Robert Reich Demagoguing On Taxes

Robert Reich gets some pixels at the NY Times Freakonomics blog; this demagoguery caught my eye:

Remember, almost all the economic gains of the last decade have gone to the people at the top. And they pay a relatively small percent of their income compared to what the people at the top used to pay. The marginal income tax on the highest earners was 93 percent under Dwight Eisenhower. It dropped to a little over 70 percent under John F. Kennedy. Now it’s 35 percent. It’s 15 percent if you’re lucky enough to be a private-equity fund manager or anyone else who can shift their income into capital gains.

Oh, please - actual taxes paid depends on the rate and the income base - back in the day, the "rich" had many more deductions available to them, as Reich well knows.

The CBO has calculated the effective Federal tax burden for different income groups from 1979 forward (1979-2002; 2004-5).  The CBO includes an estimate of the effective Federal income tax, and the effect of all Federal taxes, including Social Security/Medicare and an imputed corporate tax.

For the top 1% of earners, the effective Federal income tax rate has been this:

1979      21.8%
1985      18.9%
1995      23.7%
2005      19.4%

Not quite the wild range one might have expected, given that the top Federal income tax rate was 70% when Reagan took over in 1981 and was first cut precipitously all the way down to 50%.

As to the total effective rate, here we go:

1979    37.0
1985     27.0
1995     36.1
2005     31.2

The big difference is in the imputed corporate tax rate, which is currently quite low.  But that is not what Reich was talking about.

Well, he knows all this anyway.

A lot of the chat is quite sensible; I'll plug this:

Q: As an econ professor and Democrat I’m still having trouble with the protectionist talk of the two candidates. Do you think Obama is handling trade issues properly or should he be more pro-free trade?

A: While it makes sense to argue in favor of labor and environmental standards in trade deals (so long as they’re on a sliding scale, and poorer nations don’t have to reach the same standard as richer nations), I don’t think the candidates should feed the current frenzy against free trade.

Comments

[Gmax]

OT

RED Ken Livinstone has apparently lost his reelection bid to the Tory. This is equivalent to a real conservative winning NYC or Boston. I am sure PUK is dancing in the streets. I would say Gordie is probably polishing up the old resume right about now.

[Gmax]

OT

Here is a delicious report in the Independent:

In his first elections as Labour leader, Mr Brown saw his party come a humiliating third behind the Conservatives and Liberal Democrats. With results in two thirds of the 159 councils in England and Wales holding elections known, Labour’s projected share of the national vote was 24 per cent – two points below its recent low in 2004 when Tony Blair was hit by a backlash over the Iraq war.

The Conservatives won an estimated 44 per cent share of the vote, allowing them to claim they were on course for a general election victory. David Cameron today hailed the results as “a big moment” and “a positive vote of confidence” in the Tories. But he warned his party against complacency.

Labour was also bracing itself for another major setback in the election for London Mayor, with sources predicting that Ken Livingstone would be defeated by his Tory opponent Boris Johnson. The result will be announced this evening.

[Danube of Thought]

Yeah, apparently the Tories have cleaned up nationwide and Labour is reeling.

One thing the Dems never fail to point out is that when you factor in the FICA tax, the marginal rates paid by those at the lower end of the scale are unconscionably high. This has always seemed a bit misleading to me, inasmuch as it's "for their retirement." In theory at least, it's "their" money, taken from them for their own good.

If you listen to Obama and Reich, both of them seem more than willing to alter tax policy for the sole purpose of punishing hedge fund managers. If a hundred million or so other taxpayers get harmed in the process, well, what the hell...we've gotta get those guys!

[Danube of Thought]

(I was typing while GMax was posting the full picture.)

[Porchlight]

If a hundred million or so other taxpayers get harmed in the process, well, what the hell...we've gotta get those guys!

The same is true on the "helping" (read: welfare) side of things, DoT. So what if it encourages dependence and fraud and destroys families and inner cities - we've got to make sure no one falls through the cracks!

