May 07, 2006

Ben Stein in NYT: "You're Rich? Terrific. Now Pay Up."

Economist Ben Stein is not usually known for his progressive flights of fancy. But in today's New York Times, he uncorks this diagnosis of what ails American society:

The real problem is the difference between the rich...and the poor. It is up to the government to redress this extraordinary difference in incomes of the rich and the nonrich, even at the margins.

Stein thinks that at least in some cases, we need to fix both extremes of the rich-poor divide:

What Congress can do, and should do, is address the stunning underpayment of military men and women and the staggering budget deficits that will be a burdenon our posterity for decades, by raising the taxes on the rich.
There's nothing particular new about this argument--the causal linkage between the Bush tax cuts and our ongoing ability to fund public services is not exactly rocket science at this point--but it's absolutely novel, and great, to hear it from a public persona with no particular ax to grind. Stein's diagnosis of the problem couldn't be clearer:

It's fine that there are rich people. It's even fine that there are superrich people. But if they are superrich, they derive special benefits from life in the United States that the nonrich don't...It is just common decency that they should pay much higher income taxes than they do. Taxes for the rich are lower than they have been since at least World War II — that is to say, in 60 years. This makes no sense in a world at war, in a nation with so many unmet social needs, in a nation with so many people without health care, in a nation running immense and endless deficits... Whatever rationale there may have been in 2001 for lowering their taxes is long gone. It's time for them — us, because it includes me — to pay their (our) share.
Stein doesn't provide much in the way of numbers to back up this assertion (and shouldn't be expected to, given his limited word count)-- but the numbers don't lie:

1) According to a 2004 CTJ analysis, the wealthiest 1 percent of Americans paid (on average) just under one-third of their incomes in combined federal, state and local taxes.) The average income in this group was just under $1 million.
2) The 20% of Americans smack-dab in the middle of the income distribution paid...almost as much as these wealthiest guys. 27 percent of their income in federal, state and local taxes. Average income in this group was $34,500.
Put these two things together and you've got a tax system that is, at best, modestly progressive--hardly the confiscatory system you'd expect from the anti-tax rhetoric being slung around by Congress and the President.

And when you've got a distribution of income as unequal as ours, the difference between "modestly progressive" and "pleasantly progressive" can cost a lot of money. The wealthiest 10 percent of Americans have as much income as the poorest 80 percent put together-- in such an unequal society, a progressive tax system is the only way to adequately fund services. Requiring low- and middle-income Americans to pay almost as much of their income in taxes just isn't a smart idea from a revenue-raising perspective-- you can't squeeze blood from a stone.

Stein's column is the latest indicator of a growing consensus that the tax system lets the wealthiest Americans off too easy. The more we hear this argument coming from sensible centrists, the more likely it becomes that our elected officials will grow a spine and come to terms with our growing budget deficits. Thanks, Ben!


At 9:27 PM, Anonymous Anonymous said...

It makes me sick to hear rationalizations of why you deserve other people's money.

If you need money, go make it your damn self, what right do you have to make other people give theirs to you.

The reason those making a lot of income don't pay more of their money to the govt is they are counting things like moving around personal stocks as income, on which capital gains charges apply.

Additionally a lot of wealthy people buy tax-free government bonds - these pay at a lower rate than normal bonds, so the government still gets money, just in an uncounted way.

The US abounds with opportunity, and instead of throwing stones at the fortunate, people should just focus on bettering themselves, something that is possible in the US.

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