I was listening to a right-wing radio station responding to an Associated Press story on how because of various tax breaks, $1.1 trillion dollars is lost to the U.S. treasury every year. Probably a similar amount is lost to states by all the breaks they give to businesses. One of the right-wing barkers on the ropes complained about how 24 percent of the population paid 75 percent of the taxes (probably a random figure to escalate the “injustice” against the rich barometer; the actual number is 67 percent), and that the “47 percent who thought that taxes should be raised on the rich is equal the number who don’t pay taxes.” Good thing he wasn’t talking about corporations like Exxon—who in 2009 set an all-time record for profits, and paid not a dime in federal income taxes. It is not exactly clear who are the people who are not paying taxes; assuming that it is lowest income bracket is a mistake. I’m surviving (barely) on considerably less than the median wage, but even after the personal exception I still pay 10 percent of my income in federal income taxes. The AP story tells me that in 2007, the top 400 made an average of $345 million dollars each, and paid 17 percent of their income in federal taxes, down 26 percent from 1992; the top marginal rate has decreased from 70 percent when Reagan took office to less than 30 percent by 1992. Despite a top marginal rate of 35 percent today, tax breaks allow these people to pay less than half the taxes they owe. Amazing how those right-wingers miss the cogent facts. Because those same people do not pay Social Security taxes on $344.9 million of those dollars, I pay a similar percentage of my income in total federal taxes.
Think about it: Those 400 individuals make about 16,000 times as much money as I do; that may mean they’re paying 16,000 times as much taxes, but that still leaves them with $285 million to play with; in the state of Washington, they don’t pay any income tax, just the regressive sales tax and property taxes that hit the lower income bracket much harder. So where does the “unfairness” part come in? Just to show you how far the right is gulling the public on tax issues, let’s examine the 75-24 figure that right-winger threw out there (even if it slightly overstates his case). That means that the 24 percent (those making over $70,000) are paying 10 times the amount of taxes as the 76 percent. That would appear to be unfair—if in fact the 24 percent were making was the same amount of money as the 76 percent were earning. But as we all know, income disparities in this country have been growing more and more since Reagan took office (remember the “trickle down” effect?). Some of the 24 percent may be making “only” 3 times my wage, but the those making $250,000 make 12 times as much, those making $1 million 50 times as much, and $10 million 500 times as much, and $100 million 5,000 times as much. So it turns out that maybe the amount of taxes that the 24 percent is not “unfair” after all. Even if there are some who do pay a higher percentage, their disposable income far exceeds that of most Americans. It may in fact it be more “fair” than the tax code intended, considering all the “breaks” their accountants can find for them, and various tax shelters and tax havens to stash their extra dough.
There have been many claims about percentages of incomes and percentages of taxes, yet the reality is that one number often cited—Adjusted Gross Income—is frequently misinterpreted even though it means exactly what it says; it does not represent total personal income. People in the lower 50 percentile who are single tend to be hit harder from all taxes, despite the IRS personal deduction (which everyone receives), while people in the upper-most bracket use all sorts of tricks to lower their adjusted, taxable income. Another fact is that according to 2007 figures, the top 20 percent controls 80 percent of net wealth—and 93 percent of financial wealth; how they manage this despite their tax “burden” is beyond my understanding.
Those aforementioned 400 made a total of $138 billion; that’s 6.4 million of those $20,000 wage earners. Within those two subgroups, to say that .006 percent of the people paid 50 percent of the taxes isn’t “unfair” if you just take the time to think about it. Some of that money made by the top one percent isn’t even justly earned: Rush Limbaugh makes $40 million for rarely stretching himself beyond the same tiresome self-indulging in his personal prejudices, and glibly parroting right-wing talking points for three hours a day; that’s 20,000 times more than a “mudsill” who has to do the “dirty work” to keep the country from falling apart. The reality is that the taxes paid by the upper-income brackets as a percentage of all taxes has little relation to the de facto tax “burden” on the individual in those brackets. Why the media has missed this essential flaw in poor-little-rich-person tax argument is just another element in how the right is allowed to frame the public debate with false and/or misleading arguments. Now maybe the next time the state gives Boeing billions of dollars in tax breaks, maybe it should be contingent on the company promising to hire more people, instead of laying off tens of thousands more.