Hoist on His Own Petard

Offering further proof that he is a walking, talking left wing trope, Eric Luedtke cites the Wall Street Journal in his pedestrian analysis of the latest IRS income and tax data:

From that bastion of liberalism, the Wall Street Journal:

In a new sign of increasing inequality in the U.S., the richest 1% of Americans in 2006 garnered the highest share of the nation’s adjusted gross income for two decades, and possibly the highest since 1929, according to Internal Revenue Service data.Meanwhile, the average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years. The group’s share of the tax burden has risen, though not as quickly as its share of income.

Gives some credence to the argument behind the millionaire’s tax. Unfortunately, that tax sunsets in 2010, in the midst of an election year. So two years from now we could see another fight over whether the fabulously rich can afford high taxes, or whether we should cut services for the rest of us instead.

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Luedtke glosses over the very salient fact that this stratum’s tax burden has increased along with their income. In fact, if you bother to look at the data, the tax burden of the top 1% in earners is almost double their share of income. Furthermore, as a separate WSJ editorial notes, The top 10% in income, those earning more than $108,904, paid 71%” of all income taxes.

Look at the chart and you will see who pays their fair share of the taxes in this country

The editorial also notes that Luedtke’s favored presidential candidate, “He who must not be criticized,” wants to raise the tax rate on the top half of earners. And, even more puzzling, is how he seems to want to increase the tax burden on all levels of the income ladder, especially the lower end.

The facts belie much of Luedtke’s tired and false argument.

My family happens to fall within that top 10%. Both my wife and I work, and contrary to Luedtke’s delusions we are not “fabulously rich”, we live in a modest city row house, do not spend extravagantly; we save for retirement, and for college tuition for two children. We feel the pain at the pump and the added costs on our food and energy bills. We manage by cutting back and spending within our means, would that our state government could do the same.

I know, I’m so bourgeoisie. However, my political proclivities don’t mesh with radical bohemians of Hampden or whatever politically chic trend is en vogue among the bobos of Roland Park.

Anyway, for folks like Luedtke their solution is to tax, tax, and tax some more, adding more burdens on to working families like mine. Apparently, middle class folks—like my family—paying the lion’s share of the tax burden is not progressive enough for him.

What Luedtke fails to understand is that, as Stephen Moore has shown, lower tax rates means “progressivity—in terms of total taxes paid—has risen.” That is, lower taxes stimulate economic growth and hence overall increase tax receipts.

Conversely, when you raise tax rates, you hinder growth and as the WSJ editorial states:

The last time tax rates were as high as the Senator [Obama] wants them –the Carter years — the rich paid only 19% of all income taxes, half of the 40% share they pay today. Why? Because they either worked less, earned less, or they found ways to shelter income from taxes so it was never reported to the IRS as income.

The beautiful irony here is that in favoring higher taxes on the “fabulously rich,” Luedtke is actually supporting less progressivity in actual taxes paid by the “fabulously rich.”

The common progressive response to this is that tax cuts are government handouts to the rich. Of course, this is complete nonsense. I have cited Rick Moran’s smack down of Ezra Klein in previous posts, however it is so instructive of the major difference between conservatives and progressives about the role of government that it bears repeating here:

I’m glad it would never occur to you Ezra because trying to compare a tax cut to an entitlement program is the most stupefyingly idiotic analogy I have ever seen a lefty make. It’s not even worthy of Oliver Willis. It’s not even comparing apples to oranges – more like peaches to elephants.

But Klein’s analogy is instructive. Not of leftist stupidity although you’d be hardpressed to find a more doltish example of liberal witlessness. Rather, it points up very nicely the difference between a liberal and conservative on the reason and function of government.

Klein has no trouble equating a tax cut with an entitlement program because he sees the tax cut as a gift from government. It is government as daddy giving us a boost in our allowance. More prosaically, it is, like SCHIP, just another responsibility of government – in this case, by “giving money back to the people,” consumerism is encouraged.

But tax cuts have nothing to do with government and everything to do with personal property. That money is the taxpayer’s. It is already in his pocket. A tax cut is nothing more than a law preventing the government from reaching into the taxpayer’s pocket and taking away his property. It is not a gift or a favor or even a responsibility of government. A tax cut has everything to do with expanding personal liberty and nothing whatsoever to do with government being nice to taxpayers.

This simple, basic, liberty loving concept has been forgotten by liberals like Klein who see tax cuts as part of a government “plan” for the economy hence, monies that the government will forgo collecting in order to modify or encourage some kind of economic activity. In short, the money “given back” to taxpayers is really the government’s money to begin with, theirs to do with as they see fit.

To not see how that concept turns the idea of freedom on its head reveals a moral blindness that makes it easy to posit that all property is subject to government approval and control. It justifies eminent domain and host of other egregious threats to human liberty that used to be a concern of liberals but is now seen as an impediment to government management of most every facet of people’s lives.

Emphasis mine

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