WSJ's Moore selectively cited IRS data to deceptively assert "the federal income tax burden has substantially shifted onto the backs of the wealthy"
SUMMARY: Stephen Moore selectively cited Internal Revenue Service statistics in order to buttress his assertion that "[i]n the aftermath of the Bush investment tax cuts, the federal income tax burden has substantially shifted onto the backs of the wealthy." In fact, the reason that the total share of income tax paid by those making more than $200,000 increased between 2002 and 2004 is that the number of people earning at least that much increased substantially, as did the average income of people within that bracket. However, filers earning at least $200,000 actually paid an average of 4 percent less federal income tax in 2004 than they did in 2002, even though their average incomes increased 10 percent during the same period.
In a May 4 op-ed titled "How to Soak the Rich (the George Bush Way)," Wall Street Journal editorial board member Stephen Moore selectively cited Internal Revenue Service (IRS) statistics in order to buttress his assertion that "[i]n the aftermath of the Bush investment tax cuts, the federal income tax burden has substantially shifted onto the backs of the wealthy." Moore cited figures showing that the portion of total federal income tax paid by Americans with adjusted gross incomes (AGI) of more than $200,000 increased between 2002 and 2004 while, conversely, the portion contributed by Americans earning less than $200,000 decreased during that time period. That does not mean, however, that the tax burden "shifted onto the backs of the wealthy"; the reason that the total share of income tax paid by those making more than $200,000 increased between 2002 and 2004 is that the number of people earning at least that much increased substantially, as did the average income of people within that bracket. As a group, filers earning at least $200,000 paid an average of 4 percent less federal income tax in 2004 than they did in 2002, even though their average incomes increased 10 percent during the same period.
Moore also noted that the tax share paid by Americans earning $1 million or more increased from 16.9 percent in 2002 to 17.8 percent in 2003 to further support his assertion that the richest Americans are paying more of the total income tax paid. Again, Moore ignored the fact that the number of Americans reporting the highest incomes has risen at a substantially larger rate than that of all Americans earning less, according to IRS figures. Between 2002 and 2004, the number of Americans reporting incomes of $1 million or more increased by 40.2 percent, while the number of Americans reporting incomes of less than $1 million increased by only 1.7 percent. Among those filers earning at least $1 million, average income tax paid decreased 8 percent while average income rose 10 percent. At the same time, average income tax paid by Americans earning less than $200,000 decreased 7 percent while their average incomes rose 4 percent.
While the percentage of federal income tax paid by Americans earning $200,000 or more increased from 40.5 percent to 46.6 percent between 2001 and 2004, as Moore noted, the amount of income reported by Americans in that bracket also increased at a significantly greater rate than the incomes of Americans earning less than $200,000. From 2002, the last year before President Bush's tax cuts on income earned on capital gains and dividends, through 2004, the most recent year for which IRS data is available, the total taxable income of Americans earning $200,000 or more increased 38.7 percent, while incomes for all Americans earning less than $200,000 increased by 5 percent during the same period. Therefore, the gap in the share of federal income tax paid by those making more than and less than $200,000 did not expand at the same rate as the gap in incomes between those two groups, meaning that the tax burden has actually been shifting away from these taxpayers rather than to them as Moore stated. In addition, the number of Americans reporting an AGI of $200,000 or more increased by 24.5 percent between 2002 and 2004, whereas the number of Americans reporting income of less than $200,000 increased by 1.3 percent, according to the most recent data supplied by the IRS.
An April 5 New York Times analysis noted that IRS data through 2003, the first year with complete IRS data following Bush's tax cuts, taxes on incomes of $10 million or more decreased by an average of approximately $500,000.
From Moore's May 4 Wall Street Journal op-ed:
With the House and Senate preparing to vote on extending George W. Bush's investment tax cuts, it's no surprise the cries against "tax giveaways to the rich" grow increasingly shrill. Just yesterday Senate Minority Leader Harry Reid charged that the Bush tax plan "offers next to nothing to average Americans while giving away the store to multi-millionaires" and then fumed that it will "do much more for ExxonMobil board members than it will do for ExxonMobil customers."
