement action for fraudulent advertising.
Upward mobility in America is largely a joke. Americans are increasingly stuck in the same socioeconomic place as their parents. If you start out poor or working class, you are likely to stay there. A few wealthy people who beat the odds is a ridiculous basis for any kind of public policy.
“Upward mobility in America is largely a joke.”
While that is patently, and demonstrably false (“US added 700,000 new millionaires in 2017” https://www.cnbc.com/2018/03/21/us-added-700000-new-millionaires-in-2017.html), the popularity of that canard among the left does explain a lot of the inchoate rage directed at successful people from the left.
We may add 700,000 new millionaires a year, but we are also unfortunately maintaining an unsustainable population that is mired in avarice.
Speaking of jokes, one that is especially bad is the idea that all is hunky-dory, economic-mobility-wise, because there are more millionaires. How many of them are millionaires on paper because real estate values increased?
I suggest you look at some real research, instead of just relying what you see on the TV:
Michael Hout, Americans’ Occupational Status Reflects the Status of Both of Their Parents, Proceedings of the National Academy of Sciences, September 18, 2018.
https://www.pnas.org/content/115/38/9527
It’s not basic cable, but it’s solid research.
And who is it sir, that is out there purchasing all of that pricey real estate? It’s 30 something professionals climbing the economic ladder; the next batch of millionaires. You suggest the market value of held real property is not real wealth? Well tell that to a San Francisco real estate agent.
I’m under no delusions that hard core leftists can ever be shown the error contained in their conclusions; they’re never going to believe their lying eyes and facts to the contrary be damned. And that’s fine as long as they are never allowed to foist their misery and failure upon those of us out here making it work.
No Trump supporter should ever cast aspersions on anyone else’s ability to accept “facts to the contrary.” Not a single one of them.
Actually, a lot of American real estate is purchased by Chinese looking for a safe place to park their cash,
Right-wingers like to cite Sam Walton as an example of a “self-made billionaire.” a rags to riches story.
It is true that he was not born wealthy, but he started his first store with a loan of $20,000 from his father-in-law, an amount equivalent to about $285,000 today, according to an inflation calculator. In other words, he married into money.
When I was in Mississippi a few years ago, someone down there told me that initially, WalMart served a useful function, making a wider variety of goods available to people in small, rural towns. That changed, though.
Walton’s children are billionaires due to having won the parental lottery, but evidently, all that wealth, an unimaginable amount (someone with a $50,000 annual income would have to work 20,000 years to accumulate a billion) is not enough to satisfy them.
They still don’t pay a living wage, and they give their employees information about applying for food stamps and Medicaid (so who are the welfare queens in this case?). They still use predatory pricing to drive locally owned competitors out of business. Remember how they used to brag about selling American-made products? That lasted until they put so much downward pressure on their suppliers’ prices that the suppliers could no longer afford to stay in business, at which point WalMart started sourcing its merchandise from China.
A $20,000 loan AND $5,000 of his own savings ($71,000 In 2019 dollars). That’s called putting skin in the game, which is how risk takers attract investors. Omitting it from the Wiki biography suggests that’s an inconvenient truth.
It’s no stretch to conclude the loan was considered the very best investment Sam’s father in law ever made.
Wal-Mart isn’t the best employer, but for many it’s the only opportunity available. The fact that Wal-Mart has no trouble filling positions is much more an indictment of our public school system, and the collapse of the nuclear family than Sam Walton’s business model, in my opinion.
How many of us in 2019 have $71,000 in savings to put into our businesses? Especially when we were 27 years old?
Most Americans have NO savings — they couldn’t pay a $400 medical bill.
Exactly! It’s obvious young Sam Walton drove himself to succeed. He saved the meager income he earned in the Army with a clear vision to investing it in his future.
I must admit I’m surprised you chose to admit the obvious point of my argument.
When Sam Walton was in the Army, he had all of his living expenses paid for by the government. All of his housing, his food, and his medical expenses were covered. He also did not have a family to support at the time.
