Corporate backed media, think tanks and academics love to point out that the wealthy pay proportionally more in taxes. They accuse our tax system as redistributive, taking away hard earned money from the wealthy to provide entitlements to the less deserving. This is what echo chambers and news talk hosts regurgitate and this is the misinformation we tend to believe.
The past two entries explored one reason why this is misinformation. Much of the wealth of the wealthy is not hard earned at all. Some is obtained through the capital welfare provided by real estate, publicly traded stock, inheritances and other means of getting income without economic productivity. Some is obtained by inflated compensation for those at the upper levels of management hierarchies.
There is another reason why accusing our tax system of being redistributive is misinformation. Pointing out that a fewer percentage of the wealthy pay a higher percentage of taxes is meaningless. What matters is how the percentage of their wealth relates to the percentage of their taxes. From the IRS (www.irs.gov/taxstats) you can find out that those with incomes of 1.5 million dollars or more, paid a little over 149 billion dollars in taxes in 2004. As corporatists would be quick to point out, this was about 0.1% of the population of IRS returns shouldering about 17.1% of the tax burden. Oh, the redistributive horror!
But wait a minute! If we turn to the Wealth tables of the Statistical Abstracts we find that those with a net worth of 1.5 million dollars or more possessed 27.6% of the net worth in this country in 2004. Taxing the wealthy more at this point would not be redistribution so much as retribution to make them pay their fair share of wealth that they control. I don’t suppose the Puppet Libertarians and the Powell Cabal will ever make that one of their talking points.
Tags: Free Market Merit, Middle Class Economics, Misinformation, Unbalanced Trends
