Taxes – Page 3 – Rolling Doughnut

He’s a Knight? He should only be allowed to ride a horse.

The article says this idea won’t go anywhere, but it’s a suggestion to the EU, so I wouldn’t quite discount it so quickly:

The former head of Royal Dutch Shell has gone way out on a limb and urged the European Union to ban all vehicles that get less than 35 mpg, saying it is the only way to significantly address global climate change and force the auto industry to build more efficient vehicles.
…

Sir Mark Moody-Stuart, who spent his career working for the giant oil company, says an outright ban is needed because so-called “gas-guzzler” taxes do not work – and aren’t fair because they let those with the means to pay them skirt responsibility for reducing greenhouse gas emissions.

Gas guzzler taxes are only ineffective – permitting “those with the means to pay skirt responsibility for reducing greenhouse gas emissions – to the extent that politicians direct those gas guzzler taxes to the general fund to pay for expenditures not related to reducing the effects of greenhouse gases. The fault does not rest with those who pay the tax.

“‘It is a social thing,” he explained. “We mustn’t say the wealthy can avoid doing what is needed by society. When we eliminated coal fires in London we didn’t say to people in Chelsea you can pay a bit more and toast your crumpets in front of an open fire. We we [sic] nobody, but nobody, could have an open fire.”
…

Moody-Stuart, who is currently chairman of the mining group Anglo American, says he is a great fan of the free market, “but like most things, they have a failing. Without regulation to channel their power, markets will not deliver things which are of no immediate benefit to the individual making his or her choice, even though they may be beneficial to society.”

We all know who gets to decide what is (allegedly) needed by society.

And of course Moody-Stuart is a “great fan of the free market”, but it’s just not quite right. Some human needs to be the guiding hand rather than the invisible hand. The PC? When that showed up, ~~Altair~~ IBM sold 70 billion PCs the first year because they knew it would sere an immediate benefit. The iPod? When that showed up, Apple sold 98 billion of them in the first 3 weeks. The ~~incandescent~~ fluorescent light bulb? Don’t even get me started on those ridiculous sales when the government regulator gave Edison the idea.

Every time one of these imbeciles opens his mouth, I wonder if he’s ever opened a book.

Four commas times three is madness.

Check in on any political blog today and you’ll see mention of President Bush’s proposed budget for FY2009 (which starts Oct. 1st). Much of the attack has already been made in better detail, so, other than pointing out that 3 trillion dollars is $3,000,000,000,000, the only budgetary point I’m going to mention is this:

The document also assumes $70 billion in costs for the Iraq and Afghanistan wars next year, a fraction of the true costs, which could reach $200 billion in 2008. Beyond 2009, the budget includes no war costs at all.

Lying, in addition to not being very Christian, is an interesting way of “supporting the troops”. I wonder if he’s trying to be snarky to indicate what he expects will happen if Obama or Clinton wins in November. That would require more foresight and less middle-finger-waving than the Bush administration has shown in the last seven years, so I doubt it. Regardless, it’s a significant political abuse of our money to ignore what will eventually be taken from us.

However, as awful as that is, this poor reporting from the article is embarrassing (emphasis mine).

Budget analysts and Democrats say the good news in later year is likely illusory. The Bush budget plan makes room for $61 billion in 2009 to stop the growth of the alternative minimum tax, a parallel tax system enacted in 1969 to make sure the rich pay income tax that is increasingly squeezing the middle class. The cost of an AMT fix will continue to grow each year, but the budget makes no more allowances for the cost of that fix.

This is simply devoid of any historical accuracy.

Why Was the AMT Enacted?
Congress enacted the AMT in 1969 following testimony by the Secretary of the Treasury that 155 people with adjusted gross income above $200,000 had paid zero federal income tax on their 1967 tax returns. … In inflation-adjusted terms, those 1967 incomes would be roughly $1.17 million in today’s [ed. note: the article is from May 2005] dollars.

The Washington Post article can’t believe that 155 people in 1969 constituted “the rich”. Details matter with the AMT because its egregiousness becomes more apparent to the typical voter who doesn’t dwell on such details. The goal in reporting is not to convince him that it is egregious, but omitting specifics deprives him of a relevant fact necessary for him to reach an informed conclusion. Omitting specifics becomes a method for endorsing the policy. Maybe we can’t expect the average voter to seek out The Tax Foundation, but presumably he does read a mass-market source of information.

