Thursday, September 09, 2010

Class Warfare, Indeed

It's a good thing that it is the left which is conducting class warfare. From Wednesday's On The Record with Greta Van Susteren and Tucker Carlson of GOP TV:


VAN SUSTEREN: Now, the rich may need to pay more for whatever reason, because we need to get the economy going or whatever, but they certainly were paying their fair share in that they were paying everything that was asked of them. And it was almost a class warfare in terms of the tax -- in terms of the discussion about the taxes. Now fast-forward to now, and we talk about the upper 2 percent as eliminating them from continuing the tax cut as almost a class warfare political weapon.

CARLSON: Well, it's very flatly and plainly a question of class warfare. I mean, look, I'm hardly defending rich people. I'm not a rich person, unfortunately, though I aspire to that. They pay for everything in this country. The top 10 percent pays more than half of federal taxes. You take out rich people, and the country doesn't run.


Van Susteren and Carlson are right! There is class warfare going on, as demonstrated by the following graphs and tables (1, 2, and 3 from here; 4 from here) from the Center for Budget and Policy Priorities. (Hence the numbering system). As Figure 4 indicates, the average value in 2007 of tax cuts which had been enacted since 2001 was $20 for the bottom quintile of the income distribution, $740 for the middle quintile, $5700 for the top quintile, and $45,000 for the top 1%. The wealthiest 20% of the population received more than 60 times the money from the GW Bush tax cuts of2001-2007.





Partly as a result of this regressive tax policy, as Figure 1 indicates, the top 1% of earners captured 63% of the income growth from 2002 to 2007 while the bottom 90% captured a mere 13% of the growth. The 63% is the greatest share of the income gain captured by the top 1% since the 1920s, when the figure was 70%. That would be the Roaring '20s, which led into the Great Depression in 1929.





As Figure 2 illustrates, the share of total pre-tax income flowing to the top 1% had risen to 23.5% in 2005, the highest ever-except for the 23.9% in 1928, a year before the Crash.





We can gain a wider perspective by comparing the distribution of gains in the first three decades following the end of World War II with that of three decades which since that period. As Figure 3 illustrates, from 1946 to 1976, the average income of the bottom 90% shot up by 80%, but by less than 10% in the succeeding three decades. By contrast, for the top 1%, average income increased less than 25% in the first three-decade period but in the following period skyrocketed by approximately 280%. During the past three decades (ending in 2005), the income of the wealthiest of the wealthy increased roughly 28 times as much as that of the bottom 90% of earners.





And why wouldn't it? As the following table confirms, the marginal top tax rate the past thirty years (notwithstanding year-to-year variation) has been far lower than it was for the first 35 years following the end of World War II. From a high of 94.00% in 1945, it declined over the next quarter century but was still 70.00% in 1980. It dropped to 69.13% in 1981 and to 50.00% in 1982 and was cut to a low of 31% in 1961, before President Reagan regained his senses in 1983, when it increased to 39.60%. It ultimately dropped to 35% in 2003, where it has remained through 2010. And that is the tax rate, not the effective tax rate, which is much lower, the wealthy having a way to reduce by various means the revenues they turn over to Washington for the common good.





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Tucker Carlson, born into a family of privilege, tells us, with Van Susteren's assent, that the rich "pay for everything in this country" and "you take out rich people, and the country doesn't run." Not even close. Goods and services are purchased by the middle class and to a lesser extent, the poor, while the rich seek tax havens and means of enhancing their wealth. Contrary to the inference in Carlson's elitism, the country "doesn't run" without the bottom 90% of earners. There are, after all, only so many illegal immigrants Tucker Carlson and other affluent people can import to do their landscaping for minimum wage while they "earn" a consulting fee denigrating the middle class.



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