Top 1 Percent Pay 37 Percent of Income Taxes

Tax cheat Tim Geithner, the only member of the Obama economic brain trust who has not yet been fired, testified to the Senate Finance Committee today in favor of the president’s proposed trillion-dollar-deficit budget. 

Geithner, a Dartmouth man esteemed more for his tennis skills than for his understanding of markets or business, peddled much Keynesian voodoo before a nation whose economy he helped destroy while employed by the Federal Reserve Bank and then the Department of the Treasury. To get a sense of the mixed metaphors and confused logic that characterized the treasury secretary's testimony, ponder the Reuters headline “Geithner: Year-end fiscal cliff to hit U.S. growth,” and tremble to reflect that this word salad accurately describes Geithner's comments. 

Mostly, Geithner pressed the need to lay heavier tax burdens on the “top 2 percent” of Americans. In proof that the second version of history is farce, the same rhetoric that characterized the birth of the modern central banking system – that the income tax would be levied only on the rich – is being used again at its death. But the Tax Foundation, citing data from Geithner’s Internal Revenue Service, suggests why the political goal of raising taxes on people who earn more than $340,000 in a year will not achieve the fiscal goal of raising more revenue: 

Earners in the top 1 percent pay 37 percent of the income tax. Earners in the top 5 percent pay 59 percent. Raising tax rates for these people may feel good, but the iron judgment of history is that it will not increase the total tax haul. As you can see from the chart here, top marginal rates have varied from above 90 percent to below 30 percent over the past 70 years, but federal revenue as a percentage of GDP has remained steadily in the 19-percent neighborhood. 

The chart also gives strong evidence of what brought Uncle Sam’s cut of GDP from the single-digit range to the 19-percent range. That happened in the mid-1940s, when the government and the Federal Reserve broke their original promise to soak the rich and broadened taxable income to include every penny earned by every American. 

While the Geithner plan will not succeed in raising revenue, it does have the capacity to raise the volatility of revenue collections. High earners experience more severe ups and downs in their income than the rest of us. This is the particular danger in California’s own effort to service its spending addiction through higher top rates, as I explained a few weeks ago

 

Geithner’s top-2-percent strategy risks putting federal revenues on the same roller coaster. Here is a look at just how contingent and temporary millionaire status is in the United States. As Geithner knows from his own experience using TurboTax to conceal income from Washington, high earners also have more opportunities to earn in ways that will not be captured by the IRS – even though in the final stages of its decadence the U.S. government is becoming far more punitive on overseas earnings, charitable donations, expatriation of wealth and people, and other hallmarks of personal freedom.

This is not novel stuff. Even First Baron Keynes understood that the relationship between tax rates and revenue raised is not one-to-one. In fact, if Keynesians were truly attentive to their master, they would have a better understanding of the importance of depressive taxation in centrally planning an economy. What’s truly worrying is that Geithner doesn’t seem to grasp the concepts he’s trying to put into practice. Plenty of people want to soak the rich: 

 

But if Warren Buffett or Hillary Clinton or even Stephen King believes in garbage, that has at most a tangential effect on me. Geithner, on the other hand: He’s the guy who takes money directly out of my pocket. 

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • sarcasmic||

    What are you talking about?

    Obviously the rich don't pay their fair share!

    We know this because they are rich!

    If they paid their fair share then they wouldn't be rich, now would they?

  • Almanian||

    I know, right?

    Tim writes like a typical 1%er. What do you expect?

  • cci||

    happy Valentine's day! Do you wanna look for some bilover to hook up tonight?===Datebi*c/O'm=== is a site for bisexual and bicurious singles and friends.Here you can find hundreds of thousands of open-minded singles & couples looking to explore their bisexuality.sign up for free.

  • Eduard van Haalen||

    And he wants to chip away at charitable deductions, too:

    "Two national Jewish organizations criticized a provision in the Obama administration’s federal budget proposal that would reduce the tax deductibility rate of charitable donations.

    "The Union of Orthodox Jewish Congregations of America and The Jewish Federations of North America both released statements Monday objecting to the president's proposal, which would force taxpayers earning more than $250,000 to deduct contributions to charities at a rate of 28 percent rather than the current rate of 35 percent."

    http://www.jta.org/news/articl.....uction-cap

    What's up with Jews always criticizing the Messiah?

  • Jeffersonian||

    Obama wants the Central State to be the universal benefactor. Leaving disposable income in the hands of individuals subverts that end, so it's just a matter of removing those greenbacks from us and putting them into his trembling mitts.

  • Almanian||

    What's up with Jews always criticizing the Messiah?

    RAAACc....no. Um, ANTI-SEM..um...

    No, no, you're right...

  • Bod||

    He's not the messiah, he's just a naughty boy!

  • o3||

    Matthew 6:32 For the pagans run after all these things, and your heavenly Father knows that you need them.
    _
    jihad babieeee!!!

  • Paul Krugman||

    In fact, if Keynesians were truly attentive to their master, they would have a better understanding of the importance of depressive taxation in centrally planning an economy.

    HOW DARE YOU SPEAK FOR THE MASTER!!!

    BLASPHEMER!

  • Auric Demonocles||

    Here comes Tony to complain about that chart without giving any actual argument against it.

  • ||

    You're a fucking oracle, dude.

  • Jeffersonian||

    Aurical?

  • Auric Demonocles||

    Win.

  • ||

    Don't worry, I'm sure a few dozen people with be along any minute now to have the same argument with the same result as always.

  • ||

    And that's the typical argument's template:

    Somebody: [Economic argument]. You're wrong, Tony.

    Tony: Stop apologizing for the wealthy cryptofascists and suck Obama's cock, nice and steady.

  • annonymous commenter some guy||

    Everyone is an oracle today. You have to admit, though, Tony does at least try to insert economic arguments. He's just wrong most of the time. It's only when he runs out of ammo that he starts calling people wealth apologists.

