« Homeowner’s Associations Are Hurting | Main | Gas Prices Have People Not Thinking Clearly »
Bush’s Tax Cuts for the “Rich” Actually Favor the Poor
By JLP | May 13, 2008
It really bugs me when people in the media and (increasingly) in everyday conversation insist on mentioning Bush’s “tax cuts for the rich.” People throw that phrase around a LOT (usually as evidence that Republicans are evil and Democrats are pure goodness), but I’ve found that few actually have any idea what tax cuts they are referring to and what taxes were like before the infamous cuts.
To be honest, I didn’t either. So I did some research; allow me to enlighten those brave souls who insist on arguing about such matters at cocktail parties.
In 2001 and 2003, President George W Bush signed into law various tax cuts. I’d like to quote the following from a May 2008 Kiplinger magazine article by Knight Kiplinger entitled “Fuzzy Tax Talk:”
Those laws slashed tax bills of low- and middle-income families, sometimes down to zero for those with several children (each of whom is now worth a $1,000 tax credit). The percentage declines for upper-income people were much smaller; but in terms of actual dollar amounts, the wealthy received the bulk of the savings because they pay the most income taxes.
Specifically, with regard to the wealthy, Bush lowered the marginal tax rates for those with incomes over $350,000 (the top tax rate, admittedly on the rich) from 40% to 35%. He also approved the lowering of the capital gains tax from 20% to 15% (which helps everyone who owns stock, real estate, or any other sell-able asset, but admittedly most benefits the wealthiest members of society since they own more of those assets).
That’s what he did for the “rich.” But he also lowered every OTHER tax bracket (from 15, 28, 31, 36, and 39.6 percent to 10, 15, 25, 28, 33, and 35 percent) and added other of tax credits and breaks for the “poor” such as the child care tax credit, AMT, and earned income tax credit. The following data is taken from the articleBush’s Tax Cuts Are Unfair…:
If you and your spouse have a taxable income of $60,000 a year, you’ve had almost a 24 percent income tax cut since President Bush took office. (And ditto if your income was just $20,000.) Meanwhile, the folks who make $350,000 a year got a cut of only about 12.5 percent; those who make $1 million a year got an even smaller cut. Pre-Bush, the $1 million a year couple paid 33 times as much as the $60,000 couple; today they pay more than 38 times as much.
Overall, the biggest percentage cuts went to the poorest of the poor (those with incomes in the $10,000 range) and the next biggest to those making about $60,000. Surprised? I bet not; you’re wondering about the other cuts – the ones on dividends, capital gains, and inheritance taxes that allegedly skew gains to the rich. Well lets add all those changes in, along with all the other Bush tax breaks such as the child-care tax credit, the earned income tax credit, the AMT, etc.:
The biggest percentage tax cut—about 17.6 percent—went to taxpayers in the second-lowest quintile, that is to taxpayers with below-average incomes. After that, the size of the tax cut falls off as you move from the lower middle to the middle middle (12.6 percent) to the upper middle class (9.9 percent). It rises again slightly for the top quintile, but only to a little over 11 percent.
[Click the article above for a chart of this data.]
Here’s the real kicker. The data shows that the tax code has gotten even MORE progressive since Bush took office (skewed so the richer pay a bigger percentage of their income to taxes than the poorer), and that kind of change is really hard to undo. But federal spending dramatically increased as well; eventually (soon and very soon) Americans are going to have to pay for that. Taxes will rise again no matter who next takes office.
And when they do they’ll rise according to the more progressive model. All three candidates want to leave the low and middle income tax breaks alone – the debate is only over by how much to raise the taxes on the “rich” (the highest tax rate, capital gains tax, and estate tax) and where to draw the classification line for “rich.” They used to pay only 33 times more than the average taxpayer; thanks to Bush it’s now 38 times more. Wonder where it’ll end…
See Tax Policy Under President Bush for a great summary of all tax code changes made during his term.
See Taxes: The Candidates’ Plans to find out which of Bush’s cuts each presidential candidate plans to change.
More from Meg at The World of Wealth
Topics: Taxes | 32 Comments »
May 14th, 2008 at 12:27 am
They don’t actually favor the “poor” (lowest quintile). They appear to favor the middle class, if anyone.
