Monday, April 16, 2007

Tax Day and who is "rich"

Well, it's tax day and I thought you'd be interested in some quick facts...

Gregory Mankiw, an economist at Harvard, conducted a study about the 'cost' of a tax decrease. If his figures are looked at from another perspective, you can also get the 'cost' of a tax increase...

According to his figures, if Congress would forego 50 cents of revenue, the economy would grow and people would have $2 more income. I think we'd all like the extra $2 and isn't that a small price for the government to pay?

Additionally, the cost of providing the government with an extra $1 tax increase on dividends only nets the Treasury 50 cents, but costs you and me $2 in lost incomee - in addition to the 50 cents in tax. Again - who would be better off with this money - the government or you and me?

And then there was this wonderful study by the Congressional Budget Office which details who is paying what in terms of taxes.

Did you know that people who make more than $43,200 fall into the top 40% of earners and pay 99.1% of all income taxes?

Did you know that people who made more than $87,300 in 2004 (which is easy to do in Toledo with a 2-income household and a decent union wage), are in the top 10% of earners? Did you know that they paid 70.8% of all income taxes and that this was an increase over the 48.1% that such earners paid in 1979?

The 'super rich' (top 1% of earners) in 2004 made 16.3% of the country's income but they pay 36.7% of the income tax. The middle class makes 13.9% of the country's income but pays 4.7% of the income tax. In 1979, the 'super rich' paid 18.3% and the middle class paid 10.7% of the country's income tax.

Basically, because of our form of government, 60% of the people (those who don't pay taxes) can force 40% to pay all the bills. And remember that that 40% starts with earnings of $43,200!

It's redistribution of wealth - the main premise of socialism - in America. What's wrong with this picture?

7 comments:

save_the_rustbelt said...

Maggie:

I have read most of Mankiw's papers and your summary is rather simplistic, but that can be forgiven considering the theoretical nature of his work.

Mankiw's analysis is not consider "settled" by any majority of economists. The research continues.

Mankiw, by the way, says that workers in Ohio and Michigan should just pack up and move. Obviously the same advice he gave
Bush, who clearly thinks the rustbelt can rot. I suspect Mankiw has given the same advice to Romney.

As far as our "socialism" what should we cut. Medicare? Insider contracts to Halliburton? Insider contracts to mismanage Walter Reed?

On another note, take a look at the Findlay Courier today. Great article on how the Bush administration is neglecting injured soliders. Support our troops!

Maggie Thurber said...

s_t_rustbelt: yes, the summary is simplistic...sorry about that...

AS for the socialism aspect - there are lots of things I'd cut, starting with subsidies for crops, the department of education, pork projects (like funding for art and museums and all kinds of local programs)...

I'd eliminate anything not identified specifically as a function of the federal government - this is probably one of the reasons I like Rep. Ron Paul (R-TX) so much...

Additionally, I think I'm leaning toward a flat tax. Why should those who earn more (for whatever reason) be penalized? Why can't we all pay a 'fair share' instead of expecting that 40% of the population will pay for themselves and the other 60%?

And what happens when some of that 40% decides it doesn't want to pay anything either? If 60% can 'confiscate' earnings from 40%, why stop there? Why not let 70% 'confiscate' earnings from 30%?

I'm reminded of the quote:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship."

I fear this is where we are today.

Kurt said...

Maggie,

Fantastic as always. I urge you check out progressive toledo on my opinion of economic theory, but that is irrelevant to your post (but I think you'll find it interesting).

You mention eliminating federal programs, but does that mean we should eliminate local programs? Where I work, and I'm not able to disclose that at this time (give me a few weeks), I've found that the people who come in to see me see it as a public service. It is nothing of the sort. Indeed, my impression is that most of these people see what I do as similar to picking up a welfare check. They think these services are a right to them (I miss private practice, and I'll likely be going back to it soon. like at the end of the week). But where I work we have ethical obligations, and those who expect government services cannot comprehend these ethical obligations. In the law, we take these obligations very seriously. At least I do.

Regardless, the challenge with a flat tax is that these services would be lost, and imagine that people would actually have to work to receive any benefit? Wow, imagine. That said, I'm all for the flat tax. Well done Maggie, check out PT on a good theory I have.

Maggie Thurber said...

Kurt - thanks...

As for cuts in spending...I refer to the Federal Government, whose duties and authorities are outlined in the Constitution. Those powers not specific to the Federal government are the purview of the states.

I believe the intent was to allow the states to be the experimentation grounds for various programs and services...with best practices carried over into other states with modifications for the state's population.

Besides, if we didn't pay so much in taxes to the feds, think of how much more we'd have to spend within our own state...NOT that I'm suggesting paying those federal taxes to the state...but you get the drift.

I read an interesting column recently on RIGHTS versus ENTITLEMENTS. I think it was Walter Williams or Thomas Sowell...I'll see if I can find it. Anyway, the premise is that too many people today confuse these two.

Even in health care - a friend wears a button that says that health care is a right. And you're seeing it in your job, too. Somehow, I just can't find these 'rights' in the Constitution...But that doesn't stop people from insisting upon it - usually at someone else's expense.

I'll stop by your blog as soon as my computer is fixed...ugly blue screens of death...several trips to the repair place...more blue screens...NEW repair place...problem identified...several days for parts. Until then, surfing around is a bit difficult...sigh!

Hooda Thunkit said...

Maggie,

Due to the dumbing down of Americans thanks to our failing public school systems, most of the sheeple haven't a clue, so popular rumor is readily accepted as fact.

There's where the problem begins, IMO.

Still, even the most factually challenged among us quickly learns where the "free" stuff can be had; free to them, that is.

I just wish that they can do well, prosper and learn to hate giving their tax money to support the willing freeloaders that they once used to be; now, that's real justice ;-)

Russ said...

Interesting comments and I appreciate all of them. As for a "flat tax", though it makes good sense we can forget it. It's been mentioned for decades, but has no chance of advancing. These, however, have EVERY chance of advancing: (1) continuing false idea that there is some determinable "fair share" that "the rich" should be paying but aren't; (2)escalating class envy and hatred towards those who have succeeded and accumulated wealth in the process; (3) pervasive entitlement mentality to go along with a pervasive victim mentality; (4) escalating "global warming" hoax that - make no mistake - is really about advancing a so-called redistribution of wealth and of power, away from G8's (especially the US) and towards "the poor of the world". You will hear of a global tax, and all about how the coming climatic disasters will impact the poor more than the rich, who supposedly caused the disaster to happen. You will hear less "global warming" and more "climate change" - that way, any blip in weather of any kins whatsoever can be used as support for all of the redistribution that is at the heart of it; (5) escalating bigotry towards anyone who has been successful and accumulated anything, such as commonly accepted statements about "the rich", as in they are allcorrupt, they are greedy, they don't want to pay their "fair share", etc. If directed towards blacks or ane thnic group, this would be harshly criticized as the bigotry it is; however, when directed at "the rich" it will be ok; (6) increasing acceptance of determinism, naturalism, evolutionism, humanism, and assorted other 'isms that move us away from personal responsibility, choice, initiative, and investment, and towards "redistribution", socialism, and entitlement.
Now, wasn't that uplifting?

Russ

Maggie Thurber said...

Russ - while I hope your points do not come true, I fear they will...No wonder people are so apathetic about the political process...

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