Also, while I agree with concern that the AMT is “squeezing” the middle class, it’s irrational to believe that we should fix “middle class” rather than “squeezing”. See here.

We’d better spend it well the first time.

What’s the definition of insanity?

“I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said.

I love that she knows it will help. Oh, but if it doesn’t, which it will, because she knows it will work, she’s going to do the exact same thing again. Because, in the evidence of failure, it will clearly work on the second try.

These are our “leaders”. How does anyone identify as anything other than a libertarian?

They should pay it in Euros.

This is only in the House so far, so there’s a chance, however slim, for cooler heads to prevail. I’m not counting on it.

Democratic and Republican congressional leaders reached a tentative deal Thursday on tax rebates of $300 to $1,200 per family and business tax cuts to jolt the slumping economy.
…

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining rebates of at least $300 for almost everyone earning a paycheck, including low-income earners who make too little to pay income taxes.

Families with children would receive an additional $300 per child, subject to an overall cap of perhaps $1,200, according to a senior House aide who outlined the deal on condition of anonymity in advance of formal adoption of the whole package. Rebates would go to people earning below a certain income cap, likely individuals earning $75,000 or less and couples with incomes of $150,000 or less.

Before addressing the plan, is the economy “slumping”? On what economic data is everyone falling all over themselves to give away public treasure? On what economic data is everyone reporting that the economy is in a recession (allegedly) requiring government intervention? Speculation rarely makes for good public policy.

Now, about that plan… This is naked welfare. If a “taxpayer” hasn’t paid any taxes, he is not a taxpayer. Under this plan, he will be a welfare recipient. If that’s what Congress intends to do, it should be honest about it. Because politicians are involved, they can’t be honest. Instead, they wrap their redistributionist garbage in “for the children”. Children do not stimulate¹ the economy.

As for subjecting this welfare to an income cap (there is a $3,000 income floor), is there an expectation that lower income non-taxpayers will spend the ~~rebate~~ free money better than others? Are there restrictions on how the money may be spent? Momentarily ignoring income distinctions, there will be a deadweight loss of some portion that will inevitably be spent on unproductive consumption (e.g. beer and cigarettes). There is no concern for the effect of this nonsense, only whether or not it buys more votes.

To those receiving my tax payments, you’re not welcome. To those distributing my tax payments, you’re economically illiterate scumbags.

More thoughts, both specific and general, here, here, and here.

¹ Stealing money from X and giving it back to X can no more stimulate the economy than stealing from X to give to Y. Welfare is an additional problem, but it is not the only problem. President Bush’s preferred “solution” would fail to achieve economic stimulus just as well.

Teach financial skills.

Would you choose moral preening over substantive solutions? If so, here’s your example for today, courtesy of Michelle Singletary’s column in the Washington Post:

When you’re living on the edge financially, you cannot afford convenience fees that go along with instant money. That’s why I dislike Refund Anticipation Loans, or RALs.

A RAL is a short-term loan backed by a person’s tax refund. Tax-preparation companies count on desperate people trying to get their refund as quickly as they can. But there’s a price for that speed.

What galls me is that there’s little, if any, risk to the lender — yet the loans often carry high fees. The Consumer Federation of America and the National Consumer Law Center have found that RALs cost from about $30 to more than $125 in loan fees. Some tax preparers also charge a separate application or document preparation fee of about $40. The consumer groups say the effective annual interest rate for a RAL can range from about 40 percent to more than 500 percent.

This type of loan takes advantage of the very people — cash-strapped taxpayers (sic) — who can ill afford the costs.

And so on. Of course, it’s also possible to say that this type of loan offers an advantage to cash-strapped taxpayers, and getting a benefit generally requires a cost. We may deem the terms unfavorably lop-sided compared to what we would agree, but that does not mean they are “unfair”. As long as both parties involved agree that the terms are acceptable enough to enter the contractual agreement, they are acceptable.

That almost gets lost in the buildup to the key argument.

Although the appeal is that you get your money fast, you in fact marginally speed up the delivery of your refund cash. The turnaround on the loans can be a day or two. However, taxpayers who file returns electronically and opt for direct deposit can receive refunds in 10 days or less.

Logic is a powerful tool. I’m glad it’s finally unleashed here. But it’s strange that the article isn’t a plea targeted to the millions of Americans who receive a tax-refund, the potential customers for this service. Instead, a proposal:

I would like to see a ban on these loans. …

Of course. And concluding the essay with a rumination on the IRS proposal to regulate such loans:

The longer they take to restrict the marketing of this useless product, the more it costs the poor.

