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Tilting at Windmills

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October 8, 2007
By: Kevin Drum

TAX FOLLIES....As a blogger, here's one of my problems. I see something like this, and I think: Oh God, not that again. He can't really be that clueless, can he? Gotta do a takedown! But then: I'm tired. Can I rouse myself to take on this nonsense yet again? On the other hand: he's got a big audience! People read this stuff and believe it. And yet: None of those people are going to come over to my site and read a bunch of tediously factual tax numbers anyway. A rebuttal won't really accomplish anything.

So.....what to do? Beats me. But just in case any of Glenn's readers do hop on over here, the short answer is: there are many taxes other than the federal personal income tax. Honest. If you add them all up, everyone does pay "at least some tax," and the overall distribution is only modestly progressive. OK?

UPDATE: Back from lunch and full of energy now. Here's a chart showing part of the tax picture:

So the tax system is moderately progressive until you get up to the 5,000 richest people in the country, at which point it becomes regressive.

However, this includes only federal income tax and payroll taxes. It doesn't include excise taxes, state income taxes, sales taxes, or property taxes. If you add in all that stuff, things get even flatter. The chart below doesn't include imputed corporate incomes taxes or the employer portion of the payroll tax, so the overall numbers are lower than they should be, but it still gives a pretty good idea of the overall flatness of our tax system:

Kevin Drum 4:06 PM Permalink | Trackbacks | Comments (86)

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Comments

A rebuttal won't really accomplish anything.

A winger I sometimes work with keeps saying "If the Democrats win, the economy will go to shit!It's always happened."
My attempts a rebuttal include sending him your posts on the relative performance of the economy in Democratic and Republican administrations. My attempts have been as successful as yours in convincing , say, Zatharas or The Real Al...

Posted by: MR. Bill on October 8, 2007 at 4:13 PM | PERMALINK

Why have taxes at all? Bush shows you can cut taxes and grow the government like crazy. QED.

Posted by: Gore/Edwards 08 on October 8, 2007 at 4:15 PM | PERMALINK

God the right wing is so compassionate when it comes to the welfare of the super wealthy, I could almost cry.

Posted by: AnotherBruce on October 8, 2007 at 4:27 PM | PERMALINK

Furthermore, the fact that the upper 1% pays more income tax than the lower 90% does not demonstrate progressivity of the tax code. If upper 1% has more income than lower 90%, then a completely flat tax would still generate this pattern.

Posted by: Jim on October 8, 2007 at 4:28 PM | PERMALINK

I recently got into an argument about the economy. I had no business arguing about anything economy-related, but I figured this guy's argument was simple enough to where I could make a couple points and at least get him thinking maybe supply-side economics isn't as concrete as he thinks.

He starts by saying I could look this up - after every tax cut, the economy has doubled. I said that doesn't make any sense. If tax cuts double the economy hard and fast everytime, what kind of stupid, suicidal politician wouldn't keep cutting taxes? He went onto some analogy about happy hour: when you cut prices, you increase volume. I didn't understand the comparison, tried to ask how the volume is sustainable, and how business philosophy that relies on supply/demand principles relates to tax policies, but didn't have the wherewithal to make my point. Here he is, in 2007, arguing that tax cuts not only work, they double the economy each and every time. That's a dedication to a philosophy I simply couldn't work with.

My point to all this, Kevin, and everyone else, is to take heart that about 70% of people eventually come around. Ain't no point in worrying about the 30% or so who can't/won't/never will.

Posted by: A different Matt on October 8, 2007 at 4:29 PM | PERMALINK

"the overall distribution is only modestly progressive."

Given that SS payroll taxes apply to only the first $97,500, it is hard to believe that the overall distribution is even "modestly progressive."

Posted by: Peter on October 8, 2007 at 4:32 PM | PERMALINK

Somebody needs to do a takedown on this horrible conservative talking point. Rush Limbaugh has had a chart on the front page of his site for years under the banner "Only The Rich Pay Taxes." Why do we let them get away with this crap? Because it takes too long to cut through the nonsense?

Posted by: Jason on October 8, 2007 at 4:32 PM | PERMALINK

Given that SS payroll taxes apply to only the first $97,500, it is hard to believe that the overall distribution is even "modestly progressive."

It's not.

Before the Bush tax cuts, the income tax rate increased at the SS cutoff to make the total tax rate flat at that income level.

After the tax cuts, the rate became regressive. (And that's not even counting the lower tax rates for unearned income.)

Posted by: ferg on October 8, 2007 at 4:36 PM | PERMALINK

Given that the top 1% by definition earn more money than anyone else, in pure dollar terms they are by definition going to pay more in personal federal income taxes. This is a bogus argument and always has been. If the top 20% control/earn 80% of all income earned in the United States, they should pay 80% of all the personal taxes collected by the government. That is equitable, fair and just. I have had the ridiculous argument with far, far too many unthinking Republicans (white males all). Besides, why should I subsidize their mortgages? I rent.

Posted by: Susan on October 8, 2007 at 4:39 PM | PERMALINK

Peter: Yeah, the overall system is modestly progressive, even when you count payroll taxes. Estimates vary, but roughly speaking the bottom quintile pays a fairly small amount, the next quintile pays about 15% in taxes and the top quintile pays about 24% or so. That isn't very progressive, but it is progressive.

