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Tuesday, April 26, 2005

The rich... getting soaked!

Instapundit links to this post by TaxProfBlog, which links to a Wall Street Journal editorial that shows that, from 1979 to 1999, the rich paid a greater share of federal taxes, considering both regressive Social Security and Medicare taxes and progressive income taxes. Even after the Bush tax cuts, the richest Americans are getting soaked, compared to that economic heaven (*snicker*) of 1979.

In between me first seeing this post and now, Instapundit posted a response from Brendan Nyhan, who points out it's because the rich are getting richer. Hey, I'm all in favor of seeing an increase in the number of people earning a level of real income that makes them quite comfortable. It's the ultimate demostration of the success of the American economic system.

In every debate on taxes, you will hear a very consistent portrayal of numbers from the two sides. The left will say that some percentage of the tax cut went to the "richest 1%," without mentioning how much of the tax burden they have. The right doesn't want to say that, so highlights how the rich will pay an even greater percentage of the total burden, even if they are getting a significant benefit from the tax cut. The left never says where that 1% or 5% or 10% level break is; chances are, many people wouldn't think of that as rich, particularly those living in places like New York City. And of course, both sides supports their tax policies by picking an example of the person who does best.

I just want to scream, "You're both right, and you're both biased!"

The debate should come down these points:
-What should the top marginal tax be? What's the most someone should pay to the government on a dollar they earn?
-How should the burden be shared?
-Most importantly, when you propose a tax change, what do you expect the results to be?

A tax increase or decrease should require an estimate of the tax revenue that will be collected after the change, under a variety of economic scenarios. "If taxes are increased 5%, and the economy grows 3%, then tax revenues will increase 5%." With predictions like these, we might be able to settle the debate on whether static or dynamic scoring is more appropriate.

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