We have Ms. Singletary’s subjective assessment that these loans are “useless”. Her judgment is a better stand-in than the person who takes the loan. Thus always with central planners.

This is not to argue that I like these loans. I don’t. Nor am I arguing that I think poor Americans will make good choices when the terms of the loan are terrible. Income is not an indicator of intelligence, and circumstance can force decisions that involve choosing the lesser of two evils. But I believe that people who take these loans are taking them for a reason. I do not pretend to know what that reason might be, nor will I speculate or pass judgment. Still, it’s logical to accept that quick access to most of the money they’re owed is better than no quick access to any of the money they’re owed.

I will make a suggestion for an objectively better topic than calling for a ban on financial transactions between consenting adults. Tell poor Americans to stop being interest-free lenders to the United States government and start being taxpayers who pay only the taxes they owe.

If poor Americans do not pay the government money they do not owe throughout the year, they will have more money throughout the year to pay for whatever inevitably builds from a lack of those dollars. They are much less likely to need a solution such as a refund anticipation loan. Or they can save they money in an account that pays interest, spending it at tax-time if they must have the irrelevant visceral feel of a large lump sum amount. That’s stupid, of course, if there are creditors at the door who will charge interest and fees for debts not payed, but it’s smarter than lending that same money to the federal government without interest while those creditors are calling. And the money has the benefit of being available immediately, beating even the two days of the RAL.

Interest-free loans masquerading as tax refunds are the problem, not an imagined capitalist conspiracy to screw the desperate poor.

More tax refund thoughts here, here, here, and here.

Meet our next Treasury Secretary, Harry Potter.

Following on yesterday’s theme, Mike Huckabee is the only national candidate (that I know of) currently advocating the FairTax. With friends like him, who needs enemies?

Instead we will have the FairTax, a simple tax based on wealth. When the FairTax becomes law, it will be like waving a magic wand releasing us from pain and unfairness.

That quote is taken from Huckabee’s campaign site. I’m not about to claim that FairTax advocates and Huckabee supporters are the same group. Overlapping, yes. The same¹, no.

I can accept a claim that a plan is better than what we have. I want evidence, of course, and I’ve stated that evidence from the FairTax leaves me against the plan. But to pretend that anything short of eliminating taxes completely will be “like waving a magic wand releasing us from pain and unfairness”? Huh? No thanks. Even if I supported the FairTax, that kind of lie would turn me off of Huckabee².

¹ First, obligatory dig at Rep. Ron Paul. Why do people claim that Ron Paul is a libertarian because many of his supporters are libertarians? Overlapping, ~~yes~~ maybe. The same, no.

² Second Obligatory dig at Rep. Paul. There are other issues that disqualified him from my vote long before I got to this issue. But like Mike Huckabee, Ron Paul does not believe in evolution. I think Rep. Paul is leaving himself wiggle room in there as a politician, but I will not accept the pandering of wiggle room. Rejecting evolution despite clear evidence is irrational. Neither Paul or Huckabee could earn my vote based on that (among many objections).

The FairTax is a bad idea.

Remaining from a September debate, I owe regular commenter Scott my analysis and opinion of a national sales tax. To be upfront, I began my search against the idea. Not because I wanted to hate it, although I do hate it. Yet, as I’ve thought about my 15-year support for a flat tax plan – and I acknowledge that it has its problems – I’ve considered some of the basics of a national sales/consumption tax. The economics and politics of a national sales tax fail miserably.

From Americans for Fair Taxation, I roamed through some of the finer points of what is now under consideration. I used this recent editorial to focus mostly on the ideas. For example:

What emerged from this research is that a national retail sales tax is a preferred method of taxation among most Americans surveyed.

A majority of Americans supported slavery at our nation’s beginning. Segregation was hunky-dory for most well into the 20th century. Even today, a majority of Americans believe that surgically altering the healthy genitals of their male children is reasonable. Of course income versus sales tax is not comparable to those sorts of oppression, but forgive me if I fail to be swayed by such arguments in favor of any position. Mob desire is irrelevant because good intentions do not guarantee good outcomes. The details matter.

Research on the price of consumer goods reveals that up to 20% of all prices today represent hidden income taxes and payroll taxes. Once these taxes are repealed and replaced with the FairTax, it is likely that market pressure would force retail prices to fall.

This is either ignorant or dishonest. The FairTax will not eliminate embedded taxes; it will merely change the source of which businesses collect taxes from individuals. Even something as simple as an apple will have embedded taxes.

