Congratulations, Billionaires! You Really Do Have Lower Tax Rates Than Everyone Now!
New research out this week shows that, for the first time ever, the 400 richest families in the USA pay the lowest total tax rates of any income segment, thanks to the 2017 Big Fat Tax Cuts For Rich Fuckwads. The study comes from UC Berkeley economists Emmanuel Saez and Gabriel Zucman, who helped Elizabeth Warren develop her Eat The Rich wealth tax. The full study will be published next week in their new book, The Triumph of Injustice, which New York Times columnist David Leonhardt calls "the most important book on government policy that I've read in a long time."
It's really very simple: since the Reagan administration, one political party has dedicated itself to driving tax rates on the richest people in America lower and lower, and now that the very richest have the very lowest tax rates, that party wants more tax cuts.
Saez and Zucman looked at overall tax rates -- the combined total of all federal, state, and local taxes, including both personal and corporate income taxes, and there's no doubt about it: the rich have paid less and less tax since the 1960s, and now the very richest Americans now pay about a full percentage point less in total taxes (23 percent) than the bottom half of Americans do (24.2 percent.) That's the effective tax rate, the actual amount paid, accounting for deductions and stuff, which may differ from the "on paper" tax rate.
Yes, we will now have some goddamn libertarian show up to yell "but they still pay the biggest total AMOUNT of taxes!!!" True. We believe that may be related to their having the most money. Call it a hunch.
Here, have an animated chart showing the top tax rates bending lower and lower to their current swoon, like a filthy rich snake.
The top 400 earners have seen their effective tax rate fall from 56 percent in the early 1960s, to 47 percent in 1980 before the Reagan tax cuts, to today's pittance.
But wait, haven't middle class folks seen tax cuts, too? We were promised tax cuts! Haha, don't be silly, middle classers generally don't have capital gains or corporate taxes, which have been slashed:
For middle-class and poor families, the picture is different. Federal income taxes have also declined modestly for these families, but they haven't benefited much if at all from the decline in the corporate tax or estate tax. And they now pay more in payroll taxes (which finance Medicare and Social Security) than in the past. Over all, their taxes have remained fairly flat.
Bet all those Trump voters really feel like dopes now, huh? Haha, they know better than to trust the fake news! They know they'd be rich if only there were more tax cuts and we shot all the illegals, plus ending food stamps.
And yet, says Leonhardt, this doesn't have to be a story of the rich playing the rest of us for suckers:
"Many people have the view that nothing can be done," Zucman told me. "Our case is, 'No, that's wrong. Look at history.'" As they write in the book: "Societies can choose whatever level of tax progressivity they want." When the United States has raised tax rates on the wealthy and made rigorous efforts to collect those taxes, it has succeeded in doing so.
And it can succeed again.
And big surprise, cutting taxes again and again is not a recipe for enormous growth, though it's very nice for the already rich.
The American economy just doesn't function very well when tax rates on the rich are low and inequality is sky high. It was true in the lead-up to the Great Depression, and it's been true recently. Which means that raising high-end taxes isn't about punishing the rich (who, by the way, will still be rich). It's about creating an economy that works better for the vast majority of Americans.
In their book, Saez and Zucman sketch out a modern progressive tax code. The overall tax rate on the richest 1 percent would roughly double, to about 60 percent. The tax increases would bring in about $750 billion a year, or 4 percent of G.D.P., enough to pay for universal pre-K, an infrastructure program, medical research, clean energy and more. Those are the kinds of policies that do lift economic growth.
As for the claim that higher taxes on the very rich would just spur them to hide their money away, Leonhardt notes that while the wealthiest generally do put a lot of effort into avoiding taxes, "history shows that serious attempts to collect more taxes usually succeed."
Besides, he asks: If trying to tax the very very rich were an inherently doomed effort, "why would so many of the super-rich be fighting so hard to defeat those efforts?"
I dunno, probably because freedom or something. Just turn on Fox Business and you'll learn all sorts of facts about how any attempt to raise tax rates even the least bit is the same as confiscation and genociding the rich. (Turn to Mother Fox for news of real genocide, on the other hand, and you'll find that it happens to people you haven't even met, and whose deaths are none of our business.)
In conclusion, if you're not rich it's probably because you paid $60,000 cash for a new car instead of investing it like a rich person would, the end.
Looks like that financial expert deleted his wisdom after people kept pointing out only the rich have $60K lying around to either buy a car or invest. Poor fella was silenced by socialists, the real end.
Yr Wonkette is supported entirely by reader donations. Please give generously, because YOU are in the top 1 percent -- of our hearts.
Doktor Zoom's real name is Marty Kelley, and he lives in the wilds of Boise, Idaho. He is not a medical doctor, but does have a real PhD in Rhetoric. You should definitely donate some money to this little mommyblog where he has finally found acceptance and cat pictures. He is on maternity leave until 2033. Here is his Twitter, also. His quest to avoid prolixity is not going so great.