Demands to let taxes rise for Americans topping the income charts have led to charges of “class warfare” by the usual Republican suspects. To move the conversation forward, here are some questions and answers:
Question: Do you believe that only the rich should pay higher taxes?
Answer: Yes. When the economy gets better, people somewhat lower down on the income scale probably should pay something more. But let’s start with the rich.
Q: Is it fair that the top 1 percent pay 38 percent of all taxes?
A: First, let’s correct your number. It applies only to federal income taxes. When you add in payroll taxes, federal excise taxes (gasoline, for example) and various state taxes, the bottom 20 percent paid 12.3 percent of their income in taxes last year and the wealthiest 1 percent paid 7.9 percent. Does that sound fair to you?
With all these taxes in the mix, the top 1 percent paid only 21.5 percent of the total — and do note that they earned 20.3 percent of total personal income.
Q: Well, what about that 51 percent of households that owed no federal income tax in 2009? Huh?
A: So few Americans paid the federal income tax that year because the recession pushed many people’s earning below the taxable level. In ordinary times, households that don’t pay federal income tax range from 35 percent to 40 percent of the total. In 2007, the number was 38 percent.
Bear in mind that the Bush tax cuts removed many people (who were paying very little tax to begin with) off the tax rolls. Also, 17 percent of those who paid no income tax are over 65 and probably retired.
Q: Sen. Lindsey Graham defined class warfare as “when you pick one area of the economy and say we’re going to tax those people because most people are not those people.” Is it fair to let the American masses raise taxes on a small group of rich people?
A: Hmmm. I don’t recall the Republican from South Carolina complaining during the Bush years, when the top 1 percent receive an average tax cut of $34,992, while the middle 20 percent got $647.
Q: President Obama keeps going on and on about asking the wealthiest among them to “pay their fair share” in taxes. What on earth does “fair share” mean?
A: Beats me. Call me a technocratic bore, but I think the role of taxation is to pay for the cost of government in a way that causes the least distress. That means a progressive tax code that takes a larger percentage from those who can afford it most.
Q: You want to soak the rich, don’t you?
A: No. They’re already soaking — in a bathtub of Champagne.
Q: You hate the rich, don’t you?
A: Absolutely not. I take them one tycoon at a time. Some I like a lot. But let me say this: I especially like rich people who don’t play the martyr when asked to pay their taxes. I like Warren Buffett very much.
Q: Well, if Warren Buffett wants to pay more in taxes, who’s stopping him?
A: That’s very cute.
By the way, Bill Gross, the head of Pimco, the investment giant in Newport Beach, Calif., recently tweeted: “Class warfare by the 99 percent? Of course, they’re fighting back after 30 years of being shot at.” I like him, too.
Let me ask you a question: Are you better off than you were 11 years ago, when Bill Clinton was president, tax rates were higher and budgets balanced?
A: I’ll have to get back to you on that.
Froma Harrop is a Providence Journal columnist. Her email address is fharrop@projo.com.
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