Oh really. New IRS data released last month tell a very different story: In the aftermath of the Bush investment tax cuts, the federal income tax burden has substantially shifted onto the backs of the wealthy. Between 2002 and 2004, tax payments by those with adjusted gross incomes (AGI) of more than $200,000 a year, which is roughly 3% of taxpayers, increased by 19.4% -- more than double the 9.3% increase for all other taxpayers.
Between 2001 and 2004 (the most recent data), the percentage of federal income taxes paid by those with $200,000 incomes and above has risen to 46.6% from 40.5%. In other words, out of every 100 Americans, the wealthiest three are now paying close to the same amount in taxes as the other 97 combined. The richest income group pays a larger share of the tax burden than at anytime in the last 30 years with the exception of the late 1990s -- right before the artificially inflated high tech bubble burst.
Millionaires paid more, too. The tax share paid by Americans with an income above $1 million a year rose to 17.8% in 2003 from 16.9% in 2002, the year before the capital gains and dividend tax cuts.
From an article in the April 5 edition of The New York Times:
The first data to document the effect of President Bush's tax cuts for investment income show that they have significantly lowered the tax burden on the richest Americans, reducing taxes on incomes of more than $10 million by an average of about $500,000.
An analysis of Internal Revenue Service data by The New York Times found that the benefit of the lower taxes on investments was far more concentrated on the very wealthiest Americans than the benefits of Mr. Bush's two previous tax cuts: on wages and other noninvestment income.
When Congress cut investment taxes three years ago, it was clear that the highest-income Americans would gain the most, because they had the most money in investments. But the size of the cuts and what share goes to each income group have not been known.
As Congress debates whether to make the Bush tax cuts permanent, The Times analyzed I.R.S. figures for 2003, the latest year available and the first that reflected the tax cuts for income from dividends and from the sale of stock and other assets, known as capital gains.
This is the kind of logic used by MMFA that gets the left beat in elections. More people earning more money paying more of the total and MMFA spins it as a bad thing. Utterly ridiculous.
MMFA gave teh details, but here it is in simpler terms for you.
The rich are getting richer faster than the poor and middle class have increased their earning. Of course, more of the "burden" is placed on the rich. Their income had increased by a higher percentage. MMFA isn't slanting anything.
Did you actually read the article? MMFA just pointed out the truth, the spin here is the claim that the "wealthy" are paying a bigger burden because of the tax cuts.
Personally, I think they should pay even more because every argument ever made is based off of facts associated with AGI (adjusted gross income) - you know, the money you claim to have AFTER ALL DEDUCTIONS are subtracted from the total. The gross unfairness in who those deductions are slanted for is ALMOST enough to make me support a flat tax. ALMOST.
They're just pointing out that moore lied about it.
That causes the Democrats to lose elections, or the voting public's lack of understanding?
You conveniently ignore the whole point of the post. Yes, more people earning more money are paying more of the total, but each individual is paying less in taxes and therefore is actually sharing less of the tax burden. This completely refutes the purpose of the WSJ op-ed. So tell me again how people in these tax brackets are getting "soaked" anymore than they were a few years ago?
That is completely untrue. The people who have moved into that upper bracket are paying more taxes in total than they were previously. You think if your income moves from $150K to 200K that you are paying less taxes? Give me a sip out of your cocktail. MMFA's rebuttal is based on how many more people have moved into that upper income. Of course they are paying more than they were. Just not as much as you would like them to, in point of fact.
When the right doesn't get it, and posts the lie a second time, we should remember Colbert's corollary: "There's fluid down there. But I wouldn't drink it. It's usually backwash."
It would save us all a lot of time.
"More people earning more money paying more of the total and MMFA spins it as a bad thing."
The whole point of this article is that Bush's tax policy has NOT shifted the burden to the wealthy, despite what Moore says. MMFA is not spinning a greater tax burden on the wealthy as a bad thing, they are showing that it doesn't exist.
Read the article again, Bruce.
Here's a comment I wrote to NPR's Marketplace show. I urge others to do the same, at [link to marketplace.publicradio.org]
Dear Marketplace:
I don't mind you show featuring conservative commentators. I do object to your show featuring dishonest ones.
