Actually, We Shouldn't Soak the Poor
Bill O’Reilly, back at it again. (Illustration by Eddie Guy, originally from Shut the F*** Up: The Second Most Powerful Man in America Is Talking)
Last week Bill O’Reilly dutifully repeated one of the right wing’s favorite sentiments about how 51 percent of Americans don’t pay federal income taxes: He said we should soak the poor.
“Why?” he fumed, “Because of social justice, because the feds are allowing Americans who don’t make much money to pay no income tax … ‘Talking Points’ believes it’s time to go back to a Democrat who actually had the right idea about America.”
At which point O’Reilly showed the 1961 clip of JFK’s memorable “ask not what your country can do for you” address.
O’Reilly made a great point. Unfortunately, he’s such a dim bulb that he didn’t have a clue about what he actually said. Back in 1961, the U.S. Tax Code was far more progressive than it is now. And things back then seemed to go rather swimmingly. Back in 1960, as Kennedy prepared to take office, the overall federal tax burden for the upper 1 percent of earners was 71.4 percent. Now it’s less than half of that. And the O’Reillys of this world want the rate for the rich to just keep decreasing. Just the way it never was.
Unlike O’Reilly, Emmanuel Saez is a guy who actually knows what he’s talking about on taxes. He’s an “economist’s economist” who has been awarded the John Bates Clark Medal by the American Economic Association. In 2006 he co-authored a paper titled “How Progressive Is The U.S. Federal Tax System? A Historical And International Perspective,” concluding that:
“The progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s.”
The easy-to-digest tables at the end of the paper make it quite plain that the O’Reilly/GOP/Romney mentality that the poor don’t pay taxes is utter hogwash. Though many pay no federal income tax now, the middle class and the poor still pay plenty. As the paper notes:
“The combined employee/employer payroll tax rate on labor income has increased from 6 percent in the early 1960s to over 15 percent in the 1990s and 2000s. Moreover, the Social Security payroll tax applies only up to a cap — equal to $90,000 of annual earnings in 2005 — and is therefore a relatively smaller tax burden as incomes rise above the cap.”
In other words, middle class and lower earners pay a significantly higher percentage of their total income than rich guys do in excise taxes on gasoline, cigarettes, and alcohol and more percentage-wise in user fees, license fees, Social Security, Medicare, and so on. As ABC News wrote:
“To actually pay zero taxes, someone would have to be unemployed, not own any property, live in Delaware, Montana, New Hampshire or Oregon, where there is no sales tax, and not buy anything that has an excise tax, such as alcohol, cigarettes, or gasoline.”
Essentially, if you want to avoid all taxes, you would have to live much the way the Unabomber once did: in the woods, off the grid, eating a lot of squirrels.
The mere fact that this is indisputably so doesn’t stop the far right from pushing the highly regressive “We Should to Soak the Poor” mentality. Just last week, Republican Senate Leader Mitch McConnell whined to CBS’s Charlie Rose that 70 percent of federal revenue is now provided by just the top 10 percent of earners and that “we have an extraordinarily progressive tax code already.”
That almost makes you feel sorry for rich. Until of course you realize that, as Nobel Prize winning economist Joseph Stiglitz points out:
“The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent.”
Or if you prefer your facts from the other side of the great divide, Ron Paul has noted that the top 10 percent of U.S. citizens own 70.9 percent of all U.S. assets.
To make this even more nauseating, it comes on the heels of GOP attempts to blame the great economic meltdown on the poor. To hear the GOP tell it, the whole financial collapse was all the fault of those out-of-power-for-a-decade Democrats and those greedy working stiffs who had the unmitigated gall to want to live in houses.
In the wake of the great collapse, the poor are even poorer, and the rich are even richer. So it seems to me it could not have been the poor who made off with all those trillions back then. And it’s certainly not the rich who need our sympathy now.
Source URL: http://www.bostonmagazine.com/news/blog/2012/07/09/american-taxes-soak-poor/