  • Mr. FIFY||

    You were right, Res... Tony did, indeed, do just as you predicted. Just a few posts down thataway.

    What a pussy he is.

  • Tony||

    Eww, pussy!!

  • The Pointer-Outer||

    More for us!

  • Auric Demonocles||

    Ninja fingers!

  • Jeffersonian||

    Right on cue vvv

  • Tony||

    This provides a good explanation of why this is bullshit.

  • Jeffersonian||

    Is there a single criterion that describes a "tax hike era" and a "tax cut era?" The top marginal rate in 1986 dropped considerably, and revenues went up after...how can that be?

    Why is it your blogger doesn't show top marginal rates? Could it be that, as NG says, they are irrelevant to tax revenue in terms of GDP?

  • Tony||

    The cut/hike eras are defined by the most recent change to tax policy. It's right there in the chart.

    Revenues always go up as long as there is economic growth. The relevant fact is that revenues would be higher with higher taxes--as every economist on right and left believes.

  • Jeffersonian||

    So if Congress compresses tax rates from 5%-90% into 15%-40%, is that a tax cut era or tax hike era?

    And if reducing tax rates is so damaging to federal revenues (as if that was a bad thing), why did revenues stay so constant when the top marginal rate plummeted from 90% to 28%?

    You're flailing, Tony.

  • Tony||

    "So constant" meaning a window of 5% of GDP? Those differences, which look small on a 100-point scale, are what make up the entire discussion about whether we're doing too much deficit spending or not. Do you care about deficits or don't you?

  • annonymous commenter some guy||

    In order to pay for our current level of spending you would need to collect over 20% of GDP. Clearly that rarely happens. The only solution is to spend less than 20% of GDP.

  • Jeffersonian||

    The single spike that provides that 5% figure is from the dot-com bubble, not the tax increase. If it was the tax increase, the jump would have occurred immediately after the increase was passed, not years later.

    The deficits are due to overspending, not under-collecting.

  • ||

    There wasn't a rise in GDP because as they lowered tax rates loopholes were closed, so the top people still paid about the same. Like in the 1980's when the top marginal went down, the IRS also established rules for passive activity loss rules.

  • annonymous commenter some guy||

    US revenue in constant dollars from 1950 to present.

    http://www.usgovernmentrevenue.....le=Federal Revenue In Constant Dollars&state=US&color=c&local=s

    So, yeah, economic growth is the primary driver of federal revenue.

    Q: What should the top marginal tax rate be in order to get the most economic growth? Well, Tony?

  • Matrix||

    Not if those higher rates cause lower economic growth, which they do. So bugger off.

  • #||

    because though the rates went down, the tax thresholds for the top rate fell (roughly 5 million to 300k in today's dollars) and they removed many of the deductions and loopholes - so it wasnt as big of a cut as its said to be. It was mostly cutting rates and broadening the base.

  • Tim Cavanaugh||

    This provides a good explanation of why this is bullshit.

    It does? The piece you linked to shows the total tax haul remaining within three or four percentage points of 19 percent of GDP for every year from 1951 on. It also covers a shorter timeline than the chart above, thus avoiding the stunningly obvious evidence that it was broadening the tax base, not raising rates on top earners, that allowed the federal government to grab nearly a fifth of GDP for the past seven decades. All the finagling with top rates that the author color-codes result in variations of revenue that are within the margin of error. (You also need to be clearer in your terminology: A "tax cut" or a "tax increase" is not the same thing as a lowering or raising of the tax rate)

    If you have evidence that increasing top marginal rates would result in the 25-percent-of-GDP revenue Uncle Sam needs to fund his spending habit, you've done an excellent job of concealing it.

  • Tony||

    The only point I'm making with the link is that the supposedly narrow range income/GDP falls in is actually a huge one... when we're talking about GDP. A single percent is big. Putting them on the same scale is to intentionally obfuscate the relationship, which is that higher rates correlate to more revenues. I know it's more complicated than that.

    But let's be clear, by "broaden the base" you mean taxing middle-income people more and rich people less. I guess when you get down to it, I'm in favor of taxing less than you. I know that there is relatively little revenues to be had from the very rich. That's because there are so few of them. Rather than make taxes more regressive as you seem to favor, they should be more progressive, and more people should be upper income instead of sliding into lower middle, more should be middle than poor, even if it means fewer should be ultraultrarich. That (and only that) will increase revenues meaningfully as well as shrink government's role in the economy as a proportion of GDP.

    It's like you're deliberately focusing on the wrong numbers. It is not an outrage that the wealthy pay a larger proportion of taxes when the share of their income going to taxes has gone down. That's only a sign that too few people make all the money. And The "too big" number representing government's share of GDP isn't the result of a suddenly booming government, but a weak private sector. Government action on demand is more stable than a weak private economy since it can spend basically whatever it wants, which is precisely why it's useful for stimulating growth.

    Wealth inequality is the heart of all of these issues, and for some reason I cannot fathom you see it as your job to give faulty arguments in support of making it even worse.

  • Tony||

    More participation in social safety nets also increases government spending, but government hasn't started lavishing welfare on people, more people have gotten poor or unemployed enough to qualify. Again, another problem that can only be solved by more people sharing in prosperity.

  • The Pointer-Outer||

    So, if we ALL got on the dole... we'd all be filthy rich!

  • Tony||

    I want as few people as possible on the dole. Your policies are to make most people poorer and fewer people richer. You guarantee more go on the dole, then you bitch at them for it.

  • The Pointer-Outer||

    Your party WANTS people dependent, Tony. They tell the masses that success is evil, that virtually no one makes it rich unless they cheat or backstab or stand on the necks of the workers.

    And you're right... we DO "bitch", but more about the entity that wants to vilify selected successful people while treating the blue-collar sector as mere worker drones - which is exactly how your party views the vaunted "working man".

    This is where you say "nyah nyah" or something equally entertaining.