Nice try.
A. Capitalism is not ingrained in the constitution: Please prove me wrong.
B. Scalia, and the right wing conservative supported the notion that those with the most can spend the most to influence the election, i.e. corporations are people, and financial corruption is legal Please prove me wrong.
C. As before there is nothing in the constitution that says as “in Order to form a more perfect Union” that the well to do can not be taxed higher to form that “more perfect union”. Again please prove me wrong.
As always you dodge the question and per a previous comment: The Walton family as an example etc. etc. did not earn their $ they inherited it, So your conclusion is, you prefer monarchies where wealth, power ans status is passed down from family generation to family generation,. just like King George? Meaning, folks are not required to pull themselves up by their own boot straps, as long as grandpa etc. etc. did it for them from now to eternity? And that is your definition of fair?
Money circulates (keeps going around), so ALL income is subject to multiple taxation.
Your employer pays taxes, so do her suppliers, so do the businesses that you patronize.
The rich, poor and middle-class all pay the same for a loaf of bread or a gallon of gas. Paying for government should be no different.
The Left would have the merchant charge you for his goods based on your income, I suppose. Makes as much sense.
One answer: that’s the difference between private and public goods.
Another: the wealthy receive more in public services (even considering social services) than the poor do.
Your argument might make more sense if government services were itemized and you paid for exactly what you received. For instance, fire protection on a mansion would cost more than on a tenement apartment.
So your point is, the well to do can buy more governemnt than the poor, i.e. they should get more out of their dollar invested?
The rich and the poor do not benefit from government equally. This is where your simplistic analogy falls apart.
I am among those that believe no one should pay $0; even the lowest income earners should kick something in.
They do, its called a number of things, City/county/state sales tax 7.525%, franchise fees, surcharges, solid waste management tax 9.75%, etc. etc, The poor basically spend every $ they take and other than clothes and some food, pay tax when they spend it, They are also not immune from FICA and Medicare contributions unless they are in the cash economy.
$0 income tax. No one should pay $0.
Surprise, surprise, surprise! Many wealthy people pay $0 income tax, Yes, they pay a capital gains tax, but they pay $0 income tax, You know that Bill Gates said, you want the wealthy to pay their fair share, go after capital gains. So like poor people they pay $0 income tax. Now answer the question, what should get more favorable tax treatment, blood and sweat income or money made on money? Not being religious but raised religious, last I recall, JC threw the money lenders/traders out of the temple, not the common workers!
The book should be an interesting read explaining all the legal ways that the “rich” (not defined in this article) reduce their effective tax rate. The chapter explaining the effective tax rate of citizens who, besides paying no income tax, are actually paid by the government. Can a tax rate be less than zero?
“Effective tax rates – calculated as the total income tax owed divided by adjusted gross income – also rise with income. On average, taxpayers making less than $30,000 paid an effective rate of 4.9% in 2015, compared with 9.2% for those making between $50,000 and under $100,000 and 27.5% for those with incomes of $2 million or more.”
“By contrast, taxpayers with incomes below $30,000 filed nearly 44% of all returns but paid just 1.4% of all federal income tax – in fact, two-thirds of the nearly 66 million returns filed by people in that lowest income tier owed no tax at all.”
https://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/
An informed opinion relies on one’s willingness to search out non-biased, fact based information.
Wealthy people pay more than 1/2 of Federal income taxes, although they make up less than 15% of the population.
Meanwhile…
“An estimated 45.3% of American households — roughly 77.5 million — will pay no federal individual income tax, according to data for the 2015 tax year from the Tax Policy Center, a nonpartisan Washington-based research group.”
https://www.marketwatch.com/story/45-of-americans-pay-no-federal-income-tax-2016-02-24
Informed people understand basic math.
Sure, 10% of a million dollars will yield more dollars than 30% of $50k but that doesn’t mean the millionaire is getting gouged. The economic impact of taxes isn’t measured in terms of dollars, it’s the percentage of income that impacts households. Anyone trying to live in America on $900k is way better off than someone living on $35k. The millionaire may put 6+ times as many dollars into the tax coffers but the economic impact on them is negligible compared that of the $50k household.
