AEIdeas

The public policy blog of the American Enterprise Institute

Subscribe to the blog

Discussion: (50 comments)

  1. Like most conservatives you are trying to persuade with facts. Doesn’t work with an electorate for whom MTV is considered intellectual stimulation. Adolph Hitler built a (temporarily) successful movement on a premise that the Jews were responsible for Germany’s woes. Democrats seem to be building a similarly appealing storyline that The Rich profit at the expense of the rest of us. Concentrate on finding a scapegoat rather than researching the facts. That would be more helpful to us.

    1. Coincidentally, the Jews were disproportionately bankers and merchants in their society. Read: the rich.

  2. Chart 4 really doesn’t say anything – if we have a progressive tax system, then the highest 1% earners will pay more taxes than average, and if they pay more taxes than average, then the other 99% had better be below average.

    Really, 8 is the only chart with anything interesting to say.

    1. Interesting that the only chart you see as being relevant is the one you, no doubt, believe can be solved by a larger government and more public spending.

      Chart 4 is actually quite interesting when you look at it in light of chart 1. Despite only earning 23% of income in the US, the $250K+ group pays 53% of all federal income taxes.

  3. Looking at the first figure, it is pretty clear where the money is, and where it is going to come from to pay for the Democrats socialist utopia (looking at you folk in the $50-250K range).

  4. Next time it would be fun to take a look at the spending side, in particular the claim that “Bush’s two ‘unfunded’ wars are responsible for the deficit.”

    1. I’ve personally always found it entertaining watching the contortions some go through to bolster that particular factless leftist meme

    2. bill hertzog

      Of course the wars aren’t responsible for it; the total for the entire campaign over the last ten years, added together, comes roughly to the same amount as the federal budget deficit for the single fiscal year 2012.

      That would be, 1.2 trillion dollars.

      Sounds like a lot, but over ten years, that’s 120 billion a year.

      Remember, the federal budget deficit is 1.2 trillion dollars.

      Oddly enough, the amount spent on Social Security, Medicaid and Medicare last year comes to roughly…

      …1.2 trillion dollars…

  5. Including the increased GINI score would explain why the richer people are paying more of the income tax. It’s because they are getting more of the income. So that’s chart 3 and 4. And that “double the poor” income tax rate? That’s on earned income, not capital gains. Look at the tax returns of all the presidential candidates to see what a realistic tax rate would be. Chart 20. If you would pay more for childcare than you would earn, what would be the advantage of going to work? If you are making close to minimum wage, you are going to lose money on paying the sitter, and your children would lose the benefits of having their mom take care of them. If you are making more than $20 an hour, well, maybe hiring help is the answer for your kids. And, those of us who have cleared up a debt problem know there are 2 parts to making it happen fast. 1, budget. 2. get more income. Chart 29 is like some deadbeat saying, If I take on another job it’s only going to bring in another $20 a day, and that’s not going to make a dent in my $30,000 credit card debt. Guess what, buddy, It WILL. Yes, the budget got out of line. The revenues did too. And this analysis was provided you by a stay-at-home mom with a high school diploma. Your welcome.

    1. Tim Blosser

      Chart 29 assumes that those earning over a million dollars are somehow more responsible for the federal deficit than the rest of us. That’s the equivalent of shooting your horse for meat instead of driving it to the market.

      And if you had graduated from a good high school you might know it’s ‘you’re welcome’, not ‘your welcome’ (Chart 25).

      1. Excuse me. You’re welcome.

      2. Tim, could you explain where responsibility for the federal deficit shows up on Chart 29? I looked at it again, and I don’t see it.

    2. “And, those of us who have cleared up a debt problem know there are 2 parts to making it happen fast. 1, budget. 2. get more income.”