May 14th, 2008 at 1:37 am
This analysis seems unfair to me for a number of reasons; one big one is that it completely ignores social security / FICA. Social security is currently a very regressive tax. This was considered an acceptable situation when it was supposed to be kept in its “lockbox” for a specific purpose. As that lockbox has been raided for general funds, however, and politicians and conservative economists move towards arguing that our borrowing from social security is just borrowing from ourselves, the proper interpretation of the situation changes: in fact, payroll taxes have been used to keep our general tax rate artificially low; because of the regressive structure of this tax, this has in fact been a use of a regressive tax to subsidize general revenues.
Because payroll taxes are generally the most significant part of the tax burden for the lowest income americans (the lowest third at least), the fact that they are generally entirely left out of analyses that say “but, we halved the tax rate for ___!” makes a huge difference, and misrepresents the actual impact for working class americans.
May 14th, 2008 at 7:04 am
What point is this post trying to make?
Progressivity/regressivity; percentage change for rich/poor; actual dollar amount change?
“[T]he media” and other people are correct: those making the most money in this country (by percentage or actual dollar amount, whichever way you care to look at it) DID get a series of tax cuts under the GW Bush administration. How is that disingenuous?
May 14th, 2008 at 7:15 am
The problem is that we’re so caught up in “class envy” that we think it’s fair to single out someone who has money, force him to pay with the threat of imprisonment, then give that most of that money to government bureaucrats and a pittance to “the poor.”
Yeah that sounds “fair,” if you’re a member of the mafia maybe.
Who defines poor anyway. I heard one government bureaucrat say it was the lowest 20% of wage earners. If that’s the case, we will NEVER eliminate poverty.
Personally, I think the best way to eliminate poverty isn’t to rob the rich, but to help the poor become rich. You don’t strengthen the weak by weakening the strong.
May 14th, 2008 at 10:42 am
I concur wholeheartedly with Ron (who said it better than I could).
May 14th, 2008 at 11:39 am
I too agree with Ron.
I’d also like to thank Meg for the post. I too have long been sick of hearing “tax cuts for the rich” and “top 1%”…. although it has always made me laugh since I am a father of 2, solidly in the middle-middle class, have seen significant benefit to the tax cuts but have never considered myself rich!
May 14th, 2008 at 11:41 am
@KMC: I think the purpose of the article is to highlight that the rich are NOT the only ones who got a tax cut. I have heard a lot of rhetoric through both media and friends that implies the “rich” are the only people who received tax cuts, and they were HUGE tax cuts. This article seems to be saying that if you look at the numbers, then yes, the rich got cuts, but the middle class and the poor received tax breaks as well.
—
I really appreciate this article. I have neither the time nor inclination to do the research, but I have often wondered what classifies one as “rich.” I agree with Ron that class envy is a problem and believe it leads people to live outside their means.
I have friends with minimum wage jobs who went out and bought iPhones then complain because food is more expensive than it was. They are making bad choices. I genuinely feel for them, they are one hospital stay away from bankruptcy; BUT, I do not think it is right to put the burden of financing others’ bad choices on the people who have saved and made more reasonable choices thus allowing them to acquire wealth.
Tax everyone. Stop looking at the rich as evil oppressors.
May 14th, 2008 at 12:04 pm
@KMC…Meg acknowledged that “those making the most money” (i.e., the notorious, evil “rich”) DID benefit from the tax breaks. Then she went on with evidence to show that those who make substantially less (i.e., the poor and lower middle class) ALSO received benefits too — and that the latter group got more relative benefit from those cuts than the former group. Her point is that some people, including most of the media, conveniently ignore the facts in order to criticize Bush’s tax cuts as supposedly only being for the “rich.” With all due respect, it seems pretty clear to me.
@anon…Your point about payroll taxes is generally true. However, if you factor in the earned income credit at the bottom of the scale then this effect is largely negated. I have seen tax returns for low income (<$30k) workers with families not only pay $0 income tax (i.e., they have no liability at all), but get $1,000s BACK from the IRS instead. Yes, the federal government PAYS them money! This is due to the EIC. Interestingly, the amount refunded pretty much covers the amount withheld for payroll taxes (Social Security and Medicare). In effect, they are receiving credit for contributing into the system but the government then refunds that money back to them.
Look folks, we can argue forever about who benefits from the tax code and who doesn’t. In the end we are all getting screwed. We are paying more and more to feed a government that cannot restrain its penchant spending.
It’s ridiculous that we’re even at this point.