It’s simply bizarre that so many American’s simply don’t understand the basic nature of our tax system and government funding. This should be common knowledge but we’re perpetually mired in these facile “arguments” about trickle down and tax dollars.
By the way, we also need to recognize the myth that the wealthy somehow are funding a government that they don’t use… i.e. paying for everyone else. The wealthy get far benefits from government than anyone else… our court system alone, with it’s patent and copyright protections is worth trillions to the wealthy. Add to that government contracts, and direct and indirect subsidies and your average billionaire makes a food stamp recipient look like grain of sand in midst of a Sahara sand dune. The biggest welfare families in the State are the Pohlads, Wilfs, and the guys who built the MOA. So no, these guys aren’t paying for everyone else’s welfare… they rely the government as much if not more than anyone else.
You’ve dragged my comment off into the weeds and abused it disgracefully, sir.
I didn’t say the wealthy were being gouged, I said they contribute most of the money our federal government uses to fund it’s operations; and so they do.
I also noted that >45% of US households pay $0 federal income taxes. That accounts for most of the $35k/yr folks you worry about. How much impact does 0% have on their incomes?
Finally, trickle down what? This is the 21st Century, sir. We’re not arguing a 1980 tax policy that is no longer used.
I think most readers grasp of math here is fine, and so is our nose for gaslighting, however poorly executed.
“I didn’t say the wealthy were being gouged, I said they contribute most of the money our federal government uses to fund it’s operations; and so they do.
I also noted that >45% of US households pay $0 federal income taxes. That accounts for most of the $35k/yr folks you worry about. How much impact does 0% have on their incomes?”
Again, your observation that the wealthy contribute more dollars implies a disproportionate tax burden. This suggestion is simply facile and the observation itself is at best inconsequential.
As to your zero income tax- tax payers the fact is that even THEY pay a higher percentage of their income in total taxes because of all the non-income taxes they pay. By the way, you have to have a federally adjusted income of e less than $10k a year to escape any payroll or income taxes so I don’t know how you’ve decided that those making $35k are paying zero income taxes.
If you look at the total tax burden in the tax incidence study I’ve provided (page 83, table 4-10), you see that those in the bottom decile ($10k and under) pay an effective total tax rate of 28.3% while those in top decile ($140+) pay 10.5%. It works out this way for a variety of reasons: While income taxes are graduated, none of the other taxes are- so the poor pay the same sales, gas, property, excise, etc. etc. that everyone pays, regardless of income, and it adds up. Furthermore wealthy may live in large and more expensive houses but they dodge property by owning houses in no-tax or low tax states (six months and a day). If you look all the other taxes you see that from sales tax to property tax the wealthy pay far less a percentage.
And again, part of that is just math; if you make a million dollars a year, and pay the same property tax (for instance in Hennepin Co. around 1% of assessed property value) on a million dollar home- That’s $10k. If you live in $220k home you pay $3k. but check it out- while $10k is 1% of the millionaires income $3k is 3.5% of an $80 income. So even though the millionaire is paying three time more money, they paying three times less percentage of their income. And of course this is assuming the millionaire is actually paying the full property tax, most aren’t.
This has been a standard feature of our tax system for several decades. In MN the OMB publishes Tax Incidence Studies every two years that reveal who pays what rates, and for a long time now the top 10% have been paying lower rates than everyone else. The put in more actual dollars, but they’re rates have been falling since the 80’s.
The OMB uses a Suits Index to measure the actual progressiveness. The index ranges from +1 to -1, those scores below zero (in the negative territory) are progressive. We have seen less than zero index numbers since the mid 80’s.
