In the Washington Post, a look at the Administration’s new plan for tax justice (and fiscal stimulus):
Economists at the Treasury Department are drafting new ways to calculate the distribution of tax burdens among different income classes, which are expected to highlight what administration officials see as a rising tax burden on the rich and a declining burden on the poor. The White House Council of Economic Advisers is also preparing a report detailing the concentration of the tax burden on the affluent and highlighting problems with the way tax burdens are calculated for the poor.
The efforts would thrust the administration into a debate that until now has lingered on the fringes of economic policy: Are too few wealthy Americans paying too much in taxes for too many, and should the working poor and middle class be shouldering more of the tax burden?
“The increasing reliance on taxing higher-income households and targeted social preferences at lower incomes stands in the way of moving to a simpler, flatter tax system,” R. Glenn Hubbard, chairman of the Council of Economic Advisers, warned at a tax forum at the American Enterprise Institute on Tuesday.
…
The Treasury Department is working up more sophisticated distribution tables that are expected to make the poor appear to be paying less in taxes and the rich to be paying more.
Answering critics who say the working poor do face high taxes because they pay high Social Security payroll taxes, outgoing White House economic adviser Lawrence B. Lindsey told the AEI tax forum that the 12.4 percent Social Security levy should not be considered when tax burdens are calculated. Lindsey said the Social Security tax is ultimately returned to the taxpayer as a benefit.
Lindsey compared the Social Security tax to a deposit in a neighborhood bank’s Christmas Club. In such clubs, periodic deposits are returned in a lump sum during the holiday season, and Lindsey said no one would consider such deposits a tax.
Some things just speak for themselves.
I wonder if they would have had the nerve to float this if Gore hadn’t dropped out, and the reality that GWB will essentially run unopposed hadn’t set in?
(added to quote in order to clarify point)
whoa there. Dubya ain’t running unopposed. I think the *only* reason Gore is not running in 2004 is that he thinks a “fresh face” will have a better shot at beating Bush. Republicans are not happy that Gore isn’t running. They actually seem a bit disoriented.
Frankly, I don’t know what on earth is motivating the Republicans to speculate about *raising* taxes on the middle class. It’s one thing to lower taxes on the rich, but to raise taxes on the non-rich. . .?
I have a bit more to say about this, but it’s late. I’ll just advise you to read Paul Krugman’s short book “Fuzzy Math”, which has a good discussion on the political economy of taxes. It’s brief, clear and smart.
I wish Liberals would define rich each time they talk about taxes. Is it a household earning $120,000, which could be a married couple, each earning $60,000? That could be 80 hours per week to get to this income level. Is it a small business owner earning $80,000 a year most years and has one good year earning $300,000? That puts that owner in the top 1% of taxpayers; too bad they can’t keep more in that rare year.
The article does not speak for itself. The author worded it to make it sound as if GW and Repubs want to shaft the middle class. Take the following quote in the article: The president is making the case that people who earn between $50 [thousand] and $75,000 a year should be paying a third more taxes A Democrat is making this quote! Nowhere in GWs policy do I see him proposing people in this income range should pay more taxes. In fact he gave this income group a tax cut in his last proposal. The Dems have never proposed a cut for this income group in recent history. In fact, Clinton increased taxes for this group when he came into office.
I think they are going to put together good stats to define who is exactly is paying taxes. This could be a problem for Liberals that want to raise taxes on people who truly are middle class ($50,000 to $120,000 AGI)
Bad blog today. You would have a better case for runaway military spending being a problem if government revenues do not keep up.
Agreed. I, for one, am extremely happy that Gore’s dropped out. If he’s the best the Democrats can do in ’04, then so is second place.
Actually, I think Gore is in perfect position to be a royal pain in the ass to the administration on some of this issues. He doesn’t give a damn about who he offends anymore. GO AL!!!
I guess I must be missing something in your comments on this story. Are you saying that the question of how the tax burden should be distributed should not even be asked? That the right answer is always and everywhere to increase taxes on “the rich” however defined?
Or, perhaps, you really meant that it is ok to ask these questions, but that nobody would have the nerve to do so if Al Gore was still running. If the latter, then I think you are ascribing far more influence to Al than he deserves. I suspect most have stopped caring what (or if) he thinks.
Re taxes, sorry, should have included the ‘money graf’ from the article…I’ll update and do so (short version: they want to recategorize substantial parts of the payroll tax, which is regressive) as ‘not taxes’ because in theory, there is a benefit that comes back to you.
Given the fiscal state of Social Security, this is kinda amusing…
A.L.
Time for some level setting… From IRS stats, here are the wage earners in each category and the percentages they pay:
Top 5% – 56.47% of all income taxes; Top 10% – 67.33% of all income taxes; Top 25% – 84.01% of all income taxes. Top 50% – 96.09% of all income taxes. The bottom 50%? They pay a paltry 3.91% of all income taxes. The top 1% is paying more than ten times the federal income taxes than the bottom 50%!
And who earns what? The top 1% earns 20.81% of all income. The top 5% earns 35.30% of the pie (pays 56.47% of taxes). The top 10% earns 46.01%; the top 25% earns 67.15%, and the top 50% earns 87.01% of all the income (but pays 96.09% of the taxes, fair huh).
Mcwop, what did you expect, they will try to demonize the Bush administration at every turn.
>> as ‘not taxes’ because in theory, there is a benefit that comes back to you.
>> Given the fiscal state of Social Security, this is kinda amusing…
The checks that I write for a number of utilities are made out to govt entities.
Are those utility payments taxes? (One of the payments is part of my property tax bill but the others aren’t.)
Note that my city occasionally tries to take over one of the local utilities. So, if the payee determines whether or not something is a tax, one of my payments may change status. That doesn’t make a lot of sense.
Yes, regulated monopolies are odd and govt services may well involve a huge amount of politics, but it seems wrong to lump them in with income tax, where there is basically no association between amount paid and value received.
Yes, SS is a boondoggle and the payments are extracted at the barrel of a gun (not unlike trash service), but there is some connection between the benefits owed and the payments made. (It’s vaguely like the connection between insurance payments made and the benefits received.)
So, if you’re not going to call my payments for trash service a “tax”, I don’t think that you can call my SSI payments a tax either.
Yes, I agree that a third category might be useful….