From the right: The bottom 10% are "lucky duckies"

[monkspider]

Low-Income Taxpayers: New Meat for the Right

Prepare yourself for the latest cause of the political right: You are about to hear a great deal about how working Americans at the bottom of the economy are not paying enough in taxes.

I am not making this up. The Wall Street Journal's editorial page always provides important clues about the Next New Thing among conservatives, and there it was last week assailing "The Non-Taxpaying Class."

You'd think the tax-cutters on that page would be happy with a policy begun under Ronald Reagan to lift the income tax burden from Americans struggling to get by on modest paychecks. But no, it seems that because of our tax structure, the favorite causes of supply-siders -- big tax cuts for wealthy Americans and investors -- are just not popular enough. "While we would opt for a perfect world in which everybody paid far less in taxes," the editors write, "our increasingly two-tiered tax system is undermining the political consensus for cutting taxes at all."

The editorial writers are roiled by the fact that the richest Americans, those with incomes of more than $500,000 a year, account for 28 percent of total tax revenue and that the top 5 percent "coughed up more than half of total tax revenue." The Journal contrasts these unfortunate souls with the thriving person who earns $12,000 a year and ends up "paying a little less than 4 percent of income in taxes."

Worse yet, various tax credits, mostly aimed at helping families raise children, further reduce the income tax burden on low-income folks to the point that "almost 13 percent of all workers have no tax liability and so are indifferent to income tax rates. And that doesn't include another 16.5 million who have some income but don't file at all."

Then comes this remarkable sentence: "Who are these lucky duckies?"

"Lucky duckies"?

Now, I credit my friends on that editorial page with strong principles and powerful feelings of compassion toward high-end taxpayers. But it will certainly come as news to low-income families getting by on two small paychecks that they are lucky duckies.

And the truth is, low- and middle-income people do pay a lot in taxes. They just don't happen to pay the taxes that supply-side conservatives want to cut.

The Journal's editors make only a passing comment on payroll taxes. But the basic FICA tax takes a much bigger share from middle and low incomes than from large ones. The 6.2 percent tax applies on incomes up to $84,900, meaning that if you make that or less, you pay the full 6.2 percent. But Richard Sims, the policy director of the Institute on Taxation and Economic Policy, took the recently published example of a top CEO who earned $122.5 million in 2000 and calculated that his FICA tax rate was 0.00043 percent. Lucky ducky.

Sims also notes that sales and excise taxes hit hardest at low- and middle-income people who have to spend most of their earnings on taxable items, can't save a lot, and don't put much of their money into financial, accounting and legal services, which generally aren't taxed.

According to Sims's figures, the bottom 20 percent of Illinois residents pay 10.8 percent of their income in sales and excise taxes, compared with only 1.4 percent paid by the top 1 percent of earners. In California, the comparable figures are 7.4 percent and 1.0 percent; in Arizona, 8.1 percent and 1.2 percent; in Colorado, 5.1 percent and 0.8 percent.

Yes, the wealthy are paying more in federal taxes, but for reasons that are good news for the wealthy -- "largely because they receive a much larger share of the total income in the nation," says Isaac Shapiro of the Center on Budget and Policy Priorities. Between 1979 and 1997, the last year for which figures are available, the average after-tax income of the top 1 percent of households, adjusted for inflation, rose by $414,000 -- a 157 percent gain. For the middle fifth of households -- the middle of the middle class -- the comparable gain was 10 percent, or $3,400. The bottom fifth was stagnant.

Over the past generation, the federal government's best deed for the working poor -- it started with Reagan and gained momentum under Bill Clinton -- was to reduce federal taxes on their labor and give low-income families an additional boost with the Earned Income Tax Credit. If the goal of welfare reform is to encourage work, we ought to be thinking of more ways of lifting the fortunes of the poorly paid. That's not class warfare. It's good policy. The last thing we need to worry about is whether poor Americans are taxed too little.

source: http://www.washingtonpost.com/wp-dyn...2002Nov25.html

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Absolutely incredible, I see that the political right has become a tad bit more belligerent as a result of it's recent victory. I greatly fear what is going on in this country this country right now. I pray that God will deliver us from the fury of the current administration.

