Now They Are Irritating Me

Via Glenn we come to an analysis of the tax burden of the rich in the US.

Although philosophically I am on their side, this presentation irks me.

First, although their headline is "Tax Burden of Top 1% Now Exceeds That of Bottom 95%", the text deals with income taxes.  Hey, those lower earners pay Social Security and Medicare taxes, you know.

Secondly, there is no mention of any income-inequality effect in this bit of rhetoric:

Some in Washington say the tax system is still not progressive enough. However, the recent IRS data bolsters the findings of an OECD study released last year showing that the U.S.—not France or Sweden—has the most progressive income tax system among OECD nations. We rely more heavily on the top 10 percent of taxpayers than does any nation and our poor people have the lowest tax burden of those in any nation.

If the top earners in the US earn more on a pre-tax basis than their counterparts in France or Sweden (as every income-inequality survey indicates) we would expect them to pay more in taxes even if tax rates were identical in the three countries.  As a matter of simple arithmetic we might even find that high earners in the US pay more in total taxes even if tax rates are lower in the US.  That would hardly resolve the question of which country had the most progressive tax code.

Better arguments, please.

MORE: And better arguments would include noting that over a person's lifetime Social Security and Medicare are considered to be progressive, in the sense that lower earners get more than they paid for.  STILL MORE:  If, she says IF, you ever collect all of it!  OK, as to how much today's youngsters will actually get back on Social Security, who knows?  Probably less than the currently promised amount.

Comments

[Appalled]

Good last point, Tom, and one that often gets forgotten. Social Security's formula redistributes income from those making 100,000 to those making 10,000, while ignoring income over 100,000. I'm not sure I understand the point of a Robin Hodd formula that takes from the confortable middle class, and forgets the rich.

(Medicare's taxes are on all income, so there isn't a similar complaint there.)

And, when you talk about self-employed people, they really get fouled up by this peculiarity of the tax scheme, as their tax rate on the income they make is higher.

[clarice]

There you go, TM, talking logic and arithmetic again! How many times do we have to tell you to cut that sort of thing out?

[boris]

"Hey, those lower earners pay Social Security and Medicare taxes, you know."

SS is something between tax and pension. There are things about it which are stupid looked at it either way but we are stuck with it. If as you say the lower income groups get more out than they put in (probably far less than if that had been invested) it makes no sense to use that as part of the "tax burden" argument. Please.

Now ...

The progressitivity being discussed may simply be the burden of total tax not the number of tax dollars. That is a seperate and useful metric for certain type of analysis.

To say that the top 1% pays as much as the bottom 95% is a comparison independant of total dollars. If in France it takes the top 3% to pay as much as the bottom 95% that says something about the "progressitivity" of the US in comparison.

[LilyS]

"Hey, those lower earners pay Social Security and Medicare taxes, you know."

Except with the EITC, the Child Tax Credit & the Additional Child Tax Credit [ see Sch 1040A Lines 40a, 33 & 41, respectively], low wage earners recoup some, all or more than all of their FICA taxes. For low wage earners with no income tax liability, the allowed credits result in a tax refund; I've seen returns where the tax refund is more than 20% of the filer's wages. They are not paying a positive FICA; they are paying a negative FICA.

Re: "(Medicare's taxes are on all income, so there isn't a similar complaint there.)"

Medicare premiums are income based. Higher income Medicare recipients pay a monthly Medicate premium more than 3 times the standard rate.

[Frank Siegler]

What if every tax payer asked Charley Rangel for a hard copy of the entire tax code before they could pay their taxes? We'd wind up buying trees from Mexico.

[Jim E.]

Imagine my disappointment to come over here to find that there have been no threads (that I can find, anyway) discussing the recent magazine story which reports that Bush, Bolton, Sharp (Bush’s personal attorney), and Fielding all agreed that Libby lied under oath to protect Cheney. Man, a Plame story and no coverage over here? (Perhaps because the reporting would cause your collective heads to explode?)