    BTW... the fewer people on the dole, the less need for more government employees and - most importantly - welfare expenditures. Even you have to admit, that would be like your party cutting its collective (pardon the pun) throat... your party _depends_ on the dependent for votes every two/four/six years. How do you convince millions to support your "team" if they're doing well financially?

    Mind you, I have no reason to vote for the other party... your enemies and mine, the Republicans - though I also count your party as an enemy.

    Guess you're too Stockholmed to see just how tightly you're chained to the radiator in the basement of the DNC headquarters.

  • Tim Cavanaugh||

    But let's be clear, by "broaden the base" you mean taxing middle-income people more and rich people less. I guess when you get down to it, I'm in favor of taxing less than you.

    I don't want to broaden the base. I'm merely noting that that's what you have to do if you want to keep spending the way D.C. spends. That's not a policy recommendation. It's a fact demonstrated by 70 years of budget history.

    You must learn to govern your passions; they will be your undoing.

  • Tony||

    Passions? I presented a straightforward case for downward redistribution being the only possible path to a healthy economy with enough government revenues to fund the civilization we want, and you accuse me of emotionalism? Do you suppose I'm unaware that this is the tactic taken by every defender of privilege every time anyone suggests the smallest increase in taxes, to accuse us of being hysterical?

    It is not "passion" to care more about the physical well-being of most humans more than the inconvenience on the rich of paying Clinton-era taxes. It's the bare minimum of a nonpsychopathic moral system. Could you be any more of a hack?

  • The Pointer-Outer||

    You could demand ALL wealth - accumulated or just-earned - put it in one huge pile, and divide it down to the penny into millions of tiny piles... then give each pile away to every "poor" person... and guess what would happen?

    Momentary happiness.

    That's _all_. Nothing else.

    But it could only be done once.

  • Tony||

    How many times are you gonna repeat the "roughly 18–19%" bullshit? It's been debunked as a lie every single time you say it. Even Bush economists agree that tax cuts reduce revenue and add to the deficit. No economist claims otherwise. No federal revenue does not swing as much as top-tier tax rates. But there is a definite relationship, if you cared to use an honest graph. All you're doing is putting the two numbers on the same graph and saying "look, one line is flat-ish!" They shouldn't be on the same scale, at all. And since revenue/GDP is now closer to 15%...

    You're trying to confuse people into believing that arithmetic is untrustworthy. What's next? Revenue increased during tax cut periods, ergo tax cuts caused revenue to increase?

    Similarly misleading is noting what a huge portion of total taxes the richest pay, as if that somehow represents an unfair burden even as their rates have gone down. What should shock you is how much of a share of the total income and wealth they have, which is why they pay so much.

    Even though apologizing for the rich is your purpose in life, if you can't defend your tax policy without resorting to repeatedly debunked nonsense, then maybe you should reexamine your life as a wealth apologist.

  • ||

  • Brian||

    Am I misreading the chart? I see two columns, % of AGI and % of Income taxes paid. I assume the first is the % of income earned by the group and the second is the % of taxes paid by that group. Assuming this is the case, the top groups pay a much higher % of the taxes than they earn as a group.

    As for the chart, it is perfectly valid to plot top marginal rate and revenue as a % of GDP on the same chart if the point is merely to demonstrate independence, which is how it is always used around here.

  • ||

    Well, Tony does have a point.

    The Obama tax cuts (the payroll tax cut, the middle class tax cut, etc., that Obama and the Dems have gone to the mat for more than once) have reduced the GDP share down to 15% and change.

  • Tony||

    I'll have to re-read the chapter in my Econ text that explains why Democrats' tax policy follow arithmetic and Republicans' is magic.

  • o3||

    no surprise since the gop uses magic to justify their social policies

  • Almanian||

    Shorter Urine: "derp"

  • Mr. FIFY||

    And here's Tony, again, calling tax hikes "magic".

    Instead of hiking top rates by five cents on the dollar, why not freeze spending for a few years? Shit, that's not even a CUT... unless you believe future money not increaded = slashing future budgets.

  • ||

    Freeze spending? How would congressmen eat?

    ;)

  • ||

    Connect the dots for me, Tony. What does that have to do with the tax cuts that the Dems have fought so hard for reducing the % of GDP seized by the government?

  • Tony||

    Not sure what you're asking. The tax cuts Democrats favor now are for stimulative reasons--granted it's among the least efficient ways to stimulate, but if that's all that is available to you (since Republicans can hardly argue against a tax cut, though they've absurdly tried), then cuts on lower-income people are the most stimulative. Rates on the wealthy have very little to do with economic growth and really only serve to affect revenues/deficits.

    You care about deficits right? How can you be in favor of continuing the policies that are the single largest contributor to sustained deficits, massive tax cuts?

  • Colonel_Angus||

    This discussion is retarded because income taxes should be flat. Of course you don't agree because you like class fighting.

  • annonymous commenter some guy||

    Tony, you seem to always advocate higher taxes. At what point would you say taxes are too high? I'm guessing your decision has nothing to do with the actual percentage or the actual revenue gained and everything to do with income equality, or some equally bullshit measure.

  • Tony||

    When taxes aren't at their lowest point in generations, perhaps?

  • annonymous commenter some guy||

    Appealing to tradition. How very conservative of you.

  • Colonel_Angus||

    Government should be getting more productive over time, along with economic growth providing more revenue, therefore the historical tax rate does not reflect the amount of revenue that government currently requires to be productive.

  • Paul||

    When taxes aren't at their lowest point in generations, perhaps?

    For the 1% I assume? Because my taxes are not (and I can prove it) at their lowest point in generations.

  • ||

    Not sure what you're asking.

    Well, you started by bitching that we aren't getting @20% of GDP in taxes now. I agreed, and pointed out that this was because of the Obama/Dem tax cuts.

    You started raving about math v. magic.

  • Juice||

    ORLY? Revenue has been relatively flat over the past 10-15 years at about $2.2 to $2.5 trillion, but the budget has gone from about $2 trillion to $3.8 trillion. Yeah, definitely a problem caused by tax cuts.

