Covered at Reason 24/7: Federal Revenue Suffers From Reliance on Small Group of High-Income Earners


Reason 24/7

The "one percent" get a lot of blame from certain sectors, and it turns out that they're also responsible for the federal government's revenue issues, too. Those bastards. Yep, it seems that as top income-earners have taken on the burden of paying an ever-growing share of income taxes, the take from those taxes has come to rise and fall based on the fortunes of that one percent. And top earners tend to have extremely volatile income, by comparison to salaried and hourly workers. That might mean soaring tax revenues when the economy does well, but it also means serious belt-tightening when business is bad.

From the Wall Street Journal:

What is shocking is the degree to which federal revenues have underperformed even for an underperforming economy; revenues have dropped by 2.7% of GDP since 2007.

Why? A more progressive tax code now leverages the negative impact of slow economic growth. The share of all individual income taxes paid by the top 1% has risen to 41.8% in 2008 from 17.4% in 1980—but almost two-thirds of the income from the top 1% comes from nonwage income, including capital gains, dividends and proprietor's profits.

Individual income taxes as well as corporate taxes are now far more rooted in the shifting sands of volatile business income and capital profits rather than in the terra firma of wage income that stabilizes payroll taxes. From 1960 to 2000, payroll taxes were never lower than in the previous year, individual income taxes dipped only twice, and corporate taxes dropped 11 times. Since 2000, individual income and corporate tax revenues dropped five times, while payroll taxes fell twice. Not only do revenues from individual tax returns drop more often now. They fall more severely, with recent collapses of 14%-20% versus the 3%-5% range before 2000.

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  1. Just kick that good a little harder. She will lay.

      1. Jesus, ya just never know, do ya?

      2. Either really.

  2. You can’t set up a system that is designed to prevent people from getting rich while also depending on the rich to pay for it.

    1. Just like you can’t fund a program with excise taxes designed to make people stop buying what you’re taxing?

      1. Why do you hate programs funded by tobacco?

    2. ^^THIS^^ The funny and sad fact is, that if the liberals would give up their compulsion to control everything and actually let the market function, it would probably generate enough revenue to satisfy the free shit brigade. But they can’t do that. Liberals could never let someone have a little freedom, unless it is to get an abortion.

      1. Yup. The economy is in the shitter because there are just too many barriers to economic activity. The only thing right now that could help the economy is to start wholesale repealing great swaths of regulation and legislation. Barring that, the economy will only get worse. And since we know that that will never happen, might as well embrace the new normal.

        1. The common figure thrown around is that federal regulations cost the country around a trillion dollars a year in lost economic growth. A trillion dollars a year. But they won’t let that happen because they love control more than they love making things better.

          1. It’s not just federal. Even if federal law didn’t make turning my homebrewing hobby into a business financially out of reach, the local government would never allow a brewery in the town.

            1. Actually in a lot of ways state and local regulations are far more burdensome on startup businesses than Federal.

              Federal regulations tend to kick in as you start to grow (more than 50 employees for example), State and Local regulations often simply outlaw the business in the first place.

      2. Actually discussed this back in the late 90s with a proggie, and he admitted that he wasn’t interested in having the government have more revenue.

        And people keep looking at me skeptically when I say that the income tax is less about revenue than it is about policy.

      3. it would probably generate enough revenue to satisfy the free shit brigade.

        You can never supply enough if the price is free. They will see the extra revenue and find shit to spend it on.

    3. “You can’t set up a system that is designed to prevent people from getting rich while also depending on the rich to pay for it.”

      Yes you can!

      It’s just that the system won’t be designed to optimize public policy; it’s designed to get reelected through demagoguery.

      Remember, a politician’s principle motivation isn’t to do what’s best for the economy–it’s to get himself reelected. If those two things should happen to be the same thing, that’s great! If not…so what? The important thing is that he gets reelected.

      1. Eliminate the career politician.

        Term limits.

        *Steps down from soapbox*

        1. Not only term limits, but summarily execute politicians upon winning an election. We’ll clean up our political class in no time.

          1. That’s harsh. However, bringing back ostracism is a good idea. I’m sorry, sir, but you have to leave. Now. You can come back in ten years. . .unless we ostracize you again.

          2. How about we go Terran Empire and have political promotions be earned by assassination?

            We’d just have to build Rand a Tantalus Field.

          3. They should at least have to be tough enough to take a tar and feathering, then being ridden to their elected office on a rail. That way they know what’s waiting for them when we get tired of them.