Just remember that when you set out to tax one group more than another that you embark on a slippery slope. When the income tax was introduced in 1913, the top rate was 7% and that only applied to those making over $500,000 AT THAT TIME (that’s something like $10 million in 2008 dollars). Back then 99% of all U.S. households paid $0 income tax. I can hear the arguments even now…”We’re only going to tax the rich. They can afford it.” Sure. Well, look who’s paying now. Today we assess a 35% rate on those making over $358,000. Who pays 7% these days? No one! Even the working poor and lower middle class start out at 10% as they work their way up out of poverty. What a great reward for working hard! Oh, and that doesn’t include Social Security and Medicare taxes.
We have surrendered a lot of money and freedom in the last 100 years — mostly for ill conceived government programs that don’t work. But that wasn’t enough; our government is buried in debt too! Just how will that debt be paid off? How much more will be extracted in taxes? Where is the breaking point? Can a free country tax its way to prosperity? I don’t think so — no matter if you’re taxing the rich and/or the poor.
May 14th, 2008 at 1:10 pm
The govt must change from a “spend it or lose it” mentality to a corporate model built on cost control incentives.
I once worked for a non-profit as the finance director and personally saw how these organizations must spend the money granted to them by city, state or federal or they lose it the following year. If your grant is for $250K and you spend $200K, next year your budget will be $200K and you will have to work hard to get the grant increased the following year. And the govt employees will remind you of this as the year end gets closer.
May 14th, 2008 at 1:16 pm
Don’t forget, however, that Bush + congress didn’t actually use the tax cuts to spend less. Perhaps there is a reason we’re seeing lots of inflation, and only part of it is the federal funds rate.
Inflation is a tax. And it is a regressive tax because it taxes those more heavily whose wealth is “money” and not property. That’s people whose wealth comes predominantly from their paycheck.
That’s a lot of us to be sure. But it is the poorest of us a lot more than it is the richest of us.
May 14th, 2008 at 1:27 pm
@KMC It’s disingenuous because people are always referring to “Bush’s tax cuts for the rich.” If they just said “Bush’s tax cuts” a post like this wouldn’t be needed. Bush cut tax cuts across the board, and actually decreased the lowest brackets tax liability by the largest amount.
@Meg Thank you for clearing up an issue that is so often misquoted. I would caution you against substituting the word “taxes” for “tax rates.” Bush cut “tax rates” but the amount of “taxes” collected actually went up. I think that when people use the word “taxes” people can mistake it for “tax revenue.” By cutting tax rates, tax revenue increased, and historically always has. If the government wants to increase the amount of revenue it collects, it need only cut tax rates, especially for those members of society that are productive and contribute.
May 14th, 2008 at 1:38 pm
easystockalerts will keep you abreast on the latest news on stocks you follow. You can get e-mail and RSS alerts when a stock you are tracking has news, an SEC filing, or a press release. It also monitors some of the top financial blogs for opinions on your stocks.
May 14th, 2008 at 2:09 pm
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers, he said, ‘I’m going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. What happens to the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
‘I only got a dollar out of the $20,’ declared the sixth man. He pointed to the tenth man, ‘But he got $10!’
‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I!’
‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’
‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important.
They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
May 14th, 2008 at 2:57 pm
@Richard:
Warren Buffet has a salary of $100,000 as I recall, so I assume most of his income is capital gains/dividends, currently taxed at a rate of 15%. If you are rich enough to live off your investments you can get into an excellent ‘tax bracket’ at the moment.
May 14th, 2008 at 3:03 pm
@Richard What Warren Buffett says is probably true. His main source of income is from long term capital gains – at 15%. However, his secretary has a more or less guaranteed salary. She will be paid the same regardless of how the company is doing. The same cannot be said of Warren Buffett, who takes tremendous risks in trading stocks. He is being rewarded for the risks he took. Having a low rate on long term capital gains is a good thing. It encourages people to invest their money rather than let it sit in a savings account. That’s a good thing, we want people to invest since it encourages innovation and productive activity.
The idea that the “rich get a lot of tax breaks not available to the rest of us” is silly. You are free to invest all of your money into stocks as well. People often imply that the rich are in some sort of secret club with the government that allows them to escape their tax obligations. It’s flatly untrue.
Despite all of these mythical tax breaks, the rich pay the vast majority of the taxes in this country. However, this is kind of drifting from what the post was about. The post was referring to the assertion often made by Democrats that Bush’s tax rate cuts disproportionately benefited the rich. I think Meg did a great job of debunking that.
@Adam I thought about posting that myself. It’s a great metaphor.
May 14th, 2008 at 3:18 pm
The people who get nailed the hardest percentage-wise are people with high salaries – or small biz types with decent income – but who aren’t rich enough to get a lot of income from investments. Salaries are extremely hard to “shelter”, and taxed at a higher rate than investment income (even if the investment income is “income”, due to Medicare taxes if nothing else).