  • ||

    Just to throw a fact out there:

    In 2009, the top 1% earned 16.9% of AGI, and paid 36.7% of income taxes.

    http://www.taxfoundation.org/news/show/250.html

    All income, all taxes: top 1% earned 20.3% of income, paid 21.5% of taxes.

    http://www.ctj.org/pdf/taxday2011.pdf

    Looks to me like the tax "fairness" problem here is the payroll taxes that fund our transfer programs.

  • sarcasmic||

    Gotcha Tony.

    Not taking is giving.
    Not giving is taking.
    Inaction is violence.
    Government can protect your private property while also giving you a claim to the private property of others.

    You are the king of doublethink.

    Long live the king!
    Long live the king!

  • Tony||

    Either you care about deficits or you care about your stupid little antigovernment dogma. Revenues must be a part of any conversation about balancing budgets. Refusing to allow that means you're being a liar, that you don't actually care about deficits, you care about using deficits as an excuse to enact your social engineering scheme. "Any and all tax cuts are good" is not policy thinking, it's dogma.

  • Auric Demonocles||

    Yeah, revenues have to be higher than spending. You directly control spending, so decrease that until it's below the revenue you are getting.

  • Tony||

    So say specifically what you mean: we have to cut old people's medical benefits so billionaires can have their tax cuts.

  • annonymous commenter some guy||

    Or, to put it another way:

    Old people had a chance to take responsibility for their lives and retirements. Their failure to do so does not justify theft.

  • Tony||

    Your failure to provide for armed protection of your homestead does not justify theft, then.

  • annonymous commenter some guy||

    Your failure to provide for armed protection of your homestead does not justify theft, then.

    Agreed. I'm glad you're starting to come around.

  • ||

    "Old people had a chance to take responsibility for their lives and retirements. Their failure to do so does not justify theft."

    Great point that just doesn't seem to sink in for many Americans. Probably because they want their share of entitlements in the future. Step up and take responsibility for your own future. Relying on the government (or anyone else) to do that for you is folly and only serves to make yourself a burden to those of us who do take responsibility for our futures.

  • Jeffersonian||

    Medicare taxes haven't been cut, and aren't limited like SS taxes are.

  • Zeb||

    I wonder how a rule that limits one years expenditures to the amount of the previous years revenue woudl work. Seems like it could be a good way to slow government growth and keep deficits rare and small.

  • Mr. FIFY||

    And here Tony goes again, using the "old people are gonna suffer" propaganda.

  • Shorter Tony||

    Gimme the money or granny gets it!!

  • Tony||

    What do you suppose will happen when we abolish Medicare?

    Policymaking is about imperfect choices. At this moment in time, you have to choose between tax cuts for billionaires and aid to the needy. I know what my morality says is more important. What does yours say?

  • annonymous commenter some guy||

    At this moment in time, you have to choose between tax cuts for billionaires and aid to the needy.

    Actually, you don't. Very few people in our society are "needy". Most wealth transfers go to people who are doing just fine. Means-testing Social Security and Medicare would cut our unfunded liabilities tremendously, for example. Of course, then the old people would revolt.

  • The Pointer-Outer||

    Add up every dime owned by every millionaire and every billionaire... put them in a pile... and you STILL don't have enough dimes.

    But if it makes you feel better, Tony...

  • annonymous commenter some guy||

    Most people wouldn't go for it because it wouldn't allow the gov't to "handle" emergencies.

    What about limiting each presidential term's spending to the revenue of the previous term? Or you could do it in ten year blocks... something like that.

  • The Pointer-Outer||

    There are no tax cuts for billionaires on the table, Tony.

    Either show us pending legislation CUTTING taxes from their current levels, or shut the fuck up.

  • Auric Demonocles||

    I wonder how a rule that limits one years expenditures to the amount of the previous years revenue woudl work.

    To me that seems like the most workable balanced budget requirement.

  • Colonel_Angus||

    Deficits are an indication of government being too massive. I'm not the one who decided it was a good idea for the government to owe people money. If you have treasury bonds, as far as I'm concerned I don't owe you shit. Investments have risks, and government paper is the stupidest financial risk of all.

  • ||

    Revenues must be a part of any conversation about balancing budgets.

    Absolutely.

    We should reduce spending until it below the level of revenues received.

    Happy now?

  • annonymous commenter some guy||

    Revenues must be a part of any conversation about balancing budgets.

    How do you expect to end the deficits when spending is over 20% of GDP, Tony? Spending cuts have to be the main part of any conversation about balancing budget, unless you want to drastically change the tax system in this country and send us down a more European path.

  • Tony||

    By making revenues 20% of GDP or reducing spending to 15% of GDP or meeting somewhere in between. That's pretty simple.

    I get that you guys want to drastically reduce the role of government and put millions of old people into poverty in order to preserve low tax rates on billionaires. Just try being honest about it.

  • Mr. FIFY||

    Five cents more on the dollar is going to get us out of the hole, eh?

  • Paul||

    Five cents more on the dollar is going to get us out of the hole, eh?

    No, five cents more will get the exact same thing we have now, except worse. And Tony will be right back here demanding another 5 cents on the dollar. Rinse, repeat.

    Tony won't be happy until 100% taxation is achieved: The post office will be the single employer in the united states. Single payer/Single employer.

    You'll receive scrip from the Post Office, and you'll buy your goods and healthcare from the company store: The Post Office.

  • Brandon||

    You know what I used to eat for breakfast? The Post Office. You know what I used to eat for lunch? The Post Office.

  • annonymous commenter some guy||

    I get that you guys want to drastically reduce the role of government and put millions of old people into poverty in order to preserve low tax rates on billionaires. Just try being honest about it.

    False choice. You keep presenting that same false choice. We could cut defense spending without hurting old people. We could cut discretionary spending without hurting old people. We could means-test our social programs without impoverishing old people. You're the one not being honest, Tony. You damn well know most government spending doesn't go to help "needy" people.

