"Tax, Tax, Tax the Rich!" Calls to Tax Wealthy Making Right Wingers Sweat?
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A simple but powerful chant is now starting to reverberate, all across the country, in protests against budgets cuts gone wild.
“How to fix the deficit?” marchers are shouting. “Tax, tax, tax the rich!"
That sentiment, unfortunately, hasn’t yet reached deep into many law-making chambers. Last week, in the nation’s capital, Rep. Jan Schakowsky from Illinois did introduce legislation that would up taxes on income over $1 million, from the current 35 percent to a range of new rates that run from 45 to 49 percent.
But the budget debate in Congress still revolves almost exclusively around questions about how much to cut, with no attention at all to the vast untaxed fortunes of America’s super rich. In state legislatures, largely the same story.
So why are cheerleaders for America's rich starting to sweat? They're hearing the rising drumbeat — from labor and community groups the nation over — for new “millionaire” taxes. And they’re watching the polls, too. Over 80 percent of Americans, the latest surveys show, want higher taxes on our richest.
Apologists for the awesomely affluent, in the face of this swelling tax-the-rich tide, have now begun mounting a pre-emptive strike. Taxing the rich, their new argument goes, can’t possibly offset our budget shortfalls — because, as the National Review’s Kevin Williamson pronounces, “there aren’t enough rich.”
The National Review, the right wing’s most revered publication, ran two blasts along this line last week. Williamson, the journal’s deputy managing editor, ended his piece reverting back to standard right-wing tax myths. The rich, he claims, will either “lawyer up” to avoid higher taxes or flee to lower-tax jurisdictions.
His National Review colleague, Robert VerBruggen, tried turning to actual numbers, from 2008 tax returns, to make his case that “if we can’t raise taxes on anyone who’s not rich, the income tax can’t be of much help in increasing revenue.” But the numbers, on closer inspection, don't support that assertion.
In 2008, the most recent year with complete IRS stats available, taxpayers making over $200,000 paid in federal income tax, after exploiting every loophole they could find, just 21.8 percent of their total income.
That’s considerably less than what America’s most affluent paid, after loopholes, 50 years ago. In 1961, taxpayers making over $27,000 — the equivalent of about $200,000 in today’s dollars — paid, on average, 31.3 percent of their total incomes in income tax.
Taxpayers making grander sums 50 years ago paid an even greater share of their total incomes to Uncle Sam. In 1961, income over $400,000 — that would be about $3 million today — faced a 91 percent tax rate. Income over $3 million today, by contrast, faces a 35 percent tax rate.
This 91 percent rate, remember, only applied to income over 1961's $400,000 cutoff. Income under that $400,000 faced lower rates. And even some income over $400,000 — capital gains income, for instance — faced lower rates, too.
So what share of their total incomes did 1961's seriously rich end up paying in taxes? Taxpayers with over $135,000 in 1961 income — the equivalent of $1 million today — paid an average 43.1 percent of their income total in federal tax.
In 2008, taxpayers making over $1 million gave Uncle Sam only 23.1 percent of their total incomes. In other words, the seriously rich 50 years ago paid almost twice as much of their incomes in federal income tax as the seriously rich today.
How much more in revenue could Uncle Sam raise today if our contemporary rich paid the same share of their incomes in federal income tax as 1961’s rich?