My wife’s marginal tax rate is nearly 50% between federal, state, and self-employment taxes.
Somehow, I suspect President Obama and the Dems will take it over 50%, while leaving Mr. Buffett unscathed.
May 14th, 2008 at 5:43 pm
What a bunch of great comments! I’m traveling on business at the moment so I have limited time to access the internet and respond each day, but I appreciate all of you for contributing to the discussion.
@ anon (#2) The analysis does leave out FICA taxes, along with sales taxes and “sin” taxes and gas taxes which also are regressive, since lower earners spend a higher percent of their income on those taxes. However to my knowledge Bush didn’t change those tax rates (I could be wrong…), but either way the analysis of the impact before vs after Bush is still valid.
@ Ken – I totally agree. System is screwy.
@ Don – you’re right Bush increased spending (though taxes collected did NOT go down; as David points out tax revenue increased despite tax rate cuts, because of the economic stimulus tax cuts historically create. The real problem with the increased spending is that now tax rates will have to go back up, as the economy has faltered and we need revenue. But since the system is now ever-more progressive, the rich will be worse off than before (i.e. shouldering an even higher percent of the tax burden).
@ David – good point and thanks for pointing out that “tax rates” don’t mean “taxes.” No president ever cuts taxes – they cut tax RATES which actually leads to increased tax revenue for the country (either bc the economy is already booming or because it will be stimulated bc of tax rate cuts).
@ Richard – It may be true Buffet pays a lower percentage of his income than his secretary to taxes – but I bet you $100 his secretary makes $75,000 or more (you don’t think he gives him/her a bonus and a fat paycheck?) so that may be a bit disingenuous.
@ Foobarista – Buffet WILL be affected by tax rate hikes, as the capital gains rate will likely rise as will estate taxes. And the poor and middle class (defined by Obama at least as those earning $75K or less) will almost certainly not be “scathed.” God forbid any politician even suggest raising taxes on the “poor.”
May 14th, 2008 at 7:21 pm
The tricks used by the super-rich to avoid taxes include:
o Organizing their finances so they’re capital gains or dividends instead of ordinary income.
o Infinite depreciation.
o Use of foundations as tax shelters. Foundations are one of most interesting tax-sheltering devices; basically, the idea is you park your wealth in the foundation and pay a “wealth tax” every year to your favorite cause. Note that you still have access to the assets of the foundation itself for personal use if you’re a foundation principal as long as you pay out the proper amount every year.
You get props as a selfless man-of-the-people while escaping both federal and state taxes. Doubtless there’s lots genuine philanthropy done by foundations, but there’s plenty of tax-sheltering being done too.
In my perfect world, we have consumption taxes and a far smaller government. I’m not completely in love with the “Fair Tax” – especially in the questions of getting from here to there – but I like the general idea.
May 14th, 2008 at 8:46 pm
One item you forget to mention is that many middle and low income people own stock in 401K and IRA accounts, so they get no benefit of the 15% rate on capital gains and dividends, while wealthy people have a majority of their assets in taxable accounts. Then when the money is taken out of the tax sheltered accounts, the middle and lower class people are paying regular income tax rates further penalizing them.
May 15th, 2008 at 2:38 pm
I hope you enjoy paying for your tax cut in the future. One of these days I hope someone suggests foregoing all taxes. Who needs them anyway when we can just borrow more?
May 15th, 2008 at 10:18 pm
@Lord – Exactly. So much for pay as you go.
Personally, I think when the media says “tax cuts for the rich,” they mean the part of the tax cuts for those in the (current) 35% bracket and the cut in the dividends tax.
The only people I personally know who benefited from those cuts are pretty objectively “rich.” Most of us don’t have a significant amount of qualified dividends rolling in.
Anyway, taxes aside, I’d rather have the country run by a competent administration. And it looks like we’ll finally get that, no matter who wins in ’08.
May 16th, 2008 at 10:05 am
How is Social Security tax regressive? Everyone pays equally based on their income up to about $103,000. Social Security payments are skewed so the less you made, the more you collect. Because of Social Security and its CPI-tied payments, seniors are least likely to be poor.
May 21st, 2008 at 10:05 am
I too am extremely annoyed by the “tax cuts for the rich” temper tantrums. Sure the rich got a tax cut, but so did everybody else. I’m solidly middle class and I got quite a large tax cut. To say that the rich got a tax break at the expense of the poor and middle class (which is exactly what these people are claiming) is bunk.
