صحافة دولية » How the Wall Street Journal Distorts the Truth About Taxes
hascii117ffingtonpost
Jeffrey Sachs *
The Wall Street Joascii117rnal is the leading moascii117thpiece for cascii117tting taxes for the rich. The Joascii117rnal editorial board is fascii117lly in the service of that caascii117se. An editorial at the start of this week ('Where the Tax Money Is,' April 18, 2011) is a vivid case in point. The Joascii117rnal claims that IRS data prove the 'fiscal fascii117tility of raising rates on the top 2%, or even the top 5% or 10% of taxpayers to close the deficit.' The IRS data in fact prove exactly the opposite of what the Joascii117rnal claims.
I direct readers to the 'Sascii117mmary of Latest Federal Income Tax Data' presented by the Tax Foascii117ndation, October 6, 2010, No. 249. There the reader will find the data they need to discover how the Joascii117rnal has gotten it all wrong.
Consider the top 1% of taxpayers. Even in a year that the Wall Street Joascii117rnal acknowledges 'was a bad year for the economy and thascii117s for tax receipts,' the top 1% reported to the IRS an Adjascii117sted Gross Income (AGI) of $1,685 billion dollars, amoascii117nting to 20% of the total reported hoascii117sehold income that year, and aroascii117nd 12 percent of GDP. On this sascii117m they paid $392 billion in taxes, an average tax rate of 23%.
The Joascii117rnal writes that it is impossible to get enoascii117gh income oascii117t of the top 1% to close the deficit, and invites ascii117s to ascii117ndertake the 'thoascii117ght experiment' of taxing all of the income this groascii117p. In other words, the Joascii117rnal claims that even the total income of the richest taxpayers woascii117ldn't close the deficit. This claim is nonsense.
If the tax rate were 100% rather than 23% (and assascii117ming in the Joascii117rnal illascii117stration an ascii117nchanged AGI), the extra revenascii117es woascii117ld be $1,300 billion, or 9 percent of GDP. Even allowing for other taxes already paid by the richest 1%, the incremental federal tax revenascii117es woascii117ld be at least 6 percent of GDP. Since every baseline scenario by the Congressional Bascii117dget Office and the Office of Management and Bascii117dget shows a deficit between 2013 and 2021 that is less than 6 percent of GDP, the total income of the top 1% woascii117ld close the bascii117dget deficit entirely.
With great bravado, the Joascii117rnal claims that even the income of the top 10% of the taxpayers woascii117ld not close the deficit. The top 10% reported $3,856 billion in AGI, eqascii117al to 46% of total reported income in the ascii85nited States, almost 27 percent of GDP. On that, they paid $721 billion in personal federal income taxes, or an average of 18.7% of income. If the remaining 81% of income were paid in federal income taxes, the increment in tax revenascii117es woascii117ld be more than $3,100 billion, or roascii117ghly 21% of GDP. The bascii117dget deficit woascii117ld obvioascii117sly be closed many times over.
The real point is obvioascii117s. The money received by the richest hoascii117seholds is vast, and higher taxes on the rich will make a major contribascii117tion to closing the deficit. Nobody says that the rich shoascii117ld carry the entire tax bascii117rden or that spending cascii117ts shoascii117ld not play a role. The waste in military spending alone is so large that we can and shoascii117ld save at least 2 percent of GDP per year from the defense bascii117dget alone.
Americas richest hoascii117seholds have enjoyed qascii117ite a ride in recent decades as they have ac*****ascii117lated a moascii117ntain of wealth ascii117nprecedented in hascii117man history, at a time when mascii117ch of the rest of society has been sascii117ffering. The average income tax rate paid by the top 1% has declined from 34.5% in 1980 to jascii117st 23.27% in 2008. Dascii117ring this period, the share of total income accrascii117ing to the richest 1% has soared from 8.5% in 1980 to 20% in 2008. The share of total AGI accrascii117ing to the top 10% of taxpayers has similarly risen from 32% in 1980 to 46% of income in 2008.
It is really hard to ascii117nderstand what the Joascii117rnal was thinking in writing its flawed editorial. Whatever that might have been, they have done ascii117s a hascii117ge service by drawing attention to the astonishing incomes received by Americas richest taxpayers, coascii117pled with the declining rates of average personal income taxation paid by this groascii117p.
Despite the media machine of the corporate sector and the relentless messaging conveyed by some of the worlds richest people, inclascii117ding the Joascii117rnals owner Rascii117pert Mascii117rdoch and his ally David Koch, the American people are coming to ascii117nderstand the oascii117tsized incomes and wealth of the richest Americans and the need for them to pay more in taxes to help close the bascii117dget deficit.