            1. Well, yes, tar and feathering, definitely.

          4. Forced exile on an island. Maybe this one off Brazil.


            1. I root for politicians over fer-de-lances. The latter are quite literally the Devil.

              1. I hate snakes. But high casualties on both sides would not be a bad thing.

                1. I hate snakes.

                  You wouldn’t like my house. My wife has a dozen or so pet snakes ranging from ball pythons to corn snakes, and is planning to start breeding them.
                  People will pay a couple hundred bucks for a baby albino ball python, and clutches average a dozen. A few breeding pairs could put some money in the bank.

                  1. Really? ball pythons you say?

                    1. Ball pythons of varying morphs, red tailed boas, a rat snake, corn snakes (mine), and I’m sure I missed something.

                  2. I used to catch and sell snakes at school as a kid. Then I got into the business of breeding mice to sell to the kids I sold the snakes, to, which was mighty damn lucrative, too.

                    Snakes are awesome!


                    One day a snake got loose in my house. Ended up in bed with my sick mom. She…um…literally freaked out. Had to move the snakes out in shed in the middle of the winter. Either that or mom said I had to move into the shed. Anyway, it froze that night. In the morning, I just had a bunch of snake-flavored popsicles to sell.

                    …which presented somewhat of a marketing problem.

                    1. Today most snakes are captive bred. This has several advantages including their being handled from birth, accustomed to eating frozen-thawed rodents instead of live, lack of parasites/diseases, not to mention breeders have created genetic morphs and combinations that would never appear in the wild.

                      The hobby has come a long way, especially over the last few years.

                    2. Last twenty years I should have said.

                    3. Most pet snakes.

              2. The latter are quite literally the Devil.

                Really? I would root for the snakes. At least they are part of nature and have some evolutionary use. Politicians, not so much.

                1. I’d be worried about it harming the poor things. The snakes, that is.

        2. Term limits do not eliminate the career politician.They just prevent him from sitting in the same office for his career.

          One could easily spend an entire career in elected office without ever holding the same office twice.

          2 years on the city council, 4 years as Mayor, 2 years as a state Rep, 4 Years as a State Senator, 4 years as Treasurer, 2 years in the House, 6 years in the Senate, 4 years as governor, then 4 years as a State Judge*

          All totaled, 32 consecutive years holding elective office, never once being elected to the same office twice.

          Also I should note, you could extend that time in Congress if you were elected from one district, then sometime later moved to a new district you could run for the seat in that district since that is a new office. Further there are dozens of other elective offices at the state and local levels you could mix in the middle there and if you by chance did happen to lose an election here or there and had to sit out a term, no problem, I’m sure you could get a friend in office to finagle a nice appointed position for you and if not there is always being a lobbyist until the next election cycle comes around.

          1. Simply put in a caveat they must do a minimum pre-requisite 10 years as dog catcher before seeking any other office.

        3. And after their term is up they are given a pension equal to their final official income. Any income beyond this pension is taxed at 100%. No deductions or credits allowed.

          No more getting rich off book-writing, speaking tours or lobbying afterwards.

  3. Alt-text win.

    1. No way. The alt-text on the Morning Links was the winner. Hands down.

  4. It’s hard to believe that doing stupid things to make the wealthy stop taking risks could have such a terrible impact on government programs meant to help the poor.

    This is one of those externalities people on the left don’t want to recognize–so they pretend it doesn’t exist. They only want to recognize externalities when they’re killing polar bears for some reason.

    Believe it or not, I think it has to do with Ronald Reagan. An externality is a terrible, evil thing–unless it seems to suggest something Ronald Reagan once said was true. …in which case it’s best to just ignore it.

  5. Seriously, isn’t it time to dust off the ol’ Laffer Curve already?

    Or is that a little too Ronald Reagany?

    1. Pointless. They figured out a way around that one pretty quickly:

      “I agree that the Laffer curve exists, but there is evidence that the peak is at the 92.4% rate.”

  6. Atlas hasn’t shrugged, but he is being stabbed with red-hot pokers while trying to hold up the world.

  7. what is the 1% exactly? it seems to mean “rich” and that means “anyone who makes more than the group i’m currently addressing”

    1. “anyone who makes more than the group i’m currently addressing”

      Pretty much. Like all those people who claimed “I am the 1%” on those Occupy solidarity pictures posted on the interwebz? They were sitting in kitches with linoleum countertops from 1978, and I’m supposed to believe that this person holding up the sign is the CEO of Oracle?