Other estimates suggest even less progressivity. But the bottom line is that, yes, the tax system is progressive, it just isn't very progressive.

Posted by: Kevin Drum on October 8, 2007 at 4:40 PM | PERMALINK

Given that SS payroll taxes apply to only the first $97,500, it is hard to believe that the overall distribution is even "modestly progressive."

It isn't.

Progressive income taxes do not make up for the regressivity of the rest of the tax structure.

Posted by: Disputo on October 8, 2007 at 4:41 PM | PERMALINK

My point to all this, Kevin, and everyone else, is to take heart that about 70% of people eventually come around. Ain't no point in worrying about the 30% or so who can't/won't/never will. Posted by: A different Matt

If it were only true. I believe that if you could actually poll 1,000 people in each tax bracket that you would still find a healthy majority believing that the Bush tax cuts benefited not only them personally but the country as a whole.

Americans have next no understanding of economics. That's precisely why charlatans (a nice way of saying asshole) like Instatwit can still get away with promising the moon and the stars if only we cut taxes again, and why banks and mortgage companies helped so many morons buy houses they couldn't afford, in many cases even if the mortgages didn't take a 3-5% rate jump after a few years.

Posted by: JeffII on October 8, 2007 at 4:44 PM | PERMALINK

There must be something we can conduct a military strike against that will resolve this shameful progressiveness.

Posted by: Billy Kristol on October 8, 2007 at 4:49 PM | PERMALINK

If you do have the numbers off the top of your head, please just jot them down once again. At the very least, it helps those of us who do encounter folks we want to argue this with.

Posted by: JD on October 8, 2007 at 4:53 PM | PERMALINK

Kevin, why don't you simply do one post on a permanent page, and every time this nonsense gets posted by someone like Instapundit, you link to it and you link to the rebuttal page with some snarky comment about it. You get snark, which is full of win, plus facts, which are full of win, and it's easy, also full of win. He's obviously not going to take the time to rehash it, even if he does link to the same tired "Taxes suck" BS he always does with his "heh" comments, you shouldn't have to do more than one short post on it either.

Posted by: Kit on October 8, 2007 at 4:55 PM | PERMALINK

On trying to persuade supply-side wingnuts, a good place to start is the claim that tax receipts always go up when taxes are cut. You say, "So if the tax rate were cut to zero, tax revenues would become larger than ever?"

Posted by: bobo the chimp on October 8, 2007 at 5:07 PM | PERMALINK

If you follow the links to the report, you'll see that

The top 1 percent of taxpayers (AGI over $364,657) earned approximately 21.2 percent of the nation's income (as defined by AGI), yet paid 39.4 percent of all federal income taxes.

and in the table on that page, the top 1% pay an average tax rate of 23.13%, compared with 12.45% over all tax payers. Yawn. To get into the 1% club, you make a minimum of six times the average (mean) wage in the U.S.; you pay somewhere around two times the average (mean) tax rate. What numbers would the wingers like to see?

Posted by: RSA on October 8, 2007 at 5:11 PM | PERMALINK

Yes, not only can he ( & they) really be that clueless, they are proud of their cluelessness & refuse to hear any info to the contrary. "La la la I cannot HHEEAARR you!"

Posted by: darms on October 8, 2007 at 5:14 PM | PERMALINK

The reason Glenn Reynolds and his followers are impervious to logic is because they're not concerned with economic performance in this context. They simply want to do away with the income tax, period, and could care less what the overall effect upon the economy might be. Some of Reynolds' acolytes think we'd do just fine with a national sales tax. Others are genuine drown-the-baby-in-the-bathtub libertarians who want to strip the federal government down to pre-1860 levels, the hell what that would do to the economy, society, or anything else. We can't get through to them, and won't get through to them, because we speak two different languages. The best approach is simply to outnumber them.

Posted by: dr sardonicus on October 8, 2007 at 5:31 PM | PERMALINK

How's about just saying:

Bush cut taxes for the wealthy and Republicans said it would put money in your pocket and strengthen the economy. Has it?

Clinton raised taxes on the wealthy and Republicans said it would hurt you and wreck the economy. Did it?

If you want more Bush economy, vote Republican. If you want an economy like we had under Clinton, vote Democratic.

Oh, and if you think it's a problem to run up massive deficits on the national credit card for your kids to pay off, vote Democratic. Republicans have proved they can't be trusted with other people's money.

Posted by: anonymous on October 8, 2007 at 5:32 PM | PERMALINK

I also live in Tennessee which does not have a state income tax (except on interest income over a certain amount.) Consequently, we have a very high sales tax which applies to almost everything. Perhaps the Professor shoplifts all his food and so hasn't noticed the 9.25% tax he and the poorest beggar on the street have to pay to eat.

Posted by: greennotGreen on October 8, 2007 at 5:34 PM | PERMALINK

99% of wingnuts think they are above average.

Posted by: RobertSeattle on October 8, 2007 at 5:37 PM | PERMALINK

Professor shoplifts all his food and so hasn't noticed the 9.25% tax he and the poorest beggar on the street have to pay to eat. Posted by: greennotGreen

What I think has gone unnoticed by the regents and administration at UT is all the idiotic shit "the perfesser" posts to his blog.

