Thank you very much Mr. Chait.  It is very welcome to see your claim backed up with the facts.  We need more of that around here.

Facts?  We don't need no stinkin' facts.  Facts are for pointy-headed expert elitists.

Pssh. Facts can be twisted to say anything that's even remotely true.

Dr. Chait, you are the best diagnostician of the faux populism of the right. We need counternarratives as effective as theirs. That is a tall order, though. Any ideas on how to go about this?

Oh, "duh" (a George W. favorite saying) - so why should this be a surprise to anyone?  Billary has no clue about the 'lower class', and really doesn't care a bit about them as long as they listen to the BS and vote for her.

I thought your front page article was quite excellent; though I was not worried about the tax thing because you always seem to have solid references to back your stuff.

A perfect counter-narrative would be some audio of Hillary expressing her "true" feelings about the "working-class" people; I know it smacks of character assassination, but if you can prove her disingenuity then its her own fault for not retracting her previous stance before switching positions.

Forget Hillary.  She's a sideshow now, left to wander about in her political hallucination while the party and the world are moving on.

At this point, the Times is reporting that Obama has surpassed her in super-delegate commitments.  My calculation is that he needs at most 78 out of 258 uncommitted supers and that number could easily be 60.  Supers previously committed to Hillary are flipping to get on the right side of history.

Even I don't have the heart to kick Hillary any more, although I will certainly work to defeat her in 2012.

Maybe I'm misreading that, but it l looks like the top 20% of tax-payers pay 66% of taxes collected, and the rest of us only pay 34% of taxes collected.  I guess the argument is that our share of the burden, although still the lowest of all brackets, went up by a whopping 1%, a jump that raced us all the way up to the lowest of the brackets.

Huh.

Chait is quoting his facts from a table published in a WaPo article, not checking them from official government sources the way I did.  

He convieniently cherry-picked a single year (2001) when high incomes went into the tank from the dot-com collapse as his baseline, and compared to a more typical year (2004).  Even so, the actual data don't back up Chait's original  contention.  

Here's the official data from the IRS (who know a whole lot better than some low-level WaPo reporter):  

Percentage of total income tax share paid by year and income groups:  

Bottom 90% of income earners:

2001 35.1%, 2002 34.3%, 2003, 34.2%, 2004 31.8%, 2005 29.7%.

Bottom 75% of income earners:

2001 17.1% 2002 16.1%, 2003 16.1%, 2004 15.1%, 2005 14.0%.

Bottom 50% of income earners:  

2001 4.0%, 2002 3.5%, 2003 3.5%, 2004 3.3%, 2005 3.1%.  

In contrast, for the top 10% who Chait alleges got the big-break from the tax cuts:

2001 64.9%, 2002 65.7%, 2003 65.8%, 2004 68.2%, and 2005 70.3%.  

All of which clearly show that despite the "tax cuts for the rich," the overall share of

income tax paid has only gone up for one group: the top 10% of earners.  It has steadily declined for those in the bottom 50%, the 50 - 75%, and the 75 - 90% (which pretty much covers the poor, the middle-middle class, and the upper-middle class.  

John, you really ought to get better sources.  You are highly literate, but your WaPo source was apparently innumerate.  Quoting a WaPo staff writer as an authority on taxes is kind of like quoting a medical beat reporter as an authority on cancer treatment.  I'd go to the IRS for an expert opinion in the first case, or an oncologist for the second situation, but a journalist?  Not!  

phargle, you are correct.  Chait's data source lumped two groups into the highest quintile:  the top 10% or earners (upper class, or filthy rich in my book), and those in the 80 - 90th percentile range (upper middle class).

The total tax burden share went up for those in the top 10%, but because the tax burden on the middle class went down, combining the two (the sneaky part here) made it look like the top earners caught a break (the 0.9% decline Chait is making so much of here).  

What Chait's data source actually confirms is that it was the middle class that got the benefit, and the WaPo dude had to lump the upper middle class in with the filthy rich in order to smear the Bush tax cuts.  Some source!  

Who knows:  maybe the reporter was innumerate.  Chait may be as well.  

rocdoc, where did you get your numbers? went spelunking on CBO website but don't see anything.

