How liberals mislead about the tax history of the past 30 years
President Obama’s (latest) soak-the-rich plan is bringing out the worst in his fellow liberals. If you want to understand exactly what’s wrong with their mindset on taxes, and why it is irreconcilable to reality, you must read Michael Tomasky’s column in the Daily Beast today.
Not because Tomasky points out the deficiencies. On the contrary, he recites nearly every one of them with gusto.
To begin, Tomasky states that taxes — not spending, not debt, nor cultural politics, nor anything else — have been “the biggest problem in our politics for the last 30 years.” By “biggest problem,” he apparently means what follows:
The anti-tax revolt that started in 1978 in California (Proposition 13) has destroyed this country. Our taxophobia has made the rich vastly richer and reduced the amount of money for the public benefits the rest of us depend on, and a hundred other horrible things besides.
One can hardly argue against “a hundred other horrible things” that Tomasky hasn’t specified, but there’s plenty to discuss about what’s wrong with the rest of that second sentence.
Part 1: “Our taxophobia has made the rich vastly richer…”: Really? The top marginal tax rate in the Internal Revenue Code is what’s made the rich “vastly richer”? Not such economic trends as the shift toward an information-based services economy, or the ever more rapid rise of global manufacturing competition, or the change in the way corporate boards have awarded executive compensation? Or any of the things Tomasky means, several paragraphs later, when he acknowledges, “A hundred factors affect economic performance”?
Certainly, lower tax rates have allowed higher earners to keep more of what they earn, which has compounding effects on wealth, but the tax code does not explain why those higher earners are earning more than did the higher earners of earlier generations. Which is where the “problem” Tomasky identifies really begins. If you agree that this is a problem, the tax code is not the place to “fix” it.
Part 2: “…and reduced the amount of money for the public benefits the rest of us depend on…”: I didn’t realize columnists at the Daily Beast were on welfare — and with “the rest of us,” Tomasky is necessarily excluding those public functions (e.g., the military) that benefit everyone regardless of income. But that’s a side point. Have lower tax rates really “reduced the amount of money” sent to the government?
From 1944 (the first year federal revenues exceeded even 14 percent of GDP) through that year Tomasky so rues, 1978, federal revenues averaged 17.6 percent of GDP.
From 1979 through 2010, the last complete fiscal year, federal revenues averaged 18 percent of GDP.
Hmmm. That can’t be correct. We all “know” that Republicans since Reagan have been starving the beast. The post-1979 data must be skewed by the Clinton years, right?
Well, federal revenues certainly flourished under Bill Clinton, averaging 19 percent of GDP. But even if we exclude 1993-2000, federal revenues since 1979 have still averaged 17.7 percent of GDP — that is, just a tad more than they averaged before 1979.
OK, Wingfield. But we all “know” that George W. Bush completely obliterated the federal fisc with his ruinous tax cuts.
Not really. Federal revenues from 2001 to 2008 averaged 17.6 percent of GDP. Exactly what they averaged before that dread year of 1978.
It turns out that the Clinton years were an anomaly in modern tax history. Do Tomasky and his fellow travelers truly believe that those eight years were the only ones in which America wasn’t being “destroyed”?
***
So, the premise of Tomasky’s piece is demonstrably wrong. But that doesn’t stop him from making another crucial error.
Presumably, he writes, President Obama’s plan “will include taxing capital gains and carried interest at the same rate (for millionaires only, that is, not for middle-income Wall Street dice-rollers) as regular income.” Presumably, he’s right about that.
Yet, a bit later, he suggests that Rep. Paul Ryan is “stupid, a liar, or something even more malevolent, a morally diseased ogre who secretly believes with his delirious mentor [Ayn Rand] that the rich deserve every handout government can offer them” for saying Obama is engaging in class warfare and claiming these tax increases won’t work economically. Set aside for now Tomasky’s repugnant rhetoric — it hardly qualifies as an argument — that anyone who disagrees with Obama’s position on taxes must lack intelligence, honesty or morals. He unintentionally undermines his own claims — and the argument for raising capital gains tax rates — here:
Under what recent president was the economy strongest? Bill Clinton. Under what recent president were tax rates the highest? Bill Clinton. I don’t claim direct cause and effect. A hundred factors affect economic performance. But I certainly and emphatically claim that recent history disproves Ryan’s [claim that tax increases don't work] to such an extent that he can’t possibly be taken seriously.
If Tomasky won’t claim direct cause and effect, it’s not out of modesty. It’s because it’s not true.
