Paul Krugman wrote the original "Lucky Ducky" editorial which showed a very
different picture.
I don't think Krugman is biased; I think the Wall Street Journal is
protecting its own. Krugman is certainly in the same class but ...
Selma
----- Original Message -----
From: "Ray Evans Harrell" <[EMAIL PROTECTED]>
To: "futurework" <[EMAIL PROTECTED]>
Sent: Friday, December 06, 2002 12:01 AM
Subject: Luckie Duckie Article
>
>
> Here is the "Lucky Duckie" Wall Street Journal article. What do you
> think?
>
> REH
>
> America divided by Democrats: "The Non-Paying Class"
> Wall Street Journal ^ | Nov 20, 2002 | Editorial
>
>
> The stars look to be in perfect alignment for tax relief. With a GOP
> majority in both houses of Congress, the Bush Administration is making
eager
> and energetic noises, and the economy is in what Fed Chairman Greenspan
> calls a soft spot.
> But as the Republicans construct their tax plan, there is a large and
> under-appreciated fact they would do well to keep in mind. Over the past
> decade or so, fewer and fewer Americans have been paying income taxes and
> still fewer have been paying a significant percentage of income in taxes.
> While we would opt for a perfect world in which everybody paid far less in
> taxes, our increasingly two-tiered tax system is undermining the political
> consensus for cutting taxes at all.
> Even the barest of glances at tax data reveal a system that is steeply
> progressive. Tax revenue has been increasingly squeezed out of top
earners.
> According to the most recent data, from 1999, the richest -- with income
> above half a million dollars -- constituted 0.5% of taxpayers but
accounted
> for 28% of total tax revenue. Simply put, a tiny group of people (553,380)
> were responsible for more than one-quarter of the income tax take of $877
> billion.
> Well, maybe you're saying -- so what? They can afford it. Then take a look
> at those who aren't Richie Rich. The most recent data from the IRS, in
2000,
> show that the top 5% coughed up more than half of total tax revenue.
> Specifically, we are talking about folks with adjusted gross incomes of
> $128,336 and higher being responsible for 56% of the tax take. Eyebrows
> raised? There's more. The top 50% of taxpayers accounted for almost all
> income tax revenue -- 96% of the total take.
> These numbers are more arresting when compared with the situation 14 years
> earlier. In 1986, the top 1% paid 26% of revenue, the top 5% was
responsible
> for 42% and the top half contributed 93%. And what about the bottom half
of
> taxpayers? They accounted for 7% of the total in 1986 but only 4% in 2000.
> This skewed reality is the result of a growing number of absolutely legal
> escape hatches. Consider what happens to those in the lowest bracket. Say
a
> person earns $12,000. After subtracting the personal exemption, the
standard
> deduction and assuming no tax credits, then applying the 10% rate of the
> lowest bracket, the person ends up paying a little less than 4% of income
in
> taxes. It ain't peanuts, but not enough to get his or her blood boiling
with
> tax rage.
> Of course, lower-income workers are on the hook for the payroll tax -- but
a
> sizable group slip free from even that net tax liability via the
refundable
> earned income tax credit. ("Refundable" means that even if your net income
> tax liability is zero, the government still writes you a check.)
> These numbers represent only people who have a positive adjusted gross
> income. In 1999, there were 127 million tax filers, 94.5 million of whom
> showed an income tax liability. That is, 26% had no liability at all. The
> actual number of people filing without paying comes to 16 million (after
> subtracting those getting earned income tax credits and thus, presumably,
> still somewhat sensitive to tax rates). So almost 13% of all workers have
no
> tax liability and so are indifferent to income tax rates. And that doesn't
> include another 16.5 million who have some income but don't file at all.
> Who are these lucky duckies? They are the beneficiaries of tax policies
that
> have expanded the personal exemption and standard deduction and targeted
> certain voter groups by introducing a welter of tax credits for things
like
> child care and education. When these escape hatches are figured against
> income, the result is either a zero liability or a liability that
represents
> a tiny percentage of income. The 1986 tax reform, for example, with its
> giant increase in the personal exemption and standard deduction, took six
to
> seven million people off the tax rolls.
> This complicated system of progressivity and targeted rewards is creating
a
> nation of two different tax-paying classes: those who pay a lot and those
> who pay very little. And as fewer and fewer people are responsible for
> paying more and more of all taxes, the constituency for tax cutting, much
> less for tax reform, is eroding. Workers who pay little or no taxes can
> hardly be expected to care about tax relief for everybody else. They are
> also that much more detached from recognizing the costs of government.
> All of which suggests that the last thing the White House should do now is
> come up with more exemptions, deductions and credits that will shrink the
> tax-paying population even further.
>
