Friday, April 29, 2005

Fuzzy Math and the WSJ

If you are in the mood for a data-reality-check, read Jonathan Chait's commentary in today's LA Times on the slick relativism found in the pages of the Wall Street Journal.

A Wall Street Journal editorial this week cites a recent IRS study detailing which income groups pay what level of taxes. The editors note with satisfaction that the highest-earning 0.1% of the population paid 5.06% of the federal tax burden in 1979, and was paying 9.52% as of a couple of years ago.

To the Journal editors, this proves that "the overall tax burden grew more progressive from 1979 to 1999." The editorial goes on to note that any move to raise taxes on the rich would be deeply unfair because those poor folks "already bear an outsized share of the American tax burden."

It is certainly true that the richest 0.1% are paying a higher share of the national tax burden. Is that because they're getting socked by the tax code? No, it's because the very rich are earning a far bigger proportion of the national income. In 1979, the highest-earning 0.1% took home about 3% of the national income, and paid about 5% of the taxes. In 1999, they earned about 10% of the national income and paid about 11% of the taxes.

In fact, the tax rate borne by the very rich has plummeted. In 1979, the top 0.1% paid, on average, 32% of their income in taxes. Today, they pay less than 23%. So what's happening is that the top 0.1% are paying a higher share of the tax burden because their share of the national income is rising faster than their tax rates are falling. The Journal editorial board sees this state of affairs as class warfare against the rich.

And as long as you're visiting, check out Bill Maher's piece on GOP rage. Realizing you have a problem is the first step to recovery.


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