Think Economically

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Maximum understanding, minimum average total cost.

Brief: rich people make more of the money, labor pays more of the taxes

So, via my friend (and rich person supporter extraordinaire) Bob Buschman, Ari Fleischer bloviates nonsensically about the rich being unfairly taxed. Buried in there is the following:

The top 20% in 1979 made 44.9% of the nation’s income and paid 55.3% of all federal taxes. Thirty years later, the top 20% made 50.8% of the nation’s income and their share of federal taxes paid had jumped to 67.9%.

And the top 1%? In 1979, this group earned 8.9% of the nation’s income and paid 14.2% of all federal taxes. In 2009, they earned 13.4% of the nation’s income but their share of the federal tax burden rose to 22.3%.

So the top 20% went from making 44.9% of income to making 50.8% of income, and the top 1%? From 8.9% of income to 13.4% of income. Fleischer’s upset that their share of the tax burden rose faster, but guess what–if they (and by they, I mean we, of course) made 100% of income, they’d pay 100% of the taxes.

Arm und Reich (flämisch 17 Jh)

And so I look a little further. It turns out that since the eighties, the effective tax rate on capital has declined, and the effective tax rate on labor has increased–and not just in the U.S., but in OECD countries in general. And this isn’t even accounting for the 20 trillion dollars hidden offshore by the very wealthy (h/t to Devin Lenda).

So which do you pick: equality of opportunity or equality of outcome? I dither between the two, but siding with the inexorable accumulation of wealth is something that was not endorsed by really any of my philosophical forebears, including virtue ethicist Adam Smith, and mad architect of destiny Thomas Jefferson, either. You can ask Devin, I’m as much an apologist for the status quo as anybody, but c’mon, people: do you have to keep making it more unequal?

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