June 5th, 2008 at 9:01 am
The wealthiest pay the ordinary income rate on a relatively low percentage of income. They received a massive tax cut for investment income. They pay payroll taxes on a miniscule portion of income.
Bush is now hitting the middle class with AMT. Bush’s massive debts due to out of control deficit spending has lead to inflation — an effective tax hike that affects middle and low earners who spend most of their income.
Bush has shifted taxes to states and municipalities so we got a tax hike there. And then there are the future tax hikes to pay all the interest on Bush debt.
The dishonest try to look only at the marginal ordinary income rates. It does not tell the real story.
August 1st, 2008 at 1:00 pm
At the risk of running off topic the only real problem with the “Bush tax cuts” is that his administrtion chose to spend far more than it recieved in additional revenue from initiating them. If it had held spending in check, our economy would be solid.
Many “middle” class took the same road by spending beyond their means, and are now looking for a scapegoat. The “class envy” is a good point, as for quite a while it was hard to discern between who was actually succesful and who was just living “large” on borrowed time.
September 5th, 2008 at 2:06 pm
Many good points on both sides. Adam’s 10-men story really captures the essence of the problem. But why do folks think that way? Why, despite the hard evidence, do people actually believe that Bush has an evil plan to make the rich even richer at the expense of the poor? Simple, because humans are highly susceptible to envy. Our current tax system encourages this unfortunate tendency to flourish by enforcing the sort of poisonous class system dynamic which eventually ruins nations. So, what should Bush or any other president push for… further tweaks to the current rates? That’s just putting a band-aid on a bullet hole. No… the entire system needs to be eliminated! We debate endlessly on this topic because there is NO right answer when it comes to government controlled tax rate distribution (someone will always be envious). The solution is change the nature of the debate. We must scrap the current system in favor of a system which more acurately reflects the America our founding fathers envisioned. America should not be about class systems, punishing success, or placing blame on our brothers. America should be about freedom and opportunity. This is why the only logical solution to our neverending tax problem is to institute some form of flat tax / consumption tax. Every American should be able to keep every penny he/she earns… the government should have NO right to confiscate it. Only when WE THE PEOPLE decide to spend our money should a portion of the amount go to the government. So the question we should all be asking is not “how do we tax those darn rich people?”, it is “how do we safely transition to a system of taxation that is blind to an individual’s wealth… that eliminates class envy… that truly reflects the American ideal?” Let’s stop arguing about the methods our government should employ to confiscate our money and start focusing on how we can eliminate the relevance of such an argument forever.
October 12th, 2008 at 11:27 pm
The key word here is capital gains. While the rich pay most of the taxes in the country, (and they should pay the most)capital gains are taxed at 15%. That means SOME of the rich pay less than almost all of the middle-class. This is the target we should fight against. Many wage earning rich people pay a very high tax burden…and it should be that way…but the super super rich pay only 15%.
History Lesson: Why have capital gains (dividends and the sale of stock) at 15%. The government double taxes corporations on dividends is part of the reason. So I say, give a deductions to corporations for giving out dividends (this will also reduce the problem with over leveraging with debt). Put equity on the same par as debt for the corporation. Don’t tax the corporation on dividends or it’s equity.
What do we do for capital gains? We tax it at normal progressive rates. To all of you who think that will reduce the drive in invest, hogwash. People will invest regardless of taxes. Lower taxes very rarely encourages re-investment. All it does is increase the amount of money out there, lowering the value of the dollar. The vast, vast, vast majority of economists agree that Laffer curve is pretty much a joke outside very high tax brackets (like 70%).
January 9th, 2009 at 4:12 pm
The points made are worth considering. It is true that “tax cuts for the rich” is an over simplification, and worth deeper examination.
However, it’s not cut and dried the other direction either. Conveniently leaving out FICA is critical to the current argument.
It should be obvious that there’s no *objectively* “fair” amount for people to pay in taxes – everybody has their own concept of what fair means, most often biased towards their own perceived self interest though not always. There are few facts to use for persuasion in terms of fairness; it’s mostly about biased judgement calls.
However, we can relatively more objectively look at measurable effects. If the rich are proportionately richer today than a decade or generation ago then either (1) today’s top 1%/10% etc are several times as smart, hard working, and deserving than the top 1%/10% etc ten/thirty/fifty years ago so this is in correct proportion to their contributions, or (2) the system overall is biased toward increasingly high rewards at the top – after taking all proportioning considerations into account.