The liberal/left view is straight out of Robin Hood - steal from the rich to feed the poor. F the middle (no matter what lip service is paid, the middle is never the true focal point - it's always the extremes they're worried about).

[clarice]

GMax, what fabulous news! Do you suppose it was the spandex pussycat costume that finally did in Livingstone.
Maybe Reich can move to London and run for Mayor--he's an evil, lying, little leftist himself, isn't he? Not quite as bad as red Ken but not far behind.

[Cecil Turner]

The marginal income tax on the highest earners was 93 percent under Dwight Eisenhower.

Lovely. Not quite "one for you, nineteen for me," but getting there. And Reich's waxing nostalgic position appears to be "Be thankful I don't take it all." Someone ought to write a song.

I also suspect tax avoidance is a major part of the disparity between marginal and effective rates, and the only ones winning that game are the tax attorneys. Remember when the complaint was that the Feds were taking all the tax base, and leaving the states with no means of squeezing? Also in the news is the rise in state use taxes for visitors (gee, I wonder what'll happen there--think they might have a slowdown in marina and airport use?).

[Sue]

I wonder why they never say anything about tax-free municipal bonds while discussing the rich? People like Tereza Heinz are not concerned about the income tax. Or FICA. Their income comes from tax free munis.

[cathyf]

If you listen to Obama and Reich, both of them seem more than willing to alter tax policy for the sole purpose of punishing hedge fund managers. If a hundred million or so other taxpayers get harmed in the process, well, what the hell...we've gotta get those guys!

I can just see the commercial now: Middle-aged plain-speaking midwestern woman says, "Well, it's one thing when the politicians spend money we can't afford trying to help people. It's quite another for Mr. Obama to spend money we can't afford to hurt people that Mr. Obama's friends don't like."

[Danube of Thought]

Clarice, I think the pussycat suit was George Galloway--although it's tough to keep these goofballs sorted out.

[Rick Ballard]

"One thing the Dems never fail to point out is that when you factor in the FICA tax, the marginal rates paid by those at the lower end of the scale are unconscionably high."

Hey, wait a second, that's the Federal Insurance Contributions Act - those are insurance premiums. That's the way the Dems under Roosevelt sold them and that's what they stay. The contributions fund (partially) a level of benefits roughly defined by the amount contributed.

Or are you saying that the Roosevelt Dems were lying SOBs who scammed the economically ignorant in the '30's in order to accrete control over those incapable or unwilling to plan for their own retirements? Hmmm.... I suppose that's a possibility. Although that would mean that the Roosevelt Dems were no better than the '60's Dems with their profligate and useless War on Poverty and no better than today's Dems with their constant mendacity concerning a very healthy economy.

Gee, that would mean that the Democrats have been winning (when they win) by lying for over 70 years.

Imagine that.

[clarice]

Thanks for the correction, DOT. You are correct. I bow to your superior knowledge of men in spandex costumi.
(Smooches)

[Danube of Thought]

Here's a discussion of a quote from FDR:

"Franklin Roosevelt made a famous remark about the Social Security payroll tax, to the effect that he designed Social Security to use a payroll tax so 'no damn politician can ever scrap my social security program.'"

Here's what his grandson had to say about it in a Boston Globe op-ed on January 31, 2005:

"FDR believed that Social Security should be simple, guaranteed, fair, earned, and available to all Americans. President Roosevelt was adamant that Social Security was an insurance program to provide basic needs in retirement."

Tax? Insurance? Both? Whatever you call it, they take your money from you whether you want them to or not.

Clarice, I keep current by modeling my own in front of the full-length mirror from time to time.

[Lindak]

We pay high taxes so that Congress can afford their taxpayer-funded lux lifestyles. Like Charlie Rangle and his $717/month leased Cadillac DeVille. His rationale is that his constituents expect the best. !@#$%^&*

[bgates]

The liberal/left view is straight out of Robin Hood - steal from the rich to feed the poor.
Robin Hood's chief enemy was the Sheriff of Nottingham, a government official who enriched himself by overcharging taxes. "The rich" in those stories weren't people who had made great discoveries or built better mousetraps, they were politically connected dynasties who thought they deserved as much as they could squeeze from everyone else. If Robin were alive today, he'd be working at Heritage or Cato.