  • BC||

    By making revenues 20% of GDP

    Because this can be done, like magic, via the expedient of dicking around with marginal rates. Never mind the sixty years of evidence to the contrary.

  • The Pointer-Outer||

    Well-explained, Paul.

  • Colonel_Angus||

    Spending money adds to the deficit.

    Money (or assets) is not wealth.

    Taxing existing assets is immoral.

    Fuck off.

  • ||

    A wealth apologist?

    You truly are scum.

  • Tony||

    That's me!

  • Coffa Tupp||

    X = Your annual income
    M = Median per capita income
    R = Rate, between 0 and 100%
    Your income tax amount = R*(X-M)

    The only question is: What R is "fair"? 95%?

  • ||

    0. Keep the rich people in cages.

  • Bill McQuarterly||

    No way. Those cages won't pay for themselves.

  • Thruda Noss||

    Actually, probably something like 200% is fair, since you've already accounted for the non-earners in per capita income.

  • sarcasmic||

    Why stop at income?

    Rich people are to be hated and envied because they haven't spent everything that they earned, resulting in accumulated wealth.

    If you really support equality then you must support a wealth tax.

  • Tony||

    At what point does wealth concentration become a problem, to you people? If 10 guys had 99% of the wealth, would you still see it as your mission in life to defend every single cent being where it is? Surely there's a line somewhere... where is it?

  • Almanian||

    At what point does wealth concentration become a problem to you?

    *raises hand*

    Never.

    NEXT QUESTION!

  • Sparky||

    How much wealth is 1%? Is it enough for the population-10 to live comfortably on? If I have enough to live comfortably and the ability to move upwards if I desire why should I care how much anyone else has?

  • Colonel_Angus||

    Money is not wealth. If you are adequately surviving, you have just as much wealth as the richest guy.

  • ||

    At what point does wealth concentration become a problem, to you people?

    Never. I learned long ago not to worry about how much other people have, because it doesn't affect me one bit.

  • ||

    Seems to me that all of the wealth is concentrating in the hands of the government. Why are those assholes better than people who at least produced something?

  • Paul||

    Seems to me that all of the wealth is concentrating in the hands of the government. Why are those assholes better than people who at least produced something?

    Because government gives it back. Where do you think all that high speed rail is going to come from? Regular people? It comes from the Transportation Trust Fund. Why do you hate trust funds?

  • ||

    It's so insane. We reward the least productive for not producing.

  • Juice||

    Yeah, I don't know about that. How much others have definitely affects you. That doesn't mean that you can go forcibly confiscating it from them though...despite the fact that the uber-rich probably didn't get their money all that honestly.

  • ||

    How much others have definitely affects you.

    How?

  • annonymous commenter some guy||

    The more others have, the more likely you can trade your labor for their wealth. Really, it's good to be surrounded by rich people...

  • Paul||

    I had a really good job throughout the 90s because a rich guy started a company and hired me. I'd say that definitely affected me.

  • MJGreen||

    I consider it a potential problem.

    I don't consider giving more money to the feds a potential solution.

  • ||

    What you dont get is that 10 guys having 99% doesnt matter. What if the total amount of wealth, distributed as you say, still enabled everyone else to be 2X as rich as they are now?

    What gets you upset, you fucking swishy communist, is that someone else has something you dont. That they earned it and you didnt doesnt matter to you. fucking commie.

    You are just trying to rationalize theft. You are no different than half the guys in prison.

  • Tony||

    Only a seriously deluded person looks upon the trend in wealth distribution and says "so what?" All of the wealth going to the top wasn't earned, and all of the stagnation everywhere else wasn't a result of laziness. There is something wrong, and it's no big mystery: with wealth comes ability to influence policy in your favor. We've had massive tax cut after massive tax cut over the last decade, skewed toward the wealthy, and what is there to show for it but huge deficits? If all you're going to do is call taxes theft and rest on your stupid little dogma, then what use are you to this discussion?

  • Sparky||

    with wealth comes ability to influence policy in your favor

    So you admit this but you still don't see that the problem is with cronyism, not with people having money? If nobody were rich then nobody could affect our noble elected officials to distract them from making the right choices for us all?

  • ||

    Making the right choices for us all? You mean like how much salt I can eat?
    You cant possibly believe the shit you are saying.
    How about I make choices for you motherfucker?

  • Sparky||

    Psst, Suthenboy, I think your sarcasmometer might be busted like with my Constitutional amendment below. Don't worry, I know Tony can have that effect on people.

  • ||

    I was just doing a headsmack Sparky. My apologies. Ugh.
    You are right, after the time he told me my profits were not legitimate all I can see is red when he is around.
    Again, Sparky, I apologize. It was an easy catch and I missed it.

  • Sparky||

    No worries, I've been at that point too.

  • Tony||

    In any society at any time, the wealthy will have outsize political influence. That means it takes active steps to check that power.

  • The Pointer-Outer||

    How about we stop electing presidents who are worth millions of dollars, Tony?

    Like the one we have now, for instance?

  • Colonel_Angus||

    Money is not wealth.

  • Juice||

    You're right. It's power.

  • Colonel_Angus||

    You're wrong. Collectivism is power for a minority.

  • ||

    Only a seriously deluded person looks upon the trend in wealth distribution and says "so what?"

    Would that be the trend in wealth concentration that turned down in 2008 and hasn't turned up yet?

  • annonymous commenter some guy||

    Would that be the trend in wealth concentration that turned down in 2008 and hasn't turned up yet?

    It needs to go MOAR lower!

  • Sevo||

    Tony|2.14.12 @ 4:37PM|#
    "Only a seriously deluded person looks upon the trend in wealth distribution and says "so what?"

    Nice job of poisoning the well, shithead.

  • Paul||

    with wealth comes ability to influence policy in your favor.

    You're close, Tony. Ever so close. It seems that with just a nudge, we could make you into a decent libertarian.

