On NewsHour, WSJ's Moore misled on wealthy Americans' tax burden
SUMMARY: Stephen Moore asserted that "a lot of the new [tax] revenue is coming from rich people," and then asked rhetorically, "if [Bush's tax cut] was a big tax cut for the rich, why are the rich paying more taxes than ever?" In fact, filers earning at least $200,000 paid less federal income tax in 2004 on average than they did in 2002.
During a discussion of the new estimated U.S. budget deficit on the July 11 edition of PBS' The NewsHour with Jim Lehrer, Wall Street Journal editorial board member Stephen Moore asserted that "a lot of the new [tax] revenue is coming from rich people," and then asked rhetorically, "if [Bush's tax cut] was a big tax cut for the rich, why are the rich paying more taxes than ever?" In fact, filers earning at least $200,000 paid less federal income tax in 2004 on average than they did in 2002. It is true that the total share of income tax paid by those making more than $200,000 increased between 2002 and 2004, but that is not because wealthy taxpayers individually paid more. While taxes as a percentage of income went down in that bracket, the number of taxpayers in the bracket increased during that time period, as did the average income of those within that bracket. Those making more than $200,000 saw their incomes increase 7 percent between 2002 and 2004, while average decreases in their income tax ranged from nearly 9 percent for those making between $200,000 and $500,000 to more than 19 percent for those with incomes of more than $10 million.
Media Matters has previously debunked a similar claim made by Moore in a May 4 Journal op-ed. Moore had 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."
The Bush tax cuts lowered the top two tax brackets from 35 percent and 38.6 percent in 2002 to 33 and 35 percent, respectively, in 2004. And according to the most recent IRS data, the number of those taxpayers earning more than $200,000 increased by nearly 600,000 from tax years 2002 to 2004. The same data also show that the combined adjusted gross income of those who filed tax returns making more than $200,000 a year rose by more than $420 billion throughout the same time period with the average income of those with incomes more than $200,000 rising from about $518,000 per filer in 2002 to about $559,000 in 2004, a 7 percent increase. Simultaneously, the average tax paid by those making more $200,000 a year declined significantly, as the table below illustrates:
|
Average tax (whole dollars) |
||||
|
Adjusted gross income |
2002 |
2003 |
2004 [p] |
% Decrease |
|
$200,000 under $500,000 |
$ 65,452 |
$ 60,453 |
$ 59,801 |
-8.63% |
|
$500,000 under $1,000,000 |
$ 188,463 |
$ 169,166 |
$ 166,196 |
-11.81% |
|
$1,000,000 under $1,500,000 |
$ 352,318 |
$ 313,177 |
$ 303,304 |
-13.91% |
|
$1,500,000 under $2,000,000 |
$ 508,213 |
$ 450,683 |
$ 437,490 |
-13.92% |
|
$2,000,000 under $5,000,000 |
$ 876,541 |
$ 765,117 |
$ 753,371 |
-14.05% |
|
$5,000,000 under $10,000,000 |
$ 2,003,435 |
$ 1,730,613 |
$ 1,696,738 |
-15.31% |
|
$10,000,000 or more |
$ 6,370,481 |
$ 5,792,690 |
$ 5,129,136 |
-19.49% |
[p] = preliminary
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. In addition, in a June 5, 2005, article titled "Richest Are Leaving Even the Rich Far Behind," the Times presented its analysis of the tax burden in the United States and found that:
- Under the Bush tax cuts, the 400 taxpayers with the highest incomes -- a minimum of $87 million in 2000, the last year for which the government will release such data -- now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
- Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to $200,000.
From the July 11 edition of PBS' The NewsHour with Jim Lehrer, during a panel discussion also featuring senior correspondent Ray Suarez and University of California-Berkeley professor and former Clinton Secretary of Labor Robert Reich:
SUAREZ: Well, Stephen Moore, taking Professor Reich's point, is there something changing about how the American government collects the money it needs? A lot of this new revenue is coming from corporate taxes, and a smaller overall share is coming from the taxes that individual workers and wage-earners pay on the money they make.
MOORE: Well, actually, the big picture to me, Ray, as I look at this data, is that, when you see where the new revenue is coming from, a lot of the new revenue is coming from rich people, from people in the top one, or top five, or top 10 percent of earners in America. They're the ones that are largely paying these capital gains and dividend tax cuts, which calls into question, if this was a big tax cut for the rich, why are the rich paying more taxes than ever?
the slaves paid no taxes whatsoever? The free men and white slave owners had to bear the entire burden of the government with no help at all! I weep to think about it!
I'm glad that today's African Americans feel some guilt about this grave injustice that has gone uncorrected for so long. They're the ones bringin up the subject of reparations. I'm confident that one day they'll do the right thing: repay their fair share of taxes (with interest and penalties) to their former owners.
Let's just hope it never happens again.
if I could, I'd bake you some brownies right now, just so you'd see, in a steamy chocolately way, how much I love what you wrote.
Thanks! :D
Is he really expecting us to not come up with the simple answer to that question: there are more rich people who make more money than before, this in actual dollars they pay more taxes, while their taxes as share of the income has gone down.
Duh.
I guess it's a nice soundbite that Rush, O'Reilly et all can use though, to convince their low-income listeners that the rich are being sucked dry by the government.
the ultra ultra rich pay alot of taxes, boo hoo. Oh the burden!
I sure am glad I'm not one of the super-rich.
When my uncle and my Dad were making decent livings as working men with lots of seniority in a union factory, they both recognized that people who earned more paid more.
Their favorite thing to say about taxes?
That they'd LOVE to have to pay a lot on taxes, because it would mean that they were earning a lot!
All too often, on economic questions, I see MMFA changing the question, exploiting ambiguity, and delibrately misleading its readers in order to "refute" statements it doesn't like. But this is different. Moore made a straight-up, unambiguous, and wrong claim, and MMFA cited precisely the correct data to refute it. (Although it apparently couldn't hold itself back from afterward piling on some irrelevant red meat for its readership in the form of "share" statistics that have no bearing on Moore's statement.)
Keep up the good work, MMFA fact-checkers, and you might someday advance to a job at a respectable site like factcheck.org!
Here is where your arguement it wrong: It is true that people making 200,000 paid less than before. But the reason tax revenues when up is because there are more people now in the above 200,000 tax bracket. More wealthy americans! This is a good thing.
This boom is precisely the arguement that the Bush Admin. made when justifying tax cuts. If you cut taxes on the upper income bracket, the economy will improve and this will generate more taxes, to replace or even exceed what you would have gotten with higher taxes.
Of course, it may be true that this leads to more people poor people, or, more likely, does not effect them much. It could be argued that even no effect is wrong, because it is solely the rich who are benefiting.
In the end, though, more people are rich (not just the rich got richer) . Thus, they have more taxable income, and pay a higher rate because they make more money. Hence, a tax revenue windfall.
What you really need to read is [link to online.wsj.com] which suggests that the total pie has not changed sides. Thus, more rich people means there are more poor people. This is of course bad news, and a mark against the Bush administration.
To quote it, "The share of national income going to corporations and the wealthiest individuals, already large, has expanded, while the share going to typical wage earners has shrunk."
A lot of rich people still make a good portion of their money as earned income. The earned income is usually a lot larger than the average person so I naturally they pay a greater porportion of taxes than the average person. This myth that poor and middle class people pay the most taxes is a liberal lie.
Someone willing to tell the truth and speak up for the abused people of wealth in this country, and against those parasites and leeches in the middle class and amongst the poorest in our society. Well done!
"This myth that poor and middle class people pay the most taxes is a liberal lie." --Osiris2k5
+++++++++++++++++++++++++++++++++++++++++
Can you cite an example of some liberal spouting this seamingly pervasive "liberal lie" you are talking about? Or is this just another strawman argument?
I have personally never heard such an assertion from anyone other than conservatives who invariably insist it is true.
Under the Bush tax cuts, the 400 taxpayers with the highest incomes -- a minimum of $87 million in 2000, the last year for which the government will release such data -- now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.
Yes, that seems fair.
Certainly, those people making $50,000 to $75,000 don't need ALL their money to get by, to maintain a minimum standard of living. They should pay the same percentage of total taxes as the hyper wealthy.
It's the least those middle class slackers can do.
Prove it, then. There's REAMS of info that prove that the transfer of wealth from middle class to the *already* wealthy does nothing but hurt the middle class, as in the internet bubble bursting in 2001. The middle class is under attack, and only the blind can't see it.
Those that benefit the MOST from a society should give the most BACK to that society.
Only the truly selfish would argue otherwise.
If more people are moving into that $200K+ income range, thereby spreading the tax burden out amongst that group of people, I don't see why that should be a negative.
If we weren't TRILLIONS of dollars in debt. But since we ARE, mightn't it be a sound fiscal policy to ask those who are doing so well to help bail out the government that allows them to enjoy this prosperity?
It never ceases to amaze me that ones who profit the most from the American way of life are the least willing to support the instrument of their financial largess, that being the US government.
that's it, that's it. Our generation isn't willing to bear the burden of our consumption. Instead, we borrow and borrow and borrow and will let the unborn children of America pay the bills.
We may be trillions in debt but as a percentage of the economy the debt is at a lower level than it has been during much of our debt history and wealth is not generated by the government but by the hard working people of this nation and they don't need to "prop" up the government the government needs to control their spending.
If our debt as a percentage of GDP is no big deal, then why is the Fed continuing to regularly raise interest rates? Do you think that an argument could be made that the whole percentage of GDP point you are making is a red herring, because the sheer amount of "loose money" for fresh investment to cover the debt is drying up due to more competitive options for investment elsewhere and/or a lack of confidence in the integrity of US Dept. of the Treasury assurances to eventually pay back money currently owed?
In other words, if the debt is becoming harder to finance (forcing higher interest rates), do you see that as being a problem regardless of the percentage of GDP, but simply based on the enormity of the actual dollar figure?
OK, 1st of all compare the average # of deductions the middle class gets and compare that to the average # of deductions the upper classes typically claim. Next, let's talk about a flat tax - how close to parity now are the top 10% vs. the middle class? It's kinda hard to figure out these days because I've noticed the IRS site has cleverly hidden away GROSS income #'s. Adjusted Gross Income is a sham # because that's what you claim AFTER deductions. Let's see the % #'s for taxes paid vs gross income!
I know a woman who lives off of dividend income from stock that she inherited. Her dividend income is well into six figures annually. Since 2003, dividend income has been taxed at 15% instead of at the previous rate for ordinary income (around 35%). Pretty cool, for her.
If all your income is dividend income, and then you claim deductions against it, how close to 0 do you think you can get 15%?
Her first name isn't the name of a city in France and her last name that of a hotel chain, is it?
Yes! How did you know my friend is St. Brieuc Embassy Suites?
I was thinking it might be Marseilles Best Western. She's very famous here in NJ and a bit of a brat.
I saw John Edwards on C-Span not long ago. He is involved with anti-poverty programs. He said that he knows a lot of rich people which is understandable since he himself is wealthy, but he said that the wealthy are able to legally structure their income so that a good portion of their income is derived from dividends and they are taxed at the 15% rate. He said often the secretary of an executive is taxed at a higher rate than her/his boss.
Look again at your last tax return. AGI is income before itemized (or standard) deducations are subtracted. The only things you get to subtract from your gross to get AGI are things like investment losses and a few bones thrown to the lower classes like student loan interest and classroom supplies for teachers.
AGI is defined as your taxable income from all sources including wages, salaries, tips, taxable interest, ordinary dividends, taxable refunds, credits, or offsets of state and local income taxes, alimony received, business income or loss, capital gains or losses, other gains or losses, taxable IRA distributions, taxable pensions and annuities, rental real estate, royalties, farm income or losses, unemployment compensation, taxable social security benefits, and other income minus specific deductions including educator expenses, the IRA deduction, student loan interest deduction, tuition and fees deduction, Archer MSA deduction, moving expenses, one-half of self-employment tax, self-employed health insurance deduction, self-employed SEP, SIMPLE, and qualified plans, penalty on early withdrawal of savings, and alimony paid by you. Do not deduct your standard or itemized deductions.
So, I wasn't quite correct, however, the base of my argument still stands.
The base of your argument still stands?! The base of your argument was that AGI significantly understantes the income of the rich, as compared to the middle class, because it allows the rich people to deduct a buch of stuff that really should be considered part of their incomes. Of the deductables you listed, most are not even available to the rich (e.g. IRA, student loan interest), and the few that are look entirely justifiable (e.g. alimony is deducted because it appears in the ex's AGI). Could you please site which deductable item(s) you believe causes AGI to severely mis-represent the income of the rich?
The base of your argument was that AGI significantly understantes the income of the rich, as compared to the middle class, because it allows the rich people to deduct a buch of stuff that really should be considered part of their incomes.
Your words not mine. I just said let's see the difference between taxes paid vs gross income. You can theorize all you want about who gets the bigger benefit, I want to see facts. It may bear out against the middle class, maybe it will show the rich getting a bigger slice too. Doesn't matter to me, just the truth matters.
And to note, everone gets to claim IRA's, etc. There may be limits, but everyone gets to claim them.
A friend and I invest in a piece of property. We think we'll make some money down the road, so we'll hold it a few years. But every year, the taxes come due. What to do? I've invested 10% of the cost of the property, while my friend owns 90%. Should the taxes be FAIR, and split evenly between us, 50-50? After all, when we SELL, our "shares" will be proportional to our percentage of investment.
So, FAIR is not a "flat tax", but instead a tax based on how much of the capital each of us holds.
Now to the TOP 5% of wealthy Americans. I don't care how much their foundation pays them in "salary" as income. I care how much of AMERICA they own. If that TOP 5% (15 million folks) own 50% of America's capital holdings, then they should pay half the tax burden for running America, while the remaining 280 million POORER Americans should cover, collectively, the other 50%. It's about how much of the investment each segment OWNS.
Yet, we see that the TOP 5% actually hold over 80% of America's capital holdings. The bottom 95% are left to divide the remaining 20%, and scrape by on subsistence living in many cases.
So, do the wealthiest 5% pay an amount in line with their actual ownership? Nope. They surely do NOT. They are largely "free riders", not paying an amount in line with the advantages America has provided them.
Warren Buffet is a smart man, but does he WORK HARDER than a coal miner or a school teacher? Nope. He just works DIFFERENT: He lets his MONEY work FOR him. So it's not the hard nature of the work that would signal that rich folks deserve a "BREAK" from paying their fair share of ownership.
We're at WAR, yet these wealth folk happily scarf up the Bush tax breaks, putting the difference between what we're spending and what we're taking in on a credit card for our children to pay. If nothing else, this is IMMORAL. (It's also inexcusably GREEDY.)
So, when I hear the wails about how much the rich are STILL taxed, and how it's an amount that's more than the "bottom 95%" of Americans pay, it tells a false story, although the "figures" may be accurate as far as their limited scope goes.
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I have a proposition survey: How many in here would take me up on this "DEAL":
You get a job, and that job is waiting for dividend checks to roll in at the end of each month. I intend to TAX you at a rate of 80%. WAY TOO HIGH, you say, but is it? The dividend payments will amount to $40 million a year. Taxed at an 80% rate, your "spendable income" will be ... wait for it ... "ONLY" $8 million. So, how about it? Any takers on this deal? Sky high taxes, but a pretty high income as well.
If anyone is interested in this deal, it would show that tax rates are simply RELATIVE, and to say a tax is "too high" is an arbitrary determination that has no actual application in the real world. I daresay 100% of the readers in here would take such a deal (probably all the staffers at MMFA as well!) if it were REAL; and they would be agreeing to an 80% TAX.
That the wealthy may be paying "MORE" in actual dollars due to Bush's tax structure, only shows that the WEALTH REDISTRIBUTION which is grossly expanding the rich/poor gap means that the wealthy now control exponentially MORE of America than they did before Bush. So OF COURSE a lesser percentage tax of a LOT MORE money amounts to a larger dollar amount to the treasury.
Funny the Bush supporters want to talk about the TAX, without talking about how much more of America has been shifted into the wealthy's control.
You have stated what I have been saying only a whole lot better. As I said in an earlier thread. I dont care how much the rich get taxed. 20% of 100 million is still more money than any of normal Americans can dream of earning. If they can't live on that then that's just tough. I would gladly pay a higher tax if I was still left with a few Million afterwards.
Tex, you went through your tax scenario several months ago and I will present the problem with your argument just as I did then.
The tax law is constructed because the US Government wants its citizens to do certain things with our money. If we do these certain things that the government wants us to do, we are rewarded by getting a lower tax rate on these items. The government thinks it is in Americas best interest that it gives tax BREAKS for certain things, and tax PENALTIES for certain other things. An example of tax penalties would be sin taxes on cigarettes and alcohol, tax breaks would be tax deferrals on IRA's, reduced rates on investments and so on.
Now, the problem with your scenario is that it would create a disincentive to own tangible assets, as these assets would cause a higher tax burden relative to you just hanging onto your cash. This would cripple investment, slow the economy and greatly reduce revenue into the Federal treasury. In essence, your scenario penalizes people for investing their money opposed to traveling around the world or buying lottery tickets. That's the way I see it.
Bruce,
I didn't get that Tex was necessarily advocating an 80% tax bracket. I took it that he was giving an example why it is important to look at these numbers in context.
To be fair, both sides take some liberty at putting the data in and out of context as suits their argument.
You say, "The tax law is constructed because the US Government wants its citizens to do certain things with our money."
RESPONSE: SOME of our tax law has that goal. OVERALL, though, Taxes go to pay for chores that the people's representatives claim need to be done. Paying for such chores is not a "penalty" or "incentive" for anything; it's a bill that needs to be paid.
Now, the government can go either way on tax policy. It can set policy to allow some to become very wealthy, but to prevent the power that comes from money from creating a 'ruling class' of HAVES. Under this plan, you can STILL have a Bill Gates with hundreds of billions, but he pays his taxes at a higher rate (which Gates "gets" ... he understands that the strength of the nation is in its PEOPLE, and not in the few very wealthy).
OR, the government can set policy towards "trickle down", whereby ALL policy is geared towards allowing the amassing and retention of huge fortunes, meanwhile eliminating any "benefits" for THE PEOPLE that make for a better quality of life for the nation. This CREATES and STRENGTHENS the wealthy ruling class (while degrading average folk and workers), and a plutocracy is formed.
You say, "The problem with your scenario is that it would create a disincentive to own tangible assets, as these assets would cause a higher tax burden relative to you just hanging onto your cash."
RESPONSE: Republicans are fond of pointing out that John Kennedy was a big "tax cutter". He lowered the top marginal rate from around 90% down to around 30%. Interesting to note, however, is that America experienced astronomical growth, prosperity, industry, and improvement of quality of life in the years since WWII to when Kennedy took office. All this happened WITH the tax code in effect; although it might THEORETICALLY seem that taxes would cause people to NOT want to succeed, the actual history of the nation is that people will do whatever they can to get ahead, regardless of the tax code. It SOUNDS good to say, if you tax rich folks, they will stop investing, and this will destroy the nation's economy. In PRACTICE, this is simply not what happens.
You say, "This would cripple investment, slow the economy and greatly reduce revenue into the Federal treasury."
RESPONSE: Good lordy, that's EXACTLY what the GOP said about Clinton's early tax INCREASES. But guess what? They were flat WRONG; Clinton's economy did GREAT, and the recession/depression the GOP predicted in apocalyptic terms just did not happen.
You say, "In essence, your scenario penalizes people for investing their money opposed to traveling around the world or buying lottery tickets. That's the way I see it."
RESPONSE: Look to ACTUAL history, instead of "incentive" theories. America's high marginal tax rates saw tremendous growth and investment. What you theoretically fear will happen ... doesn't.
Your example of the 90% tax rates and Clintons tax increases were federal income tax rates if I'm not mistaken. There was no choice but to pay these rates on their earned income.
But what you were proposing above was a tax based on assets, or what a person had accumulated from spending his money. (Which is really a double tax since they were already taxed on the initial earnings) Reading other posts on this forum, where most agree that the wealthiest among us are shrewd in paying the least amount of taxes legally possible, it seems obvious to me that the wealthy would make alternate choices to what they currently do if there were negative tax consequences.
I agree with you to a degree: There is absolutely NO patriotism in our wealthy class. They abhor paying taxes, and will let America DIE rather than agree to paying a fair share of the cost of running this nation.
We saw this when a "luxury tax" was enacted (an ill-thought out policy, to be sure, easy to circumvent).
What happened? The YACHT industry tanked, because rich folks simply went to France or Portugal to buy their luxury yachts, to AVOID paying American taxes. So much for "buy America" ... when it comes to their money, the wealthy have no allegiance to ANY nation.
So, you may be right. If asked to pay a fair share, in line with the BENEFITS they realize by being Americans, many rich folks will just bail out, and move their assets and their asses to other nations. I say, LET THEM. America doesn't need unpatriotic free riders here.
In point of FACT, though, this is not a danger. America has the best deal going (still, although Bush is working to make America into a 3rd world nation), and even though our wealthy whine like little girls when they pay taxes, there is no better place to go.
Can't blame the wealthy for ASKING though. They say, "We don't want to PAY for this damned expensive war. We want to KEEP our money!" and the Bush Administration said, "OK! No problem!" and then adds, "Hey! How about you MAKE a lot of money, while you're not paying taxes? This Iraq thing is a goldmine, there's infrastructure to be rebuilt and oil to harvest and lots of bombs and planes to be built. We can get you a NO BID contract for BILLIONS! How would THAT be?" ... and the wealthy said, "Now you're talking!"
So, can't blame them for ASKING. It's just criminal and immoral and outrageous for our government to cave in to fears that, if we don't give the wealthy everything they ASK for, they might take their ball and go somewhere else. Ridiculous on its face.
Bush has taken the "best deal going", and shifted it into the realm of rape and pillage. For his PALS.
Oh wait, you're too intelligent.
If the examples this lyin' scum notes actually paid the rates he cites, he might have something. But they don't and he doesn't.
The only people who pay the tax rates they supposedly should pay are the middle class and the working poor because they don't have sharp lawyers and accountants on the payroll to see that they don't pay their fair share like the rich do.
This guy is all trickle down horsebrit and deficits don't matter malarkey. Just like he was when he headed the club for cancerous growth.
When he finished spewing his nonsense as a panelist on Maher's show, Maher was prompted to ask, "What color is the sky in your world?"
You kill these guys, love it.
We know that they don't *like* to be confused by those inconvenient fact-thingies, but luckily MM is there.
for the right wing economic fantasy supported by the Cato Institute and other snake-oil salesmen.
He even tried to sound reasonable when discussing the scam that is intended to rip off future retirees. How credible can a person be who tried to sell the Americans on George Bush's Social Security almost reform plan.
Whenever a republican uses the word "reform" it is time to duck. I once was under the impression that the word "reform" meant to "improve" on a problem, but when a republican uses the word another synonym comes to mind - "destroy" .
Think of what the republicans did to Medicare - "cripple", "confuse", with the end result being to use half the budget for Medicare to pay hospital and doctor malpractice insurance.
Think of what the republicans tried to do to Social Security, but were so arrogant that they thought they could sell their half-baked plan to an unsuspecting public.
Think of how they held off on a prescription drug benefit plan until the pharmceutical companies had enough time to jack their prices up high enough that the benefit is meaningless.
Think of a war for profit, with no plan for anything after "mission accomplished".
Think of a frozen minimum wage at starvation levels.
Think of a broken social contract. The social contract between the press and the people of this country was broken when it decided to stop informing them and began to propagandize them for the government.
The social contract between the rich and the poor was broken when they decided that nothing could break the cycle of poverty and that abandoning them to their own minimal resources is therefore acceptable behavior. As for the poor, they remain loyal and willing to fight for the rich and have not risen in rebellion, although how long the poor will remain passive depends upon how desperate they become.
The middle class's buying power has decreased while the rich have seen increases in pay that has resulted in a difference five hundred times greater than that of the average production line worker. This compares with Japan, Germany and France where the difference in pay is from 40 to 70 times that of their production line workers.
This is the administration's well thought out attempt to remake America and the world in its own image, a delusion that cannot stand the test of reality. It is the immature idea that the world would be a better place if everyone was them.