[Asher]

yay for sweeping generalizations.

[Ogie Oglethorpe]

Yawn.....Yet another alarmist troll.

[monkspider]

Originally posted by Asher
yay for sweeping generalizations.

[Asher]

I hate threads about "the left" and "the right" because there *IS* no "left" and "right". It's all relative, and even then it's not black and white.

[DanS]

I agree with the WSJ. It is important for the tax base to be as wide as possible. The goal is to match benefits with payments, and it will create long-term distortions in the body politic if a whole class of people benefits but doesn't pay or conversely if a whole class of people pays but doesn't benefit.

While important to point out that the total tax burden is still substantial for most, these payroll taxes are paid with the expectation that the payer will benefit in equal proportion. For instance, your social security retirement benefit is matched to how much you paid in to the system.

[monkspider]

Well for you Ashie, I'll change it to " from what's generally referred to for all practical purposes politically as "the right".

[Capt Dizle]

Oh, if you claim there is no left nor right, nor black nor white, nor is there no right nor wrong then all you have is chaos theory to rely on.

No thanks Mister Malcom.

[Capt Dizle]

In other words I'll maintain my fixed point and pretend the universe is spining about me.

[Felch]

Different people pay different taxes. I agree with you though, monk, the WSJ isn't looking at the whole picture here. However, it is written by and for people who don't live paycheck to paycheck.

[Nubclear]

So what does all this prove....?

That we MUST attack Iraq NOW! Remember....hes an evil man!

[Sikander]

Originally posted by jimmytrick
Oh, if you claim there is no left nor right, nor black nor white, nor is there no right nor wrong then all you have is chaos theory to rely on.

It's been damnably reliable for me.

[TheStinger]

If everybody just paid a set % of income in tax with no exemptions whatsoever, everyone would be treated the same and an a lot of lawyers and accountants would be out of work

[Spiffor]

Raising taxes of the poorest is highly utilitarist, because they cannot go away in another country like the richer. It is the only reason this method is applied (Monkspider explained well how FICA was incredibly higher for lower - middle class people than upper class people).
All other justifications are mere pretexts given by the guard dogs of the Big Business. Yeah, let's attack Iraq, at least we won"t think about it

[Urban Ranger]

Originally posted by DanS
I agree with the WSJ. It is important for the tax base to be as wide as possible. The goal is to match benefits with payments, and it will create long-term distortions in the body politic if a whole class of people benefits but doesn't pay or conversely if a whole class of people pays but doesn't benefit.

So are things like porkbarrelling and corporate welfare included? Doesn't look that way.

Besides, what you are saying is those who don't need benefits doesn't need to pay taxes, which doesn't make sense. Clearly, you need to re-evaluate what these benefits include and see who need to pay.

For example, a rich person should contribute a lot more to the local police department, because he benefits a lot more from their services.

[Sikander]

Originally posted by Urban Ranger

For example, a rich person should contribute a lot more to the local police department, because he benefits a lot more from their services.

And in the U.S. he pays a lot more, as most local funding comes from property taxes. He also pays a lot more for the schools, roads etc. I pay more in taxes every year now than I used to make when I was younger, and I am only a middle class person who owns his own house.

[Kropotkin]

The real "problem" with the article is not it's views on the taxes. Some like the WSJ and DanS don't think there should be any elements of redistribution of wealth through the tax-system. It's first and foremost a normative statement that's beyond right and wrong (although DanS' use of the term 'Class' in his post is somewhat interesting, at least from my point of view). There's also the hinted perspective on how to messure cost and benefits. It's normative as well. my personal view is that the WSJ shows a good example of the rights paradoxal mix of ruthlessness and naïve innocence.

Anyhow, the key thing in it is really the WSJ's perspective on people with a low income. "Lucky Duckies" is a clear nominee for a "Let them eat Cake"-award. It's really a lot like the way people wrote about those happy negros in the not so good old days. It puts the entire article in another light. Quite contraproductive for their virews in my not so humble opinion.