Meanwhile, during my quick review of the archives, I discover that this is a birther site. Even Ann Coulter thinks the birthers are “cranks.” Guess it was good of me to have stayed away these past years . . .

So just continue to ignore that Bush and company think Libby was guilty as charged.
http://www.time.com/time/politics/article/0,8599,1912297,00.html

[boris]

It seems the main point of the tax burden analysis is being missed.

Suppose a flatter tax system results in the top 10% paying a greater share of the burden than a more "progressive" rate?

What is the intent here?

Is the "progressive" rate better because it prevents the top 10% from making more money? (By limiting the ecomony from heating up for example)

Or is the flatter rate more "progressive" because when the top 10% are making more money, everybody benefits from the better economy AND the top 10% are paying more total dollars in taxes.

The counter argument would be whether the bottom 90% is better off in the first or second situation. More total dollars in taxes would tend to benefit the bottom 90%. So the real question would be the non SS tax rates for the bottom 90% which can't be determined from a claim that they are paying a smaller percentage of the burden which is a bigger number in total dollars.

If one makes the claim that the bottom 90% rate is that same and flat vs progressive is strictly a question for the top 10% then ISTM everybody is better off in the better economy.

[Captain Hate]

LUN for the unbelievable chutzpah of Chollie Rangel

[Sue]

Posted by: Jim E.

Mr. E! What a pleasant surprise.

[matt]

Jim E.;

take a running jump at a rolling donut. The case was never about Libby. It was about Rove and Cheney and Libby and Judith Miller were door prizes for Fitzgerald. Turns out it was Armitage and people went to jail in a witch hunt. Some American justice, huh?

[glasater]

CNBC has just made an announcement that Dodd has early stage prostate cancer.

[centralcal]

How early is the stage, glasater? Could it be related to his corruption exposure? A sympathy ploy?

I am sure every single one of us is in the early stages of something or other.

[Eyas]

Thank You Tom Maguire. This faulty comparison has been going on a long time. Perpetuated by Rush & Hannity (Hannity still does it but, God Bless him, he's just not that bright). I've recently been listening to Levin a lot, and he makes a point of stating not only the percentages paid by wealth segments but also the amount EARNED pre-tax.
It's a horribly unfairly progressive income tax (the top 5% pay ~40% while making ~20%, or something like that). But stating how much a segment pays without stating how much they earn is an utterly meaningless fact. When people on my side of the political spectrum make stupid arguments, it's far more irksome to me than any leftist propaganda. So, again ...
Thank you.

[cathyf]

And better arguments would include noting that over a person's lifetime Social Security and Medicare are considered to be progressive, in the sense that lower earners get more than they paid for.

And better arguments might also include noting that very few people in the Baby Boom, not to mention taxpayers younger than that, have gotten anything at all for what we paid in. And what level of benefits we will receive, and how they will compare to what was paid in, is pure speculation.

[Rick Ballard]

"Hey, those lower earners pay Social Security and Medicare taxes, you know."

Hmmm... certainly not all of the 45 million receiving SS pension or disability payments are continuing to pay either. It would be interesting to know what percentage of the lower 50% (64.3 million returns) is composed of pensioners and those on disability but that's the type of stat that is very difficult to find. It's almost as if our beloved government believes there are facts which the public just doesn't need to know. Cross indexed tax and SS data would just confuse people concerning the desperate need to redistribute wealth.

[Charlie (Colorado)]

If we're going to bring in SS and Medicare, we should also note those are supposed to be insurance, not taxes (that's the "I" in "FICA") and so aren't supposed to be "progressive" at all. High earners get more than low earners because they paid more in, and the amount they can pay in is limited, as are what they receive. (Figure out what one of those top 1 percent would get for an annuity into which they paid 15 percent of their *total* income.)

[centralcal]

O/T: Rush just referenced this photo from American Thinker that has been posted on the White House website.

A picture worth a thousand words . . .!!!!

See LUN

[orthodoc]

Here's the share of income by quintile.

