Friday, October 19, 2012

The Most Hilarious Class Warfare Piece Ever!

Must be this one (via Alicu blog):

Class warfare is a form of bigotry; it shouldn’t be tolerated any more than we would other forms of bigotry in public life.
Most people think of bigotry only in terms of race, religion, ethnicity and sexual orientation. But at its core, bigotry simply is intolerance – which all too often leads to singling people out for attack based upon their group identity.
Think for a moment about the small business entrepreneur just starting out in his basement, mortgaged to the hilt, wondering if he will make it. Everyone loves these heroes when they are struggling to survive. But when they rise from the basement and make it all the way to the penthouse, these heroes suddenly are “not paying their fair share.” Today, it is open season on them.
As the spending-driven debt crisis grows in America and among the 50 states, we would not accept such vilification toward the poor and elderly who consume taxpayer resources. We certainly would not accept such vilification toward the working class or minorities. So why do we tolerate the vilification of those most successful in America?
According to the IRS, the top 1 percent of earners take home 17 percent of the nation’s total taxable income. Yet they pay 37 percent of the nation’s taxes. They are paying a disproportionate share of the burden of government and yet the Occupy protestors, public employee unions and even President Obama demonize them.

Even the title of the piece is wonderful:

The Unctuous, Impoverishing Bigotry Of Class Warfare

Just to get this out of the way:  I'm certainly not advocating bigotry towards the rich or stating that they are bad people just because they are rich or anything else similar.  But there's a huge difference between asking whether the one-percent is paying their fair share and calling asking that question "an open season" on them.

So why did I find the piece stomach-hurting funny?  Because a) most of the class warfare goes on in the reverse direction, nonstop, for decades if not for centuries and b) because of that data on how the top one-percent are paying a disproportionate share of the "burden of the government."

On part a):  Remember the 1990s?  Remember the piglets at the teats of the government sow?  Remember the moniker  "welfare queens"?  Those kinds of arguments are still common on the net but few people think they are a form of class warfare.  Neither is the Citizens United decision seen as part of that long-standing war.

On part b):  One reason* for those 17% vs. 37% figures is a previous one-percenter victory in that real class war:  The seventeen-percent-figure excludes capital gains (including realized capital gains) because they are not taxable income.  Yet capital gains are a major source of income for the very rich.  Indeed, it constitutes 60% of the income of the Fortune 400, for instance.

Another reason is that the 37% figure is about federal income taxes, not all taxes, and not even about all federal taxes.  The following quote corrects the same conservative argument using slightly older data:

When Rep. Bachmann or Karl Rove or anyone else claims that 1 percent of Americans pay 40 percent of all taxes, they are flat out wrong. That’s because they are conflating the federal income tax with all taxes. It’s true that in 2007 (the last year for which complete data are available) the richest 1 percent paid about 40 percent of all the federal income taxes. But the federal income tax is only one part of the federal tax system, and of course, there are also state and local taxes.
In fact, federal income taxes make up just 42 percent of all federal taxes, and only one-quarter of all taxes, systemwide across our country. The federal income tax is progressive—meaning that higher-income households pay, on average, higher tax rates—but it’s practically the only piece of our country’s tax system that is.
Payroll taxes, which make up 40 percent of all federal revenue, are regressive. According to the nonpartisan Congressional Budget Office, or CBO, in 2007 a household in the middle class paid about 9.5 percent of their income in payroll taxes while someone in the top 1 percent paid just 1.6 percent of their income in payroll taxes. State and local taxes are also regressive. The Institute for Taxation and Economic Policy reported that the average state and local effective tax rate for the top 1 percent is only 5.2 percent, while the average tax rate on the middle 20 percent is 9.4 percent.
By ignoring the regressive parts of federal, state, and local tax codes, and either implicitly or explicitly suggesting that federal income taxes are the only taxes, conservatives are artificially inflating the share of taxes paid by the rich. When other federal and nonfederal taxes are taken into account, the 1 percent’s share of taxes paid declines quite a lot.
The CBO found that the top 1 percent paid 28.1 percent of the total federal tax burden in 2007. And a more recent analysis by the Tax Policy Center estimates that the share of federal taxes paid by the top 1 percent dropped to 25.6 percent in 2011.
Furthermore, the share of taxes paid by the top 1 percent drops even more when taking into account state and local taxes. An analysis by Citizens for Tax Justice found that when state and local taxes are included the share of total taxes paid by the top 1 percent in 2010 is only 21.5 percent. This is just about half the “headline” 40 percent that conservatives like to claim.

Guess what the income share of the top one percent was in 2007?  It was 20.3% of all income.  So if the top one percent paid 28.1% of all federal taxes that year is the system terribly unfair?  If the top one percent paid 25.6% of federal taxes in 2011  and 21.5% of all taxes in 2011, is the system terribly unfair?  After all, their share in the income wasn't that much smaller than those percentages, especially given the absence of capital gains in the definition of taxable income.

Now compare that to the horrible-terrible-absolutely awful argument that a mere one percent of all taxpayers, with 17% of all income, paid for 37% of all "this nation's taxes" [sic].

*The post discusses other reasons but not the question whether corporate income tax payments should be attributed only to the shareholders or not.  The former lies behind the 37% tax figure for the top one percent.