Senator Lazich's theory on "who pays what" in taxes is incorrect and more than a little sad

RE: Republican State Senator Mary Lazich's "Conservatively Speaking" blog entitled "How Does the Government Spend Your Money":

The senator's  "who pays what" numbers are skewed and easily dissected (her ongoing reliance on the "nonpartisan" Tax Foundation - - "in Washington D.C."! - - doesn't help).

As a PERCENTAGE OF INCOME, it is the middle class and lower-income population groups who pay MORE in taxes (not to mention fees and transportation expenses you may choose to ignore). This is a result of non-progressive tax and social policy embraced by the current administration (who unapologetically embrace their base, "the have and the have-mores.")

To say "In general, households that earn the most income pay the most dollars of taxes" is self evident; 4% of $10 is $4 and 4% of $1000 is $4000, for instance.

Examine instead the more intelligent - - and more personally consequential - - numbers: the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor. THAT'S the real eye opener, and that's the embarrassment to anyone who cares to couple a cursory grasp of math with a rudimentary sense of morality and social justice (see, for example, "Warren Buffet: The Rich Need to Pay More Taxes").

The widening gap between what is expected from the rich as opposed to what is extracted from the middle class and poor is also the reason we can't afford sidewalks in our neighborhoods, decent schools for our kids, effective transit options, amenities for non-affluent communities, and librarians for our libraries.

I read recently that greed is the last socially acceptable vice. You reinforce  - - and pander to - - that sad observation, senator.

Comments

[Josh]

I covered pretty much the same thing a week or two ago. The upper middle class and upper class pay all the taxes, which is unfair and uncompetitive. http://blogwaukesha.com/?p=53

[John Michlig]

And you are wrong as well, I'm afraid.

Sooo wrong, now that I've read more of your blog. Wow.

[Randy]

Well said - you should leave this as a comment on her blog!

[John]

Sen. Lazich does not ENGAGE. Her "blog" is merely a dumping ground for Republican talking points.

It's written largely by her aide and stuffed with platitudes and dogma that play to what they assume is a naive readership willing to believe anything.

The illusion would SHATTER if she actually had to explain her viewpoints and faulty data.

[fact check]

According to the Urban-Brookings Tax Policy Center, you're not right on the facts. Taxes as a percentage of income are lowest for low-income households, and higher for middle and upper-income households:

http://taxpolicycenter.org/briefing-book/background/distribution/progressive-taxes.cfm

[John Michlig]

Even if I agree with the Urban-Brookings Tax Policy Center numbers as they relate to the arguable fact that low-income households pay lower taxes as a percentage of income than middle- and upper middle-class households (as it should be; however, you have to ignore the myriad fees and expenses the poor face that we don't), you will find NO credible numbers claiming that the VERY RICH (the "haves and the have mores") pay a higher percentage in taxes, fee, penalties etc. than us (middle- and upper-middle class).

I am right on my facts.

[Suicuin L'Moriel]

Related, if not exactly the same topic. Great Doonsbury cartoon -

http://www.f-ckingc-nts.com/otw/on-the-web-oooh-more-republican-hypocrisy#more-91

[Terrence Berres]

Page six of this December 2007 Congressional Budget Office report indicates the percentage of income paid in federal taxes rises with income quintile. The lowest income quintile's rate is 4.3%, the middle quintile rate 14.2%, the highest quintile rate 25.5%.
http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.pdf

[John Michlig]

Terrence, you speak strictly of federal tax computations - a squirt-gun in the rainstorm of fees,liabilities, allowable deductions, exclusions, etc. that make up the landscape of taxes and federal policy skewed toward the rich (who have, after all, bought the politicians who make the current policy).

For just ONE example (taken from the book "Free Lunch" by David Cay Johnston, and contained between the "••"s):

••
Taxpayers who make $40,000 to $50,000 per year save on average less than $400 from the home mortgage deduction, while those making more than $200,000 save on average more than 12 times that much, analysis of 2004 tax return data shows. Americans who make more than a million dollars a year save on average 16 times as much, nearly $6,300 each.

For every dollar the federal government forgoes in housing tax breaks for the poor, it spends a dollar and a half on housing subsidies for those making more than $100,000 per year, roughly the best-off tenth of Americans.

Peter Drier, a professor at Occidental College who studies housing patterns, notes that “Only one-third of the 52 million households with incomes between $30,000 and $75,000 receive any homeowner subsidy.”

Drier notes that Australia and Canada do not give a tax deduction for mortgage interest, yet they have almost the same rate of home ownership as the United States.
••

Realize that myriad policies, fees, deductions, exclusions, etc. are in place to favor the richest among us - - or you can pin your hopes on page six of this December's 2007 Congressional Budget Office report. I'm not fooled. Nor is Warren Buffet.

Since you are the author of a blog which discusses Catholic issues, I'll note that the Catholic Church has added seven new deadly sins:

(1)genetic modification;
(2) human experimentations,
(3) polluting the environment;
(4) social injustice;
(5) causing poverty;
(6) financial gluttony;
and
(7) taking drugs.