The question is why isn’t the fact that we’ve had a regressive tax structure for decades common knowledge? Every tax cut that’s been issued in the last 40 years has made the system more regressive, yet the media still pretend that tax cuts could make fiscal sense? I think the answer to that question is rather simple: our corporate media by and large services the elite who benefit from the regressive tax structure, and for the most part sounding alarms about it undermines the illusion of general prosperity that both political Party’s have been relying on.
Not to disagree, but the crux of the matter to me is pretty simple, Growing financial inequity in America is either a good thing or a bad thing. Seems the right wingers think it is a good thing, better to have the rich get richer and the poor get poorer, and the left wingers think it is a bad thing, a larger center to the distribution curve is good along with shorter and lower standard deviations in the tails. Personally, I lean that way because our goal as a country is to “form a more perfect union” and you can’t do that with humongous distribution curves.
The only issue I would take with your comment is that you polarize the population unrealistically. Right wingers certainly believe that wealth disparity is the best economic outcome, but everyone else disagrees… it’s not just about “left” wingers. Neoliberals can be more supportive of trickle down economics… but even they don’t think that an economy with millions living in poverty is the best outcome.
We have decades of polls and research, and elections that have consistently revealed a majority of American believe in more wealth equity than disparity. A majority have always supported higher taxes for the wealthy, and Republican tax cuts actually rarely enjoy a lot of support. Trump’s tax cuts were actually unpopular.
By and large, a majority of people aren’t anti-tax, but they want to know where their tax are spent, and how. The corporate media actually does a really piss-poor job of covering that. Most people don’t realize that something like 94% of all tax revenue goes right back out into the community in terms of services. Neoliberal economists have actually been teaching students that tax revenue just suck capital out of the economy… this is simply daft.
Dennis,
You keep presenting with this “centrist” distribution curve that simply doesn’t exist. Yes, normal distribution curves exist, but this curve of yours is a product of your imagination. We all know you draw anything with a Sharpie, but legitimate observations are based on actual data.
I know this curve is comforting to centrists but its an illusion. Any REAL curve would put a majority of people who believe in liberal policies like living wages, affordable college tuition’s, state of the art transit and sustainable energy infrastructure, and National Health Care systems; in the center of the curve because they ALL enjoy a majority support while and “centrists” hostility.
The people YOU call centrists would actually fall off the right of the apex. Just because you label them “centrists” doesn’t mean you can actually put them in the “center”. Your curve isn’t based on any statistically valid data, it’s a manufactured statistical bias that puts yourself in the center. That tells us more about “centrists” notions of privilege and entitlement than it does the actual political landscape.
Buy the way, some may have noticed that I almost always put “centrists” in quotation marks? This is why… the fact is that Centrists simply don’t occupy the “center” of anything, or even a majority. By and large the “centrist” mentality is just an expression of privilege and comfort levels revolving around a status quo that represents an increasingly small number of Americans, liberal or conservative; actually support or embrace. Not only are the actual numbers of “centrists” declining, but they’ve always occupied a space to the right of the actual center of American politics.
Paul, I did not invent statistics, or the bell curve, further down in the first linked article they provide an analysis on “politics” and how a bell curve applies. The 2nd article is titled political bell-curve.
https://arbitraryc.wordpress.com/2014/10/20/politics-policy-campaigning-and-the-bell-curve/
https://www.modernrepublic.org/political-bell-curve
Anyone who uses the term “bell curve” is (like Charles Murray) statistically illiterate.
The correct term is ‘normal distribution’, which is mathematically defined.
My apologies, for the illiterate “bell Curve” as a mathematical description of a “normal distribution” sometimes refereed to as a “Gaussian distribution” as before I make no claim to be a statistical wizard.
I know I sound overly harsh, but the term can be an oversimplification.
To quote from Wikipedia:
“The normal distribution is sometimes informally called the bell curve. However, many other distributions are bell-shaped (such as the Cauchy, Student’s t-, and logistic distributions). ”
In other words, the term “bell curve” refers to an unskewed normal distribution only if certain assumptions are met.
Dennis, I don’t think anyone would assume you invented statistics, unfortunately the problem is you don’t seem to understand the statistical principles you’re tying to apply. Its you sampling method, not your skill with a Sharpie that at issue.
