The End of Welfare as We Don't Know It

Max Sawicky sawicky at epinet.org
Mon Oct 12 15:02:16 PDT 1998



> Max Sawicky writes:
>
> >The tax burden on middle class has been very stable
> >for the past twenty years.
>
> Social security taxes have been raised 9 times since 1977, and have

They could have been increased a million times, and it would be meaningless. The question is by how much, and to what end.


> increased 31%.

31 percent of what?


> This of course is a tax that only affects the first
> $55,000 of income. >

$68,400 now, but don't let that slow you down.


>From 1971 to 1991, the combined tax bills of
> median-income families increased 329 percent. (Barlett & Steele, "Who

Interesting phrase, "combined tax bills of median income families." What in the world could it mean? If it means the taxes of a typical middle-income family, then the statement is total bullshit, and Barlett & Steele can't count.

As a side note, the size of government increased between 71 and 76 or so, so the taxes paid were not unrequited.


> Really Pays the Taxes?" p. 104) The government now taxes unemployment
> benefits. Some stable burden.

UE benefits are taxable, and there is nothing wrong with this; they are usually not actually taxed because the family's income falls below or near the zero bracket. If two families get $30,000 in income, one totally from wages and the other from wages and UE, I would stand behind the notion that both should pay the same tax (actually, the UE family is somewhat better off and has better ability to pay, relatively speaking, but leave that aside).

Poor people pay little or no Federal income tax, as a rule.


>
> >The share of taxes paid
> >by the rich has gone up a lot (because their income
> >share has).
> While the top tax rate was slashed from 70% in 1977 to 39.6% in 1994. I

The base was broadened, restoring the same burden, roughly speaking. The burden went down between 81 and 86, up from 86 to 97, and probably down since. I noted in another post that it has bounced around more than for other groups.


> don't know anyone who cares what their class' share of the overall tax
> burden is; given a choice between their class paying a smaller share and
> themselves paying a lower tax rate, anyone is going to choose the latter.
> Put the bottom 90% out of work and the share of the top 10% goes to
> 100%, whatever the tax rate. Big deal. Focussing on share of the overall
> tax burden is flummery.

I didn't focus on it. I mentioned it.


> Item: in 1991 with an income of $1,324,456, George Bush paid $239,083 in
> federal, state, and local taxes, for an effective tax rate of 18 percent.

Nice data point. The President of the U.S. Owned a vacant lot in Texas so was able to claim residency there and pay no state-local income tax. Doesn't have a lot of restaurant and grocery bills. Ah, research!


> A typical middle-income family in Oregon making an AGI of $43,690 paid 26
> percent of their income in taxes (excluding things like gas taxes and
> such). (Who Really Pays the Taxes? p. 295.) The tax lobbyists for Bush
> and his fellow Yalies are clearly earning their retainers.

And your point was . . . ?

If people want reliable numbers on these issues, I would refer them to the CBO study I mentioned in another post, Citizens For Tax Justice web site (www.ctj.org), Joe Pechman's "Who Paid the Taxes?" and "Who Bears the Tax Burden," and Aaron/Gale "Fundamental Tax Reform." For trends in tax policy, see Steuerle "The Tax Decade," and "Taxing Ourselves," Slemrod and Bakija.

Overtaxed,

MBS



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