  • Brandon||

    Tony, you always ignore that, even under the sainted TEAM BLUE!!!!, government programs tend to increase wealth concentration.

  • Mike M.||

    If you really feel this way so strongly, why the fuck don't you leave all of us alone and go endlessly pester your buddy Warren Buffett to just pay the one billion dollars in back taxes he already owes to the I.R.S., you fucking worthless griefer piece of shit loser, you?

  • Mr. FIFY||

    He won't do that, Mike. To him, Buffett is one of God's Own People, even though he is a multi-billionaire trying to influence public policy.

    But it's wrong if the Koch brothers do it.

    Which means... *some* billionaires get an exception from Team Blue.

  • Zeb||

    If rich people kept their money in huge piles of gold or something, you might have a point. But they don't. Their money is by and large invested in companies and other financial instruments. Which means that their wealth is out there in the world, employing people and facilitating economic development. Someone being worth $5 billion doesn't mean that there is $5 billion that could have been used for something else. Most of it already is being used for something else. So no, wealth concentration is not a problem that I worry about.

  • ||

    Now we get to the root of the matter. This isn't about funding the government at all, is it? It's about your jihad against the successful.

  • o3||

    offshore accounts aint for paying taxes. jeesch

  • Jeffersonian||

    Usta be tha we were the offshore account, back when we didn't ass-rape anyone who managed to earn a buck. Just ask John Lennon. Now that we're in the plunder biz, the money is leaving instead of entering and the Left is OUTRAGED!!!

  • Almanian The Offshore Acct||

    Hello? Who is it? The door's open - c'mon in!

  • romulus augustus||

    So Mr. President, what is the top 5%'s "fair share.?" They are already paying 90% more tax on their income than if everyone paid the same percentage of AGI. So what is "fair?"
    Someone in the factory was bitching the other day about "the rich" not paying their fair share. I asked him what he considered fair. "25% of their income sounds fair but those c..ks..kers pay like 15% same as me."
    Thanks for the chart. I'll se what he thinks of it.

  • Almanian Obama||

    Let me be clear - there are those who say rich people already pay enough.

    But the rich people NEVER pay enough. So are we going to continue to let the rich people kill small children and old people and steal from the poor, or are we going to provide good jobs at good wages to hard-working Americans who've done nothing wrong but play by the rules?

    The choice is yours, America - THANK YOU, GOOD NIGHT!!!

    *mic drop*

  • robc||

    They hate these charts, they prefer pulling out one of two examples of guys who pay 15% while super rich, but as a whole, that group is paying 24%.

    Everyones tax circumstances are different, you cant look at anecdotes. But the whole chart makes it clear that the rich as a whole arent getting some sort of special tax advantage.

  • 99%||

    You know what a fair tax is? That's when the government shows up on your rich ass doorstep and takes whatever the democratically elected representatives of the people decide they want to take from you. We figure it's somehow all ours anyway since the rich are really just looters and the economy is most definitely a zero-sum game. Also, Tony for president.

  • Almanian Obama||

    Let me be clear - I appreciate your vote in advance

  • Occutards||

    We get dibs on the furniture and the refrigerator contents!

    Oooo, is that an Xbox??

  • mad libertarian guy||

    Why aren't the rich paying 50% in taxes?

    A better question is why are the rich paying more than 50% of taxes?

  • ||

    What we need is real tax reform: The repo man tax.

  • ||

    The default question should be why is it fair that people can force other people to pay for things at all? It's not a crime to accumulate wealth--why is it okay to take it? Even accepting some taxation as a necessary evil, why is it okay to take such huge amounts from so few to redistribute to others?

    It's not like communism and socialism haven't been discredited.

  • Brett L||

    "It's not a crime to accumulate wealth"

    Yet. But that seems to be exactly what the Occupy movement is after. Well, that's not fair. They just believe in their little grinch-sized hearts that only a conspiracy could make business majors rich while their French lit degree doesn't qualify them for a barista slot. But the upshot is, like dogs with food, if they can't have it, no one else can either.

  • Sparky||

    Constitutional amendment XXVIII

    No person shall accumulate wealth at a rate higher than the economic growth rate of the given year. In the case of a negative growth rate, any person earning a yearly compensation between $100,000 and $999,999 shall add the negative growth rate to their tax burden for that year. Any person earning a yearly compensation greater than $1,000,000 shall add triple the negative growth rate to their tax burden for that year.

    So, what do you think?

  • ||

    It isnt important what I think. What are you going to think when I cut your hand off because you wouldnt take it out of my pocket?

  • Sparky||

    Maybe after some negotiation it could be changed to quarterly measurements instead of yearly, that way the government can pocket more money even if the year ends up a net positive.

  • ||

    Of course we need a 25% deficit. Without it, the federal government would have to limp along with only 3,000,000,000,000 dollars per year. That's only a paltry $95,129 per second! Madness!

  • ||

    We spend too fucking much. More than we have. On shit. There. It's that simple.

    It would be funny to watch people act like we can tax our way out of this--when the evidence is so overwhelming that we can't--if the situation weren't getting so dire. Raise the effective tax rate enough, and our economy will go into the tank. Not to mention that our debt is so big that just taxing the rich isn't a solution.

    It's very frustrating that we had this little moment where the potential disaster seemed evident, then, all of the sudden, our scammers in DC decided it was a false alarm. We're still heading right off the cliff.

  • ||

    $95,129 per second? I mean there's no way there's any fat to be cut. The fedgov has been pared down to the bone!

    Of course, $95,129 per sec is what we are already taking in. Obama thinks we should be spending $118,911 per second instead.

  • ||

    It's a mere 86,400 brand new Porsche 911 Turbos per day! Starvation! Panic!

  • ||

    I'm so sick of people saying crap like "It's politically impossible!" No, it isn't. And it's moronic to continue doing something that's going to wreck our economy, sooner or later.

    We're idiots to keep allowing the political class to pull this scam on us.