Speaking of people who don't belong in academia, please explain, Kevin, what UC Berkley was thinking by hiring John "You have no inalienable rights" Yoo to it's law faculty. I could see him at Pepperdine or George Mason, even Chicago. But Berkley?

Posted by: JeffII on October 8, 2007 at 5:44 PM | PERMALINK

"People read this stuff and believe it."

I think you have that a bit backwards.

People generally read Glenn because they ALREADY believe that kind of crap, if not that exact crap.

You will never be able to reason with them, because they are not open-minded at all.

So take some solace in that -- he is not convincing anyone who has not already drunk a vat full of Kool-Aid.

Posted by: Cal Gal on October 8, 2007 at 5:48 PM | PERMALINK

Yes, they're always bullshitting about that. Here's what I posted at what Glen Linked to about it:

They didn't include FICA (Social Security), right? FICA takes a flat percent of earnings up to about 90k, and should be flat all the way up. Sure, "You get that back someday", but it's still a tax because you have to pay it now, and other taxes presumably offer some benefit. (Not only that, but some of the FICA is being used for the general fund, and not likely to be paid back anyway.) Then there's all the other kinds of taxes, and one thing most people don't think of (but an economist has to): the expansion of the fiat money supply. That brings more buying power to the wealthy than a hard currency system, so the current system of monetization of debt etc. is in effect a regressive tax on the rest of us.

Posted by: Neil B. on October 8, 2007 at 5:50 PM | PERMALINK

Did a graph of where we get taxes from over at Angrybear and found something surprising. Back in 2000, the state & locas raised as much tax revenues as did that Federal income tax Glenn et al. keep babbling about. State & locals still take about 13.5% of GDP while the FEDS take about 11.7%. And of course, payroll taxes take about 7%. But Glenn only looks that the Federal income tax bite. To omit the rest omits about 63% of what we pay. So why do we even care about some spin based on only 37% of what we pay?

Posted by: pgl on October 8, 2007 at 5:52 PM | PERMALINK

Disputo: "Progressive income taxes do not make up for the regressivity of the rest of the tax structure."

All too true. State snd local consumption taxes, especially those imposed at the retail level, impact disproportionally the poor and middle classes when compared to the wealthy, simply because a greater percentage of wage-dependent income is spent on those involuntary assessments at the cash register.

Posted by: Donald from Hawaii on October 8, 2007 at 6:04 PM | PERMALINK

"I think that degree of progressivity is actually bad. I think that everyone should pay at least some tax, and it should vary each year with how much the government spends, and should be enough to give people an incentive to care." - Glenn Reynolds

I happen to agree with the last bit especially. It's called tax and spend. I know, "tax and spend" has become a negative, a phrase used to attack democrats, but isn't it, at it's heart, responsible management? I mean, I "earn and spend" and home, and earn first, spend second. Democrats do tax and spend, which is honest.

On the other hand, Glenn's Republicans spend spend spend, and avoid taxing anyone who might donate to their political campaigns. (Their children won't be so lucky.)

Posted by: Fides on October 8, 2007 at 6:05 PM | PERMALINK

But the people like George Bush who succeed at what they do and have made tons of money by the dint of sheer hard and backbreaking labor should actually have to pay less taxes so that they can generate more jobs for those who waste their time doing nothing.

Posted by: gregor on October 8, 2007 at 6:38 PM | PERMALINK

Kevin,

I like the "Spreading the Tax Bite Around" table you've got there. The bottom 20% are definitely getting boned (especially if they smoke and drink and have to commute a long distance to work!). Looks like you could have a nice mellow straight progressive line by: Increasing the standard deduction and offset the lost revenue with an upward click in the fed. income tax rate; Extend FICA to *all* income, and offset the increased revenue by a downward click in the FICA rate.

Posted by: Doc at the Radar Station on October 8, 2007 at 6:42 PM | PERMALINK

"Looks like you could have a nice mellow straight progressive line by: ..."

Don't forget one of the most important and politically easiest to sell ideas: start taxing capital gains at the same rate as earned income. Dividends too, if that tax cut didn't already expire.

I think moderate republicans are particularly susceptible to that one because of all the 'flat tax' baloney they are trying desperately to swallow.

It would help if most states would fix their tax systems to not be hideously regressive. Basically that means progressive state income taxes. A very hard sell, unfortunately. I win every argument I have with the republicans I know about it, but at the end they just go to their happy places and pretend the conversation never happened.

Posted by: jefff on October 8, 2007 at 6:57 PM | PERMALINK

Kevin,

Glenn's (which is also Rush's) argument ignores state and local taxes. For example, here in Texas, taxes are highly regressive, thanks to the sales tax and others.

To increase the tax on the lower income brackets while ignoring the state and local taxes would put further burden on them. When 11+% of the income for the lowest 20% bracket goes to state and local taxes, *that* is the perspective to look at, not from who, as an aggregate, contributes the most.

Posted by: tx bubba on October 8, 2007 at 7:04 PM | PERMALINK

I think it's pretty generous that everyone is assuming that Glenn actually believes the things he puts on his blog. He passed a state bar exam, which suggests enough intelligence to know that he is lying to people.

He's lying for a cause though. The cause of the downtrodden wealthy.

