Slightly more sober conservatives quickly started trotting out all the hoary rationales for keeping tax rates on the wealthy low. Their all-time favorite argument: “Confiscatory” tax rates on the incomes of the rich may make the non-rich among us feel good, but they simply don’t work.
The wealthy and “their armies of lawyers and lobbyists,” as Heritage Foundation senior fellow and Donald Trump advisor Stephen Moore contended after the Ocasio-Cortez 60 Minutes interview, always end up avoiding whatever stiff rates “dimwitted” members of Congress might insert into the tax code.
Moore’s slam-dunk “proof”? America’s richest 1 percent paid 19 percent of the nation’s federal income tax revenue when the top tax rate stood at 70 percent, he declared, and nowadays, with the top rate down by almost half that, pay 37 percent of federal income tax revenue.
What Moore doesn’t point out: The nation’s top 1 percent pays more of the federal income tax burden today only because the top 1 percent is now raking in a spectacularly higher share of the nation’s personal income, as the work of economists Emmanuel Saez and Thomas Piketty carefully details.
Back in 1976 — the middle of a decade where the top tax rate never dipped below 70 percent — America’s top 1 percent collected just 9 percent of the nation’s income. America’s bottom 90 percent, meanwhile, that year pulled down 67 percent, two-thirds of the nation’s income total.
By 2017, after years of tax cuts on high incomes, the income share of America’s bottom 90 percent had dropped from that two-thirds of the national total to just under half. The income share of the top 1 percent, by contrast, had soared to 21.5 percent.
Too many percentages for you? Let’s talk dollars and cents. In 1976, America’s top 1 percent averaged $425,294, after adjusting for inflation. By 2017, that top 1 percenter average had skyrocketed to $1,380,724.
And how did ordinary-income Americans fare over that same time span? America’s bottom 90 percent averaged $35,510 in 1976, in today’s dollars, and just $35,628 in 2017.
In other words, over the course of the last four decades, most Americans have seen no real increase in their incomes at the same time Americans in the top 1 percent have watched their real incomes more than triple.
Low tax rates on the rich, our history shows, help only the rich. Average Americans made out far better economically in the four decades that began during World War II — years that saw top tax rates on the rich range from 70 to 94 percent — than they have in the four decades since.
Indeed, Americans in the bottom 90 percent watched their real incomes more than double in the high-taxes-on-the-rich middle of the 20th century, from $16,563 in 1942 to $36,545 in 1979.
Alexandria Ocasio-Cortez knows this history. Sometime soon, our right wing fears, so will a majority of her fellow Americans.
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Reposted from Inequality.org