The apple will require a seed to create an apple tree. That seed will have a sales tax. The tree will require fertilizer to make grow. That fertilizer will face a sales tax. The fertilizer will need to be transported from producer to apple grower. That fuel will face a sales tax. The distributor needs a truck to haul the fertilizer. That truck will face a sales tax. The truck will require gas to operate from A to B. That fuel will face a sales tax. And so on, all the way to my cupboard.

Now, imagine something more complicated, with multiple ingredient raw materials. Think that iPod that Americans love doesn’t consist of parts purchased from vendors with an “s” for plural who all require inputs to make their products? The disappearance of embedded taxes is a myth, unless we assume that someone who currently fails to absorb hidden costs will suddenly absorb non-hidden costs. I will not assume something quite that silly.

Which leads to this, perhaps the boldest claim:

The FairTax would collect revenue from the underground economy.

How, exactly, when basic logic suggests the FairTax would push more of the U.S. economy underground, not less? There would be evasion everywhere. Need to get your hair cut? Here’s $20 cash. Need your lawn mowed? Here’s $40 cash. Never doubt the human capacity to subvert rules. Simplicity is important, but reducing the burden of complying is much more effective. Absent that, reducing the ability to bypass the system is important. I don’t have to believe that taxes are good to push the idea that collecting as close to the assumed amount is wise. Otherwise, reality will be destroyed by the theoretical estimate and actual receipts. The rate would increase more the greater those two figures differ.

As the FairTax advocates own figures indicate, the sales tax is not 23 percent. That’s only the tax-inclusive rate offered because it looks better² than the tax-exclusive – the common metric – rate of 30%. Dividing 30¢ sales tax by the final price of $1 and 30¢ gives a 23% tax-inclusive rate. But in Virginia, if I go into the store and buy a bottle of water, I see the price of the water as 99¢ and the final price as $1.01 after the 2% sales tax is added. No one pretends that the rate is 1.98%.

In the end of the editorial, this:

Significantly, the FairTax eliminates all loopholes, gimmicks, exemptions and deductions from the federal tax system.

The “prebate” is certainly an exemption, and given the details, I’d call it a gimmick. The details:

Another benefit of the FairTax is that, unlike other sales taxes, it would not hit the poorest Americans the hardest. The FairTax proposal calls for sending every American a “prebate” check to offset the cost of the national sales taxes paid by those living in poverty. This feature would effectively exempt those living below the poverty line from paying taxes to the federal government, and provide all taxpayers with a reimbursement of a portion of taxes paid.

Who’s administering this “prebate”? How are differences in regional cost of living factored into the “prebate”? Are the differences factored in? According to the following document, “The Prebate Explained” (pdf):

Poverty level spending represents what it costs families of varying household size and composition to buy their necessities.

All consumers are alike. Every central planner believes that and the “prebate” requires the adoption of central planning. You need four chickens, two gallons of milk, one dozen eggs, and eight ounces of cheese. That’s normal. Except it’s not, because the government can’t know everyone. It can only assume and expect you to fit that mold. Some people will receive a larger “prebate” than they should and some will not receive enough. It’s inevitable.

And what about those people who spend their “prebate” on lottery tickets, for example? I’m not offering that as an expectation of what “the poor” will spend their “prebate” on or as a judgment on lottery tickets. I think people should be able to spend their money on whatever they want. But this plan specifically relies on government-managed handouts, in advance and tied to no actual spending, to make the plan plausible and not regressive. How do we prevent such wastefulness among citizens when it leads to further reliance on the government to pay for necessities? There will be people who waste their “prebate”, just as there are now millions of Americans who believe that their tax refund is found money rather than an interest-free repayment of excess taxes paid as many as 16 months prior. There will be a call to further assist these people through government resources. The loopholes, gimmicks, exemptions, and deductions aren’t going anywhere.

Neither is the intrusion of government into each person’s privacy. To get the “prebate”, Americans must do the following (according to the pdf above):

The registration form requires only the following information:

The name of each family member who shares the residence;

the Social Security number of each family member;

the family member to whom the monthly prebate check should be paid;

a sworn statement that all listed family members are lawful residents, that all family members sharing the common residence are listed, and that no listed family members are incarcerated;

the address of the shared residence; and

the signature of all family members 21 years of age and older.