      If by “get more income” you mean tax people more, then you’re not going to “get more income”. History has proven that the more we take from people, the less revenue the government actually receives. This concept is always hard for liberals to understand for some reason. But the problem is that people think that the only option we have is the divide up the pie differently when the best option is to bake a bigger pie! You don’t look at a pizza and say we need to cut more pieces and it will feed more people because in the end everyone just gets a little less. You look at the pizza and ask, “How can we make a bigger pizza or order a second one.” Tax cuts, business incentives, all of these things grow the pie not divide it up more. Want more opportunity? Grow the pie. Want more revenue to the government? Grow the pie.

      So I would agree that “get more income” is a decent idea but it must be additional income. Taxation is the same as someone making $10 an hour cutting their hours in half to take a second job making $5 an hour and then wondering why they aren’t making more money.

      1. “History has proven that the more we take from people, the less revenue the government actually receives.”

        I disagree with this statement, I think history has shown no such thing. However, without even consulting reality, by this argument the tax rate should be zero, then we’d REALLY have a lot of government revenue. The absurdity of this concept is always hard for conservatives to understand for some reason.

        The fact is, to maximize government revenue (i.e. allowing a healthy economy with some taxation), there is a tax rate X that is somewhere between 0 and 100%. Why can’t we have an honest debate what is the value of X? Why is the fact that we are at the lowest tax rate as a percentage of GDP in my lifetime (I’m 53) not give anyone pause?

        I’d like to think we are all smarter than this.

        1. are you counting debt payments in that? because deferred taxes are still taxes owed.
          Every dollar the government owes someone else is a tax dollar yet to be collected.

        2. Ever heard of the Laffer curve? The assumption that those who think that lowering rates would increase revenue somehow believe that that holds true down to a rate of zero is an asinine one. Two rates bring in zero revenue: zero and 100% & those are the only two rates that are defined on the famous chart. The trick is finding the rate that maximizes revenue. According to the late Jude Wanisski that is the rate that the people “want” to be taxed at.

    3. ‘Including the increased GINI score would explain why the richer people are paying more of the income tax. It’s because they are getting more of the income. So that’s chart 3 and 4. And that “double the poor” income tax rate? That’s on earned income, not capital gains.’ A few clarifications for our intellectually ambitious but perhaps not so well informed stay at home mom: Capital gains are reported on income tax returns, and are included in the effective tax rate shown here. Capital gains are also a tax of choice: they are only due when realized. It is in society’s best interests to keep this tax rate low (many countries don’t have it at all) so that capital can flow from less productive to more productive uses. Thus, when rates are low it results in more revenue for the government because gains are realized more often (see ’90s). More importantly for the economy, when the rate is high people will put off realizing the gain in order to avoid paying the tax, thereby locking capital into potentially less productive uses. One of the more irritating dodges used by ‘liberals’ is to try and conflate capital gains with ‘earned’ income to insinuate that somehow a lower capital gain is rate is a cheat for rich people to avoid paying taxes on ‘unearned’ income. (When I sell my business, which I will ASAP if this president is re-elected, I will pop anyone in the mouth who tries to tell me my capital gain slowly and painfully accumulated over many years is somehow ‘unearned’.)
      And yeah, higher income earners pay more tax than low earners because they earn more income. No kidding, this would be true with a flat tax rate (another dodge of the uneducated–as in most of the media–is to try and focus on the top marginal rate rather than the actual dollars paid, which should be the only number that matters). These charts point out that not only do higher earners pay more of the overall tax burden–which they do, because they do earn more–but they also do it at twice the rate, which in any ‘fair’ world could only be considered punitive.

  6. Fred Bergold

    Thank you for an excellent analyses. It would be an interesting addition if you could show the percentage of millionaire tax payers that are professional athletes and how many years they file as millionaires.

  7. These charts would be more relevant if you had started your analysis at 1930 or 1940 or even earlier.

  8. Ha ha ha ha ha.
    The watermark on the ‘fact free’ documents says it all. The tax foundation is part of the hard right echo chamber.

    1. Harold Miller

      So, what’s your point? Facts are facts. Raising taxes on the “rich” won’t come close to solving the deficit problem. I fact is will likely make it worse. This isn’t an income issue it is a spending issue.