[JohnT]

So we have one editorial taking swipe at another. And that's news?

I subscribe to the WSJ and must have missed the editorial in question - I'll look it up tonight (it's 8:30am here) before commenting on something that I haven't even read.

I will say that it sounds more like a warning and oblique advice to the Republicans: 29,000,000 potential voters have no stake in the lowering or raising of income taxes, but those same voters are getting creamed by payroll taxes. Therefore, your future strategy should de-emphasize income tax cuts and emphasize payroll tax reform (like cut the rate by 2% but raise the cap to $125,000) if you want to attract these voters.

I'll alert the RNC.

[JohnT]

Oops.

[Dr Strangelove]

How does the portion of the tax burden for each segment of the population comopare to their portion of the gross national (or domestic) income? If the top bracket pays half the taxes, what portion of the nation's income do they get? What portion of the nation's wealth go they own?

[Ogie Oglethorpe]

Originally posted by Dr Strangelove
How does the portion of the tax burden for each segment of the population comopare to their portion of the gross national (or domestic) income? If the top bracket pays half the taxes, what portion of the nation's income do they get? What portion of the nation's wealth go they own?

Are you proposing a flat rate tax?

[Sava]

I bet if you did an in-depth study about who pays what, I'm sure you'll see that the top 1% and corporations end up paying much less taxes (as percentage of income) than the middle and lower classes. With all the corporate welfare, bermuda tax dodging, and Bush/Reagan style cuts, the wealthy make out like bandits.

BUT SADDAM IS BAD, WE MUST DISARM HIM!!

[Dauphin]

If you look at what percentage people pay just to live (e.g food, rent, electric etc) you will find poor people pay a lot more for basic needs. Seeing as they have a higher cost of living it stands to reason that they are less able to pay taxes. Having progressive taxation (to me at least) is not about redistribution of wealth, but about letting poor people have an opportunity to live.

I would have thought this obvious.

[Sava]

It is obvious to those who aren't drowning in selfishness and self-righteousness.

[GePap]

I say we get rid of taxation on incomes and switch to a proggresive sales tax on all transaction. Tax people for consuming, not earning, with very low if any taxation on basic needs and high taxes on luxury items and certain services.

Let the boys at the WSJ take that!

Also funny is the fact the the WSJ has asked its writers not t use GOP anymore since some of its readers don't know what it stands for: I guess when they talk orgasmically about the republicans, they want to be sure everyone will know who they are speaking so orgasmically about. (Though if you don't know what GOP stands for, why would you know all the other abbreviations in that paper?)

[Dauphin]

Originally posted by GePap
I say we get rid of taxation on incomes and switch to a proggresive sales tax on all transaction. Tax people for consuming, not earning, with very low if any taxation on basic needs and high taxes on luxury items and certain services.

Can you say "Smuggling"?

[Sava]

That would only work if the taxation is less than the amount it costs for smugglers to peddle their warez.

[chequita guevara]

I'm in agreement with DanS, up to a point. Everyone should be taxed. Everyone needs to have a monetary stake in the system. However, I think the income tax structure should be far more progressive. Taxes on basic necessities like food (labeled tax loopholes by the politicians in Florida) should be substantially lowered or abolished. Tax on unemployment income should be abolished. (I know, rather self-serving of me).

[Dauphin]

Originally posted by chegitz guevara
Tax on unemployment income should be abolished. (I know, rather self-serving of me).

It seems pointless to me anyway. What is the difference between the current situation and abolish the tax and giving less in benefits. As far as I can see its just about paperwork and funding channels.

(It does effect later employment, but I'm thinking longer term unemployed)

[Imran Siddiqui]

Taxes on basic necessities like food (labeled tax loopholes by the politicians in Florida) should be substantially lowered or abolished.

In some states taxes on food are abolished. In New Jersey, there are no taxes on food (except candy), water, and even clothes.

And how did all people from the 'right' get represented by a random WSJ commentary? I don't remember voting on that .