Bottom 20% Households: 3.4%
Next 20%: 8.6
Middle 20%: 14.5
Next 20%: 22.9
Top 20%: 50.5%

For interest: top 5% earns 22%

Keep in mind that richer households are larger — an average of 3.1 people in the top fifth, compared with 2.5 people in the middle fifth and 1.7 in the bottom fifth. So the smaller household almost by definition will make less - because fewer people are working. Can't have two incomes if there are only 1.7 people....

Now let's look at percentage of taxes paid:
Bottom 20%: 0.8 (all federal) and -2.8 (income - they got $ back)
Next 20%: 4.1 and -0.8 (they also got $ back)
Middle 20%: 9.1 and 4.4
Next 20%: 16.5 and 12.9
Top 20%: 69.3 and 86.3%

No matter how you slice it, the US tax code is steeply progressive, taxes any dollar that a two-income household earns more heavily than a one-income household, penalizes extra effort, and gives back far more to low income households than it takes.

[Ignatz Ratzkywatzky]

--As a matter of simple arithmetic we might even find that high earners in the US pay more in total taxes even if tax rates are lower in the US.--

That would appear to be the essence of Reagonomics and Arthur Laffer's curve.

It would also appear to be the basis of the left's irrational hatred of lower taxes; it is better to punish the rich with higher rates even if it destroys wealth and results in less revenue to the government to redirect to their constituents.

[Pofarmer]

Mike Rowe from Dirty jobs speaks on, well, you should watch it, it's awesome.

LUN.

[Pofarmer]

Guess it was good of me to have stayed away these past years . . .

You assume that you were missed or something?

[willem]

Perhaps I'm a petty idealist, but shouldn't we be true to the founding principles of our nation? Aren't we supposed to be a nation of law; a nation which guarantees equal protection under the law; a nation where my rights end where yours begin and vice versa; a nation where the spirit of the Golden Rule was to move among us unmolested; a nation of sovereign individuals sharing collective interests and responsibilities under the guidance of our Constitution?

The strategic genius of our founding is being reduced before our eyes by an unrelenting philosophy and practice very similar to the doctrine of Legalism, something which dates back to the legacy of the infamous Li Si.

We live today in a densifying web of duplicity, where disingenuousness, effete sloth and elitist indifference masquerade as sophistication and evidence of education, competence and character. Some might argue such training has replaced the traditional liberal arts in our modern universities.

There is a difference between entropy and conducting an assault on entropy's behalf.

How would the framers react to the notion that employees of corporations (for profit and not) have more standing in our government that the individual for which the nation was founded?

When I say "corporations" I include political parties, municipalities, counties, states, unions, NGOs, charities, foundations, associations and advocacy groups. They are all members of our national corporate family along with the for-profits and their employees who, altogether, collectively infest and clog the orifices of government on every level.

A lone individual can only purchase their way in; and only at the highest of cost. Otherwise, they will no longer be heard. That is reserved for groups represented by proxy; a near permanent controlling class of proxy. What a change that has brought.

Tactically, there is much amiss; much to ridicule and, perhaps, to fear.

But strategically, and philosophically, there is a pernicious sickness that has taken hold; something worse that dishonesty; something more permanent than corruption; something more akin to a collective psychosis in pursuit of mutual self immolation.

It is as if their souls have been murdered to allow and preserve the identities they have assumed.

The Corporatist, Legalist, Institutionalist, Philanthropist and Lobbyist have become worse that the worst Bureaucrat, and now drive our collective governmental bureaucracy to extremes the bureaucrats themselves can no longer understand, manage or control.

And we have normalized it.

The best I can characterize it is the term "mezzanine corruption" where the intermediaries destroy the ability of the system to function by unreconcilable 'particularities' that make the system unmanagable.

The examples are everywhere; Cash for Clunkers, NCLB, TARP.. pick your example. It's all low hanging fruit.

And the most emblematic of all rests in the example of the natural born citizen requirement and the subsequent trampling of the Constitution by both political parties and their sycophants. There, their contempt and inviolable sense of indemnity is nakedly presented for the world to see.

Stir this all together, let it ferment, and you'll brew the gestalt of collective concern that many American's have yet to put into words.

