Conservatives have a new idea: Raise taxes!
The argument was laid out Nov. 20 in a Wall Street Journal editorial headlined, "The Non-Taxpaying Class." A lot of people missed this epochal document because it wasn't posted on the Journal editpage's free Web site and because readers of the print edition were distracted that day by Robert Bartley's lengthy tribute to himself on the occasion of his imminent retirement. That the Journal would wage class warfare in an attempt to fatten the treasury shows just how much its editpage has changed since Bartley turned over the reins last year to Paul Gigot.
Or maybe not. On close inspection, this class that the Journal frets is not paying its fair share in taxes isn't the rich. It's the poor. When the poor don't pay sufficient taxes, the difference must be made up by the rich. As of 1999, according to the Journal, Americans whose income put them in the top 1 percent paid 28 percent of all income-tax revenue. By contrast, in 1986, the top 1 percent had paid only 26 percent. That the income tax is 2 percent more progressive than it was 16 years ago would not be deemed news on any other editorial page. To the Journal, it's a crisis.
The editorial's indignation is richly comic. By the sixth paragraph, Gigot and Co. are fulminating that a person earning $12,000 pays a mere 4 percent of his income in federal income tax. (It's doubtful there's a single full-time employee on the Wall Street Journal's payroll whose salary is this low.) Why does the Journal want to whittle down this group's disposable income? Not out of sadism, it turns out, but rather because it wants these people to vote Republican. (Who says the GOP doesn't reach out to low-income communities?) The Journal wants poor folks to hate their government, and that can only happen if they're overtaxed. No pain, no electoral gain.
To a person earning $12,000, the Journal argues, paying 4 percent in federal income tax is not
enough to get his or her blood boiling with tax rage. … [A]s 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.
Even if you accept this analysis as legitimate, the right should calm down. By looking at the income tax in isolation, the Journal overstates the status quo. It's true that in general federal taxes became slightly more progressive during the Clinton administration, to a great extent because the Earned Income Tax Credit lowered taxes on the working poor. But when you factor in other federal taxes—corporate taxes, excise taxes, and the ludicrously regressive payroll tax—the rich are hardly getting soaked. Robert McIntyre, director of the nonprofit, union-funded Citizens for Tax Justice, estimates that in 2001, the top 1 percent earned 19 percent of the nation's income and paid 26 percent of the nation's federal taxes. (The Bush tax cuts will drop the latter to 24 percent.) Everyone else earned 81 percent of the nation's income and paid 74 percent of the nation's federal taxes. "The rich are paying an amount roughly comparable to their share of their income if you do it right," McIntryre told Chatterbox. "That's not exactly socialism."
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