Posted on 12/17/2019 5:52:38 AM PST by Kaslin
In a recent New York Times opinion essay, drawn from their new book, Professors Emmanuel Saez and Gabriel Zucman, advisors to Senator Elizabeth Warren’s presidential campaign, advanced a startling claim. In 2018, the 400 richest Americans paid a lower effective tax rate (23.0%) than the bottom 50% of Americans (24.2%). That claim furnishes a juicy soundbite for all the left-of-center Democratic presidential candidates – “American voters, you pay more tax than a billionaire!” The soundbite will resonate once President Trump’s tax returns are leaked and it turns out he paid less than the average billionaire.
But is the soundbite accurate? The professors assert a “comprehensive” view of effective tax rates, including not only federal income taxes but also state and local income and property taxes, excise and sales taxes, payroll taxes, estate taxes and corporate profits taxes. But wait! To make a political point, they conveniently ignore a range of programs, akin to negative taxes, designed to ease the fiscal burden on lower income households. Arbitrarily left out of their analysis is the Earned Income Tax Credit (EITC), Medicaid, food stamps, welfare, unemployment insurance – all targeted at the bottom 50% of households. By ignoring redistributive programs, the professors can falsely claim that the US tax system “is a tax system of the plutocracy”, devoid of progressive features.
And they completely ignore the enormous charitable contributions – akin to voluntary taxes – made by billionaires, Bill Gates, Warren Buffet, Michael Bloomberg and many others. In a bygone era, the Hearst family generously endowed the University of California Berkeley, the professional home of Saez and Zucman. Perhaps some gratitude is in order.
The professors enrich their cookbook by attributing all corporate taxes to shareholders. Since billionaires are big shareholders, and since the federal corporate profits tax has been slashed from 52% in 1962 to 21% in 2018, this attribution explains a good part of the calculated fall in the effective billionaire tax rate, from 54.4% in 1962 to 23.0% in 2018. But some corporate taxes – it can be debated how much – are shifted back to lower employee compensation and shifted forward to higher prices paid by consumers. A comprehensive analysis of tax burdens would at least wrestle with the thorny attribution of corporate taxes to shareholders, employees and consumers.
To deliver “tax justice”, the professors and the left-of-center candidates endorse a wealth tax, high personal income taxes on the rich, and a corporate profits tax rate of at least 35% -- the rate before it was reduced to 21% by the Tax Cut and Jobs Act of 2017 (TCJA). The corporate part of their shared agenda may be the least unpopular but in terms of economic impact it is the most questionable.
At long last, the TCJA put the US corporate rate in the vicinity of corporate rates imposed by advanced countries elsewhere – Canada, the United Kingdom, France, and others – and close to the Chinese rate. This eliminated the temptation for existing and newly founded corporations, created with American ingenuity and money, to set up headquarters elsewhere. Any Democratic president, following the advice of Saez and Zucman, would ask Congress to tilt the international playing field decisively against the United States. How? By restoring the corporate rate to its pre-2017 level of 35% or higher. Not good for business, not good for the stock market. Definitely not good for workers.
But not to worry! The professors have a plan to deal with inconvenient realities of the business world. They would tax all US firms on their worldwide profits at 35%. And any foreign firm that sells goods or services in the US market, and pays a worldwide tax rate less than 35%, would be hit with a US tax to make up the difference on revenue earned from US sales. How they would tax complex supply chains is a mystery. But in a stroke, the professors would blow up decades of international treaties that divide corporate taxes between nations and cap customs duties. If you think President Trump’s trade policies have undermined business confidence, just wait until such tax policies hit the street.
Figures never lie, but liars always figure, as the saying goes. That is evident in this case I would say.
Liars figure and figures lie. Data undoubtedly manipulated. More than likely just Bullshit.
I’ll agree with the writer leaving out Earned Income Tax Credit would be arbitrary but the rest of the point is hand waving and cooking the books in the other direction if you’re looking specifically at taxation. If you were looking at total compensation, and lumped welfare with income, then yeah I am pretty sure there are people with more spending power than I have because they avail themselves of WIC, EBT, etc. And none of my giving is tax deductible because I’m gifting to individuals, effectively extending their incomes at the expense of my own spending power while I’m taking the tax bite.