    2. You just don’t want to be told what you don’t want to hear. Facts can be use to prove almost anything that’s even remotely true.

    3. I discount your premise, as you don’t want to hear something with which you disagree. Please note that the sources are credited in the graphs, and despite your desire, are not fabricated by the Tax Foundation.

      Please – if you want to refute the information, bring data and analysis to the table.

    4. At least you’ve mastered one of the first rules of debate: If you haven’t got an argument, impugn the source. That works better if the source isn’t someone like the IRS and CBO.

  9. The scale on graph 10 is incorrect; trillion vs billion

    1. Ralph Miller

      You’re an idiot! Must be a democrat.

    2. Pay attention – the scale is in Billions, 1,200 billion is 1.2 trillion. It’s idiots like you that cannot even read a simple bar graph that have gotten our country into the mess it is in now.

    3. Looks right to me.

    4. No, it is marked in billions. That is correct.
      Notice that $1.2T = $1,200B

    5. displaced maneiac

      1000 billion is 1 trillion. Read the scale on the graph.

    6. Did any of you responders stop to consider that the original poster was not American? In a lot of the rest of the English speaking world, 1 trillion = 1,000,000 billion.

      Let’s dial back the “jump down anyone’s throat” reaction we all seem to be having these days.

      Do I know he’s from overseas, no. But the possibility exists, and this election is important to non-American’s as well.
      –b

  10. “There are three kinds of lies: lies, damned lies, and statistics” – Mark Twain

    An Aei Sedai couldn’t have come up with more misleading facts.

    1. J. Scott Lewis, Ph.D.

      Actually, the quote above was quoted BY Mark Twain from its original source—Benjamin Disraeli.

  11. Fact is, you can explain about 90% of the variance in household income knowing four variables — marriage, age, education attainment, number of earners in the household. So if you want higher income the message would be: Get an education, get married (have him or her get a job, too) and become older. With the exception of the last factor, most of that is up to you. And if you’re 25 and feel victimized because you don’t make as much as a 50 year old, you have bigger problems than your income.

  12. The title “Tax Burden Has Grown More Progressive Over Time” is indeed clever by omission, as the text points out it is income tax, not the overall tax burden, that the graph shows. Until a graph that is presented that shows the impost of all other taxes, the title is fallacious propaganda.

    1. Perhaps having included even a single example of where the addition of only one additional other tax as having some influence on the overall statistical outcome of the graph would have added at least some validity to you argument. Without it, propaganda WITH data trumps propaganda without it.

    2. Social Security was not sold to the public as a tax. It was sold as a plan by which the government put aside payments from you and your employer while your worked and gave them back to you on retirement. It’s only because the government spent the money it was supposed to hold for you that it became to resemble a tax.

      1. Read the decision Helvering vs. Davis from 1937. From its outset, Social Security was ruled a tax, regardless of how it may have been sold to the public before passage. Further, the decision does not even oblige the federal government to provide any benefit in return.

    3. Matthew Berkhan

      So because the authors restricted their subject to the specific topic they were talking about (income tax) instead of a broader topic you feel they should have (any combination of additional taxation which validates your existing viewpoint), any factual information presented can be dismissed as propaganda. Sounds legit.

    4. Social Security and Medicare taxes are paid in with the expectation of a return, like insurance or a pension. So far the participants have indeed received a return on these “contributions” as the Social Security Administration refers to them, and often many times the original amounts. Unlike income taxes, they were never intended to be used in the general operation of the government. That’s probably why they are excluded from discussions of this nature.

  13. The figures never lie, but liars can always figure…
    Let’s see this as a dollar for dollar accounting, General Electric paid NO TAXES last year, I paid eleven dollars for every one-hundred, not to mention the taxes I pay before I even get my paycheck…
    Corporations are people too, right…

    1. Corporations are people too, right…

      No, corporations aren’t people

      1. John Pierce

        Corporations do not pay taxes. Taxes are an expense passed on the the consumer in the price of the product. So consumers pay the corporate taxes

        1. All taxes may be passed on to consumers, but talk to the CFO of any company of any size and you will find not only do they pay taxes they spend a great deal of time trying to figure out what they are. We’re not just talking about the big names; even local service providers have to spend a lot of time determining what the tax code actually requires of them.

