Tax the poor!
Dionne, E. J. Jr.
E. J. DIONNE Jr. OF SEVERAL MINDS TAX THE POOR! Another brilliant Republican idea Prepare yourself for the latest cause of the political right: You are about to hear a great deal about how...
...But it will certainly come as news to low-income families getting by on two small paychecks that they are lucky duckies...
...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...
...The editorial writers are roiled by the fact that the richest Americans, those with incomes of over $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...
...I am not making this up...
...In California, the comparable figures are 7.4 percent and 1.0 percent...
...And that doesn't include another 16.5 million who have some income but don't file at all...
...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...
...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...
...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...
...Now I credit my friends on that editorial page with strong principles and powerful feelings of compassion toward high-end taxpayers...
...Another brilliant Republican idea 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...
...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 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...
...The bottom fifth was stagnant...
...The last thing we need to worry about is whether poor Americans are taxed too little.axed too little...
...According to Sims's figures, the bottom 20 percent of citizens in Illinois 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...
...Then comes this remarkable sentence: "Who are these lucky duckies...
...For the middle fifth of households-the middle of the middle class-the comparable gain was 10 percent, or $3,400...
...That's not class warfare...
...You would 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...
...Lucky duckies...
...It's good policy...
...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 0.000043 percent...
...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 Wall Street Journal's editorial page always provides important clues about the Next New Thing among conservatives, and there it was last month assailing "The Non-Taxpaying Class" (November 20...
...in Colorado, 5.1 percent and 0.8 percent...
...Over the last 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...
...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...
...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...
...Lucky ducky...
...Worse yet, various tax credits, mostly aimed at helping families raise kids, 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...
...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...
...in Arizona, 8.1 percent and 1.2 percent...
Vol. 129 • December 2002 • No. 22