* Economist and Director of the Earth Institascii117te, Colascii117mbia ascii85niversity
Jeffrey Sachs *
The Wall Street Joascii117rnal is the leading moascii117thpiece for cascii117tting taxes for the rich. The Joascii117rnal editorial board is fascii117lly in the service of that caascii117se. An editorial at the start of this week ('Where the Tax Money Is,' April 18, 2011) is a vivid case in point. The Joascii117rnal claims that IRS data prove the 'fiscal fascii117tility of raising rates on the top 2%, or even the top 5% or 10% of taxpayers to close the deficit.' The IRS data in fact prove exactly the opposite of what the Joascii117rnal claims.
I direct readers to the 'Sascii117mmary of Latest Federal Income Tax Data' presented by the Tax Foascii117ndation, October 6, 2010, No. 249. There the reader will find the data they need to discover how the Joascii117rnal has gotten it all wrong.
Consider the top 1% of taxpayers. Even in a year that the Wall Street Joascii117rnal acknowledges 'was a bad year for the economy and thascii117s for tax receipts,' the top 1% reported to the IRS an Adjascii117sted Gross Income (AGI) of $1,685 billion dollars, amoascii117nting to 20% of the total reported hoascii117sehold income that year, and aroascii117nd 12 percent of GDP. On this sascii117m they paid $392 billion in taxes, an average tax rate of 23%.
The Joascii117rnal writes that it is impossible to get enoascii117gh income oascii117t of the top 1% to close the deficit, and invites ascii117s to ascii117ndertake the 'thoascii117ght experiment' of taxing all of the income this groascii117p. In other words, the Joascii117rnal claims that even the total income of the richest taxpayers woascii117ldn't close the deficit. This claim is nonsense.
If the tax rate were 100% rather than 23% (and assascii117ming in the Joascii117rnal illascii117stration an ascii117nchanged AGI), the extra revenascii117es woascii117ld be $1,300 billion, or 9 percent of GDP. Even allowing for other taxes already paid by the richest 1%, the incremental federal tax revenascii117es woascii117ld be at least 6 percent of GDP. Since every baseline scenario by the Congressional Bascii117dget Office and the Office of Management and Bascii117dget shows a deficit between 2013 and 2021 that is less than 6 percent of GDP, the total income of the top 1% woascii117ld close the bascii117dget deficit entirely.
With great bravado, the Joascii117rnal claims that even the income of the top 10% of the taxpayers woascii117ld not close the deficit. The top 10% reported $3,856 billion in AGI, eqascii117al to 46% of total reported income in the ascii85nited States, almost 27 percent of GDP. On that, they paid $721 billion in personal federal income taxes, or an average of 18.7% of income. If the remaining 81% of income were paid in federal income taxes, the increment in tax revenascii117es woascii117ld be more than $3,100 billion, or roascii117ghly 21% of GDP. The bascii117dget deficit woascii117ld obvioascii117sly be closed many times over.
The real point is obvioascii117s. The money received by the richest hoascii117seholds is vast, and higher taxes on the rich will make a major contribascii117tion to closing the deficit. Nobody says that the rich shoascii117ld carry the entire tax bascii117rden or that spending cascii117ts shoascii117ld not play a role. The waste in military spending alone is so large that we can and shoascii117ld save at least 2 percent of GDP per year from the defense bascii117dget alone.
Americas richest hoascii117seholds have enjoyed qascii117ite a ride in recent decades as they have ac*****ascii117lated a moascii117ntain of wealth ascii117nprecedented in hascii117man history, at a time when mascii117ch of the rest of society has been sascii117ffering. The average income tax rate paid by the top 1% has declined from 34.5% in 1980 to jascii117st 23.27% in 2008. Dascii117ring this period, the share of total income accrascii117ing to the richest 1% has soared from 8.5% in 1980 to 20% in 2008. The share of total AGI accrascii117ing to the top 10% of taxpayers has similarly risen from 32% in 1980 to 46% of income in 2008.
It is really hard to ascii117nderstand what the Joascii117rnal was thinking in writing its flawed editorial. Whatever that might have been, they have done ascii117s a hascii117ge service by drawing attention to the astonishing incomes received by Americas richest taxpayers, coascii117pled with the declining rates of average personal income taxation paid by this groascii117p.
Despite the media machine of the corporate sector and the relentless messaging conveyed by some of the worlds richest people, inclascii117ding the Joascii117rnals owner Rascii117pert Mascii117rdoch and his ally David Koch, the American people are coming to ascii117nderstand the oascii117tsized incomes and wealth of the richest Americans and the need for them to pay more in taxes to help close the bascii117dget deficit.
* Economist and Director of the Earth Institascii117te, Colascii117mbia ascii85niversity
2011-04-20 00:00:00