(3) through (6) seem especially problematic for the current "camel" administration (as in "eye of a needle").

[Terrence Berres]

You said "Examine instead the more intelligent - - and more personally consequential - - numbers: the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor."

So far you haven't said what those comparative percentages are.

[John Michlig]

Terrence, there is no Catechism for something so myriad and complex as personal income levels vs. taxes, fees liabilities, allowable deductions, exclusions, subsidies, etc. You can't derive comfort from a bullet-point list issued by the government. You have to look deeper than the portions of the tax code that SEEM to break progressively. The tax code is but a SMALL aspect of our web of tax liabilities.

If you hinge your argument on a request for rote recitation of arbitrary figures - - the basis of which would constitute a book in itself (I can recommend some) - - then you should be content with this administration's gospel. When you get your "economic stimulus 'rebate' check," throw a party while carefully averting your eyes from the reality of the situation.

In the meantime, I give you one digestible and specific example pertaining to housing subsidies and it fails to generate a response of any kind. Should I have thrown a PERCENTAGE in there for you?

Senator Lazich and her ilk COUNT ON your reliance on primary-level tax code dogma to push forward their enrich-the-rich-who-put-me-here agenda.

The Republican agenda is clear: Winning elections is all about money and funding, and it's better to get the top 3% behind you than waste time on the rest of the rabble (us) who can't contribute anything financially significant to the cause.

Tell me I'm wrong and I'll throw some percentages at you. :)

[Terrence Berres]

To determine if you're wrong would start with you engaging the issue you raised and providing the numbers you said were the significant ones, "the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor."

[John Michlig]

You won't even engage the housing subsidies issue, and then send me out to do more legwork for you? I find this a common feint tactic on your part - - a bit of sophistry I find nonproductive, to say the least.

Perhaps Warren Buffet is disillusioned as well. Surely he cannot understand how money works, having made BILLIONS manipulating market forces invisible to mere mortals.

There are PERCENTAGES in this excerpt - - quibble at will!

From
http://fullyarticulated.typepad.com/sprawledout/2007/11/warren-buffett-.html

[Buffet] told the committee that he recently compared how much he pays in taxes in terms of a percentage of his salary to what his employees pay.

The results? Buffett says he pays 18 percent of his salary to the IRS while the rest of his staff pays nearly twice that - - 33 percent, a lopsided equation that put Buffett in a Robin Hood frame of mind.

"Frankly, an economy where my receptionist pays a lot higher tax rate than, than I do does not strike me as a just economy," he told lawmakers.

Buffet has challenged the elite members of the Forbes 400 list to do their own calculations and compare their tax rate with their receptionists, and then consider his challenge that the rich should pay more.

"I see nothing wrong with those who have been blessed by this society to give a larger portion of their income to the society than somebody that's working very, very hard to make ends meet," Buffett said.

ABC even offered to help Buffett by calling some of the richest 400 and offering to do the tax calculations for them. There were no takers, although the few that returned ABC's calls were polite and left nice voice mails.

"We must regretfully decline," said one.

"Unfortunately he has decided to decline," proclaimed another

"He'd like to decline the interview. & Thank you anyway."

More then 25 billionaires including Ted Turner Ted-Turners-Pledge-Money Sep-07 and Michael Bloomberg declined to talk to ABC News. But some of them sounded off to Forbes magazine. One suggested that Buffett should keep to his area of expertise, calling his ideas "grossly simplistic." Another wondered whether Buffett is going senile.

It was no surprise, of course, that these comments were anonymously submitted, says the Wall Street Wall-Street-Layoffs Journals' Wendy Bounds "The worry is that if they go on the record, the rich people & it puts them in a position of having to cheerlead for something that they're not entirely sure they're comfortable with."

[Terrence Berres]

"You won't even engage the housing subsidies issue, and then send me out to do more legwork for you?"

You raised the larger issue before I commented. You had said the consequential numbers are percentages, specifically "the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor." I cited the CBO numbers because they are in that form. You aren't engaging the issue in the form you framed it by posting what might be a component number, even if expressed as a percentage, or by citing percentages based on what Warren Buffet's says about his office staff.

[John Michlig]

What's left of your dollar after you take care of various fees, taxes, and other policy-instated burdens can be expressed as a percentage. Depending upon what flurry of specific computations you include, the percentage will change. You seem to be stuck there, refusing to budge until someone tosses out a single literal number.

This has become nonproductive; as I said earlier, sophistry seems to overwhelm your desire to truly engage.

In this case, your position and the narrow scope from which it is derived is sufficiently clear. As the gap between rich and poor widens, cling to that.

[Terrence Berres]

"What's left of your dollar after you take care of various fees, taxes, and other policy-instated burdens can be expressed as a percentage. Depending upon what flurry of specific computations you include, the percentage will change."

Your critique of numbers cited by Senator Lazich, Brookings, and the CBO, was that alternative computations produce what you claim are very different and more meaningful results. It seemed to me reasonable to assume that meant you had the results of such computations available, but it appears you don't.