Failure (unwillingness) to adhere to those instructions results in no “prebate”. And again, who will be managing this information and
distributing monthly checks to millions of households? Maybe the IRS goes away, but why should I believe its replacement will be any better? (Who validates that my claim of 6 children is correct? Fraud and waste, anyone?)

The effect of eliminating regressive payroll taxes is commonly overlooked when analyzing the FairTax, but it would have a very significant impact, as these taxes represent the single largest tax burden on these income earners.

I agree with fixing the burden of payroll taxes. It is inherently regressive. Making it “fair” would be a huge tax increase on higher earners, but it wouldn’t help our economy. So what to do?

Eliminating the tax is a great idea, but the FairTax only seeks to fund the underlying flawed entitlement through a sales tax without addressing the fundamental flaw in seeking to be revenue neutral to maintain ineffective programs. And since when has Congress been expenditure-neutral? Why should I believe it will suddenly find fiscal responsibility? Taxes are bad¹ and should be lowered as much and as soon as possible, but we need to cut expenditures first. Without that measure, we’re engaging in diversionary games³.

Finally, and most damning from a practical path, how do we transition from an income tax to a sales tax? The Y2K nonsense was overblown. Flipping the switch from Income Tax on December 31, 20xx to Sales Tax on January 1, 20xx would be a realized nightmare, but I’ve seen nothing other than that simplistic transition implied. That’s foolish.

I also used this chain of entries from Kip at A Stitch in Haste as research.

¹ We have a $9,124,016,501,555.91 national debt, as of today. That has to be repaid.

² For another example of this sleight-of-hand marketing, read this.

³ There is one final caveat looming large. We’d have to repeal the 16th Amendment.

What’s good for us is not good for them.

So many nuggets in this story.

The federal budget deficit would have been 69 percent higher than the $162.8 billion reported two months ago if the government had used the same accounting methods as private companies, the Bush administration reported Monday.
…

The report was released by the Treasury Department and the president’s Office of Management and Budget. Under the accrual method of accounting, expenses are recorded when they are incurred rather than when they are paid. That raises the costs for liabilities such as pensions and health insurance.

Imagine that. Look at the picture as a whole and it looks worse. Now, why would Congress reject such accuracy?

The new report indicates that funding for Social Security and Medicare will come up $45 trillion short in the next 75 years in paying for projected benefits over that time frame.

Oh, right. But what’s a mere $45,000,000,000,000 in the grand scope of caring about people through government?

As it has for every report, the Government Accountability Office, Congress’ auditing arm, said it could not sign off on the books because of problems at various agencies, most notably the Defense Department.

In a letter, GAO Comptroller General David M. Walker did note that his agency was able to sign off on the financial statement for the Social Security and Medicare programs.

“The federal government did not maintain effective internal control over financial reporting, including safeguarding assets, and compliance with significant laws and regulations,” Walker said in his letter.

If you or I did that in our record-keeping, the government would assume our guilt, take everything we own and throw us in jail.

**********Then there’s this:

“The 2.6 trillion in record-breaking revenues that flowed into the Treasury this year reflect a healthy economy,” Treasury Secretary Henry Paulson said in a statement accompanying the new report.

It could just as easily reflect that Congress is taxing the American people heavily. Granted, I’d go along the lines of arguing that the $275,500,000,000 deficit reflects that the Congress and President are willing to spend beyond all rational bounds of fiscal responsibility. But that wouldn’t make anyone look favorable, so it must not be true. Right?

The self-inflicted wound creates temporary sanity?

Michael Kinsley on the AMT:

The alternative minimum tax. It sounds horrible, doesn’t it? And it has very bad press. The AMT was invented in 1969 as a way for the government to collect at least something from affluent people who had been a bit too successful at taking deductions and credits on the basic Form 1040. It operates like an extra fence around a maximum-security prison. If they don’t get you the first time, they’ll get you the second.

It would be easy to get indignant here because that’s a ridiculous analysis. It’s impossible to describe those 155 non-taxpayers as “a bit too successful at taking deductions and credits on the basic Form 1040”. Those deductions and credits came about because the politicians were picking winners and losers with giveaways in the tax code. The problem arose because 155 people figured out they could benefit from complexity being harder to manage than simplicity and the extreme inability of politicians to grasp that.

The next paragraph eliminates indignation, almost.