We are waking up.

We shall see if we are out of time.

[PeterUK.]

"Guess it was good of me to have stayed away these past years ."

See if you can extrapolate that.

[narciso]

Great line there, Po, if we haven't heard you before, why would you care about showing up now, specially about some long picked over Time offering, which Clarice linked to on the AT site. Willem, I agree with much of your sentiment, and the million dollars spent on Perkins & Coie, suggests there is something there, but what is the realistic possibility that anything will be done about it. So I'd say other methods are more effective.

[Danube of Thought]

Last time I saw the numbers, the annualized rate of return for those receving s/s benefits was on the order of 1% of what they "invested." But what the hell, if it weren't taken from them they'd just piss it away on beer, right?

I'd like to a system that was progressive (basic notions of the declining marginal utility of money make that seem "fair" to me), but in which each and every citizen paid at least some tax. The result would be than any tax increase would be borne, at least to some extent, by every taxpayer, and conversely for every tax cut. But it ain't gonna happen, ever.

[Danube of Thought]

The release I saw on Dodd said that he is scheduled for surgery, which I assume means radical protstatectomy. There is really no way to make an informed prognosis, even based on pre-surgery biopsy results, until they examine the entire gland after removal.

[Porchlight]

Could be, DoT, but my dad just had surgery for very very very early stage prostate cancer. His doctor told him it was totally optional, that they could wait and watch for a long time yet, but he opted to go for it on the logic that he's reasonably strong and healthy now, so might as well get it over with before anything else deteriorates.

Surgery and recovery were a complete success btw.

[royf]

Pofarmer

Thanks for the link that was great. I like Mike Rowe and he always seems to be a honest guy. But I just wondered if that was just a character or if that was really him.

Anyway I think that video certainly speaks well of him IMO.

[bad]

Speaking of analysis, Michelle's no longer organic garden has a high lead level because the Clinton WH fertilized the WH lawn with sewage sludge which tends to be high on heavy metal.

I'm still wondering why the soil wasn't tested prior to planting.

LUN

[Al "manbearpig" Gore]

good post, willem....

[glasater]

Centralcal--
Didn't mean to neglect to respond on Dodd but I figured he might use his health situation as a sympathy ploy in next year's election.

Po--
I had an interesting job a few years ago photographing a spring branding and calf castration where a young woman who had been abused sexually participated in the event.
It was something to see her doing the job with a lot of enthusiasm.

[Sue]

http://www.foxnews.com/slideshow/2009/07/31/air-force-botched-flyover-photos-released/?slide=1>Did I misremember? I thought they said only 1 jet trailed AF1. There had to be 2 from the picture I link.

[centralcal]

Pofarmer: Loved the Mike Rowe video. Have many friends among the Basque sheepherding community and they will really enjoy seeing this.

Mike seems like a really good guy.

[Jim]

I call on someone smarter (and less lazy) than me to work through an example: Say something causes a disproportionate number of layoffs of highest-quintile earners. (5%? 10%?)

It would look very small, statistically (as it would be diluted with the other quintiles), but would have a huge impact on tax revenues, wouldn't it?

Any takers? Be fair and include SS and Medicare.

[bad]

Will Dodd go the the UK or Canada for cancer treatment since those healthcare systems are soooooooo superior to the US system?

[Captain Hate]

I think it should be Cuba or Venezuela, bad.

[bad]

Excellent choices, Captain.

[Soylent Red]

Dodd has early stage prostate cancer.

And here all these years I've been thinking he was a perfect asshole.

I hope he makes a full and speedy recovery. In time for censure, prosecution, and jail.

[Neo]

Should Presidents charge guests at White House dinners?
No, they're America's guests and it's embarrassing to the nation 58% (1078 votes)

What idiot would trust a politician with their credit card, anyway? 31% (576 votes)

It's better than renting out the Lincoln Bedroom 3% (62 votes)

I'd charge anyone who wants a subsidy from the American taxpayer 5% (97 votes)

What a great way to boost the economy! 2% (33 votes)

[Fresh Air]

Willem--

The founders would not be surprised by lobbying groups forming to represent bundles of citizens. Madison warned about factions in Federalist 10. I do think they would be shocked by the rise of the permanent legislator and the kudzu-like growth of the federal government.