It's bad enough nobody makes stories for conservatives anymore; don't give over old conservative stories to the left too.

[Charlie (Colorado)]

Or are you saying that the Roosevelt Dems were lying SOBs who scammed the economically ignorant in the '30's in order to accrete control over those incapable or unwilling to plan for their own retirements?

Yes.

[Porchlight]

It's bad enough nobody makes stories for conservatives anymore; don't give over old conservative stories to the left too.

You're right, bgates. I'll strike my earlier comment and just say that the left has an unhealthy obsession with both tails of the income distribution, and likes to use unrepresentative extreme examples to justify government intervention at both ends.

[SteveMG]

The misleading aspect of Reich's (and Hillary's too, as she repeated this line with O'Reilly) is that if we somehow raise the top rates back to 90%+ that we can then greatly reduce middle class taxes.

It's impossible to raise the $3+ trillion in revenues that Washington wants simply by having extremely high top rates on the top income earners. You need to have sufficiently high rates on the middle class in order to generate those receipts.

Anyway, a number of European countries have very high rates and yet continue to run massive deficits as well as having slow growth rates.

I want policies that make a bigger pie. Apprently Reich just wants more of the pie.

[clarice]

Heh,DOT..As for O'Reilly and Big Oil gouging "the folks", you are right on. And whenever smarter people try to explain to him why he's wrong, he ignores them utterly.
Someone noted the strange statement he made about the DC Madam, the other night. That was also weird.
I think it fair to say he is weird. Rich and popular, to be sure, but weird.
Well, he's largely a populist and I never trsut them .

[Danube of Thought]

I feel the same about him. He does not deal in anything other than soundbites, and won't permit a guest to do so either. Actually devoting himself to learning a subject such as oil pricing is out of the question--it wouldn't fit his show's format anyway.

Meantime, McCain now leads Obama by six in both Rasmussen and Gallup. I am a principal trumpeter of the idea that pre-Labor Day polls mean nothing, but I can't keep from being comforted. I'm hoping that once people have seen through Obama there's no un-ringing that bell.

[Jane]

Jim Pinkerton just said on Fox that the democrats are resigned to lose the election rather than fracture the party by displacing Obama.

My how times change.

[clarice]

DOT, you are usually so pessimistic or should I say prudent?Your optimism brings me cheer.

[boris]

Oh yeah? Wait til McCain chooses Hillary as VP.

[Danube of Thought]

Good to see that Pinkerton has awakened to what many others have been saying for over a month now.

Clarice, I know I am generally a pessimist but I've been optimistic on this presidential race for quite some time now. I declared McCain with 300+ EV's on March 19, and I haven't wavered. That's when I concluded that Obama had to be the nominee, and that he and his wife simply weren't electable--and yes, his wife, like every presidential candidate's spouse, is a "candidate" too.

I know it's going to be ugly as hell, MoveOn and Soros and the rest, and all the Dem money, and the Republican brand in high disrepute--but I still think Obama just plain doesn't have a chance.

[clarice]

From your mouth to God's ears, DOT.

[MikeS]

Liberals believe that all money and property rightfully belongs to the government.
So, they try to use the tax code to 'get back' as much of the government's money as they possibly can from bitter wastrel citizens who otherwise would likely squander it on guns, bibles, and NASCAR tickets.

[cathyf]

Jim Pinkerton just said on Fox that the democrats are resigned to lose the election rather than fracture the party by displacing Obama.

It runs both ways... If, somehow, the superdelegates give it to Clinton, then Obama wants McCain to win. If Clinton wins, then he has to wait until 2016 to run again. If Clinton wins a second term, then by 2016 the electorate will have Dem fatigue and Obama's chances will be hurt by that. If Clinton wins in '08 and a republican wins in '12, then Obama will be facing an incumbent in '16.