This is the reason for accessing Trumps tax returns
If only someone had solved this "problem" in Australia or Europe. That's what VAT, value added tax, is for. *eyeroll*
LOL so the BS lying among 'professors' has expanded beyond Global Warming liars... Time to de-fund most institutions of 'higher education'... Enough is enough.
So, the average American pays $230,000,000 in taxes each year? Gees, and I always thought I was above average in income.
Hey! Stupid! The lowest 51% of Americans pay NO INCOME TAXES and the top 10% pay 72% of all taxes collected. You lying POS!
Compare rates vs. actual dollars. A typical “rich person” probably pays a hundred or a thousand times more than one of the lower 50%. From no tax or 3K, 5K or 10K vs 100K, 1/2Million. Percentages deceive.
VAT does not apply internationally.
I’ve got news for these ersatz geniuses: It’s not your money. And listen up you morons: my fair share of taxes is the per capita cost of legitimate government expenses times myself and any of my dependents. That’s it!
And it’s not my responsibility to fund your hairbrained ideas of how to make the world a flower garden with other peoples money. If you want to pay for a sex change operation for some child rapist and murderer, go ahead! But if you, by Law, take my money to do it, then you are a tyrant, and I have every right to take you down from your arrogant perch and throw you in prison. At least you’ll be around like minded people.
It is very difficult to calculate income or tax incidence in America.
According to Saz and Erazmataz, 50 percent of Americans - many of them who do not work - pay a higher tax rate that those at the top.
This is actually impossible.
People who don’t work have no earnings. All they have is money given to them by others, either voluntarily (moochers) or involuntarily (looters). Call their taxes rebates to the people who pay taxes based on work or providing capital to the market. The moochers and he looters are tax-getters not tax-payers.
Then there is the lower middle class, which is indeed screwed by our system. These are the people who are taxed from dollar one by Social Security, both their part and their employer’s part; who pay sales and gasoline taxes; and who pay property taxes, and who get nothing from government except health care being priced out of reach and cable TV - with commercials! - costing $200 per month.
Figuring out whether these taxes are actually taxes or user fees is a tough one. Social Security is a bargain for some and a rip-off for others. It’s a bargain for aged persons brought here from overseas by family reunion, who go right onto SSI, as though they paid into the system when they were young and in good health. It’s a rip-off for those who work regularly through their working-age years, for whom the payments upon retirement are low. Social Security is partly forced savings and partly redistribution. Teasing out the redistribution part (which is a tax) is a bitch.
As for all the complications in the income tax code, yes, it does make it difficult to determine the incidence of the tax. On the other hand, Congress wants people to support symphony orchestras and botanical gardens because, I guess, having these in the city uplifts the poor. Look, somebody. has to create a job for Hillary’s kid or else she’d be homeless like Hunter Biden. These deductions are called “tax expenditures.”
A simplified tax code, such as the flat tax or the fair tax, or Milton Friedman’s negative income tax (poor choice of name) and/or Ted Cruz’ and Rand Paul’s replacement of the income tax and S.S. tax with a Value-Added Tax, would among other things enable us to figure out who pays what in taxes, and would ensure that the tax was fair and even progressive (to a limited degree).
The next point is also important to make: You can’t tax rich people hard. They flee. If you try to tax the rich, your tax base will collapse and you’ll have less money for government and/or the middle-class will have to pay even more taxes.
Therefore, fairness in taxation requires that taxes be relatively low, so that we actually have lower rates on the Working Joes than we have on billionaires with tax attorneys.
They wish to repeal the 'State And Local Tax' (SALT) limitation of 10K when using itemizing (Schedule A) in doing their taxes. The prime beneficiaries? The wealthy in the blue states with heavy SALT burdens where the old tax law allowed unlimited deduction there which shifted the tax burden to the Federal Government and thus ALL Taxpayers!
Not really. They know that anyone with tax returns as complex as Trumps are will have something in it that they will be able to twist into a negative.
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