Post Editorial Staff Blindly Socialist

The Top Takes Off
That rhetoric about giveaways for multimillionaires? It's accurate.

Sunday, May 7, 2006; Page B06

THE QUEST for ways to reduce inequality begins with taxation. Unlike spending programs, redistribution through taxation is administratively simple; besides, putting money directly into people's pockets allows them to spend it on whatever they need most. But the tax tool has been wielded badly. Rather than using it to offset rising inequality, politicians have contrived to do the opposite.

The Bush administration refuses to acknowledge this extraordinary fact. It argues that the tax system has grown more progressive because the rich provide a larger share of government revenue than in the past. But this isn't because tax rates for the rich are higher; it's because the pretax earnings of the rich have taken off. While the income of the families in the middle fifth of society has grown 12 percent since 1980, the income of the top tenth has grown 67 percent, and the income of the top 1 percent has more than doubled. In short, the rich have grown a whole lot richer: That's why they pay a larger share of total tax.

The administration also argues that the federal income tax is already progressive enough. Thanks to the earned-income tax credit and Mr. Bush's refundable child credit, almost a third of tax filers pay either zero income tax or less than zero -- meaning that they take money out of the system. But it's nonetheless true that the income tax is less progressive than it used to be. People still have to pay the regressive payroll tax. And changes to the estate tax must be factored in as well.

Our chart shows the combined effect of the Bush tax cuts. It leaves no doubt that the tax system has become less progressive, even as the need for progressivity has grown. Over the past quarter of a century, the tide of the American economy has failed to lift the bottom half of society, damaging the faith on which capitalism depends. Seven out of ten say the nation is headed in the wrong direction even though economic growth is galloping, and many are hostile to trade, immigration and big business. But rather than crafting a tax policy that responds to those sentiments, the administration has done the opposite.

The chart makes a second point. The loss of tax progressivity has not occurred in the middle of society; it's not as though someone a quarter of the way down the income scale is doing better at the expense of someone three-quarters of the way down. Rather, it's the top tenth who have benefited, and the top within the top has done fabulously well. According to Thomas Piketty of the École Normale Supérieure in Paris and Emmanuel Saez of the University of California at Berkeley, the top 0.01 percent of households has seen its tax bite fall by 6 percentage points since 2000 and by an astonishing 25 percentage points since 1980.

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To remedy stagnant middle-class living standards, more radical tax hikes would be necessary. But given that taxes will have to increase anyway because the budget deficit is running at around $300 billion, raising more than $85 billion for the purpose of redistribution is possible only if it's part of a wide-ranging tax reform.

I just had to include that last paragraph. Talk about a bald-faced, unsupported, and groundless assertion. How will "radical tax hikes" remedy a stagnant middle-class living standard? By killing off the recovery? By causing massive drops in investment? By forcing industry to lay-off hundreds of thousands of employees?

The Post editorial staff makes it very clear they know absolutely nothing about economics, capitalism, and the way our economy functions. Rather, they blindly adhere to the demonstrably failed policies of the socialist movement of the early and mid-twentieth century. These paleo-socialists seem incapable of dealing with reality or of seeing the truth that this is the strongest economy we've had in some time and unlike the "boom" of the Clinton presidency, this bullish economy is not buoyed by a false tech stock bubble. This recovery is a broad based economic explosion.

Contrary to the assertions of the Post editorial staff the middle class is rapidly expanding, salaries are growing at a 4% annual rate, the stock market is now close to the record levels of the tech stock boom inflation is (including the rises in gasoline costs) at an historically low 3%, interest rates remain at a low 5% range, and finally we have a net increase in high paying manufacturing jobs.

As they say, there are lies, damned lies, and then there is the Washinton Post.

Full Story: Post's Complete Ignorance of Economics

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