So, for Obama (and the same calculus goes for Clinton, if Obama is the nominee), the best strategy is the same: "If I'm not the nominee, then I want McCain to win."

[PeterUK]

"Maybe Reich can move to London and run for Mayor--he's an evil, lying, little leftist himself, isn't he? Not quite as bad as red Ken but not far behind."

Is he a terrorist lover,will he hug a jihadie or a Provo?

Yes we have been having a wonderful time jeering at weeping BBC staff,their bottles of champagne unopened,they are even too shell shocked to snort anything.

At last socialism is on the run,all it needs is for you to do in the Red Witch and the Lounge Lizard.

"Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning"

[Jane]

Congrats Puk!

[sbw]

Not even the end of the beginning.

I'm listening to a CD course that's discussing the French philosophs and salons of the 18th century. Too often a populist uproar created by faulty rhetoric. That was centuries ago. Today's populist fads are no less thin.

[troy mcclure]

So the stupid time serving powerbrokers in the Democratic party (superdelegates) want
more of the Wright/Rezko/Ayers/Al Sammarai
/Auchi sideshow; as they seem to be leaning
toward the 'Sumatran candidate' himself. You
know Donald Segretti wishes he had it so easy in '71-72, when he dismantled the Humphrey/Muskie campaign to make way for McGovern. Rush is doing the reverse, supporting Humphrey and and they're still rushing toward Barry. lemmings have a better sense of perspective.

[Rick Ballard]

Peter,

I hope Berlusconi sends Boris a nice long congratulatory message. I just read that the Commies are finally all the way out of the Italian legislature (if true, that's a first since the end of WWII).

Then I found this on Fox:

It was Labour’s worst election night for 40 years, its councilors left almost defenseless in the face of a tax battle and economic worries. Labour finished in third place overall, with just 24 percent of the vote. The Conservatives secured 44 percent, and the Liberal Democrats 25 percent.

Let's hope that November brings such news here.

[Danube of Thought]

Well, RickB, have you seen the Rasmussen numbers on party ID (I have not)? I'm told the Dems lead by a mere 2%, which I find very difficult to credit.

I'm also curious about his "tracking" polls. I assumed when I first heard the term that it meant that the same people were being polled repeatedly, then quickly learned that that's not the case. However, I have read within the past 48 hours of someone's tracking poll (forget whose) that does just that. Do you know his methodology in this regard?

[Danube of Thought]

By the way, I believe it is true that there have been seven recessions in the past fifty years, and that, although they have occurred under presidents of both parties, six of the seven have occurred when the Democrats controlled the Congress. Is this true? I so, anyone think anything can be made of this gem?

[PeterUK]

Rick,

"The 24 per cent share of the electorate recorded by Labour is the lowest since the party emerged on the national scene at the start of the 20th century."

That is a sea change on British politics.Let us hope it translates into a general election victory.There are a couple of bye elections coming up, one the former seat of a long time Labour MP who died recently.Labour goes down on that and they are finished.
Let us hope the process has begun in America.

[Porchlight]

Congratulations PeterUK! Tremendous newes. Here's to your victory and I'll have an extra mint julep tomorrow (Kentucky Derby Day) in Boris' honor as well.

[Porchlight]

**news**

[PeterUK]

Thanks all,I'm of to bed,need a clear head for tomorrows gloating and to make sure they keep going down.What we need is such a cockup that a vote of no confidence can be made.Even Brown mentioning the mother ship of calling his voices to advise him will do.

[SPQR]

Robert Reich is to economics, what George Patton was to diplomacy.

[clarice]

Nite, PUK. At the moment we are celebrating (on your dime) EU week in beautiful Washington, D.C. The EU is sponsoring programs on public raedio tours of Embassies and gosh knows whatever way to spend your money on this silliness! Sleep tight.

[boris]

Go Boris!