  • Zeb||

    I like to imagine how many people flying around in helicopters throwing out handfuls of $20 bills it woudl take to dispose of money that quickly. Thats over 4000 20s per second. I think I'd need some help.

  • Zeb||

    And I still stand by my contention that doing exactly what I describe above would have been a much more effective use of the stimulus and TARP money.

  • Sparky||

    Are you joking? If you just gave the money back to people they would probably do something stupid like save it.

  • ||

    The fedgov spends 6.25 tons of one dollar bills per minute.

  • we||

    Increasing tax rates from current levels to Obama's proposed levels will increase the federal government's revenues very substantially.

    You claim, falsely, that it won't because you don't want the policy to succeed, for your own reasons.

    You are being dishonest.

    You are asserting "the tax increases can't work" when what you really feel is "I don't want the tax increases to work."

    Honesty: too much to ask?

  • The Pointer-Outer||

    The tax increases _won't_ work.

  • ||

    No amount of tax increases will result in the gov seizing more than 20% of GDP. Can we agree on that? Because of, you know, the data?

    So, the gov nows spends more than 24% of GDP. It can't collect more than 20%. Even with seizure of GDP at peak efficiency levels, the gov is going to run a deficit of 4% of GDP.

    So, to balance the budget, we have to cut 4% of GDP from the fed's spending. Right? That is a best-case scenario, and it calls for a a 17% cut in spending.

  • Mr. FIFY||

    But it makes liberals _feel_ better, RC. What are you... a heartless bastard who won't let go of five more pennies on the dollar?

  • Paul||

    Increasing tax rates from current levels to Obama's proposed levels will increase the federal government's revenues very substantially.

    Increased revenues = increased spending. You do get that, right? Or is there some secret Government Savings Account that we've never heard of that it will all get stuffed into as 'overdraft protection' -- you know, just in case the government miscalculates the next annual budget?

  • annonymous commenter some guy||

    @we

    FYI.

    Your baseless assertions don't work here. You're going to have to provide some evidence for your claims before anyone takes you seriously.

  • np||

  • ||

    At what point does wealth concentration become a problem, to you people?

    This is Tony admitting that it's not about raising revenue or even redistribution of income. No, taxes are the punishment rich people deserve for the crime of being rich.

  • ||

    Yes, he used the term 'wealth apologist' earlier.
    That implies that being rich is a crime in itself.
    He is a fucking communist piece of shit, and all communists are, that is just a political disguise for a thief.

  • annonymous commenter some guy||

    The crime of being rich....

    Yes, the crime of being very good at providing goods and services to others via mutually benefitial transactions.

    Really, Tony is just mad at the 1% of "rich" people who got that way through immoral acts. He simple can't see the multitude of good, productive rich people.

    Or maybe he thinks the act of getting rich is immoral in and of itself. Who knows?

  • Paul||

    punitive on overseas earnings, [...]expatriation of wealth and people

    It worked so well for England after WWII, why not here?

  • EcoDude||

    "Even Bush economists agree that tax cuts reduce revenue and add to the deficit. No economist claims otherwise"

    Most economists agree that the Laffer curve is valid. The question is an empirical one:

    http://voices.washingtonpost.c.....ve_be.html

  • ||

    And speaking of lines Tony, where is the line where the 'rich' are paying enough?

  • Tony||

    When we pay for the things we buy. What we pay for is a question of politics. One would assume that deficit hawks would be in favor of paying for them. If you don't like Medicare and want to abolish it, fine, try to get a Congress elected that will do it. Pretending we have no choice because tax rates can never go up, ever, is dishonest bullshit.

  • The Pointer-Outer||

    Taxes are high enough. It's your party, and the other one, that's blowing the money like a kid in a toy store with Dad's credit card.

  • ||

    So, we start the budget process by listing everything we want to have.

    Then, we collect enough taxes to pay for them.

    What could possibly go wrong? I mean, isn't that how everyone does it? You decide how much you want to buy this year, then you just . . . earn enough to pay for it all.

  • Sevo||

    Tony|2.14.12 @ 4:39PM|#
    ..."If you don't like Medicare and want to abolish it, fine, try to get a Congress elected that will do it...."

    No, shithead, we'll starve the beast and hit congress in the wallet.

  • ||

    You are the king of dishonest bullshit Tony. This isnt about paying for the things we buy or about raising revenue. Just like for that limp wristed fraud in the whitehouse, for you this is about 'fairness'. To you fairness is punishing anyone who is competent or successful.

    Wealth apologist? What is that shit? Profits are not legitimate? More evidence that you are rationalizing theft. You are the worst kind of person.

    I have seen your slimy ilk before. Anyone who is better than you in any way offends you because in the contrast you can see what you are. Rather than try to better yourself, or congratulate the other, you have to tear them down. Somehow in your mind that makes you more equal.

    Everyone makes the world a better place Tony. Some because they are in it, the rest when they leave it. You aint the first kind.

    Here is hoping you get pancreatic cancer! * raising glass *

  • Tony||

    If you believe that taxation is theft, perhaps I'm rationalizing theft. But that's a disagreement about a premise, and you're wrong about it anyway since you believe in some taxation.

    The real rationalizing going on here is the voodoo math, emotional outbursts, and internet psychoanalysis you guys use to justify Gilded Age levels of wealth inequality. Forget fairness--how can you people live with yourselves being the absolute epitome of uncool? They aren't even paying you--and they hardly need you--yet you are defending every ounce of privilege in their hands even while you argue for making everyone else poor, on "principle."

    What on earth entitles you to believe that their wealth was all earned? Have they been working hundreds and hundreds of times harder in the last few decades to justify the increasingly stratospheric wealth gap? Has everyone else been lazy? What does that say about the country?

    I have no reason to envy anyone, and you don't even know how laughable the claim is. I could be just as pathetic and ridiculous and analyze the emotional motives behind your unthinking supplication before the wealthy, but it's really too ugly to contemplate.

  • Mr. FIFY||

    How rich... a guy who supplicates before the almighty state, lecturing US.