Yes, bell curves exist, but not everything anyone claims a bell curve represents is legitimate. You may recall a little book a while back called: “The Bell Curve”? Sure, Murray drew up a nice bell curve but it was garbage. Likewise the bell curves your bloggers are drawing up are based on garbage data and observations. Yes, you can construct an normal curve, and normal curves have an apex and tails… but the people you position in the middle of your curve are simply not the population in that actually populates that region.
Paul, I did not do any sampling, The reference is only that in a normal distribution this is where peoples attitudes will typically lie. Yes, the distribution can have error or move around a little. However the majority of folks will still congregate in the middle, that is not to say the middle cannot move one way or the other, Your definition appears to suggest that the mean is moving to the left, and those that 4 years ago were considered centerish,are now smaller in number and appear in a right wing tail. Personally I believe it has been quite the opposite, the country has moved dramatically to the right. I am not understanding your dialogue. Regardless of what political center looks like is described, there will still be a normal distribution. Your point appears to be that we probably have a bimodal distribution in the electorate today, this may be a possibility, especially given the Trump group,
Dennis, normal distributions like any other graphic representation in statistics have to populated with data, and that requires sampling. If your not doing any sampling, you can’t populate a normal distribution curve… you just have a blank bell shaped thing. This is your problem, you keep thinking that merely describing a normal distribution proves that your “centrist” dominated distribution represents political reality and describes our political landscape. The question isn’t whether or not normal distributions exist, the question is whether or not the curve you describe is valid… it isn’t. Circular reasoning can’t yield a valid curve i.e. “centrists are in the center therefore those in the center are centrists” is just circular reasoning pretending to be statistics and a normal distribution. Sure someone is in the center of a normal distribution, the problem is that the people in center of that curve in the US aren’t the ones who call themselves “centrists”.
Yes Paul I understand data, perhaps you do not understand the theory behind the distribution curve,
In probability theory, the normal distribution is a very common continuous probability distribution. Normal distributions are important in statistics and are often used in the natural and social sciences to represent real-valued random variables whose distributions are not known.
Please note, the distribution curve does not have to represent (collected data) it may represent what theory suggests the population will look like. That is my point, although I do not have the data, the theory suggests there is a gathering at the center and then it tails off, as did the 2 articles attached earlier. So if some one has the statistical inputs to support a different distribution curve so be it. Until then the theory (which I did not invent) suggests that if the political inputs are (normal) that is the type of normal distribution we can expect.
PS: it also suggests why candidates should stay close to the political center, Because that’s were the majority of the votes are And it is immaterial whether we agree with them or not, We want to get enough votes to push the compass needle in a different direction than it is pointed now. And according to distribution theory, you need to get votes from the opposite side of the mean to get > 50%, and those votes are in the center deviations,
Again, the assumption that populations fit a normal distribution is just that — an assumption. This was traditional statistical analysis back in the ’50’s.
These days statisticians tend to use things like Bayesian statistics, which starts with the best available predictions and measures the observed deviations from those predictions.
“The index ranges from +1 to -1, those scores below zero (in the negative territory) are progressive. We have seen less than zero index numbers since the mid 80’s.”
Paul, you’ve got your SUIT on backwards! Negative score = regressive. The following sentence is correct and I agree with your larger point.
For anyone that thinks MN leads states in progressive tax structure read this. TN we are not.
https://northstarpolicy.org/so-many-myths-so-little-time
Thank you for the correction Tom, I certainly did get that backwards.
It is a depressing set of facts.
It’s also unfortunate that you used “lead” instead of “lede,” the actual word for the most newsworthy and striking fact of a story.
