If the rich people of the US should pay 36% of their income to help their less fortunate American brothers, then why should middle-income Americans not pay 36% to help their downtrodden brothers worldwide?

Unless it’s not really all a big brotherhood after all, but more so a wolf-eat-sheep situation – tax people because we can, or perhaps because we envy them, or because it’s convenient – not because we should?

PERCENT OF INCOME EARNED AND TAXES PAID BY SELECTED CUMULATIVE PERCENTILES IN 2005
.
Top 50 Top 25 Top 10 Top 5 Top 1
Percent share of… Total Percent Percent Percent Percent Percent
——————— ——- ——- ——- ——- ——- ——-
Adjusted gross income 100.00 87.17 67.52 46.44 35.75 21.20
Total income tax 100.00 96.93 85.99 70.30 59.67 39.38
Population 100.00 50.00 25.00 10.00 5.00 1.00
AGI floor ($thousand) N/A 30.88 62.07 103.91 145.28 364.66
.
PERCENT OF INCOME EARNED AND TAXES PAID OF SELECTED DISTINCT PERCENTILES IN 2005
.
0-50 50-75 75-90 90-95 95-99 Top 1
Percent share of… Percent Percent Percent Percent Percent Percent
——————— ——- ——- ——- ——- ——- ——-
Adjusted gross income 12.83 19.65 21.08 10.70 14.55 21.20
Total income tax 3.07 10.94 15.69 10.63 20.29 39.38
Population 50.00 25.00 15.00 5.00 4.00 1.00
AGI floor ($thousand) N/A 30.88 62.07 103.91 145.28 364.66
.
Source: http://www.irs.gov/pub/irs-soi/05in05tr.xls

At risk of presuming, could you also add regression lines to the three scatter plots in “Does More Equality Mean Less Economic Growth?” (Would pull them myself, but don’t have the data.) I’m working on a post on the subject, will be referencing yours.

Thanks,

Steve

My problem with the National Taxpayers’ Union is where they get their funding. They’re one of a constellation of anti-tax organizations bought and paid for by rich right-wing interests. I thought everyone knew that.
http://mediatransparency.org/recipientgrants.php?recipientID=1129

They’re paid to reach conclusions that their funders wish to be reached.

Oh, and “ad hominem” means “to the man”. What I said wasn’t a personal attack on anyone, and in fact wasn’t even an attack. Just telling the truth. Which, of course, some folks don’t want to hear.

Carolyn Kay
MakeThemAccountable.com

Lane

Lane also mentions that “it is commonly objected that higher tax rates on the affluent will reduce incentives for saving, investment, entrepreneurialism, and hard work”. This is the reverse of the often discussed question, “will a decrease in top-bracket income tax rates encourage work and investment, increasing growth?”. Following is an excerpt on this topic from page 116 of the book “The Coming Generational Storm”, co-written by economist Laurence Kotlikoff:

[START OF EXCERPT]
There are two competing forces at play in determining whether pretax earning rise, stay the same, or fall. On the one hand, workers may say to themselves, “Boy, now that taxes are lower, I can work less and still receive the same after tax pay. I’m going to cut back my workweek.” On the other hand, they may say, “Boy, now’s a good time to work more and earn more because taxes are lower on every extra dollar I earn”. Economists call the first of these reactions the “income effect”. They call the second reaction, the “substitution” or “incentive effect”.

Some of the best labor economists in the country have spent their lifetimes measuring the income and substitution effects. The broad consensus of these experts is that the two effects are roughly offsetting. This means that if wage tax rates are cut by, say 15 percent, tax revenues will fall by 15 percent.
[END OF EXCERPT]

There are other offsetting effects. For example, tax cuts financed by borrowing may have a positive effect on the GDP by pumping additional money into the economy. But this may be offset over the long run by the resulting cost of servicing the additional debt. In addition, there may be seriously negative effects if the tax cuts are seen as unsustainable and/or to weaken the country’s financial condition. Even before the Bush tax cuts, the annual U.S. Budget was projecting that the federal debt would skyrocket over the next few decades (recent projections are at http://home.att.net/~rdavis2/pro2008.html ). Many therefore believe that these tax cuts are unsustainable. In any event, the point is that there are many possible effects of tax cuts, positive and negative. We need to carefully analyze the data and avoid jumping to conclusions about the relative size of those effects.

The problem with the tax-rates-versus-GDP-growth chart is that it compares rates versus growth for the same years. Obviously, tax rates can take a long time to play out in the economy.

Here’s a similar scatterplot, showing OECD countries’ growth versus tax rates over thirty years of taxation, and 20 years of growth:

http://trueconservative.typepad.com/trueconservative/2007/12/government-ba-2.html

And here’s more commentary on this post. Looking forward to reading more.

http://trueconservative.typepad.com/trueconservative/2008/01/tax-the-rich-an.html

I don’t think those types of Ad Hominem attacks are really conducive to a rational discussion. If you have some problem with the methodology used by the National Taxpayers Union, then please bring it up. But “THEY DISAGREE WITH ME, SO THEY ARE A BUNCH OF RIGHT WING STINKERS!!!”, is just kind of childish name calling.

Carolyn Kay
MakeThemAccountable.com