How many times have you heard Republicans say that the rich are overtaxed already because they pay a disproportionate share of all income taxes paid in the United States?
Elaborate statistical arguments have been continuously made in the Wall Street Journal editorial pages, by economists from the Hoover Institution at Stanford and most recently yesterday in the Power line Blog in support of that argument.
For a demonstration of how figures don't lie, but liars can figure, go below the fold.
The central argument against Obama's plan to increase taxes on the rich is that it is not fair. Power line makes the case succinctly in yesterday's posting:
Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.
Ok, let's back up, let's back way up. These statistics count "share of taxes" the way the Supreme Court counted votes in Florida. The proper measure of who pays their fair share of the cost of government is not measured by the share of the total personal income taxes paid by the richest 1% or 5%, but by the share of the total cost of government paid by the richest 1% or 5%.
Thus, the richest 1% of US taxpayers may have paid about $408 billion in personal income taxes in 2006, out of $1.5 trillion in personal income taxes paid by everybody, BUT the total cost of government in 2006 amounted to about $2.9 trillion. (In every sentence, remember that everything that comes before the "but" is bullshit).
In other words, personal income taxes paid for only about 50% of the cost of government in 2007 and the rest was paid with social security taxes, excise taxes and loans to the government.
Calculated thusly, the richest 1% paid for about 14% of the cost of government while receiving 22% of the country’s total income, and the richest 5% received 36% of the nation’s income and paid only 32% of the cost of the government that helped make that income possible.
Worse, if Republicans are big on cost-benefit analysis, who benefits more from the US Navy in the Persian Gulf: a coal miner in West Virginia or the CEO of Exxon Mobil? The richest should pay disproportionately more of the cost of government because they benefit disproportionately more.
As you can see, the rich are undertaxed, not overtaxed.
To quote the most famous Republican of them all, Does it appear otherwise to you?