If anyone is interested I wrote a series of blogs that discuss and explain our tax system back in 2010. I created an imaginary town and used different tax strategies to illustrate the rationals for each approach. At the time I think the over-all suits index for MN was something like -.06. At any rate here’s a link if your interested:
http://pudstrand.fatcow.com/blog/?p=8
Here’s a link to the Tax Incidence Study 2015, it projected a suits index of -.03 for 2017. https://www.revenue.state.mn.us/sites/default/files/2015-03/2015_tax_incidence_study_links.pdf
“Again, your observation that the wealthy contribute more dollars implies a disproportionate tax burden.”
And again, you’ve inferred something not contained in my statement. If I want to say someone’s contribution is disproportionate, I’ll say it.
>45% of families pay $0 federal income tax. To take your citation at fave value, we’d have to believe 77 million families make less than $10k/yr; we know that’s not true so either they’re cheating or, like their wealthier counterparts, they’ve found legal means to reduce their liability.
I really don’t want to hear about the consumption taxes paid, if someone is not paying into the federal treasury, they’re not pulling their weight in financing the running of the country.
“I really don’t want to hear about the consumption taxes paid, if someone is not paying into the federal treasury, they’re not pulling their weight in financing the running of the country.”
Are cities and states not a part of “the country?” Or is that just a convenient way of defining the debate, so you don’t have to hear about facts you would rather ignore?
Something about “The -United States- of America”.
You have recognize the difference between income tax, and payroll tax. Payroll taxes pay for Social Security and Medicare, but the ARE federal tax. When include payroll taxes the percentage of American’s who pay no net federal taxes drops to 28%, it’s not 44% or 47%. And remember, once someone reaches $120k limit, they pay no further payroll taxes.
Maybe I’m picking nits here but:
“I really don’t want to hear about the consumption taxes paid, if someone is not paying into the federal treasury, they’re not pulling their weight in financing the running of the country.”
How is that NOT claiming that the wealthy are pulling more “weight” than everyone else? And again, it’s not just consumption taxes but payroll taxes that the less wealthy contribute.
“Centrists” and normal distribution curves.
Some may have noticed a somewhat tangential comment thread here regarding the suggestion that “Centrists” occupy the center of any normal distribution curve, and therefore represent a majority that should have an electoral advantage.
I keep taking issue with this “curve” every time it appears so I’ll just take a few moments to explain my complaints.
While all normal distribution curves have an apex, the data that populates that apex has to be valid. We can draw a curve using tautology that relies on circular reasoning, or we can draw curves using reliable data. Curves that rely circular reasoning are obviously invalid.
You can say for instance: “Those in the center are centrists therefore centrists are those in center” if you want, but in order for that to be a valid observation, those who populate the center, must have the characteristics of those actually occupy the center of a normal cure. You can’t just invent a concept of centrism and drop those people in the center.
For decades now neoliberal Democrats have imagined themselves to be in the “center” of American politics, i.e. “centrists” The question is whether or not their imaginations represent reality?
A quick look at a variety of historical sources and current data and information reveal that American “centrists” are actually moderate Republicans who occupy a space to the right of the apex.
I won’t launch an exhaustive deep dive here, I’ll just make a few basic observations:
1) If “centrists” occupy the apex of the curve, which would grant them a majority advantage of “electability” in political contests; why do they lose more elections than they win? Of the last 7 centrist Democrats who ran for president (Carter, Mondale, Dukakis, Clinton, Gore, Kerry, and HRC) only one, Clinton, won the election. Obama ran as a liberal promising to do big things, he turned “Centrists” once elected, but he didn’t run as one in 2008.
2) Joe Biden and Amy klubuchar are examples of contemporary “centrists” in this election cycle, and combined they’re only capturing around 26% in the polls. The most popular candidates, both classified as “leftists” are capturing 50% in the polls. You simply cannot construct a normal curve that puts Biden or Klobuchar at the apex. Given their opposition to popular liberal polices, you cannot place them to the left or the liberal side the apex.
3) None of the centrist policies or campaign agendas enjoy the support of a majority of Americans. Liberal/progressive agendas on the other hand are garnering increasing majority support that is driving the popularity of Sanders and Warren. Policies and agendas that lay outside the majority cannot be be placed at the apex of a normal curve, and they cannot be described as “centrist” since they lay outside (mostly to the right) of center.