I think your synopsis of the problem is accurate, though. Our education system is turning out effete fools. Only a widespread depression or a war can put a dent in their permanent ignorance.

[cathyf]

we should also note those are supposed to be insurance, not taxes

And if they were "insurance" then the "premiums" would be invested in income-producing activities, not just thrown into the general revenues and spent on bridges to nowhere and salaries for girls who give BJ's to the president and all of the other various and sundry vital and useless things that the government spends money on.

[bad]

I have another riddle or puzzle, etc., regarding Ibama and racism. If Kevin Johnson were a WHITE person swindling money from the government, would Ibama still have fired the Inspector General who discovered the thievry?

[matt]

If Dodd were to have surgery while behind bars, he could count on the very best in treatment instead of that socialized health care crock.....

[Dave (in MA)]

Re: Dodd... "I question the timing", as the other side would say.

[Ignatz Ratzkywatzky]

--If Kevin Johnson were a WHITE person swindling money from the government, would Ibama still have fired the Inspector General who discovered the thievry?--

Depends on whether a white KJ ever built bombs for domestic consumption.

[Thomas Esmond Knox]

In Australia, the top 20% of income tax payers pay 60% of total income taxes.

Included in which, the top 1% of income tax payers (earning over $211G p.a.) pay 11% of total income taxes.

(Most recent figures 2006-07)

[Soylent Red]

Only a widespread depression or a war can put a dent in their permanent ignorance.

We reached record ignorance while fighting a war in two theaters, Q.E.D. I suspect a depression would have similar impact.

Some stupid is impregnable.

[Fresh Air]

S.R.--

What I mean is that war, similar to the 9/11, sometimes shocks people into appreciating reality. We have a large swathe of the population living in a bubble constructed of appallingly naive notions of human nature, the reach and abilities of government and the role of the "elites." Only a swift kick in the skull will have any effect. Even then, many won't be reached.

[Dubya should have asked us before deciding about pardon.]

You just don't get it, Jim E; Russert lied, not Libby. Fitzgerald suborned the perjury of Tim Russert, hid his FBI agent, and kept Andrea's Titanic testimony from the court. Why do you give us hearsay from people who don't know the facts.

The FBI one morning
Lost its notes suborning.
Eckenrode, where is that toad?
He's wanted at a harrowing.

[Jim E.]

Oh my god, you people still think it was Armitage that leaked Plame's name and not Libby?

You're delusional. I bet you think W actually served his time in the NG too.

[You're just beginning to find out.]

Actually, Joe Wilson blew her cover in May, 2003, but it had actually been blown a year earlier when she attended some meeting.

The date that Armitage revealed her name well proceeded any discussion Libby had with a journalist about her.

Give it up, Jim E; you are demonstrating too much ignorance of the particulars. You could look it up.

[Jane]

In need of attention today Jim E?

[matt]

Jim E

it wasn't us who "thought" it was Armitage. It came out in the testimony. Armitage mentioned it in passing to a reporter who reported it. Clear trail. QED.

[Me: Go play in a tire fire, Jim]

you people still think it was Armitage that leaked Plame's name

CNN: Former Deputy Secretary of State Richard Armitage acknowledged Thursday that he was the source who first revealed the identity of CIA officer Valerie Plame

The Nation: It was Richard Armitage, when he was deputy secretary of state in July 2003, who first disclosed to conservative columnist Robert Novak that the wife of former ambassador Joseph Wilson was a CIA employee.

Washington Post: Former Deputy Secretary of State Richard L. Armitage said yesterday that he believes he was the initial source for a 2003 newspaper column by Robert D. Novak that disclosed the CIA's previously secret employment of Valerie Plame

[Anything else you want to know, Jim E?]