Conceptually, this is all wrong. Tax deductions aren’t (or aren’t supposed to be) goodies distributed like candy on Halloween. Each one should have its own justification. And you are entitled to each one you qualify for. Giving the kids too much candy and then trying to take some of it back is a good way to become unpopular in the neighborhood. The AMT is getting more unpopular every year, as more and more taxpayers fail to make it over that second fence. That group was fewer than 1 percent of taxpayers in 2000 and will be 20 percent in 2010 unless something is done.

There are a few points worth making, but they require going into details. Mr. Kinsley is offering an incomplete summary more than analysis. Fine. But it’s incorrect to assess the AMT’s new victims as failing to make it over the second fence. The AMT is getting unpopular, in the basic populist sense that it arose, because the government is actively pushing people over the first fence. Mr. Kinsley later adds:

The problem with present arrangements isn’t the AMT; it’s Bush’s tax cut for the affluent.

That is a reason more people are hit by the AMT. It is not the problem. From the liberal viewpoint that loves progressivity¹, everyone else is the rich. The average liberal voter is thinking that he is, at best, succeeding reasonably, whatever his level of success. It’s the other guy who should face the burden, the guy who is supposedly rich. He knows there’s a top sphere that deserves to be ~~punished~~ forced to pay his fair share, but he is never that guy. Now that the AMT is hitting through poor (illegitimate) design, the dual burdens of complexity and stupidity hover around his checkbook. And he’s pissed.

Later, Mr. Kinsley writes:

The AMT prevents the federal deficit from being even higher than it is.

Technically true, I suppose, but that’s wrong. The deficit is high. “Higher” is worth discussing, but the inability of Congress to stop trading federal goodies for votes keeps both the deficit and taxes high. Deficits prevent the AMT from being lower.

Mr. Kinsley’s conclusion, however, is spot on. A flat tax would be the answer. But the problem always rests with politicians and their inability to govern based on principles of fairness (and the Constitution), as opposed to the economic populism that currently rules.

But one person’s loophole is another person’s important social policy — or, in fact, the same person’s important social policy. As soon as we get that simpler system, people will start cluttering it up again: lower rates for capital gains, to encourage investment; the charitable deduction, to encourage philanthropy; a bigger exemption for dependents, to encourage “family values” (you got a problem with this, buddy?). But all that’s okay — in 20 years we can sweep out the clutter and start all over again.

Unfortunately.

¹ Conservatives love the AMT, too, since they can’t be bothered to spend less. Or fix the AMT while they had complete control of the government.

Not only does he think to the left, Robert Reich can’t see to the right.

I’m extra-ashamed today that I ever voted for someone who would give Robert Reich any job involving economic policy. From his blog today (emphasis mine):

No candidate for president has suggested that the nation should raise the marginal tax rate on the richest beyond the 38 percent rate it was under Clinton (it’s now 35 percent, but the richest of the rich, as I’ll explain in a moment, are paying only 15 percent). Yet new data from the IRS show that income inequality continues to widen. The wealthiest 1 percent of Americans are earning more than 21 percent of all income (the data are from 2005, the latest the IRS has examined). That’s a postwar record. The bottom fifty percent of all Americans, when all their incomes are combined together, is earning just 12.8 percent of the nation’s income.

This is an incomplete picture, and I’m sure Reich knows it. Look at the full picture using the same tax data Reich uses, but fails to link:

[I don’t know why this image won’t appear. I’m looking into it, but until then, the link works.]

Click to enlarge

On their 21.2 percent of all income, the top 1 percent pay 39.38 percent of all taxes. On their 12.8 percent of all income, the bottom fifty percent pay 3.07 percent of all taxes. Those number are in the above table. Strangely, they’re in the column immediately to the right of the column Reich uses to select his data. Reich is intellectually dishonest.

Looking further at the tax tables, consider:

Click to enlarge

Aside from the brief blip of President Bush’s 2001 tax cuts, the tax burden for the top 1 percent of income earners has steadily increased since 1980, more than doubling in 25 years. The tax burden for the bottom 50 percent of income earners has steadily decreased since 1980, more than halving in 25 years. Still, Reich has the gall to write this:

If the rich and super-rich don’t pay their fair share of this tab, the middle class will get socked with the bill.

How are the top income earners not paying their fair share? They do not receive ~~handouts~~ benefits in anywhere near the proportion that middle- and low-income earners receive from their tax dollars, yet they’re still cheating the rest of America? Reich is a liar.

There is much more to analyze from Reich’s entry, but it’s the usual nonsense. Head over to Greg Mankiw, from whence the link came, for a brief synopsis of Reich’s idiotic redistributionist tax proposal.

Wow.