[John Michlig]

You can just say "uncle," Terrence. There's no shame in it. :)

[Terrence Berres]

You had said that "As a PERCENTAGE OF INCOME, it is the middle class and lower-income population groups who pay MORE in taxes (not to mention fees and transportation expenses you may choose to ignore)." Very well, to simplify the question leave out fees and transportation expenses. From everything presented, your assertion on taxes as a percentage of income is wrong. You said "Tell me I'm wrong and I'll throw some percentages at you." So can you show that "As a PERCENTAGE OF INCOME, it is the middle class and lower-income population groups who pay MORE in taxes"?

[Joshua Skolnick]

My my my Terrence. What about the fact that those in the 10% highest tax brackets often pay taxes on and often derive the majority of their income from capital gains, dividends, and other passive income vehicles which are all taxed at 15% or less, rather than as wages, which are taxed at 25 to 33 percent at the highest marginal income levels. Capital gains and wage income above 102,000 are also exempt from FICA taxes, making the code even more regressive.

I spoke with a friend today who made $30,000 as an independent contractor last year and has a wife and a dependent child. Thanks to the obscene regressive tax code, he has had to pay $9,000 in federal income tax on that paltry income, thanks to self-employment tax and the regular federal income tax. This goes to show you that unless you are dishonest, the ridiculous level of taxation for self-employed people at lower income levels is a significant barrier to starting your own business or working for yourself.

[Terrence Berres]

"What about the fact that those in the 10% highest tax brackets often pay taxes on and often derive the majority of their income from capital gains, dividends, and other passive income vehicles which are all taxed at 15% or less, rather than as wages, which are taxed at 25 to 33 percent at the highest marginal income levels. Capital gains and wage income above 102,000 are also exempt from FICA taxes, making the code even more regressive."

The headings and notes to the CBO report I cited,
http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.pdf#page=6 indicate all that is taken into account in calculating the effective tax rates by income category.

You put your criticism of what Senator Lazich said in terms suggesting you could point out contrary statistics by income category, "the rich" compared to "the middle class" and "the poor". Since you haven't since pointed them out, I'm getting the impression you didn't actually have them.

[John Michlig]

"Examine instead the more intelligent - - and more personally consequential - - numbers: the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor. THAT'S the real eye opener, and that's the embarrassment to anyone who cares to couple a cursory grasp of math with a rudimentary sense of morality and social justice (see, for example, "Warren Buffet: The Rich Need to Pay More Taxes").

The widening gap between what is expected from the rich as opposed to what is extracted from the middle class and poor is also the reason we can't afford sidewalks in our neighborhoods, decent schools for our kids, effective transit options, amenities for non-affluent communities, and librarians for our libraries. "

Still works. Say uncle, Terrence.

[Terrence Berres]

"the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor."

I continue to look forward to you actually pointing out such percentage comparisons.

[John Michlig]

The sophist retreats yet again. No debate is won or settled by tossing out a number that must be based on dozens of variables, any one of which shifts in large and small ways for each individual.Ask all you want; I won't fall for it.

Say uncle.

[Terrence Berres]

"No debate is won or settled by tossing out a number that must be based on dozens of variables, any one of which shifts in large and small ways for each individual."

One need only refer to your original post to see you claimed the relevant numbers would be the very kind you now disclaim.

[John Michlig]

Nope, I didn't. I said:

"Examine instead the more intelligent - - and more personally consequential - - numbers: the percentage of each dollar earned that is paid in taxes and fees by the very rich as compared to the middle class and poor."

... And those numbers vary from person to person, which means any citation would be arbitrary.

You fixate on INCOME TAX. You cite FEDERAL TAX TABLES. That's a narrow view that disregards bushels of other taxes and fees incurred by the poor and middle class and rarely if ever encountered by the very rich (who fund political campaigns).

Say UNCLE, before I uncork a bottle of tax sheltered whoop-butt on your willful blindness to economic reality (as perpetuated by Democrats as well as Republicans, by the way - it's just that the Bush gang is so shameless in dancing with who brung 'em).

;)

[John Michlig]

Say it ....

[Terrence Berres]

One need only read what you just said to see the numbers which you now say ought not be cited were the very ones you earlier said would, if examined, prove what you assert.

(If you again examine the CBO figures,
http://www.cbo.gov/ftpdocs/88xx/doc8885/12-11-HistoricalTaxRates.pdf#page=6
you'll see they are not limited to income tax.)

[John Michlig]

"One need only read what you just said to see the numbers which you now say ought not be cited were the very ones you earlier said would, if examined, prove what you assert."

Now THAT would be an interesting sentence to diagram, Mr. Sophist!

All right - you can't say I didn't give you a chance to say "uncle" and live to fight another day.

(Hmmm... I wonder why the Congressional Budget Office [CBO] would want to put the best face on their foibles in the tax code? Perhaps they have a BRIDGE to sell you as well.)

This will be in a new post in the coming week.

You should have said uncle.