A Short Citizen’s Guide to Kooks, Demagogues, and Right-Wingers On Tax Day

No one likes to pay taxes, so tax day typically attracts a range of right-wing Republicans, kooks, and demagogues, all of whom tell us how awful we have it. Herewith a short citizen’s guide (that is, a citizen’s guide that’s short rather than a guide for short citizens) responding to the predictable charges:

1. “Americans pay too much in taxes.” Wrong: The United States has the lowest taxes of all developed nations.

2. “The rich pay too much! The top ten percent of income earners pay over 72 percent of all income taxes!” Misleading: The main reason the rich pay such a large percent is they’ve become so much richer than the bottom 90 percent in recent years. If you look at what they pay as individuals — the percent of their incomes over and above the highest rate below them — you’ll see a steady decline over the years. When Republican Dwight Eisenhower was president, the marginal rate on the highest earners was 91 percent (after deductions and tax credits, closer to 50 percent); by 1980 it was still up there, at 70 percent (an effective rate of closer to 45 percent); under Bill Clinton, it was 38 percent (an effective rate closer to 28 percent).

Look at the after-tax earnings of families and you’ll see what’s really going on. Between 1980 and 2000, the after-tax earnings of famlies at the top rose more than 150 percent, while the after-tax earnings of families in the middle rose about 10 percent. The Bush tax cuts of 2001 and 2003 raised the after-tax incomes of most Americans by a bit over 1 percent — but raised the after-tax incomes of millionaires by 4.4 percent.

3. “The bottom 60 percent pay only 3.3 percent of the taxes!” Misleading again. Most Americans are paying more in sales taxes than they ever have. Property taxes have also been rising at a steady clip. And Social Security taxes have also risen (thanks to the Greenspan Commission), while earnings over about $100,000 aren’t subject to Social Security taxes. So-called “sin” taxes (mostly beer and cigarettes) have also skyrocketed. All of these taxes take a bigger bite out of the paychecks of people with lower incomes than they do people with higher incomes.

4. “Obama is raising your taxes!” Wrong. Obama is cutting taxes for 95 percent of Americans, by about $400 per person a year — not a whopping tax cut, to be sure, but not a tax increase by any stretch. Only the top 2 percent will have a tax increase, but even this tax increase is modest. Basically, they go back to the rates they were paying under Bill Clinton (their deductions will be limited to 28 percent, which is only fair). And they won’t start paying this until 2011 anyway.

5. “The huge debts we’re wracking up will cause your taxes to rise!” Wrong again. When it comes to the national debt, as I’ve said before, the relevant statistic is the ratio of debt to the gross domestic product. The only sure way to bring that debt down and make it manageable in future years is to get the economy growing again — which requires that, in the short term, the government spend a lot of money (because consumers and businesses won’t). In the long term, the biggest source of concern is rising health-care costs. And that’s something Obama and Congress are aiming to tackle.

6. “We have a patriotic duty to stand up against Washington taxes!” Just the opposite. We have a patriotic duty to pay taxes. As multi-billionaire Warrent Buffett put it, “If you stick me down in the middle of Bangladesh or Peru or someplace, you’ll find out how much this talent is going to product in the wrong kind of soil. I will be struggling thirty years later.” President Teddy Roosevelt made the case in 1906 when he argued in favor of continuing the inheritance tax. “The man of great wealth owes a particular obligation to the state because he derives special advantages from the mere existence of government.”

An acquaintance from law school, now a partner in one of Washington’s biggest and wealthiest law firms, explained to me one day over lunch how he and his partners use tax rules to create offsetting taxable gains and losses, and then allocate the gains to the firm’s foreign partners who don’t pay taxes in the United States. That way, they keep the losses here and shelter their income abroad. I noticed he had an American flag lapel pin. “You’re supporting our troops,” I said, referring to his pin. “Yup,” he replied, entirely missing my point.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.

6 Responses to "A Short Citizen’s Guide to Kooks, Demagogues, and Right-Wingers On Tax Day"

  1. pablothecajun   April 15, 2009 at 8:22 pm

    Reich gets it wrong as usual by simply repeating Dem talking points. Taxes can be carved back if spending is also. No one of either party has the guts to balance the budget, kill the income tax and replace it with nothing and spend less than they take in. Im not concerned as the lender markets will put constraints on the Fed borrowing that the politicians never will.The only point Reich didnt say was that higher taxes are for the children, or at least the ones left after the dems put in taxpayer paid abortions.

  2. Guest   April 16, 2009 at 5:29 am

    Pablo, I agree. I’m also offended by Robert’s “right-wing republican” reference, suggesting that a Democrat isn’t offended by the high government spending and punitive taxation passed by the House.

  3. Guest   April 16, 2009 at 11:23 am

    Robert Reich just broke my heart! Just when I thought he had escaped the Obama Thought Police, and partisanship, he once again proves that he is as clueless, elitist and as detached from the real world as our current administration.SHAME ON YOU!See here are the problems:#1. The Tea Parties are NOT about republicans, they are and alway have been a grassroots movement. Have Republicans tried to hijack a few them, sure. Were some of many of them planned by Republicans, yes, a few.If Reich would escape Mainstream Media (MSM), he would be shocked to find that the Tea Parties span all walks of life, all parties. Of course, its much easier for MSM, and sleepwalkers like Reich to dismiss close to a million people or more demonstrating throughout the entire country as right wing extremists.#2 Does Reich really think that a silly tax cut of $400 is going to blot out the $40000K tax imposed on every man woman and child by the current administration’s TARP, PPIP, stimulus and budget?Apparently folks like Obama and Reich think so. Well get a clue dummies! Taxation without representation will not stand. I promise you. Even Texas is discussion secession. CNN actually posted an article. Many other states are talking the same talk. I guess Reich would call them right wing terrorists.#3 This current post by Reich merely points out the obvious desperate jockeying for an Obama administration position. Sorry, I guess you will have to continue to stand in Krugman’s shadow. (He’s equally oblivious)#4 This post also shows how out of touch Reich and his ilk are from reality. Which is exactly why we are where we are today.

    • paul94611   April 16, 2009 at 10:15 pm

      TARP is a Bush program as is the nationalization and transference of 15 trillion of Fannie & Freddie debt. So is the guarantee of bank bonds and other programs that total more than 12 trillion in federal reserve outlays.I am sure that when it is all said and done Obama will somehow manage to surpass Bush’s 20 trillion in government giveaways and socialized losses.

  4. paul94611   April 16, 2009 at 10:10 pm

    What really bothers some folks is that they may actually have to pay for the services they demand from government. Many folks believe that the armed forces, intelligence, law enforcement, fire protection, roads and everything else is the responsibility of someone else. As a 100% disabled war veteran I am willing to wager that the lapel pin wearing fellow Reich was referring, or any of his children has never served a single day in uniform. Another fine example of expecting others to carry your burden. Sacrifice is someone else’s responsibility for the fake patriots out there.

  5. carl1776   April 24, 2009 at 8:28 am

    What you miss in this opinion piece is that the tea parties weren’t about paying taxes. If you searched out the participants views, you would have found out the massive spending and corporate bailouts are what are the roots of this uprising.Just looking at the pictures you can see that these are by a large majority the working class who actually pay their taxes that were at these protests.The complaint is that these same people are looking down the road at what these massive “pillaging” giveaways are going to do to future taxes!Gov’t. treats the citizens as a dumbed-down source of revenue, and unfortunately a lot of citizens are just that. The rest of us aren’t interested in the enslavement of debt to satisfy the elitists hunger.