NOTE: The last two election cycles are the cycles in the last 40 years that have even allowed liberal participation. Typically the Democratic Party has marginalized anyone outside the elite “centrist” confines of the DLC. It has been their power and domination within the Party that sustains “centrists”, not their popularity. We have seen that once liberal agendas and policies make an appearance, “centrist” power structures start collapsing in pretty short order.
I’m not doing a deep dive here but we can go all the way back to the late 70’s and 80’s and find that from education to abortion, and “small government” Americans have been more liberal than the “centrist” Democrats. In fact the more “centrism” came to dominate American politics, the more alienated and disconnected American’s have felt. This has been a documented trend for decades. If “centrists” occupied that center ground and enjoyed all that support… the alienation and powerlessness that has increasingly characterized the electorate would have never emerged in the first place.
Paul, the simple answer to your question though you refuse to acknowledge it. The hard core democrats and republicans are in the tails, and typically partially in the first Std. Deviation. They will vote their party no matter what. How many times have you heard “I’ll vote for anyone as long as they have an, R behind their name”. The votes in the center will swing the election one way or the other. Example ~ 40% of Trump voters won’t budge so far, is it any wonder when you look at the distribution curve? Leaves ~ 10% to sway, and where do you think those folks live politically in the 2nd or 3rd std deviation? You are aware their is no center party in America, we get to chose, crazy lefties or crazy righties. On the rare occasion waste your vote on something in between. End of the day, all the politicking, all the money, all the speeches are to move what 7-10 maybe 15% of the voters that are not already committed to an R or D candidate. And where do you think those swing voters live? Not in tails.
Dennis, now your claiming that your “centrists” are independents? Again, not to belabor the point but you’re relying on a manufactured and imaginary spectrum. Those on the extreme ends of the curve aren’t die-hard Republicans or Democrats. Again, there’s no getting around the fact that a valid curve has to be populated by real people.
The “tails” are not populated by extreme partisans, on the contrary their populated by non-partisans or/and third party voters. You’re just making up a population and dropping it into your curve. The number of voters who actually identify with one of the two Parties has been decreasing for decades. Right now the largest “party” in the US is independents with 40%. The more you describe your curve the more incoherent it becomes. Why do you think “vote blue” failed to defeat Trump?
Look, all you’re tying to do is a “normal” curve to marginalize politics you don’t agree with. Your effort has nothing to with any valid or reliable statistics.
And yes, those who get the most votes win elections (notwithstanding electoral college fiasco’s), that’s not a brilliant “centrist” discovery or insight.
Right now, those you would call “leftist” are the ones capturing the most votes and largest majorities. Sanders and Warren have twice the number of votes and support as Biden. So yeah, you have to capture the most votes… the point is that “centrists” fail to do that, so your thesis is invalid. Independents are leaning to the left, not the “center”.
Paul, you still don’t see that you are looking at samples, not populations. Samples can have errors, and you are probably only getting a sample from the far left wing, why? Because those are the folks that really are involved and care right now, The folks closer to the center are waiting to see how the dust settles before they put a lot of effort into it. That specifically explains the difference between folks in the tails vs the 1st -2nd Std. Dev. (the tails are committed) the center folks are involved, maybe.
Rather than submit their numbers to a peer reviewed journal, the authors decided to publish a book pretending to contain peer reviewed data. Now that their methods have been made public they’ve been pretty mugged discredited. But the narrative has been established for all “journalists” to parrot.
https://www.aier.org/article/the-big-fib-about-the-rich-and-taxes/
https://www.bloomberg.com/opinion/articles/2019-10-10/the-rich-really-do-pay-higher-taxes-than-you
http://www.davidsplinter.com/Splinter-TaxesAreProgressive.pdf
https://www.nationalreview.com/2019/10/income-inequality-has-soared-while-taxes-have-become-dramatically-less-progressive-or-not/