Class Warfare Rhetoric

©2003 by Dale Franks

The announcement of the president's economic plan, with its array of tax cuts, has predictably been criticized as a gift to "the rich". Almost as soon as the announcement had been made, the class warfare rhetoric began to fly. DNC chairman Terry McAuliffe characterization of the plan was that "Bush chose to reward the wealthiest Americans with a $674 billion tax cut." Citizens for Tax Justice's director, Robert S. McIntyre, said that the plan shows that the president believes "the rich don't have enough money." According to the Democratic Senate Leadership, "the package showers benefits on the wealthiest one percent of Americans." The real problem, according to the Left, is that the rich don't pay their "fair share" of taxes.

So, then, just how much of federal income tax revenues do the rich actually pay? According to the IRS, the share of federal taxes paid works out as follows:

Defining who comprises that group called "the rich" is a difficult task, but no matter where you draw the line, it's pretty clear that the rich, however defined, already pay the lion's share of income taxes. More than 37% of all income tax revenues come from the top 1% of income earners alone. Indeed, the bottom 50% of all taxpayers only contributes 3.9% of all the income tax revenues the government receives.

Much of this disparity is explained by looking at the effective income tax rates on people of various income levels. The effective tax rate is the amount of their income that people actually pay in taxes, rather than the statutory income brackets set by the IRS. According to "Tax Facts", a joint project of the Urban Institute and the Brookings Institution (neither of which is a particularly right-wing organization, I hasten to point out), the effective income tax rates break down as follows:

The bottom quintile (20%) of income earners actually has a negative income tax. In other words, the income tax actually increases their income by over 5%. At the other end of the scale, a person in the top 1%, making a million dollars a year, actually pays a $223,000 tax bill every April 15th.

By definition, tax cuts benefit taxpayers. If the top 10% is already paying nearly 70% of all income taxes, then logically they will be the people whose taxes are cut the most. It's difficult to cut taxes on, say, the bottom quintile of income earners, who already have a negative effective tax rate. As a practical matter, this means that one can characterize any income tax cut as a benefit to the rich, since they are, in effect, practically the only ones paying it in the first place.

The income tax provides only about half of all federal revenues, yet even at that, the top 10% of taxpayers provide about 30% of the Federal government's total revenue. They pay nearly one-third of the salaries of our soldiers, sailors, and airmen. They provide almost one-third of every highway project, food stamp, Federal courthouse, and welfare check, while the bottom 50% of taxpayers provide less than 2%.

Yet, despite the fact that a bit over 67% of all income tax revenues comes from the top 10% of taxpayers, the Left, of course, still believes that "the rich" aren't paying their fair share. It's difficult, then, to escape the conclusion that they aren't referring to how much of tax revenues are provided by the rich. What they really object to is the fact that the rich have too much money, and the Federal government takes too little of it.

Perhaps it is unfair that some people make more money than others, but only in the cosmic sense that life itself is unfair. Some people are blessed with talents, abilities, and drive that others are not. Some people are born to wealthy families. The purpose of government, however, is not to impose the cosmic sense of justice held by a political elite upon the mass of the citizenry, but rather, as our founding document declares, merely to secure the people's rights.

Implicit in the Left's argument is the idea that there is some maximum level of allowable income, and any income over that can simply be confiscated, and redistributed to others. The rich, after all, can afford it. Besides which, they probably got rich in the first place because they "unfairly profited in the 80s". It is class warfare, pure and simple, predicated on the idea that political power can be obtained by encouraging one group of citizens to benefit themselves by appropriating the wealth of another group of citizens.

There are more immoral ideas of political governance, but darned few of them.

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