GSpinks, I'd be glad to.  The IRS web address is:

www.irs.gov/.../0,,id=133521,00.html  

Scroll down about 2/3 of the way looking for the section called "Individual Income Tax Returns with Positive Adjusted Gross Income (AGI)"

Click on the highlighted  section in "SOI Bulletin article - Individual Income Tax Rates and Tax Shares, Table 5  Tax Years: 1986 - 2005"  

The site will ask you to download an excel file which is called "05in05tr."  

Download it, open it, and start reading.  It's all right there.  

Here's a rather glaring inconsistency between Chait's "source" (The WaPo article) and the official IRS data:  The WaPo table indicates that the top 20% of earners paid 64.4% of the tax in 2001.  

But the IRS data clearly shows that the top 10% paid 64.89% of the total tax that year.  The IRS tables also show that the 75-90th percentile earners paid 18.01% of the total tax.

Yet if we are to believe Chait's source, then somehow the folks in the 80-90th percentile of earnings actually paid no taxes at all.  OOOOOkaaaaaaaay....

roidubouloi, Chait's data source is obviously either incorrect or made up; it doesn't jibe with official IRS figures.  

Mr. Chait, do you have a credible reference to support your claims?  Or is a staff reporter for the WaPo the best you can come up with?  

Once again: Everyone is allowed his own opinion, but no one is allowed to make up his own facts.  

There's also a couple of alternative evaluations, including one by the Center on Budget and Policy Priorities, which makes interesting reading:

www.cbpp.org/8-25-04tax.htm

I leave it to others to accept or to challenge the CBPP numbers (not my field).  However, the tables are understandable, and the arguments seem sound.  The conclusion says:

"In the long run, the tax cuts will likely do harm.  The federal government is on an unsustainable fiscal course.  Deficits may not be significantly harming the nation now because the economy has not yet fully recovered from the recent recession.  But large deficits extend as far as the eye can see.  In a comprehensive new study of the effects of budget deficits on the economy, William Gale and Peter Orszag of the Brookings Institution confirm that these deficits will reduce national saving and impede economic growth.  And, as noted, the tax cuts — if they are extended — significantly contribute to the harmful government borrowing.  Gale and Orszag conclude, “...making the 2001 and 2003 tax cuts permanent would raise the cost of capital for new investment, and reduce long-term investment and economic growth.”[13]  Thus, over the long-term, the tax cuts are likely to reduce national income, leaving both the economy and the government even less-prepared to pay for the approaching retirement of the baby boomers."

Makes sense to me, and appears not to have been contradicted by the events of more recent years.

irony, from what I've seen about the CBPP, they seem like a pretty stand-up kind of organization for an independent  think tank receiving funding from undisclosed sources.    

But the reference you cited soesn't dispute the facts that I presented to Chait; instead, it points out (quite intelligently) that running chronic federal deficts is stupid and detrimental to the entire country.  Given that stupidity, either increasing spending or cutting taxes is bad.  I agree.  

But it provides no support for Chait's claim that the Bush tax cuts increased the share of taxes paid by the poor and middle class, and reduced the share paid by the filthy rich.  

I want Chait to show me the money!  

dlrocdoc,

I have wasted my morning with the figures from the Treasury website only to conclude that this is not a simple problem at all.  There are many effects going on at the same time that one would have to adjust for the get a clear reading on the impact of the tax cuts on net income distribution.  For example, the share of national income garnered by the wealthiest, on both a gross and net basis, rose considerably between 2000 and 2005.  If you are looking at tax shares without adjustment, this offsets the rate bonus although, net, the wealthy are better off both because of their growth in income share and the tax rate cut.  There are issues of real income growth versus tax brackets.  Careful thought must also be given to what should be though about as a rate and what she be considered in absolute terms.

There is also this:

If three groups pay 10%, 20% and 30% of income in taxes and all rates are cut by 10%, the lowest group receives a benefit of 1% of income and the highest group a benefit of 3% of income.  Yet, the shares of the total tax burden are the same.