  • BC||

    The labor theory of value is Marxist bullshit, Tony. Please drive through.

  • Tony||

    Ah, so you agree that there is no justification.

  • The Pointer-Outer||

    You have no moral high ground here, Tony. Your last comment proves it.

  • Adecker||

    "Here is hoping you get pancreatic cancer! * raising glass *"

    How nice of you to wish death on a fellow human being

  • Drax the Destroyer||

    Since god and magic don't exist, wishing for someone's death won't actually bring it about. Moreover, we need less people because I hate driving. Fuck human beings.

  • ||

    As you can see from the chart here, top marginal rates have varied from above 90 percent to below 30 percent over the past 70 years, but federal revenue as a percentage of GDP has remained steadily in the 19-percent neighborhood.

    The only problem with this is that the class warriors can still claim that you can raise the rates with no ill effect.

    It's win-win for them. They get the moneys and they get to screw the "rich" to the wall.

  • The Pointer-Outer||

    If the entry price to be in the top one percent is roughly $350K... why do Democrats want to raise taxes on those making $200-250K?

  • Mr. FIFY||

    Tony the Pussy is afraid to answer that.

  • ||

    I listened to the President's remarks this morning for as long as it took me to find the remote and change the channel. According to that blathering duplicitous numbskull, there are only a handful of people in this country who are not starving. We're worse off than some banana republic, apparently.

    No wonder we need to confiscate the wealth of the top percentile; they've got our stuff!

  • ||

    Did I, or did I not, recently hear somebody saying President Zero wants to put another twenty thousand IRS agents on the payroll? Because, one can only surmise, if the marginal agent can "recover" $XXX for the treasury, another twenty thousand agents will be able to "recover" 20,000 x $XXX.

    Has anybody else heard this, or was it one of my ever-more-frequent episodes of nocturnal paranoid dementia?

  • ||

    I think that's the number that needs to be hired to monitor Obamacare compliance.

  • ||

    Please, God, let there be enough left in our tank of liberty to destroy that abomination. And soon.

  • ||

    I think I'd need some help.

    We need a biggerboat helicopter.

  • ||

    The rules might be set within law, but those of us on these higher incomes know how to minimise our tax and pay zero. That's our right, is fair and just and as it should be and continue.

    These lazy people don't work hard, I know because I work hard and make plenty.

    They have the same opportunity to minimise their tax, but do they? No, the Idiots.

  • ||

    This is a horrible argument, and quite frankly if this is what I should expect from Reason Magazine I will soon be leaving them.

    1) The top marginal tax rate on individuals has no impact on overall federal revenue income in that there are several other sources of tax income that the federal gov't enjoys, i.e. anyone else's tax rates which the author does not list.

    2) I agree with the author that Tim should be in prison, but that in and of itself does not mean that the plan to increase the tax rates of the top 2% (I wonder if the author of this post finds himself firmly within that rank) does not mean that is is a bad thing.

    3) "That happened in the mid-1940s, when the government and the Federal Reserve broke their original promise to soak the rich and broadened taxable income to include every penny earned by every American."
    That's because we Americans believe everyone should play their fair share. Seriously? This is in Reason Magazine?

    3)"high earners also have more opportunities to earn in ways that will not be captured by the IRS" Translation: The rich are able to easily hide their money from the IRS. I was thinking of subscribing to Reason magazine, after this, not so much.

    4) Honestly, after reading this post, how can anyone with a rational, logical mindset (Hi Reason Magazine!) take this author seriously? Either he is a paid troll for the 1% or a paid shrill for the 1% or a paid lobbyist for the 1%. His arguments do not hold up to logic nor would any skeptical human being (which I assume would be the subscription base of Reason Magazine) give his arguments the weight of a feather.

  • ||

    Concern troll is concerned.

  • RandomGermanDude||

    I think he used the "For a magazine called Reason..." line here although not literally.

    Drink!

  • Anonymousdude||

    I wonder what percent of income taxes the top 1 percent would pay if they had 100% of the money... hmm...

    Then you could write an article titled: "The rich pay 100% of the income taxes." And all of the poor could feel even WORSE for the rich :(

  • Tim Cavanaugh||

    It's been a few days since I wrote this article, and I'm amazed at how much of the argument is about fairness. I'm not deciding whether it's fair or not that the people who (according to Picketty and Saez) control about 20 percent of the wealth pay 37 percent of the taxes. I'm saying that's progressive taxation working at full capacity. You can play all the tricks you want: Raise marginal rates, try and force people to repatriate wealth, throw more Americans in prison, hire more federal agents to poke into more wallets, expand surveillance of financial records. In the end your revenue collections will not change much. It may be fair or it may be unfair that the king can raise taxes on the rich but fail to acquire a notably bigger portion of their wealth. The point is that it is reality. We have decades of tax history, back to sainted FDR himself, to show that.

  • ||

    You're reading your chart incorrectly. If tax revenues as a percentage of total revenue stay flat when the top marginal rate falls, that means someone else not in the top marginal rate is paying what was previously paid for by the top marginal payers. It certainly does not mean that top payers are not paying less tax, as you imply. Quite the opposite.

  • ||

    You conveniently forgot to mention that the top 1% holds 40% of the nations wealth... So they are still at least 3% short of paying their fair share, and that's if you count all wealth equally. (and not disposable income vs necessities)

  • Tim Cavanaugh||

    I take anything coming out of Catherine Rampell with a grain of salt, and anything out of Picketty and Saez with an ocean of salt, but according to the former the latter[s] (who are termed "gurus of inequality" by non-libertarians)put the total earning figure of the top 1 percent at 20 percent. I hope that href works and I apologize in advance for quoting unreliable sources.

    Your source?

  • ||

    Yes, the 1% pay 37% of the taxes...but they OWN more than 37% of accumulated wealth.

    This article is a slight of hands that only morons could but into. How stupid do you think people are? Shame on you!!!

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement