Need Help Debunking: Tax "Myths"

[iamjoy]

a right-wing relative sent me this article.

"A 2008 OECD study of leading economies found that 'taxation is most progressively distributed in the United States.' More so than Sweden or France"

"In The Journal of Economic Perspectives (Winter 2007), Messrs. Piketty and Saez estimated that "the upper 1% of the income distribution earned 19.6% of total income before tax , and paid 41% of the individual federal income tax." No other major country is so dependent on so few taxpayers."

"A 2008 study of 24 leading economies by the Organization of Economic Cooperation and Development (OECD) concludes that, "Taxation is most progressively distributed in the United States, probably reflecting the greater role played there by refundable tax credits, such as the Earned Income Tax Credit and the Child Tax Credit. .. . . Taxes tend to be least progressive in the Nordic countries (notably, Sweden), France and Switzerland."

"The OECD study—titled "Growing Unequal?"—also found that the ratio of taxes paid to income received by the top 10% was by far the highest in the U.S., at 1.35, compared to 1.1 for France, 1.07 for Germany, 1.01 for Japan and 1.0 for Sweden (i.e., the top decile's share of Swedish taxes is the same as their share of income)."

http://online.wsj.com/article/SB10001424052748703581204576033861522959234.html?KEYWORDS=ALAN+REYNOLDS

[MannyGoldstein]

1. Just look at the comments section of that crazy article nt

[forty6]

2. IF that relative is not in the top 1% as far as his/her income, why is

s/he defending them so zealously?

Simple answer: they "pay the most taxes",,(ambiguous as that phrase is, most compared to what?)..because they HAVE THE MOST MONEY!

Not just A LITTLE MORE MONEY, no, they have MANY TIMES MORE MONEY...

The top 10% of Americans now earn around 50% of our national income.

Read more: http://www.businessinsider.com/22-statistics-that-prove-the-middle-class-is-being-systematically-wiped-out-of-existence-in-america-2010-7#the-top-10-of-americans-now-earn-around-50-of-our-national-income-22#ixzz19ETRxrHt

15 Mind-Blowing Facts About Wealth And Inequality In America

Read more: http://www.businessinsider.com/facts-about-inequality-in-america-2011-11?slop=1#slideshow-start#ixzz19EQmn2nT

Their wealth,(even after such "high"taxes) is:

"Half of America owns 2.5% of country's wealth. The top 1% owns a third of it."


http://www.businessinsider.com/facts-about-inequality-in-america-2011-11?slop=1#slideshow-start

one in every two American families COMBINED!! owns 2.5% of the nations wealth

one in every one hundred Americans when put together own 1/3 of the nation's wealth 1/3!!!

Charts and graphs explain how we got here. Also show dramatic rise in their percentage of ownership of the nation's wealth.


As for the argument about tax rates and REDISTRIBUTION OF WEALTH, look at this chart on that link.

"America redistributes its wealth FAR LESS than other developed countries (via government transfers)

or this one:

"The income gap is NOT growing in other countries, like France"

Then turn to THIS interesting article about the middle class:

22 Statistics That Prove The Middle Class Is Being Systematically Wiped Out Of Existence In America

Read more: http://www.businessinsider.com/22-statistics-that-prove-the-middle-class-is-being-systematically-wiped-out-of-existence-in-america-2010-7#83-percent-of-all-us-stocks-are-in-the-hands-of-1-percent-of-the-people-1#ixzz19ESJQmOm

This fact got to me, as an older guy:

"In 1950, the ratio of the average executive's paycheck to the average worker's paycheck was about 30 to 1. Since the year 2000, that ratio has exploded to between 300 to 500 to one.


Read more: http://www.businessinsider.com/22-statistics-that-prove-the-middle-class-is-being-systematically-wiped-out-of-existence-in-america-2010-7#the-top-10-of-americans-now-earn-around-50-of-our-national-income-22#ixzz19ETRxrHt

[ThoughtCriminal]

3. I can't get the article to load, but...

From your excerpt, it looks like they are only including individual income tax, rather than all taxes. This is an almost universal flaw in right-wing whine-tracts about taxes. If you include other taxes that wage earners pay, they total burden in the U.S. is quite regressive.

Lots of data and tables here:
http://www.itepnet.org/whopays3.pdf

[Igel]

4. You'd have to look at the OECD report.

What I can get online explicitly includes as income all cash distributions as household income (this would include welfare, SS benefits, as well as paychecks and realized capital gains - capital losses) as well as all taxes (income, household, payroll, including "negative taxes" like refundable tax credits, allowing for negative tax rates).

The study mentioned by author names, it seems, only includes income taxes. Yet since political battles are seldom fought holistically--nobody wants to do it because once you start it becomes a zoo--it's an interesting point.

I personally find the tangle of arguments and counterarguments to be impenetrable without spending time on it, and that much time I don't have. Payroll taxes are regressive (but less so with the 2% tax holiday), but income taxes are progressive (and more progressive than a simple presentation of marginal tax rates would indicate once you look at actual revenue by decile or percentile). A lot of arguments shift from income and income taxes to wealth and total federal taxes, some using marginal tax rates, some looking at actual revenues; some include sales tax along the way and others don't; some include refundable tax credits and others don't. Often they start with "taxes" being defined one way but mid-stream you find that somewhere a footnote hinted that they were adopting a different definition. Once I saw the horrible argument that one group of "taxpayers" actually paid taxes even though after tax deductions, tax credits, and refundable tax credits they got far more back than their tax liability was. When you see that met with acclaim and huzzahs you really know that the US school system does a crappy job at math teaching and US students do a crappy job at math learning.

Then there's the entire "redistribution" business and the requirement in this particular OECD report, that income be cash distributed to the household. The refundable tax credits count as redistribution under these conditions; government-provided healthcare and free college education does not, since there is no cash distribution to the household.

Making things even stickier are mismatched definitions. The OECD sometimes uses official figures that have widely varying definitions (so that sometimes only earned income is counted for one country but non-earned income is intended for another country and attributed benefits are included in the figure for a third). Sometimes the OECD dudes do do due diligence in adjusting them to level out differences in definitions. Sometimes the data necessary isn't available, or the researchers relegate all the caveats to footnote 123 on page 143 of the report. (Don't say "dudes do do due diligence" in isolation if you have any self-respect.)

It always pays to read these things carefully. They usually don't side with left or right, not clearly. I once saw an OECD report that was reported, in the NYT, as indicating that the US was failing our children. It listed areas where we failed and areas where we did well. It didn't ring true, and a close reading showed that the report dealt with equality of results, not the absolute level of results. So the US did worse than most European countries for living space for kids, even though our poor kids matched their well-off kids' space: But poor vs well-off kids in the US have a wide range of space amounts while in Europe the range is more restricted. Hence they're more equal. For math, the other country did poorly--poor kids did well, well-off kids did superbly. The US came out ahead even though our well-off kids did worse than their poor kids because our well-off kids had rather mediocre results, and the poor kids had mediocre results. Uniformity between rich and poor was the metric, not excellence, so that uniformly sucky was good while variation from good to excellent was bad.

As for not siding clearly with left or right, look at the OECD report referenced. The website has a nifty graph mapping over time poverty vs. social spending. You'd think more social spending = less poverty. That's a common yet simplistic view on the left. But as often they were independent: Social spending holds steady, poverty increases and decreases over time; or social spending skyrockets but poverty holds constant, or even increases. Are they independent? Probably not. But the simplistic view that there's a biunique relationship between them is certainly just that: simplistic.

[forty6]

5. Just a follow up. National Public Radio, (NPR) did a feature report

yesterday, at about 1 PM eastern time on "WEALTH" and income differences...average families at 50K or so, people that earn over $200K, people who inherited wealth... etc.

I don't know, but you can usually find stuff like that on the NPR website, either the transcript or the stream of the actual radio presentation, or both.

Maybe THIS is it, and it was a rebroadcast. Or maybe it's something else.

"the top 20 percent of people have 85 percent of the wealth."

http://www.npr.org/templates/story/story.php?storyId=130395070

[cbdo2007]

6. You don't need help debunking tax myths...you need to just hit the "Delete" button

It isn't worth it to argue with someone about something they obviously do not understand and don't care to understand. Just hit the delete button and be done with it. That's the only way you can really win this argument with them is by not responding and getting sucked into it.

[Hannah Bell]

7. check out the irs figures.

http://demopedia.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x64696