If the 10% cut in all rates produces a large budget deficit, the jackpot question is, who bears that burden?  If the same people who got the rate cuts are just going to repay the debt proportionately, then the whole exercise was really about nothing.  They temporarily received a loan from the government.  Then they paid it back.  Unless a higher rate of growth results (highly dubious in this case, the excess liquidity amongst the wealthy in comparison to the smaller benefit to consumption was not likely to lead to investment but to a bidding up of existing asset classes and the formation of speculative bubbles which is exactly what has happened), the tax cuts would be meaningless.

Of course, no one expects the people who got the cuts to pay back the debt.  Rather, it is widely anticipated that that burden will fall in a much less progressive manner than the income tax rate structure.  Accordingly, the Bush cuts were for the purpose and have had and will have the effect of shifting income from the less rich to the more rich.  I am pretty sure that the data support that conclusion, but it would require more time than I have at the moment to do that in a manner that would be sound.

All this focus on the income tax is highly misleading. About four out of five working people pay more in payroll taxes and/or self-employment taxes than in income taxes. As we know, the monies for both these taxes are commingled in the collection process, with no wall of separation afterwards. Social Security funds have been routinely raided to cover deficits in general revenues.

You are absolutely correct nbarry that, taken together, we have a regressive system.  Payroll taxes are regressive and there are countless means in the tax code for the wealthy to shelter income the effects of which are invisible when adjusted gross income is totted up.  But we weren't talking about overall tax policy.

Nbarry and roidubouloi: I have flogged this horse for years. The payroll tax is highly regressive. The cons always natter on about how much of total income tax the upper orders pay, so this datum bears repeating ad infinitum.

I think it would be useful to step back a little. It does not matter what portion of the overall tax burden is caried by wealthy people. What matters is that there overall tax burden of high earners should be a higher percentage of their income then the overall tax burden of low earners. This should be the case for several reasons. They have a greater ability to pay, they benefit more from the services government provides and because social mobility would imply that many people would pay less taxes earlier in their lives when their incomes were lower and more later in their lives when their incomes were higher. Also this discussion unfortunately isn't focused enough on the question of wealth. The Bush tax cuts eliminate the Estate tax which could result in a much less meritocratic society. Also Capital Gains and dividends should be counted as income, because that is what they are.

I should also point out that the self-employed are double-taxed when they prepare their returns, so that it is no secret that they tend to shave their gross business income and pad their expenses to ease their burden, which in turn distorts their income tax adjusted gross income.  Furthermore, the threshhold for taxing self-employment income has been $400 for around 60 years with no adjustment for inflation during all that time and none likely to ever come from Congress until people speak up.

CraigMcGil and nbarry,

I agree.  This discussion just started out in a somewhat different place.  

Since I had downloaded those charts from the IRS, I started to figure out what we could have as a two bracket system that would raise the revenues we had before the Bush tax cuts.  We could have have a zero bracket up to $100,000 and a 39% rate after that if we taxed adjusted gross income instead of allowing all sorts of deductions.  And boy would that be simple. If we went back to taxing capital gains at the same rate as ordinary income, as we should, the tax rate could be even lower.  If we created a unified system similar to S corporations for all businesses, the tax rate could be even lower.  Our present system is nuts.  With a third bracket or 10% surcharge about $1 million we could get the rate down to less than 35% for those paying tax.  75% of the country wouldn't pay income taxes at all.  Under such a system,, everyone making under $100,000 would pay zero, those between $100,000 and $1 million would be paying pretty close to the effective rate they do now, ranging from about 18% to 27%, and those over $1 million would be paying an effective rate of 40% instead of the 26% they pay now.

If we substituted carbon taxes for payroll taxes, we could have a really great, simple, fair system.  Our present system is nuts.

Roidubouloi: Really nice post. The only problem is that this is Enlightenment rationalism when it comes to the implementation department. This scheme would never - and I do mean never - make it past the first legislative post in this country.

Absolutely liberal.  Someone has to think up an incremental scheme that will ultimately get there.  Bradley made a good beginning, but it was undone.

Liberal,

It is sometimes also important to keep in sight where you want to be even if you cannot get there.  That way you can be alert to opportunities to move in the right direction.

Roidubouloi: Absolutely,  I know that sometimes I sound like the metaphorical equivalent of a hectoring schoolmarm. But I am a dreamer at heart, which is why I constantly need to keep myself grounded. At this late date, I am still occasionaly known to say "ask for the impossible, you just might get it".

dlrocdoc - I posted something on this on the original thread but the comments there seem to have stopped at 128 so apologies if they show up there later on.

