You know who they love on Fox News? Rich people. On Fox they love rich people like a fish loves water - the richer the better. They love rich people like they hate hippies. This fetishization of wealth that serves as Fox News' raison d'etre was on full display yesterday on America's Newsroom, one of Fox's "straight news" programs, as anchor Martha MacCallum interviewed Eric Bolling, Fox contributor and the host of Follow the Money on the Fox Business network. MacCallum and Bolling spent the majority of this segment lamenting the unjust tax burden faced by the wealthy while mocking the possibility that helping people who actually, you know, need help, might be beneficial for the broader economy:
The following is a sentence by sentence debunk/analysis of MacCallum's interview with Bolling:
MACCALLUM: According to the latest data that's available, this is from 2008, take a look at these numbers folks, and these are, these are record numbers, OK? The top five percent of wealthiest Americans - and that goes from making $159,000 and above, OK? They contributed almost sixty percent of all of the federal income taxes out there, and now on top of all of that, they're going to have a hefty estate tax, after having paid taxes on that money at least once when they pass that money along to those that inherit it from them, alright so this is going to become a very central issue here, this estate tax. Let's bring in Eric Bolling, he is the anchor, of course, of Follow the Money on the Fox Business Network. Hey Eric.
For starters, these aren't record numbers. According to a recently released "Fiscal Fact," published by the nonpartisan Tax Foundation, in 2008 the top 5 percent of earners paid 58.72 percent of all federal income taxes paid. In 2006 and 2007 that figure was over 60 percent and in 2005 it was 59.67 percent. A small point, to be sure, but these details matter.
Furthermore, what MacCallum calls "a hefty estate tax," according to the President's proposed tax deal, actually taxes estates at a lower rate than it's been since 1931 with a much higher nominal exemption level than it's ever been. So it's a "hefty" tax if you're extraordinarily wealthy, a nonexistent tax if you're anyone else. According to the AP the plan - which calls for a $5 million exemption and a 35 percent top rate -- leaves "only about 3,500 of the largest estates subject to federal taxes next year." Meanwhile, almost 7 million tax returns were filed in 2008 that reported income over the $159,000 figure cited by MacCallum. The AP also reports that "0.14 percent of all estates in 2011, or about 3,500 estates, generating about $11.2 billion in revenue, according to an analysis by the Tax Policy Center, a Washington research group."
More from Bolling and MacCallum:
MACCALLUM: You know there's a lot of kind of, kind of nasty language going around in scorn aimed at folks who've been very successful in this country, and who've paid a lot of taxes, and really continue to bear the bulk of the burden.
BOLLING: That's right, Martha you put up that graphic, let me do it one step further. The top 1 percent, here it is: 38 percent of all taxes paid. 5 percent, 59 percent. You see there at the bottom 43 percent of American households pay no tax and then the estate tax, which some would say a double or triple tax. Remember you pay your taxes when you earn your money. You pay your taxes if you invest your money, if you earn interest on that or dividends on that, and then when you die; they want to take now 35 percent of it above $5 million.
Here's a great example of Bolling doing what he does best: Glorifying wealth, obfuscating reality and making a lot of mistakes in the process.
In 2008 the top 1 percent paid 38 percent of all federal income taxes, not of all taxes paid. The figures Bolling and MacCallum are citing don't include any number of regressive taxes paid by the rest of us, such as sales, excise, and payroll taxes. Bolling triples down on his misstatement when saying that the top 5 percent paid 59 percent, and when saying that the bottom 43 percent of American households pay no tax at all. This is a common right wing mangling of these particular statistics. If that 43 percent number is accurate, what it means is that 43 percent of people didn't make enough money to have a positive income tax liability, meaning that after credits, deductions, and exemptions, they don't owe any income tax. They still pay a whole host of other taxes.
(As a side note, you can see in this whole conversation the way right-wing rhetoric on taxes work. Bolling says that 43 percent of people pay no tax, and someone maybe at the 50th or 75th percentile in terms of taxable income [$33,048 and $67,280 in 2008, respectively] will hear that and think "Hey, I know that I pay taxes, I don't make all that much money. Who are these people that are living easy off my hard work? The government must think I'm one of those 'rich' people they're always demonizing." In the same vein, have you heard any "nasty language" about the high earners? I sure haven't. MacCallum and Bolling don't seem to be able to distinguish between people who think that the tax code can be used to lean against rampant income inequality and...I don't know...Bolsheviks.)
