Posted on Oct 26, 2015
“You don’t pay taxes, taxes get taken. You get your pay, money gone. That ain’t paying taxes, that’s a jack.”
Chris Rock, comedian, 1 percenter
The popular election meme of “tax the rich” for social justice is a deftly practiced and well-known vote getter. Used currently by politicians in primary contests to comfort economically stressed voters, this factually impervious theory continues to enjoy wide appeal.
By appealing emotionally to the “fairness” of taking more from the rich rather than logically of getting more for the middle class, populist pols sway elections.
But even a quick examination of well-known economic fact explodes this bedtime story for economically stressed voters on contact.
To boil down all the charts and graphs into plain english, Daniel J. Mitchell, a senior fellow at the libertarian Cato Institute, Ph.D. in economics from George Mason University and a B.A. and M.A. in economics from the University of Georgia explains, “The key factoid (assuming my late-at-night, back-of-the-envelope calculations are right) is that this study implies that the government would reduce private-sector taxable income by about $20 for every $1 of new tax revenue.”
So when the government gets $1 in new taxes, we all lose $20 of taxable income. Some of this loss obviously comes out of middle class income. But how much? A study published in the New York Times in January of 2015 states, “The middle class, if defined as households making between $35,000 and $100,000 a year, shrank in the final decades of the 20th century. For a welcome reason, though: More Americans moved up into what might be considered the upper middle class or the affluent. Since 2000, the middle class has been shrinking for a decidedly more alarming reason: Incomes have fallen.”
Since 1967 lots of middle class people got wealthy, moved to a higher tax bracket, got taxed at higher rates and so increased tax revenues dramatically but those who remained in the middle class lost 10% of their income.
So, poor and middle class people, how’s more tax money working out for ya so far?
Anyone politician who has worked in the Federal government knows these tax facts. Some currently running for office, obviously choose to ignore them. An honest or less ideological politician would be asking, “How do we get more income to the middle class?” Instead of, “How do we take more income from the rich?” But the horror of the Koch brothers advocating for a tax cut for the wealthy is such a rich vein of emotionally charged mis-direction that pols just can’t resist.
Here’s the fact that, in the proper political messaging, brings home the bacon;
“Before 2000, the tax burden shifted from the lowest 80% of earners to the highest 20%; since 2000, the burden has shrunk for all groups, but more so for the highest earners.” “Economic Synopsis”, Federal Reserve Bank, St. Louis in 2011.
So even though the tax burden has shifted mostly to the rich ( a good thing) and more of us are rich (also a good thing) and the tax burden has shrunk for everyone ( a third good thing), the tax burden has shrunk even more for the rich ( a very bad thing).
And even though everyone serving in government knows that more tax revenues haven’t benefitted the poor or middle class, here’s the killer political message…