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Tuesday, October 09, 2007

McIlheran Watch: Pity the Poor, Poor Rich People, Part 11,278

by folkbum

Milwaukee Journal Sentinel columninst/ blogger Patrick McIlheran, who is not one of the richest 1% of people in America, nonetheless seems more willing than necessary to take up rhetorical arms to defend the monied on a regular basis.

I've written about this before, repeatedly; that's because McIlheran pretty regularly trots out the old "rich people pay more than their fair share of taxes" baloney. For example, yesterday:
The richest 1% of American taxpayers--make that the top-earning 1%, since income and wealth aren't quite the same--are earning a greater share of all income than before. This upper crust is earning just over 21% of all income in 2005, the data the IRS just released, compared to about 19% the year before. [. . . .T]his top 1% is paying a bigger share of all federal income taxes: 39.4% in '05, compared to 36.9% the year before. [. . .]

And if they ["populist politicians"] want to talk about shifting more of the burden of government onto the very wealthy, they'll have to cope with the fact that the wealthy are already paying most of the freight.

Watch, then, for the left to make the point that it's really about reducing "inequality"--that if the economy insists on paying an ever higher premium for really top-notch talent, it's up to the government to knock the rich guys down a peg or two.

Only that's not an argument about taxes at all, then. It's about socioeconomic jihad.
Those conservatives--always willing to fight jihad!

Seriously, though, I don't dispute McIlheran's numbers. The problem is that he isn't giving you all of the numbers, just the ones designed to make you feel sad for all those poor, poor rich people paying all those horrible taxes. The numbers he cites include only the federal income tax. And any of you who have ever gotten a paycheck know that federal income tax is but one of the negative lines on your pay stub. When you factor in federal payroll taxes, you find that this "progressive" taxation system is really not so much (click for bigger image):

If you believed McIlheran, you would expect to see a giganticon spike at the right side of that graph, suggesting that the rich pay a much greater share of their income in taxes. But that graph shows no such thing. In fact, people earning between $50k and $75k pay a greater share of the income in federal taxes than people earning over $10m an equal share of their income as the top 400 taxpayers in the country (edited to correct for the fact that I can't read at 5 AM).

Kevin Drum, who whipped up that chart, has another (follow the "not so much" link above) that also includes state and local taxes, such as the property tax. He finds that the bottom 20% pays about 18% of their income in taxes overall, and the top 20% pays 19%. The middle 60% is still pretty flat--again, there is no giant spike of the kind McIlheran suggests you would see.

So, no, the lucky duckies who pay no federal income tax don't get off the hook so easily. And, no, the top 1% aren't being squeezed like so many wine grapes, either. So don't be jealous of the poor, and don't feel bad for the poor, poor rich people.

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