On your April 26 show, Steven Moore of the Wall Street Journal claimed that, "new IRS statistics on the taxes Americans pay show that George Bush's tax policies actually soak the rich. It turns out that the income tax burden has substantially shifted onto the wealthy."
I knew at the time that Mr. Moore's argument was bogus. But I did not then have time to document his falsehoods.
MediaMatters has now analyzed similar claims by Mr. Moore in a Wall Street Journal editorial. Their analysis is at [link to mediamatters.org]
The MediaMatters analysis shows that Mr. Moore selectively quoted data that supported his argument, but ignored other data that would have discredited it. This is simply dishonest.
Please study this analysis by MediaMatters and ask yourselves whether you wish to have dishonest people doing editorials on your show. We now know that Mr. Moore cannot be trusted. Given that, what would be the point in featuring him in the future?
I did the same. Hopefully, enough of us pointing out that we're aware of the lies and distortions of these "newsie" organizations will embarass them enough to stop it.
But probably not.
I got my email to Public Radio back with this message: No such user (cstelter@americanpublicmedia.org). This was the address they provided on their webpage.
The ONLY benchmark that is meaningful is what tax percentage one pays based on income ($1,000,000/$5,000,000 = 20% tax paid) NOT what percentage of the total tax burden is being paid by rich people (46.6% of total income taxes collected). Think for a second. The rich made 10% MORE from 2002 to 2004 yet pay 8% LESS.
Example: In 2002 Mr. W made $5,000,000 and paid $1,000,000 in taxes (20% rate). In 2004 Mr. W made $5,500,000 and paid 920,000 (16.7% rate).
Now it seems counterintuitive that total income taxes paid could go up, given this calculation, until you realize there are MORE RICH PEOPLE PAYING IN, each paying LESS TAX both as a raw number and as a percentage (see above).
Please don't argue this with me. The numbers don’t lie. Only the WSJ and Stephen Moore.
I don't see bruce responding to my previous comment about adjusted gross income. Think about that bruce, if you can claim more exemptions this year than last, don't ya think it would help mask any increase in income you get?
Besides, if anything I think this just proves that the middle class is desolving. A few are bound to move up, most will move down.
than me...however, the point remains that an individual in the upper tax bracket paid less in 2004 than he/she did in 2002. There were just more of them. Simple point. So although total income taxes paid by the high tax brackets went up, the total (and percent) that each person put in was less. I don't understand the difficulty in that statement.
You're twisting the logic of my post to suit your own point. I never said that people who moved up into the tax bracket paid less taxes than before. That obviously would make no sense. What I did say was that people who were in that tax bracket in both 2002 and 2004 paid less in taxes in 2004 than in 2002. Or to use a similar example to yours, what about the person who made $200,000 in both 2002 and 2004. Do you think they paid more taxes in 2004 than 2002? According to MMFA's (correct) analysis, they paid less. According to Moore and the WSJ's (flawed) analysis, they paid more.
In addition, I never made any claim as to how much I would like people in the high tax brackets to pay in taxes though I appreciate you assigning that position to me with no prior knowledge of me or my beliefs.
This is why it is possible to make just about any claim you want using statistics. The charge MMFA is trying to refute is the WSJs claim that "the Federal Income Tax Burden is Substantially Shifted onto the Backs of the Wealthy". Okay, a few things we have to figure out. #1, what is the definition of "wealthy". MMFA centers around the $200K income level which works for me. Maybe some would prefer a higher starting point. Second, what is the definition of "substantial". According to the article the 200K and above earners paid 46.6% of total income tax in 2004, up from 40.1% in 2002. That's about a 15% increase which seems pretty substantial to me. So there isn't anything wrong with the phrase that MMFA is trying to refute. The fact that there are MORE wealthy people, using the 200K standard, doesn't change the WSJ's premise in my mind. It's a good thing for people to make more money. The more people that make more money, the more people we can spread the tax burden on. That's just the way it is. Now if you want to say the wealthy aren't paying enough because we are still running these huge deficits, thats an opinion I could listen to. But the fact is the fact, the wealthy are paying a higher percentage of the total federal income tax, using 200K as the standard. The WSJ term of "burden" is one I wouldn't have used myself, the wealthy are doing just fine.