[windansea]

speaking of taxes

Obama Backed Tempory Suspension of Gas Tax in Ill. Senate

During one debate, he joked that he wanted signs on gas pumps in his district to say, “Senator Obama reduced your gasoline prices.”

[Danube of Thought]

PUK--hope you get this first thing in the a.m. Please do some gloating for me--oh, would I strut about in those softheaded saps' faces. How I'd love to hold forth in a pub or two, while of course secretly packing major heat in case some leftist sod wanted to crack wise.

Go for it!

[JM Hanes]

I'm sure PUK must be sleeping well tonight! If anyone else has time for a spot of remedial instruction, I'm afraid I really don't know precisely where the Liberal Democrats fit in the Brit political spectrum and a quick pointer or two would save me another tedious session with Google. Am I the only one who feels like you have to use longer and longer search strings to get relevant results upfront? One word searches usually aren't too bad, but for anything else it seems like you have to go seriously Boolean in order to eliminate the chaff.

[Rick Ballard]

DoT,

The Ras Congressional Generic is at a 3% spread but that's really no big deal. The Ras Party Affiliation spread is getting worse - not closing.

The new Pew Study confirms the fact that the McCain candidacy isn't doing the Republican Party any good at all at the moment:

About equal numbers of Democratic and Republican voters say they have given a lot of thought to the election. But the poll also finds evidence of a partisan enthusiasm gap. Fully 87% of Democratic voters say they are looking forward to the fall election compared with just 54% of Republican voters. In December, before the start of the primaries, 68% of Republicans said they were looking forward to the general election.

That doesn't mean that he won't beat BHO like a rented mule, it just means that you and I are far from being alone in our feelings concerning the quality of the candidate on offer. Fortunately, general distaste for the Dem lack of anything resembling leadership in the Congress may be significantly stronger than the Republican distaste for McCain.

As people become more familiar with the BHO/MO Show I believe that regard for McCain may increase. Unless he comes up with more stupendously stupid ideas, of course. Maybe someone could lock him in a Senate cloak room for a month or so? It sure couldn't hurt.

[Elliott]

Brownie, you're doing a heckuva job.

[PeterUK]

I love the sound of gloating in the morning.
The squirming is delicious,I wish I could bag it and send you some DoT.
Of course the Labour ministers are blaming the debacle of the 10p tax rate,but in fact it is a cavalcade of incompetence and corruption stretching back over eleven years,but the main problems are socialists cannot create their high welfare,equal societies without high taxation and compulsion.
Obama is the equivalent of Tony Bliar,keep the electorate hypnotised with smoke and mirrors whilst the Marxists steal your country.Hillary would be quite at home in the old unreconstructed Labour party,an class warrior from way back.
The damage these people can do if they get the reins of power is horrendous.First the gloatathon,then the clean up

[PeterUK]

JM Hanes,
The Liberal Democrats,a strange creature,the progeny of the Labour Party and the old Liberal Party,conceived during the Lib-Lab pact.Lesssocialist members of the Labout Party joined with the less liberal members of the Liberal Party,in this case totally dissimilar to classical liberals.Lib=Dems tend to the flopsy bumnny,sandal wearing, greenoid,"love to teach the world to sing sector of humanity".It is far too cold for them here,they should rightly live in California.
LibDemdom is also a safe haven for all those can no longer vote Labour but could never bring them selves to vote Conservative.
This is what pushed Labour into third place,it could seep back at a General Election.
In the long run,none of this matters,we are just shunting round junior management to see who goes to Brussels for instructions.

[pagar]

RAS Party Affiliation

"May 1, 2008
Republican Democrat Other
2008
Apr 31.4% 41.4% 27.2% ""'''''''''''''

IMO, there is no meaningful Other. I think people are saying they consider themselves Independents and yet ninety some percent are going to vote for one of the two major parties. Hard to see how they are other.

[Danube of Thought]

Thanks, RickB and Pagar. I did notice this morning that Ras has a ten-point spread in party ID, which is in line with everything else I've seen.