BCT Editorial – 9/16/04

This page was last updated on September 18, 2004.

Rich man, poor man; Editorial; Beaver County Times; September 16, 2004.

The editorial tells us, “When it comes to taxes, Republicans get it and the Democrats don’t.” The Times also belongs in the “don’t” camp.

Below is a detailed critique of the subject editorial.

“One reason the GOP beats up on Democrats when it comes to taxes has nothing to do with the taxes that people pay.

“Instead, as Robert H. Frank, a professor of economics at Cornell University points out, it has everything to do with understanding human nature. When it comes to taxes, Republicans get it and the Democrats don’t.

“Just look at the Bush tax cuts, which clearly favor the wealthiest Americans. The estate tax is a good place to start. Even though repealing the estate tax would benefit only the wealthiest 1 percent, two-thirds of low-income survey respondents favor its repeal.”

[RWC] This is one of those cases in which an opinion piece uses a nugget of truth to mislead us. It is true wealthy Americans received more in tax cuts on a dollar basis than the poor, but less on a percentage basis. Here’s why. Let’s say you are poor and pay $100/year of income taxes and a wealthy person pays $100,000. Let’s assume the tax cut percentage is one percent. You would receive a $1 tax cut and the wealthy person would receive $1,000. Even if your income tax were completely eliminated, the wealthy person would receive a larger cut in dollars because the most your cut could be would be $100.

Here are other points the editorial failed to mention.

· The relative income tax burden of the wealthy actually increased. That is, as a percentage of income taxes paid, the wealthy bear a larger share now than they did before the Bush tax cuts.

· The top 5% of taxpayers – those persons making more than $128,000/year – pay over 53% of income taxes! The bottom 50% of taxpayers pay only 3.9%. Please explain to me why the group paying the majority of taxes shouldn’t get a piece of tax cuts.

· As a result of the Bush tax cuts, the number of income tax filers who paid/will pay no income tax increased from 29,000,000 in 2000 to an estimated 44,000,000 million in 2004, a 50% increase. When 15,000,000 people at the bottom of the income scale have their income tax cut to zero, and some actually get so-called “refunds” for taxes never paid, how can you say this was a tax cut only for the wealthy?

Let’s revise the last sentence quoted above a bit. Let’s say it read, “Even though passing the Civil Rights Act would benefit only the poorest 1 percent, 90% of white male survey respondents favor its repeal.” Would we question the wisdom of white males supporting equal rights?

The death tax is the moral equivalent of rummaging through a dead man’s pockets and stealing what you find.

Why do most people – poor or rich – favor repeal of the death tax? It’s simple; they can tell right from wrong.

“‘One reason the middle class feels so little rancor toward the wealthy is that the two groups just don’t compete directly with each other,’ Frank wrote in The Philadelphia Inquirer. ‘As Bertrand Russell once observed, beggars don’t envy millionaires. They envy other beggars who are doing just a little better than they are.’

“That’s what Republicans ‘get’ and Democrats don’t - and that’s one reason Republicans get more votes on this issue.

“And when Democrats do try to make an issue of the wealthy benefiting so greatly from Bush’s tax cuts - and the tax code as a whole, the truth be told - they’re accused of waging class warfare. (That’s funny because, as billionaire Warren Buffett has said, ‘If class warfare is being waged in America, my class is clearly winning.’)

[RWC] With respect to the “wealthy benefiting so greatly from Bush’s tax cuts – and the tax code as a whole” comment, read my analysis above about the relative tax burden of the wealthy.

Earth to editorial writers. Democrats are not just accused of waging class warfare, class warfare is a fundamental tactic of the Democrat party regardless of the issue. For example, the Democrat party sets poor vs. rich, old vs. young, black vs. white, heterosexual vs. homosexual, female vs. male, et cetera. Democrats assign people to groups and then set the appropriate groups against each other depending on the issue.

“And you know what? Republicans most likely will win the next PR round when it comes to taxes. President Bush is talking about tax simplification as one of the goals of his second term, and a flat tax or consumption tax - which have some merit but would still favor the well-to-do - could be in the mix.

“And you know what? Most low- and moderate-income Americans will buy into it, even though it might not be in their best interests.”

[RWC] Does the Times believe we should vote purely on self-interest? In other words, a person should ignore right and wrong and vote for whatever appears to put the most in – or take the least out of – his pocket? How does that differ from finding a wallet full of money and not trying to find the owner? I learned that doing the right thing is always in your best interest.

“In today’s tax language, the rich man has become the beggar man while the poor man has become the thief. In a sense, Buffett was off in his timing. The class war already has been fought, and the wealthy have won. You have to admire the political skill that went into that happening.

[RWC] I don’t believe anyone views the rich as beggars. Thanks to the new media, of which the Times is not a part, the word is getting out that a smaller and smaller segment of the population is shouldering a larger and larger share of the income tax burden. Regardless of their economic position, most people recognize it’s wrong to dump a disproportionate share of financial responsibility on any one group. Most of the wealthy don’t mind paying more than less fortunate citizens, but even the “rich” have a limit. How can anyone say that 5% of the population paying 54% of income taxes is fair? The only “political skill” it took was to report the facts and let the people judge what is fair.

The Times ignored an important problem that arises when significant portions of the population have minimal tax liabilities. If a person doesn’t pay for government spending, he will tend to support evermore government spending. Quoting George Bernard Shaw, “A government which robs Peter to pay Paul can always depend on the support of Paul.”

“But there’s a downside that cannot be overlooked. As a nation, the United States is moving from a country that encourages and believes in wealth creation to one that is more interested in wealth preservation.

“That slope is a lot slipperier than many people understand.”

[RWC] It’s interesting to see a liberal bastion like the Times write about “wealth creation.” A foundation of Marxism is that there is finite wealth and for one person to become wealthy, another must become poor. That is, there is no wealth creation. That belief is necessary to fuel the class warfare tactic. The truth, of course, is that wealth is not finite and that we can grow everyone’s wealth by growing the “pie.”