I think what is being confused here is "percentage of tax revenues" being paid by the various income percentiles and "percentage of money an individual in a percentile forks over to Uncle Sam".  Talking about the rich "shouldering" "more" of the tax burden in a deficit spending economy (i.e. there appears to be little correlation between setting tax rates, estimating revenues and deciding spending priorities) is somewhat meaningless.  I'll agree that Chait appears to be using the data from the former to support a position on the latter however.

What the IRS data that you are quoting shows is that the taxable incoming (and hence tax paid) of the very richest Americans has increased substantially since the Bush tax cuts were introduced.  Contrary to one of your assertions on the original thread, Chair was not specifically referring to "income" tax breaks - he was referring to the "Bush tax cuts" which include cuts to investment and estate taxes, which disproportionally benefit the wealthiest Americans.  

As the higher earners have become (markedly) richer, their total share of the taxes paid obviously has increased.  The corollary of this is that the tax revenues paid by everyone else have not increased in step or even proportionally.  You can argue that this is a good thing; by making the already rich that much richer you increase revenues.  However given that those who trade labour instead of capital for income would appear to have been greatly left behind in terms of increased wealth I'd disagree.  The actual percentage of income they pay as taxes has at best, modestly moved down.  For those earning much more (and from other sources), the *percentage* of their income taxed has dropped dramatically.  So relatively, yes, the middle & working classes are worse off when compared to the breaks afforded the rich.

Nari224 , "investment and estate taxes" are paid to the IRS in the form of income taxes.  So the  "Bush Breaks" on investment income and estate tax income are included in the IRS figures I provided.  

The dataflies I provided can be used to calculate the proportion of taxes paid relative to total income by earner group.  I'll have a look at it---you may be right, might be wrong.  But my gut feeling is that income didn't go down disproportionaly for the middle class and poor during the 2001-2004/5 time frame Chait selected for his slam .  And he was certainly wrong in his contention (I'm quoting him here) that "the Bush tax cuts caused the middle class to pay a higher share of the federal tax burden."  They simply did not.  His claim is demonstrably false.  

Nari224, I ran the numbers from the IRS data, and here are the results.  

The effective tax rate for the top 10% of earners declined by 12.0% (from 21.4% to 18.8%) as a result of the Bush tax cuts.  But the similar decline in the effective tax rate for those in the 75-90% of earners was 20.0%, and for those in the the 50-75% of earners, the decline was 22.2%.  For the bottom 50% of AGI earners, the decline was 27.2%.  So, from a proportional standpoint, the low (low being the bottom 90%) of  income taxpayers got a proportionately greater benefit from the Bush tax cuts than did the top 10% of earners.

But when we get into which group earned how much money, paid how much in taxes, and then evaluate how did the rate of AGI increase relate to the tax paid increase, and how fast did the tax rate increase change versus the AGI rate increase, we're getting into first and second and third order deriviatives here, and I suspect that most TNR readers never passed Calculus (although it's quite comparable to differential equations looking at position versus time, velocity, acceleration, jerk, etc).

So let me simply point out some basis facts:  Between 2001 and 2005, every AGI income group in this country saw their total AGI increase.  However, during the same time, only one group paid more tax to the feds in 2005 compared to 2001.  

The group that paid more in 2005 than in 2001 ($80.9B) was  the top 10% of earners.  

The 75-90% of earners actually paid less tax in 2005 than in 2001 by $13.2B, even though their AGI increased by $202B.  (These guys----the Upper Middle Class-----appear to be the big winners!)  

Same for the the 50-75% earners; $14.3B less in taxes paid, but $167B more in AGI.  (These guys----the Middle Middle Class----won almost as big!)

And the bottom 50%, they paid a total of $6.5B less in 2005 than in 2001, even though their AGI went up by $101.3B over the same period (These guys didn't make out as well as the middle class, but they still did better than the filthy rich from a tax standpoint).  

So everybody in the BOTTOM 90% of earners paid less in taxes in 2005 compared to 2001, despite their overall income going up a lot. Their effective tax rates decreased, and the magnitude of their tax decrease relative to the increase in their AGI was better than for the top 10% of earners.  