Posted by: Austin on October 8, 2007 at 7:07 PM | PERMALINK

I have a question rather than a comment:

If table 2 includes more taxes (state and local) than table 1 (just federal), than why are the percentages in income paid in taxes higher in 1 than 2? Is the data from vastly different years?

Posted by: TNDem on October 8, 2007 at 7:36 PM | PERMALINK

1) Glenn wasn't talking about all taxes, he was talking about income taxes.

2) There is a pernicious effect when Dems nurture a parasitical caste that thinks the income tax is money growing on trees, and that it should be harvested once a year as EITC for their benefit.

3) Glenn would gladly cut back government programs to allow a flattening you would approve of.

4) Glenn's a lot smarter than you, you shouldn't call him clueless.

5) Why don't you try to be Nordhouse to Glenn's Lomborg and look for areas you agree, like imposing user fees or sin/luxury/ostentatiousness taxes in place of penalizing constructive effort.

Posted by: minion on October 8, 2007 at 7:50 PM | PERMALINK

First, you've all had a big swig from the kool aid mug. The idea that any portion of the Social Security tax is actually paid by the employer is pure BULLSHIT. When an employer hires someone the SSI tax has to be included in determining what that employee can be paid, therefor in reality it's a part of the overll employee compensation package. IT has to be. Therefore, it is the employee, not the employer that actually pays that tax. Anyone making less than $97,000 per year should add 6.2% to his/her tax figures to see how much they're really paying. Do this and you find that our tax system is highly regressive since even minimum wage workers are actually paying over 12% of their income in taxes. Take a look at the pie chart in instruction booklet provided by our friendly IRS and you'll find that almost a third of total federal tax revenues comes from the social security tax and this money goes right into the general fund along with the rest of the federal taxes. That means that people making less than $97,000 per year are paying a third of all federal taxes via SSI before they pay one penny in income or medicare taxes. Try figuring your taxes this way, then compare your tax bill with someone who lives off capital gains or dividends which are taxed at a maximum of 15%. Wake up people--we're really being screwed.

Posted by: sparky on October 8, 2007 at 7:53 PM | PERMALINK

Just a note. A question came to my mind, so I looked it up myself here at the BLS http://tinyurl.com/24odsq. The federal income tax numbers are net of the earned income credit and are, therefore, negative for low income households. This means the appalling 18% from the poorest fifth number includes a negative amount of federal income tax. The sources make it clear that it is due to taxes of tobacco alcohol and gasoline.

Amazing effort on finding the table Mr Drum. I don't want to imagine what you do when you are highly motivated.

Posted by: Robert Waldmann on October 8, 2007 at 7:56 PM | PERMALINK

2) There is a pernicious effect when Dems nurture a parasitical caste that thinks the income tax is money growing on trees, and that it should be harvested once a year as EITC for their benefit.

As opposed to the parasitic upper class that lives off the excess labor of the people who actually do all the work?

Fuck, even Greenspan is now warning about increasing income disparities (that are now as bad as they were before the Great Depression) leading to social instability that may destroy capitalism, and yet the wingnut faithful are still whining about how the rich are victims of the welfare state.

Posted by: Disputo on October 8, 2007 at 8:02 PM | PERMALINK

1) Glenn wasn't talking about all taxes, he was talking about income taxes.

To complain about the progressivity of income taxes without taking into account the regressivity of other taxes is at best stupid and at worst dishonest.

As you say in #4, Glenn isn't completely stupid, so my guess is dishonest.

Posted by: Wilbur on October 8, 2007 at 8:20 PM | PERMALINK

I suspect the "Pretax Income" excludes obviously non-taxable items, such as welfare, Medicaid, Medicare, Food Stamps, etc. If these were included, I think we would see that the lowest 20% does pay a lower percentage of their total income than other groups.

Nevertheless, I mostly agree with Kevin's main point. Total taxes paid as a % of income doesn't vary that much among the quintiles.

Posted by: ex-liberal on October 8, 2007 at 8:45 PM | PERMALINK

"1) Glenn wasn't talking about all taxes, he was talking about income taxes."

So? His first statement was: "So I guess the tax code is pretty progressive." And his further comment was that "everyone should pay at least some tax." His point was clear and it was wrong. And stupidly wrong, at that, which means that Glenn is either an idiot or a liar.

"2) There is a pernicious effect when Dems nurture a parasitical caste that thinks the income tax is money growing on trees, and that it should be harvested once a year as EITC for their benefit."

LOL.... Dear heart, when you've got something to say other than mindless partisan drivel, do come back, won't you? I'm just going to let this bit of stupidity stand without comment, particularly since it was the point of Kevin's post and has been debunked already.

"3) Glenn would gladly cut back government programs to allow a flattening you would approve of."

Again, so? That has nothing at all to do with Kevin's point. Moreover, I rather doubt it's true, since the overwhelming bulk of that income tax goes to defense, homeland security, and the like -- programs an avowed hawk like Glenn has never showed any sign of a willingness to cut back.

"4) Glenn's a lot smarter than you, you shouldn't call him clueless."

Well, personally, I think he's a liar, but that's just me. If he doesn't want to be called "clueless," then he shouldn't write such stupid posts.

"5) Why don't you try to be Nordhouse to Glenn's Lomborg and look for areas you agree"

Because it's pointless with someone like Glenn. Or like you, for that matter. The gap between ideology and reality is simply too wide to bridge and there is no point in trying.