MACCALLUM: But you know, I want to bring up another point with you about Nancy Pelosi. Remember when she said that unemployment checks really fuel the economy because people get their unemployment check, and she it's exponential, the money that goes into the economy based on that. So what about, you know, when a so-called "rich person" who makes $159,000 a year - and that's rich in some parts of the country, it's not so rich in other parts of the country - what about when that person, uh, you know $30,000 to $100,000 back in taxes, what's the exponential effect of that money when it gets pushed back into the economy in terms of cars that get bought and vacations that get taken and all of that?
First of all, there's a shift here in rhetoric in the way MacCallum is defining "rich." Usually, within the context of the conversation about tax cuts, when pundits and politicians talk about the rich they're defining it as above $250,000. Now the definition of rich seems to be in the top 5 percent of income. That may be "rich in some parts of the country" and "not so rich in other parts", but that doesn't change the fact that if you make that much, you're making more than 19 out of 20 Americans. Of course, there's nothing wrong with that, but the way MacCallum seems to bemoan the burden faced by 5 percent with complete indifference towards the struggles of the rest is quite telling.
As for MacCallum's question about what happens if someone would be getting $100,000 back from a tax cut, I used the nonpartisan Tax Policy Center's Tax Calculator to see how much a person would have to earn in a year to pay $100,000 less in taxes if the Bush rates were extended. A married 50 year old with one kid in college and one at home would have to make around $2.3 million a year, placing them well within the top 0.1% of earners in this country.
Her wider point -- that if giving the unemployed money to spend is good, then giving the wealthy money to spend is also good -- doesn't hold up to any kind of scrutiny. Normally in making this point I'd my argument would hinge on CBO estimates about the multiplier effects of the various policies (10-40 cents of economic activity for every dollar of income tax cuts, 70-190 cents for every dollar of aid to the unemployed), but those estimates are often viewed as illegitimate in right wing press, so I'll try a different approach.
Why does giving a dollar to an unemployed person generate more economic activity than giving it to a rich person? Because the unemployed person, who has little to no income outside of unemployment will spend most of the money they get. That spending will then cycle through the economy. One person's unemployment check is a businessman's revenue, and his employee's wage. A rich person, almost by definition, makes more money than they need for daily consumption and won't spend all of the additional funds. The common response to this is that the rich person will take that additional money and invest, hiring a worker - but there's no guarantee that that would happen. When you give someone an unemployment check, you know what they'll do with it. Give someone a big tax break and where that money goes is anyone's guess. In regions with high unemployment, those checks might be the only thing keeping local grocery stores and other businesses open. Is this a violation of free market fundamentalism? Maybe. But if the world that actually exists resembled the world that exists in Eric Bolling's mind, the market would just figure everything out and everyone would be fine.
BOLLING: Or, Martha, yes, cars, vacations, etc. But a lot of the people above $250,000 are small business owners.
MACCULLUM: And they're hiring folks!
Proponents of extending President Bush's 2001 and 2003 tax cuts for people with incomes over $250,000 argue, in part, that allowing them to expire after 2010 would weaken the economy by hurting small businesses. In reality, however, extending the tax cuts would do little for small business because only the top 3 percent of people with any business income, let alone income from a small business, would benefit. Over the long term, an extension would likely harm the economy -- and thus small business -- by adding about $1 trillion to deficits and debt over the next decade and even larger amounts in subsequent decades.
Still on the subject of taxes, let's think about investment. According the BEA in the 90's - the last time taxes were what they'd be if the Bush cuts expired - investment was increasing rapidly. During the 2000's - when we had the rates we have now, investment went down, and up, and down, and up again. There's no reason to think that this minute difference in marginal tax rates - 35 percent to 39.6 percent - is going to have the impact on investment that Bolling takes as fait accompli, as given.
Now think some more about private investment. According to the Fed, we're still only utilizing about 75 percent of our industrial capacity - about six percentage points down from the pre-crash peak. Why does Bolling think lower taxes are going to make businesses invest when they already have so much excess capacity?
It's important to take a step back from this conversation and look at the broader context in which it's taking place. At the same time that the top five percent pays roughly 3/5 of the nation's federal income tax burden, during the last expansion the top one percent of earners captured nearly 70% of income growth. Income at the top grew "ten times faster than the income of the bottom 90 percent..." This is a historical aberration - most post-war expansions saw income gains shared much more evenly across the population. In fact, the last time that the fruits of expansion were enjoyed by so few was in the run up to the Great Depression.