    2. In the most accurate tax parlance, the top 1% is anyone making over $250,000. But there are a lot more people who make $250,000 than $1,000,000. And a lot more people who make $1,000,000 than $10,000,000. And so on and so forth.

  8. but it also means serious belt-tightening when business is bad

    HAHAHAHA!!!! Good one Tuccille! Are you here all week?!?

  9. O.T.: 90yr old man jailed for punching state trooper in the face.


    Some of the comments are gold.

    Mark edward marchiafava
    My hero ! We need to see more of this, daily.

    Don’t mess with Gran-Pa. He can still wuup azz.
    I will post his bail if required.

    Could the old geezer even lift the weight of the gun? I’d be embarrassed if I reported a 90 year old hitting me. It would be like a 4 year old sneezing a grown man over…

    Do you think….maybe….those young, strong troopers could give the old fossil a darn break…………….???? Did they really feel threatened…………….?????

    1. Didn’t that idiot ever watch kung fu movies? Don’t fuck with old people. They are often a lot tougher than they look.

      1. “An American senior citizen killed an alleged mugger with his bare hands, and his traveling companions aboard a tour bus fended of two other assailants in the Atlantic coast city of Limon, police said.

        The Feb. 23 New York Post identified the man as a retired Marine. He is aged about 70.

        He put suspect Warner Segura in a headlock and broke his clavicle after the 20-year-old and two other men armed with a knife and gun held up their tour bus, said Luis Hernandez, the police chief of Limon, 80 miles east of San Jose.

        The two other men fled when the 12 senior citizens started defending themselves during the Wednesday attack.”…..ist070223/

        1. I had an uncle who has now passed. He weighed the same at age 75 that he did in high school. He caught a fairly young man stealing tools out of his truck and beat the guy badly enough to send him to hospital. This at 75. I think the only reason he didn’t go to jail is because it was a small town and the cop and the ambulance people couldn’t stop laughing.

          1. my old man is 71 and still hikes, chops wood and does all the stuff required to keep a log cabin in the woods going. Of course he can pass for someone in his mid-50s.

            1. My father is pushing 70. And I don’t think I would want any part of him. I probably could take him if I had to. But it wouldn’t be in any way worth the price he would make me pay.

              1. My father is also pushing 70. He went through basic training twice, and was into boxing and judo at the Air Force Academy. I wouldn’t fuck with him.

              2. I remember when my dad was in his 50s he could do this trick where he held himself parallel to the ground by propping himself up from a telephone pole with just his arms.

      2. People don’t get old for being weak.

    2. More comments:

      trooper prob. got smart with him and being of the older generation that still had balls decked him.

      planeboy atomic811
      Exactly…probably a WWII vet who said “I ain’t taken no sh-t from a young whipper snapper”…Stand tall my good man!

      Oboy_must_go atomic811
      Don’t mess with grandpa! LOL

      HopelesslyFaithful atomic811
      worse part is he reported being punched by an old man….pussy

    3. There is, however, a dunphy on the page that says he would ‘string the guy up’ if he were on the jury and is bitching a storm at the other commentators for not knowing what law enforcement is really like.

  10. I wonder if those comments would be the same if it was a younger man doing the punching?

    1. On this site? For sure.

      1. No, the comment sarc has been quoting of people cheering on the old dude. I bet they would change their tune if it was a young guy.

        1. I dunno. I seem to sense a healthy contempt for law enforcement in general from the comments, but I could be wrong.

          1. I was just looking at the source, which appears to be a local CBS affiliate. I’ve never seen much consistency or intelligence from the comments on a local TV network site, is all. the comments on our local NBC affiliates Facebook page are almost exclusively rage-inducing.

            1. I think this was probably linked on a pro-gun, anti-LEO site.

              I’ve seen Mark Edward comment on a few different gun sites and they’re generally interesting reads.

  11. Goose, right?


    Kick it, Charlie Brown. What are you waiting for?

  12. How do I reach these libs?

    1. Use a cute kitty cat picture as the graphic component.

      1. Nope, they’ll just tell you that kitty needs to sacrifice for the greater good.

  13. There’s something I call the iron law of taxes. When times are good and revenues come in, the public sector votes themselves big raises. Then when times turn tough, they raise taxes. We are thus stuck in a rut of ever increasing taxes. Consider California’s SB400.

  14. If anyone else was making enough income to tax this wouldn’t be as much of a problem.

  15. Lets rock and roll dude.

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