Posted by: PaulB on October 8, 2007 at 8:49 PM | PERMALINK

Am I the only one whose first thought after looking at this is, "what the hell am I doing wrong?" I pay 40% of my income (30% federal, 10% local) in taxes!

Posted by: Tom Veil on October 8, 2007 at 8:49 PM | PERMALINK

"I suspect the 'Pretax Income' excludes obviously non-taxable items"

Which is just another way of saying that you have no idea what you're talking about.

Posted by: PaulB on October 8, 2007 at 8:53 PM | PERMALINK

"what the hell am I doing wrong?"

Not owning your own home and not having enough children, probably.

Posted by: PaulB on October 8, 2007 at 8:54 PM | PERMALINK

gregor: "But the people like George Bush who succeed at what they do and have made tons of money by the dint of sheer hard and backbreaking labor should actually have to pay less taxes so that they can generate more jobs for those who waste their time doing nothing."

Your train of thought is the logical equivalent of an M.C. Escher drawing.

Posted by: Donald from Hawaii on October 8, 2007 at 8:56 PM | PERMALINK

Did a graph of where we get taxes from over at Angrybear and found something surprising. Back in 2000, the state & locas raised as much tax revenues as did that Federal income tax Glenn et al. keep babbling about. State & locals still take about 13.5% of GDP while the FEDS take about 11.7%. And of course, payroll taxes take about 7%. But Glenn only looks that the Federal income tax bite. To omit the rest omits about 63% of what we pay. So why do we even care about some spin based on only 37% of what we pay?

True. Now do you think the rich pay more state and property taxes than the rest?

Not percent of income. More. You think the middle and lower classes are paying for all the good things liberals spend government money on?

Posted by: harry on October 8, 2007 at 9:07 PM | PERMALINK

Hmmmmmmm... Well, I did in fact find that an interesting rebuttal. I am generally of the opinion that the rich DO pay their fair share or more in taxes. But I can see the point that, while they undeniably pay far more than their share of income taxes, other layers and forms of taxation level the disparity. So I will say that this HAS given me something to think about, so good job!

Two other thoughts occur to me however: First off, it seems that social security is a major source of the 'regressive' taxation and a significant percentage of government expenditure. So what should we be doing about Social Security? It seems to me the options are force the rich to pay an even larger share, thus spreading the misery further, or take steps of some sort to reduce the programs burdeon.

And secondly, ignoring current tax law, what is the moral and philisophical basis of charging one group more or less for the exact same services? Or in some cases, services they will never be able to themselves use?

Posted by: Robert on October 8, 2007 at 9:25 PM | PERMALINK

Does Glenn even have people that comment on his blog?
Stop looking over your shoulder, Glenn. Cool name, Instapundit. But not nearly as cool as Kevin's original Calpundit.
Learning to be content absolutely requires stopping the "what and then" kind of thought process.
Read up on it. Rick Warren's offering on The Purpose of Driven Life is must-reading for Glenn

Posted by: consider wisely always on October 8, 2007 at 9:40 PM | PERMALINK

I wonder if Robert means the bloated Military Industrial Complex that consists of a military too large to be needed for defense and too small to pacify a moderately sized Middle Eastern nation?

The fact is, Robert, that the list of things I pay for that I will never use is large and the benefits largely go welfare queens like Richard Cheney.

One reason why Social Security is so regressive is that it is subsidizing the failure of the General Fund to collect enough taxes to pay for all of the spending on warmongering. Once you remove the outlays based on dedicated taxes you are pretty much left with nothing but military spending. The earmarks and all of the rest are mere rounding errors.

Posted by: heavy on October 8, 2007 at 9:45 PM | PERMALINK

So? His first statement was: "So I guess the tax code is pretty progressive...

The tax code is generally understood to be the internal revenue code - the one that collects income taxes. Pedantic quibbling gets you nowhere.

As for my slam on the EITC, I would not object to the program if teaching economic literacy in our schools was part of the program, i.e., the recipients realized they were getting subsidized by other taxpayers, not manna from their congresscritter.

I do not object to using the tax system to promote a more equitable distribution of income, I was objecting to Kevin's snark and pretention. Glenn is an honest person, if Kev had equal ability he should be able to dispute his post without the negativity.

Posted by: minion on October 8, 2007 at 9:46 PM | PERMALINK

Glenn is not an honest person. He is selling a line of bullshit. There are few, if any, who do not pay taxes. To suggest, imply, hint, insinuate, or intimate that taxes are progressive is the furthest thing from honest. That's why he limits his discussion to the "tax code," so that dishonest toads like you can praise him in spite of his loathsome hackery.

Posted by: heavy on October 8, 2007 at 9:59 PM | PERMALINK

Glenn believes the income tax system in this country causes more problems than its worth - a position many people like me agree with. It allows subsidies and payoffs to be hidden [see his Porkbusters entries] and its purported objectives could be achieved at much less expense and in a more open, democratic process by other means. I don't see why Kevin has to adopt the tone and demeanor of the nutrootsers like Heavy to despute those arguments, if he disagrees with them.

Posted by: minion on October 8, 2007 at 10:13 PM | PERMALINK

As for my slam on the EITC, I would not object to the program if teaching economic literacy in our schools was part of the program

Wingnut fallacy #637893: Assume that everyone else is as stupid as you are.

Posted by: Disputo on October 8, 2007 at 10:15 PM | PERMALINK

Who's being pedantic? Is it really an interesting point if all you can say is that one *part* of the tax code is progressive. If Kevin had just posted something that said "wow, look at how regressive social security is," wouldn't you have found that to be a trivial, stupid point?

Posted by: Austin on October 8, 2007 at 10:17 PM | PERMALINK

I think it was Paul Krugman who tells the joke about the progressive and the conservative sitting in a bar having a drink. They look up and who enters the bar but Bill Gates. The conservative is ecstatic, the progressive asks why. “Because we are all rich” shouts the conservative. “How do you figure that” replies the progressive. “Well, just do the math, the average income of everyone in this bar is millions of dollars” states the conservative, to which the progressive replies that is the stupidest thing he has ever heard. The conservative looks puzzled, then enlightened, and replies “Oh I see, you still believe in the discredited politics of class warfare!”

Posted by: fafner1 on October 8, 2007 at 10:56 PM | PERMALINK

Too bad if you don't like my tone moron. The world has quite enough disinformation - there is no need to be polite to the thugs spreading it. This notion that its okay to lie so long as you have a nice tone is the reason that we end up with assholes like George W. Bush killing Iraqis for sport.

Posting dishonest and partisan drivel, like the post to which Kevin refers, is a far greater incivility than any engaged in by the "nutroots." Name-calling may not be polite, but it doesn't pretend to be. Lies, on the other hand, infest our political speech and must be refuted lest the clueless base their votes on that misinformation.

Honesty is a far greater virtue than politeness.

I do have to admit the tone deaf hypocrisy of someone like moron accusing me of being uncivil while at the same time using simple name-calling to refer to me is amusing.

Posted by: heavy on October 8, 2007 at 10:58 PM | PERMALINK

I'm sure that attitude got you a lot of dates, Heavy.

Posted by: Light on October 8, 2007 at 11:00 PM | PERMALINK

Wow, that's your idea of discourse? Talking about my sex life?

No wonder the right-wing is reduced to repeating the same tired lies about who pays taxes.

Posted by: heavy on October 8, 2007 at 11:27 PM | PERMALINK

IMPORTANT QUESTION FOR ME: When these graphs/policies talk about "average income" are they talking about income from individuals or from households? For me, it makes a difference if we're talking about the tax rate for a single person earning $200k/year versus a married/filing jointly couple with 3 kids earning $200k. I never hear a differentiation being made and would appreciate some illumination. Thanks

Posted by: Anonymous on October 8, 2007 at 11:32 PM | PERMALINK

Anonymous,

I have no real input on your question, but I'm almost surprised there isn't a whole industry around people getting sham marriages late in Decemmber, then getting divorced in early January, just to get 2 years worth of the marriage related deductions. Single people get screwed by our federal income tax code.

Posted by: RobertSeattle on October 9, 2007 at 12:34 AM | PERMALINK

So, when Congress wants to fund SCHIP with increases in the tobacco and other sin taxes who does that hurt? A fifty cents a gallon gas tax for global warming hurts who? It seems to me that screwing the poor is a bipartisan effort!

We have high taxes, heavy regulation, enervating social policies and for what? Living in a rental, having no personal savings, schools that turn your kids into drug addicts and/or perverts? Sounds like a living hell, a veritable workers' paradise.

No matter how progressive, regressive, or transgressive the the tax system is, the money is clearly being spent, to put it mildly, suboptimally. What the F*#$ to do? Hell, who is John Galt anyway?

Posted by: biff on October 9, 2007 at 2:30 AM | PERMALINK

Payroll "taxes" are federally mandated insurance premiums! These payments should not be included in tax calculations. Take them out and most people in the U.S. pay get either tax credits, pay zero taxes, or pay nominal amounts. The truth is the ethical/economic elite (10%) in the USA, the lifetime student/worker/sober/lawful citizens carry the rest of the slobs on their backs like loads of bricks (often drug-doing, law-breaking bricks). Where is the gratitude? MORE, MORE, MORE ...

Ayn Rand depicted the travesty of social justice best; the parasites are never satisfied.

TOH

Posted by: The Objective Historian on October 9, 2007 at 3:49 AM | PERMALINK

That the top 1% of income earners pays 90% of the tax, says more about the absurd income disparities in our plutocracy, than it does about the unfairness of the tax code.

Posted by: The Conservative Deflator on October 9, 2007 at 5:36 AM | PERMALINK

harry: "You think the middle and lower classes are paying for all the good things liberals spend government money on?"

No, harry, they clearly don't, because:

(a) The lower classes are much too busy carrying the burden of your stupid fucking war in Iraq; and

(b) The liberals only took power in Congress eight months ago, and have been preoccupied with trying to clean up six years' worth of bullshit left by your irresponsible mortgage-and-spend Republican friends, who couldn't even be bothered to pass a federal budget last year while still in charge.

Poor harry. You clearly aspire to be a GOP tool, but alas, you're nothing more than yet another cracked blade in a depleted Republican woodshed.

Posted by: Donald from Hawaii on October 9, 2007 at 5:56 AM | PERMALINK

Kevin,
Your missing an important component of the tax rate conundrum in two respects.

Your assessment was of average tax rates. If you did an assessment of the timing of marginal tax rates (the tax on the last dollar of income earned), the rates would peak in the $200,000 - $500,000 range and that would result from the mix of increase in federal income tax but the reduction in social security (over $90,000).

The differences in rates would be more profound as you got up to the higher income levels.

The second issue is that if you stratified the tax rates by those that work for a living (proportionally) vs those that "invest" for a living, you'd find similarly that the highest marginal rates apply in the professional level working groups, and RADICALLY decline for those that make their money from investments nearly solely.

The tax code is currently functionally structured to distinguish between old wealth (receiving a higher proportion of their income from dividends and LONG-term capital gains) and new wealth (receiving a higher proportion of their income from salaries, bonuses, and shorter term capital gains).

The effect on the economy as a whole is to discourage investment in productive plant, equipment and enterprise, and to discourage work.

The flow of capital IS effected by the tax code, as money seeks the highest return. So, if the tax code is structured to reward financial gains rather than productive gains, it does effect the economy as a whole.

One reason for the current tax structure, relates to the shift in America's status from net worth to net debtor. We pander to both international and domestic financial concerns.

Work has become less sufficient to provide for a decent life and has become undignified.

The tax laws exarcebate that emphasis.

Posted by: Richard Witty on October 9, 2007 at 6:33 AM | PERMALINK

RW, the Piketty Saez data addresses the issues you raise, perhaps you could look at it?

As to The flow of capital IS effected by the tax code, this is completely wrong not least because flow may be affected, in part, by the tax code's effects on IRR, e.g., but capital investment isn't effected by the code.

The remainder of your comment is just silly although it reflects the confusion of many others in distinguishing between taxes and the economy. One reason the Glenn, and his ilk, can make comments about the "progressivity" of the tax code is that he connects the performance of the economy and tax rates despite evidence to the contrary.

Posted by: TJM on October 9, 2007 at 9:00 AM | PERMALINK

Any tax code that doesn't recognize that the $1 a poor man pays is more significant than the $1 a rich man pays is immoral.

Posted by: Jeffrey Davis on October 9, 2007 at 9:30 AM | PERMALINK

Jeffrey Davis,

Or as a wise man once told me, "Fair is NOT Equal".

Posted by: RobertSeattle on October 9, 2007 at 10:19 AM | PERMALINK

State lottery revenue should also be included as a voluntary tax.

Posted by: KMB on October 9, 2007 at 10:23 AM | PERMALINK
The chart below doesn't include imputed corporate incomes taxes or the employer portion of the payroll tax, so the overall numbers are lower than they should be, but it still gives a pretty good idea of the overall flatness of our tax system:

Kevin Drum, ladies and gentleman, the only notional "liberal" who will describe the defining characteristic of a system in which lowest quintile pays a higher percentage of taxes than any but the highest quintile as "overall flatness".

Posted by: cmdicely on October 9, 2007 at 12:28 PM | PERMALINK

Despite minion's objections (and what a perfect name for an Instarube sycophant!), the Tennessee Turd shows he is as willfully stupid about taxes as he is about every other subject. Any discussion of the fairness of the federal tax system on disparate wage earners has to include payroll taxes. And this includes the sleight of hand that payroll taxes are actually insurance premiums. You could call them Virginia Ham, and the effect would still be the same--the average Joe is still obliged to pay them.

Instarube is obtuse enough to make me wish blogs didn't exist. But I understand Kevin's concern that the idiot does have an audience. Luckily, it is dwindling. Plus, as Cal Gal notes, Instarube's readers are true believers. If Bush's approval rating sinks to the teens, you can be sure Instarube's readers will still be backing W.

Posted by: Charles Giacometti on October 9, 2007 at 12:40 PM | PERMALINK

Thanks for the excellent exposition on why flat taxes are superior.

PS: Social Security withholding isn't a tax.

Posted by: Christopher Taylor on October 9, 2007 at 1:41 PM | PERMALINK

"Christopher Taylor" is so shallow and passive-aggressive you almost wonder if he is an Instarube sockpuppet. Check that IP address!

Posted by: Charles Giacometti on October 9, 2007 at 1:44 PM | PERMALINK
PS: Social Security withholding isn't a tax.

Yes, it is, and saying it isn't won't make it any less a tax.

Posted by: cmdicely on October 9, 2007 at 1:44 PM | PERMALINK

"Payroll 'taxes' are federally mandated insurance premiums! These payments should not be included in tax calculations."

Income "taxes" are federally mandated user fees! These payments should not be included in tax calculations.

I can play silly games, too, TOH, but that's all they are -- silly games.

Posted by: PaulB on October 9, 2007 at 2:00 PM | PERMALINK

"The tax code is generally understood to be the internal revenue code - the one that collects income taxes. Pedantic quibbling gets you nowhere."

Dear heart, you're the one doing the "pedantic quibbling." "The tax code" is generally understood to be anything that takes money out of my pocket and puts it in the hands of the local, state, or federal government, which is why your "pedantic quibbling" is silly, not to mention pretty dumb.

"As for my slam on the EITC"

Since your "slam" was unsupported by anything resembling data, logic, or common sense, you really shouldn't try to defend it. You're just diggin that hole deeper.

"I was objecting to Kevin's snark and pretention."