Heh, matt, one of 'us' was the first to figure out Armitage's name, though; the renowned MJW.

[Danube of Thought]

Armitage admitted feely that he was the first to leak the name. If you don't know that you're not literate enough to be here.

The only measure of "progressiveness" that makes much sense to me is simply the rate applied as a function of the income received. Total receipts by percentile, without more, don't really tell you a lot about progressivity (although they're far from meaningless). I guess I just repeated what TM is saying, except that we should take a look at the "far from meaningless" part.

Regardless of what you think is fair, to the extent you load up your revenue burden on a small percentage of earners, you run a huge risk of disappointment in the revenues you get in a given year--the high earners tend to have far and away the most volatility in their tax liability from year to year.

The lower 95% may keep chugging along year in and year out generating pretty much a steady stream of tax revenues, but the top 5% will be all over the lot depending on the economy and the securities markets. The phenomenon is made much worse by the fact that the spenders in the legislature tend to think that a good year will be repeated forever, and they make their plans--and impose their obligations on the treasury--accordingly.

If you doubt what I just said, check California.

[You note, Jim E, the esteem with which the powerful in the Democratic Party hold Joe Wilson and Val Plame.]

Well, DoT, Armitage admitted it freely after he was pressured. He and Fitz tried hard to keep it secret.

[Fresh Air]

Well, I think the gnat just met the sledgehammer...

[Jim E.]

I did not make the 7:06pm post. Someone unfortunately wrote that under my name.

Get your own pseudonym, Bub.

[Ignatz]

As I recall Jim E, I don't agree with much of anything he says but he isn't a troll or an idiot either.
Punking cleo is one thing, and a good thing.
Not so much Jim E, IMO.

[Jim E.]

I do not, however, disagree with it.

[boris]

"The only measure of "progressiveness" that makes much sense to me is simply the rate applied as a function of the income received."

The tax burden argument goes like this:

With flatter tax rates there is better economic growth, more total tax revenues and the top 10% pay a greter share of total income tax.

"Oh yeah .... because the top 10% make more money is why!"

IOW the situation where everybody has more is somehow "less fair" because income disparity is greater. Obviously if the top 10% is paying more taxes at a lower rate then it is benefiting from the economic growth to a greater degree than the bottom 90% ... which also is benefiting.

ISTM there is a sentiment at work here that is irrational. However ... like many persistant irrational sentiments it appears to be based on "sense of fairness" at the kindergarten level. The persistent attribute IMO comes from the notion that fairness is closely associated with "reasonable" which seems to preclude further cognitive analysis of the issue because the most fair and reasonable point of view has already been arrived at.

[boris]

It also strikes me that the term "burden" in the semtimental POV is akin to pain and suffering rather than contribution.

When the top 10% pay a greater share of taxes at a lower rate, that means their income increase is even more significant. Thus it is "unfair" to say they are carrying a greater share of the burden because their pain and suffering wrt paying taxes has gone down instead of up.

The other part of the "fairness" side of the argument claimed that with the flatter tax economy wages for bottom 20% remain stagnant or even decline.

Of course with economic growth there are more new employees entering the work force at the lower wage scales which may explain such a statistic, if it's even true. Seems to me though that usually comes from the same sources that tried to make everybody believe the Reagan and Bush 43 economies were bad but the Clinton one was good and the current bouncing on the bottom is somehow "better" than when unemployment was 5%.

[Rick Ballard]

"ISTM there is a sentiment at work here that is irrational."

I'd say that it is very rational for an individual who has been thoroughly indoctrinated to believe the indoctrination. If "kindergarten fair" were only taught in kindergarten the problem would be different. Instead, it is deliberately promulgated clear through high school with the intent of swaying the dull normals into a lifetime belief that they are entitled to the same size piece of pie as those who put effort behind intelligence and actually become productive.

I suppose we might say that it represents the rationalization of irreality, except for the fact that 52% of the electorate have made it so "real" that the most productive are now spending time, thought and effort into hiding their toys rather than "sharing" them with clods who are sure to destroy that which they cannot comprehend.