Bruce, you're accusing MMFA of lying with statistics then you turn around and lie with statistics. Read my earlier post. It's a n HONEST assessment of the statistical reality of income tax burdens: MORE rich people are paying LESS taxes individually. Period. End of story. Stop trying to wigging out of this reality. It's getting embarrassing.
Great. Well, I'm embarrassed for you too playing out your class warfare nonsense when the facts don't support it so I guess we're even.
An old, old Republican canard. Any talk about fair, apportioned taxation is class warfare. Wrong. Class warfare is labeling handouts to the wealthy "tax breaks" and "economic incentive packages" while any government monies tagged for the poor are "welfare".
Bruce, your Red slip is showing. Me? I'm bluer than a Smurf and proud of it.
Yes of course I'm conservative on a lot of issues, that's not news since I've been posting on here for more than a year. I've learned a lot and been moved to the left on some things simply by reading this site.
If you look at the MMFA writeup here, the part that also strengthens my point is when MMFA says:
At the same time, average income tax paid by Americans earning less than $200,000 decreased 7 percent while their average incomes rose 4 percent.
So The fact that the wealthy paid an average of 4% less as individuals did not cause the lower and middle to pay more on a percentage basis, they also paid less by 7%. They got more of a tax break on a percentage basis than the wealthy! So if it's not class warfare, what is it?
the rates would go down but incomes would go up causing "bracket creep" and resulting in more revenue to the US Treasury? WSJ's piece (and MMFA's rebuttal) are just more examples of "twististics," making any figures say what you want them to say. The economy must have done pretty good over those two years to allow so many people to move up in income brackets.
You say, "The WSJ term of "burden" is one I wouldn't have used myself, the wealthy are doing just fine."
In fact, Moore says the wealthy are getting "SOAKED", based on total payments in the higher bracket/quintile.
The question is whether Moore is painting a proper picture of what is happening, by portraying the wealthy as being unfairly "hit up" for the lion's share of taxpaying.
The answer does not reside in total amounts, but in how Bush's tax cuts have affected each family. The guy that made a million last year and 2 million this year may well pay more in taxes. Say he paid $200,000 last year, and owed $300,000 this year. Is it a fair portrayal to say he's getting "SOAKED"?
His disposable income last year was $800,000, and this year (thanks to Bush's economic policies), his disposable income is $1,700,000. Yes, he's paying more in taxes. But he's MUCH better off, because he's in the upper bracket.
Those in the bottom 4 quintiles aren't doing as well. Their wages are stagnant, their good jobs disappearing, their expenses for heating oil and gasoline and health care and local taxes are going UP UP UP. The AVERAGE American -- the 80% who work for a living -- are worse off under Bush.
The bottom line is, anyone in their right mind would LOVE to trade places with Bush's chosen upper class, who are getting "SOAKED" according to the WSJ.
Fabulously wealthy people who are getting even wealthier under Bush do not make good VICTIMS, even though the WSJ's aristocratic class warfare wishes to portray our wealthy as being maligned and treated unfairly. So damn sad, but would they trade places? No damn way.
It's the 80% UNDER those income levels who are REALLY getting soaked, and sunk. And they KNOW it, regardless of the WJS's whining.
The editorial answers your post almost directly:
We can already hear the left objecting that the rich are paying more taxes simply because they have hoarded all the income gains, while the middle class and poor wallow in economic quicksand. But, again, the IRS data tell a more upbeat story of widespread financial gains for American families. The slice of the total income pie captured by the richest 1%, 5% and 10% of Americans is lower today than in the last years of the Clinton administration.
I agree, the wealthy aren't being soaked. I also agree that they are paying more of the total than they previously were. Just depends on your perspective.
Bruce, you're absolutely right, the "wealthy", as a group, are paying a higher percentage of the total federal income tax. However, each person in that wealthy group is paying less, so I don't see how anyone in that group is feeling more of a "burden" now than in 2002, regardless of what anyone thinks the wealthy should be paying.
The WSJ's premise is that wealthy people are being burdened by paying more taxes. That's simply untrue. Each individual is paying less while the group has grown larger. Therefore, noone is being burdened with higher taxes. I don't know why you're refusing to put this in context.