Overall, the poor paid less money overall, made more money overall, and got to keep a higher percentage of their earnings in 2005 compared to 2001.  And proportionately, they did a lot better than did the top 10% of earners (who ended up paying a far higher percentage of the total tax burden than they did in 2001 with Clinton's tax code).  

And Chait thinks this was a bad thing?  

dlrocdoc - First up, I agree that the Bush tax cuts have increased the proportion of AGI assessed taxes paid by the Rich.  However, Chait's original point was the overall "tax burden" rather than the AGI tax (I went and re-read the article just to check :).  As you've agreed above, payroll and FICA taxes are regressive and are either not paid by the very rich or constitute a progressively smaller percentage of someone's income once they make above the FICA cap.

Regarding the overall incomes going up for everyone - I might be missing something but looking at the AGI tables in current dollars, the 25-50% group saw an income increase of around 12% between 01 and 05, and the 50-100% a similarly modest increase of 11.7%.  Lets assume inflation was a flat 2% for those 5 years (it wasn't, it was higher for all years except 02) and we're looking at 10.4% inflation.  So These people's incomes basically kept in step with inflation.  Looking at the other end of the table, the top 1% saw a 24% jump in income and the top 5% a 21% over the same period.  

So yes everyone made more money, but the rich made a lot more than others.  And those richer Americans some probably made money from sources that don't proportionally show up in the tax burden percentages because either it wasn't taxed (estate tax exclusions rose dramatically) or was taxed at a much lower percentage (long term capital gains is now 8%, dividends at 15%).  While it's wonderful that dividends will be tax free for those in the 15% bracket, they're probably more likely to buy clothes and food than dividend stocks than those, say, in the upper brackets.

So the argument returns to one of fairness.  Yes the rich are now paying a greater percentage of the income tax breakdown than before.  However individually they are paying less tax as a percentage of income as they are able to exploit these changes in the tax codes that a "normal" working family just simply cannot access.  You might argue that it's raising revenues so this is a good thing.  However it is also clearly creating great wealth disparity which may not be such a good thing.  It's also not clear that there is a strong correlation between tax policy and changes in tax revenue (enter in the frothers here).  When Clinton raised taxes, revenues went up.  When Reagan raised taxes, revenues went up.  When Bush cut taxes revenues went up.  Perhaps they didn't go up as much as they would have!  

It's worth remembering that the period of probably the most robust economic growth in American history was accompanied by incredibly high top marginal tax rates.  They apparently didn't hurt too much then.  I do get what you are saying that the Bush tax cuts appear to have raised revenues at the expense of the rich, or have shifted the tax burden to the rich.  However, IMHO, the AGI tables alone do not tell the whole tax burden story.

Nari224, I agree that AGI and income tax doesn't tell the whole story.  However, AGI and the federal income tax burden were the sources Chait used to make his claim; he didn't mention FICA (which is regressive) or the Medicare tax (which is as flat as can be), etc.  All I'm doing is pointing out that his assertion was false based on the facts he quoted.  

Incidentally, you stated "When Reagan raised taxes, revenues went up."  It's true that revenue under Reagan did go up, but he CUT taxes, he didn't raise them.  Just like JFK.  

dlrocdoc - this is what I'm reading in Chait's article:

"George W. Bush offered tax cuts to the middle class, but paired them with far larger tax cuts for the rich, so that, ultimately, the middle class bore a larger proportion of the tax burden"

I'm honestly not seeing him specify income taxes, but I can see how it might be interpreted that way.  

However Reagan did raise taxes, both frequently and in a startlingly progressive fashion:

80-81 Large cuts to the marginal rates

82      Deficit balloons and recession deepens, Republicans hammered in mid-terms, most likely due to plans to cripple Social Security.  Increases payroll taxes, starts taxing payroll of federal employees, taxes SS benefits for upper earners.  Increases marginal rates, effectively undoing 1/3 of cuts from previous years.

83    Raises gas taxes in face of again ballooning deficit

85    Something like $50 billion in tax rises (albeit mostly through closing loopholes)

86    Income tax rates are lowered, but also enacts largest increased in corporate tax rates in history although standard and personal deductions are expanded