On Tue, 25 Jul 2000, Max Sawicky wrote:
> >The share of income taxes paid by the top one-fifth of earners has risen
> >since the depths of Reaganomics - a big part of cutting the deficit.
>
> You're leaving out the Bush-era tax increases here.
Bush and the Dem Congress moved the top rate from 28% to 31%. Clinton moved it from 31% to 41%.
> [mbs] hell, under Reagan taxes went up seven times,
> after the 1981 cuts.
But he did not increase income taxes, especially on the wealthy. Yes, payroll and other taxes hitting the working and middle classes did increase. And the 1983 and 1986 tax bills actually reversed some of the massive tax goodies for corporations, notably some of the provisions of the 1981 bill that had let many corporations paying zero tax.
>For 1997-98, the growth of revenues
>in excess of GDP growth was $33 billion. So the
>shares above would apply to this total. So cap
>gains might be $10-15 billion. Meanwhile, next year's
>surplus is projected at $240 billion.
Max, since we are talking about taxes on the wealthy, comparing tax revenues to total GDP growth is not the right analysis. Some of that GDP growth is going to lower-income folks paying little or no income tax, so that part of GDP growth is not a factor. Because of the expansion of the EITC (due to the good work of folks at the EPI of course), the GDP growth for the working poor is not showing up in the income tax figures.
The question is to compare how much the wealthy would have paid absent the 1993 tax bill and compare that to present income tax revenue. Total annual income tax revenues have increased to $990 billion per year since 1993 when it was $509 billion- nearly doubling total income tax receipts. Given that the richest 5% pay half of all income taxes, that adds up to an increase of $240 billion per year paid by the richest 5% and an increase of $150 billion per year paid by the richest 1%.
Yes, that is due to the fact that the rich have been getting richer, but if their tax rates were lower, a much smaller percentage of that money would be going into the tax coffers. Assume that the 1993 bill only increased total effective taxes 20% on the top 1% of taxpayers, that would add up $60 per year in additional yearly revenue just from that group. (The math- top 1% account for $300 billion in yearly income taxes, subtract 20%, lose $60 billion per year in income taxes.) Since the 1993 bill included some loophole-closing and included tax increases on more than just the top 1%, the total revenue gains should be a bit higher.
Note that FICA taxes have increased in the same period only from $428 to $650 billion, only a 50% increase in those revenues.
What this means is that income taxes, overwhelmingly paid by the wealthy, now account for 50% of all revenues while the regressive FICA taxes account now for only 32% of federal revenue.
Compare that to 1993 when income taxes were 44% of revenue and FICA taxes were 37% of revenues.
Just ignoring the total revenues in the surplus, just changing the composition away from regressive payroll taxes towards progressive income taxes is a good thing.
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So off the wonk numbers and to the politics:
As for securing the surplus, the GOP agrees with you on getting rid of it, but they don't plan to spend it, but hand it back to the wealthy through tax cuts. How Clinton or Gore opposing that makes you want to support Nader is beyond me. The spending on prescription drugs, overwhelmingly popular with the public, hasn't been passed by the GOP, so how would proposing a lot of other spending make any difference?
--- Nathan Newman