Since Kevin's "snark" was, in fact, quite accurate, I'm afraid I remain unimpressed by your "objection."

"Glenn is an honest person"

If Glenn were an "honest person," he would not have posted what he did. He's either dumb as a rock, which I do not think is true, or he's dishonest. Those are your only two choices when looking at posts like that.

"if Kev had equal ability he should be able to dispute his post without the negativity."

He did, in fact, dispute the post. The "negativity" was fully warranted by Glenn's stupidity and/or dishonesty, particularly in light of Glenn's track record.

"Glenn believes the income tax system in this country causes more problems than its worth"

Then he should say so, and back up that assertion with real data. Thus far, neither he nor you have been able to do that.

"I don't see why Kevin has to adopt the tone and demeanor of the nutrootsers like Heavy to despute those arguments, if he disagrees with them."

Because that wasn't the argument that Glenn made. And the argument that Glenn actually did make was stupid and dishonest, fully warranting the negative reply.

Posted by: PaulB on October 9, 2007 at 2:08 PM | PERMALINK

The Cato Institute has pointed out that GwB has engendered the biggest growth in government ever, exceeding even LBJ and the Great Society. Any discussion of who should pay what in taxes has to keep in mind that what those taxes pay for is important, too.

All of this points to the failure of Congress under Rep. leadership. The reason the founders put the purse strings in Congress's hands was to control the executive's tendency to spend for preferred projects. Congressional neglect over the last 13 years has cheapened the currency, run up substantial deficits and the worst is yet to come if the SS Trustees are even close to being right about Medicare expenditures.

Posted by: TJM on October 9, 2007 at 2:21 PM | PERMALINK

Aug. 29 (Bloomberg) -- Top private-equity and hedge fund managers made more in 10 minutes than average-paid U.S. workers earned all of last year, according to a new study from two research groups.

The 20 highest-paid fund managers made an average of $657.5 million, or 22,255 times the U.S. average annual salary of $29,500, said the study, released today by Institute for Policy Studies and United for a Fair Economy. The study cited data from the U.S. Labor Department and Forbes magazine.

Only twice before over the last century has 5 percent of the national income gone to families in the upper one-one-hundredth of a percent of the income distribution--currently, the almost 15,000 families with incomes of $9.5 million or more a year..." - Louis Uchitelle

"The top 10% of income earners in the United States now owns 70% of the wealth, and the wealthiest 1% owns more than the bottom 95%, according to the Federal Reserve. In 2005, the top 300,000 Americans enjoyed about the same share of the nation's income -- 21.8% -- as the bottom 150 million." - Inequality has run amok. Do leaders care?
By Dmitri Iglitzin and Steven Hill
http://www.huffingtonpost.com/steven-hill/inequality-has-run-amok-_
b_61356.html

Posted by: MsNThrope on October 9, 2007 at 4:02 PM | PERMALINK

The second chart is very misleading. The top 20% pay 19% of their income, based on the _average_ income for that group, $116,666. But as the first chart makes clear, much higher incomes pay lower percentages in payroll and income taxes. If the second chart were broken down by income ranges it would tell a different story - that the wealthy pay less.

Posted by: tom on October 9, 2007 at 4:06 PM | PERMALINK

Can you say "tax free government bonds"?

Posted by: PrestoPundit on October 10, 2007 at 12:18 AM | PERMALINK

Wow, the top 400 taxpayers are paying one tenth of one percent more than those making $50,000/year.

Ah but it's the *marginal* rate that's killing us rich folk, the Club For Growth whines.

Posted by: Nancy Irving on October 10, 2007 at 1:21 AM | PERMALINK

Thanks Kevin, great post.
One observation...when we allow the debate to be framed in terms of taxes paid by individuals are we not giving corporations, partnerships, etc.. (and thus the opposing side in the debate) a free ride?
The percentage of taxes actually paid by these groups has decreased dramatically in the last few decades, while individual taxpayers subsidize their direct and externalizes costs.

Posted by: JackNYC on October 10, 2007 at 7:09 AM | PERMALINK

tom,
Agree!
I think you'll find this interesting:
http://www.youtube.com/watch?v=SA1f2MefsMM

Posted by: JackNYC on October 10, 2007 at 7:14 AM | PERMALINK

It is not at all intuitive to consider retirement spending, although mandatory, to be a tax. Why wouldn't you also consider voluntary retirement spending a tax? Isn't deferred salary a completely different thing than a tax?

Posted by: MH on October 10, 2007 at 1:11 PM | PERMALINK

Wow. Anyone who disagrees with me is an idiot. I am overwhelmed by the brilliance of these comments.

Posted by: PresterJohn on October 10, 2007 at 5:37 PM | PERMALINK

giving corporations, partnerships, etc.. (and thus the opposing side in the debate) a free ride

corps are odd beasts . . . on some days I think it makes more sense to tax not their net income but their net wealth.

Thought experiment for everyone: let's say all income taxes went to 0.0%. . . . how many years until rising rents would wipe that income gain? Where would the added wealth end up?

In this Georgist's opinion, we can talk about tax policies all we want but we're not going to fix anything until we start taxing site values, the rents pocketed from site values is the true parasitical drag in the economy.

Posted by: Troy on October 24, 2007 at 4:44 AM | PERMALINK




 

 

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