In a previous post, I wouldn't use the term "burden" either. And the wealthy as individuals (on average) are paying a lower percentage than they were. That is true I agree. I guess everyone has their own definition of fairness, is the percentage more important or the total dollars paid. I think it's good for the middle and lower for the wealthy to be paying more of the total taxes, and of course it's good for the wealthy to be paying a lower percentage, so I look at it as a win-win. Good conversation, thanks for your input.
The WSJ is stiving mightily to EITHER claim that the wealthy are being SOAKED, or that the benefits of an expanding economy is being spread more or less evenly.
The bottom line is protecting the status quo -- or to put it in policy terms, "MAKE THE TAX CUTS PERMANENT".
The TREND is what the WSJ is invested in continuing. The expanding rich-poor gap. The wealthy amassing ever greater fortunes. The tax burden falling into a bottomless pit of American national debt. Corporations enjoying record profits, windfall gains. Corporate execs pulling in BILLIONS in personal fortune as a result of inflated prices.
And meanwhile, what concern is given the American worker and his family? Fewer jobs, worse jobs, higher costs of living, gouging at the gas pump, DEBT heaped on every family member for decades to come.
There is CLASS WARFARE being conducted in earnest, and the Republicans are waging that war. The WEALTHY are winning, bigtime. Republican CLASS WARFARE heaps every advantage and consideration on the already very wealthy, while removing protections from working people. Safety Nets for those in need are shredded, while Golden Parachutes for the wealthy are loaded down.
CLASS WARFARE was being conducted in Tzarist Russia, and France at the time of Marie Antoinette. The only question is, WHEN will THE PEOPLE have enough, and join the battle?
I hope we can at least agree that when the economy is doing well, as we have done for the past few years, that the rich are going to get theirs. I can't see any scenario where the economy is expanding and the rich aren't getting theirs, can you?
Bruce, it's obvious you refuse to listen to any reasonable analysis of the economic reality under Bush policies, that rich people are getting richer because they are paying less taxes as a PERCENTAGE of what they make. That is the ONLY standard that makes any sense to dissect.
By your flat dollar standard, if a man making $50,000 is paying $10,000 in income taxes and Bill Gates, who makes billions, pays $10,001 in income taxes, Bill Gates is therefore towing a larger share of the total tax burden. Never mind that the first man's being relieved of 20% of his income while Bill Gates is paying what amounts to less than a sliver of a penny of his earnings. WAKE UP, Bruce! Bush's policies are creating a greater disparity between the poor and the wealthy at the cost of more debt and less productivity because this extra wealth is being amass PASSIVELY, through dividends and capital gains income, which produce NOTHING. Why does Bush HATE the American workers so much? Sit on your duff and make $$$ in the stock market, you pay 15% tax. Work your keyster off at a job, you pay 28% or more. How is that parity or fair????
I've read all the posts and I agree with some of the points you make. I don't buy your logic when you say that rich people are getting richer BECAUSE of the lower percentage they pay in. Is that to say that the rich would not be getting richer if they paid a higher rate? They would still be getting richer in my view, just not as quickly.
By your second example, yes it's true that Bill Gates would be paying a larger share of the tax burden by one dollar than the other guy. I'm not saying that would be a fair way to split it but he is paying the larger share if you only look at the tax side.
You wrote: Bush's policies are creating a greater disparity between the poor and the wealthy at the cost of more debt and less productivity because this extra wealth is being amass PASSIVELY, through dividends and capital gains income, which produce NOTHING. Why does Bush HATE the American workers so much? Sit on your duff and make $$$ in the stock market, you pay 15% tax. Work your keyster off at a job, you pay 28% or more. How is that parity or fair????"
The editorial disagrees with your statement and they claim that the top 1%, 5% and 10% have less of the total than they did during the last years of Clinton. Did you think the 90's were bad for America too? Did Clinton hate the American worker? Nonsensical rhetoric on your part. As for the stock market, we just got back to where we were 4 or 5 years ago so not a lot of money made in total under the Bush Presidency. Clintons Stock market was clicking along at 20% per year for several years. How unfair of him to allow that.