The trick here is not to compare joe six pack with the 80 hour/week type A CEO, but the type A CEO of 1959 with the type A CEO of 2009. If the system is working, then the latter won’t be earning more (after inflation) than the former unless their productivity has also increased proportionately.
Has it? Are the richest 1% today actually far smarter and harder working than the top 1% before? Is the wealth escalation tied to true productivity gains?
And – if the movement of weath (not just income) upward continues unabated decade by decade for 100 years, what with the income distribution be like then? Is there some logical stopping place, a point where society or market forces or something says “Ok, it’s OK for the top 1% to own 99% of all weath but 99.5% would be just too much”?
Maybe that balance point won’t happen for another generation. But as long as wealth continues to migrate by the terabuck towards the top of the pyramid, it’s hard to feel that the taxation rate on the rich is ruinously high.
(Nor would I want it to be ruinously high – I don’t want to financialy destroy the rich, only to stop the upward hemmoraging somehow – not neccessarily through taxes – and find stability. Not equality – some will be much richer. That in itself can be based on meritocracy, which is a good thing to be preserved. But do they need to keep getting proportionately still richer every decade forever? That’s not about meritocracy but about positive feedback cycles taking the system out of the stable zone into unsustainability which will at some point collapse catastrophically. I’m coming more from science than politics here, though I fear some responses are likely to be knee jerk regurgitations of political ideology rather than fresh systems based thinking).
The beer parable is deeply flawed at the core, assuming that each drinker consumes equally but some pay much more. If that one top drinker also drank the majority of the beer and sometimes the low end left pretty thirsty, it might be closer to meaningful – we could then discuss whether he drank 50% but unfairly paid for 70%, etc. There are worthwhile discussions to be had. This parable however is more of a “look over there” distraction than a true illuminator of the tricky questions, however. The parable not so subtly biases the reader to think that the rich drinker is awfully generous and the rest are ungrateful as well as short sighted. (I think the point that those who pay the most in absolute terms will benefit the most from a reduction in absolute terms can be made without the unneccessary distortion of assumed equal consumption).
February 7th, 2009 at 9:12 pm
Let us say for sake of this discussion that W. Bush did do all that the writer says. So W. Bush signed off on a large tax cut and yet we still find ourselves in the mess we are in. So what makes the GOP think that a different result if they again only lower taxes without any investment in other areas.
April 19th, 2010 at 8:55 am
Folks…Who do expect to pay taxes? Those who have the means have to pay. I don’t care what the percentages are. A large percentage of a small dollar figure gives you a small dollar figure, whereas a small percetage of a large dollar figure gives you large dollars. Of course the rich pay most of the taxes. That’s where the money is! I wish so much I had the tax problems of the rich. Man that would be great. Sorry but no matter how you slice it Bush’s tax cuts favored the rich and made the income inequality in the country even more pronounced. That is the real problem. Ahh…but the wealthy, i.e. republicans/conservatives in this country know that. They don’t care as long as thet can keep hoarding thiers. If the wealthy in this country don’t see the value they are getting for their money by being able to amass such asurb wealth please suggest they move to whereever it is they can pay less in taxes. Perhaps Europe or Canada?
Good luck.
June 19th, 2010 at 5:57 am
The USA already has lower taxes than most industrialized states(sweeden taxes 63% on the wealthiest bracket), how much more can the rich plunder? It’s sad to see that this idiotic rhetoric didn’t die with reagan. If you make a lot of money, please don’t make it even more apparent that you deserve to be taxed more by being a high paid moron. Obviously bush’s tax cuts favored the rich, overwhelmingly. Just be honest, say “hey, you know what, I don’t like minorities and I don’t think poor kids really should have an equal chance at a good education and future”. Don’t sit there and lie through your teeth. Next you’re going to try to tell me that “no child left behind” helps public education or that bush’s changes to the clean air act helped improve our world.
June 19th, 2010 at 5:59 am
I can not believe how oblivious you people are. Obviously every tax (besides income tax) is regressive when you simply look at the proportion of earnings the person pays. Clearly a rich person can part with $9,000 more easily than a poor person can surrender 1,000. Simple logic; a rich person and a poor person pay 2 dollars on a pack of cigarettes a day, who does this more adversely affect? You don’t have to be an economist to figure it out.
On top of that, rich people already avoid taxes by receiving most of their salaries in dividends and returns. You people hide behind lies and the idea that it is “unfair” to re distribute excessive wealth that people don’t deserve. I have a PhD and I teach, so I am more entitled to my earnings than you. However, common sense says that since I make over 100k I need to help those in need.