          It isn’t just corporate income taxes. Consider:
          payroll taxes
          gross receipts
          business licensing (some industries have multiples of these)/ corporate filing/ regulatory registrations
          Social Security and Medicare match payments
          sales taxes
          property taxes
          Coming Soon: ACA penalties (since it appears many aren’t even going to try to figure out how to comply with that byzantine mess)

          Incidentally, MikeB and bullsballs, corporations are not “people” but “persons.” The concept of a corporation was created to form artificial persons (yes, as opposed to natural persons – read the corporate statutes of your state) that could own property, assume liability, open bank accounts, enter contracts, etc. A corporation as a “person” is not some new concept created by the Supreme Court a few years ago – it has been referenced in law explicitly for well over a century. A similar status exists for trusts, co-ops, partnerships and other forms of organization. Incidentally, I wouldn’t mind seeing GE pay more in taxes but I would be more interested in them not getting so many tax credits in the first place. If they want to push wind energy and electric cars, I wish them success, but let them do it at their own expense.

        2. Which, in the case of products and services, leads to a reduction of demand.

          However if supply is static, such as with economic rent, then then the expense cannot be passed on in a competitive market (e.g., land tax).

      2. Scott in Seattle

        Busballs… look at property tax… working poor do not pay that. Cap gains is a tax on money that was already taxed once. Sales tax… rich people buy more and more expensive things that are taxed. So how does that work?

        Also (to another comment)corporations pay big dollars and losses are used to even tax burden overtime…

        But hey some one else should pay for your free stuff right?

        I work with a lady claiming to be a socialist and she wants fairness. I told her she could donate vacation days to lesser paid employees since our company allows that. She refused because she “earned” her vacation.

        Funny how things work huh?

        1. “look at property tax… working poor do not pay that.”

          Yes they do, in the form of the rents they pay. Generally competitive pressures would very likely bring rents down if property taxes were reduced.

          Consumers, that is to say individuals, pay for everything. Insurance, taxes, labor etc., etc., etc.

          1. That’s only correct in terms of property taxes on produced products (i.e. buildings).

            Some property (specifically land) taxes are a tax on economic rent. Removing them actually increases the rents as speculation on a fixed supply necessity (i.e., land increases).

            Increase land tax, reduce taxes on buildings. Then you’ll end up with lower rents and better buildings!

  14. Stop complaining about a low capital gains tax. Capital gains are the dividends to investors made after already taxed profits, made of the already taxed sale and export of merchandise to people who’s income is taxed, produced by working on raw materials that were already taxed upon purchase, that were already taxed when imported. Have you ever complained about paying taxes on a used car when you are the third owner? Similar premise here.

    Despite the chain being taxed 4-6 times in its process, people still need to risk money in the investment of up front capital to make it happen. Nobody would be willing if there was no reasonable return of that investment, and increasing a tax on a chain of taxes will just add a higher margin of risk of return, which will slow economic growth and recovery.

  15. … thank you! I’ve been a CPA in the public tax accounting field for over 29 years… and your graphs were not surprising at ALL to me… I have tried to explain that the Bush tax cuts were for the poor to middle class ever since they were enacted. AND I have tried to break the myth that the “RICH” don’t pay any taxes… or some ridiculously small amount of taxes… totally ridiculous concept. As most of my clients are wealthy… I knew this to be completely false. To those with a liberal bias… I was completely unsuccessful… this data validates EVERYTHING I knew to be true… so truly… from the bottom of my heart… thank you!

Comments are closed.

Sort By:

Refine Content:

Scholar

Additional Keywords:

Refine Results

or to save searches.

Open
Refine Content