Under which years of the Clinton presidency was the economy strongest? I don’t think anyone would dispute that it was the years 1997 through 2000, when real GDP growth surpassed 4 percent every year. But which part of tax policy changed during this second term of Clinton’s? Not the individual income tax rate; that increase came in 1993. No, it was the tax rate on capital gains, which actually fell in 1997. Tax receipts and the economy soared.
Now, they soared because of the tech bubble, which produced the growth and stock earnings that were taxed in such large numbers. Like Tomasky, I’m not claiming direct cause and effect. But unlike him, I know it defies logic and the facts to claim that the Clinton years prove higher taxes on capital gains won’t hurt the economy.
I’ll leave Tomasky to his opinions as to whether all of this will make for good politics. But, if the American public understands what really happened during the past 30 years, he’ll be wrong about that, too.
– By Kyle Wingfield
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
200 comments Add your comment
fitzgerald
September 20th, 2011
11:27 am
Not everyone is paying their fair share of taxes. I receive social security and pay taxes on it after paying taxes on it for many years when I worked. If all need to share, tax those that are receiving welfare checks as well as those making a million dollars. Pick a tax percentage, such at 15 percent, and go with it.
Kyle Wingfield
September 20th, 2011
11:28 am
Joe @ 11:24: Yep, lots of reporters are tearing into the Buffett’s secretary canard. The AP is one of the latest: http://www.google.com/hostednews/ap/article/ALeqM5iP3lhS4ZQ-UhyUvFfUgdPCiu-jJA?docId=47a565563a294b2bad96544a7f0ddc1b
carlosgvv: And “fair share” is “fact-based”? What I said was fact-based was my argument that tax revenues as a share of the economy have remained consistent even after “taxophobia” began, despite Michael Tomasky’s protests. Given that the rich are bearing a larger share of the tax burden than before, I don’t see how you can factually claim they’re not paying their fair share. You can only claim that they should pay more because you want them to do so.
Kyle Wingfield
September 20th, 2011
11:29 am
Kamchak: You don’t believe the recession that began in March 2001 resulted from the bursting of the tech bubble?
joe
September 20th, 2011
11:33 am
Liberals are misled about a lot of things…for example, take Greece’s economic/entitlement/pension/union problems. Liberals think that if we continue on the path we are on now, somehow Greece’s plight won’t take hold here. Hello, McFly!! Wake up people…
MarkV
September 20th, 2011
11:34 am
Kyle,
The evidence that the rich do not pay the fair share is that their after-tax income has been growing at a faster rate than that of the middle class.
HDB
September 20th, 2011
11:35 am
Kyle Wingfield
September 20th, 2011
11:29 am
Being a part of the tech bubble in 2001, it actually didn’t burst until September 15, 2001! Over 5M techies were laid off by Corporate America immediately after 9/11…and the IT market remained flooded for over 2 years with professionals who couldn’t work! (I was one of them!)
Laurie
September 20th, 2011
11:36 am
I’ll give you part 1 Kyle. It’s not tax breaks that have made our upper class richer. It’s corporate and special interest group lobbiests, who have funneled money to corrupt politicans to pass legislation in their favor, that have ulitimately led to the demise of our middle class, and in the process, done a real number on their own tax base. go figure.
HDB
September 20th, 2011
11:40 am
joe
September 20th, 2011
11:33 am
If you are willing to note the obvious: Greece has little manufacturing structure, thereby a broadening tax base couldn’t occur. Because of the decline of the tax base, the austerity measures are having an adverse effect. Look at the US – Corporate America has offshored our manufacturing base….thereby a reduction on the tax base has occurred. If we DON’T revamp our manufacturing capability, THEN would the Greecian scenario occur here!!
KyleKyleGoAway
September 20th, 2011
11:41 am
Kyle @ 11:23 – thank you for proving my point in re your (substantial) cognitive and educational shortcomings. Economic growth doesn’t have to fall below zero for there to be a recession. Go on, look it up. Educate yourself, even if just a little. I dare ‘ya.
USMC
September 20th, 2011
11:48 am
“So sorry you’re back, Kyle. Last week was wonderful without you. Your disingenuous, obfuscating blather is old, tired, worn and dead wrong.”–Comrade KyleKylegoaway
It looks like this Bolshevik/\/\/\\/\/\/\/\ can’t handle the truth.
Obama is turning to his Leftwing Liberal base for support as his Independent support is quickly eroding. This latest “Class Welfare” Bill from Obama is merely a campaign tactic for 2012.
Obama is toast in 2012
Kamchak
September 20th, 2011
11:55 am
Kamchak: You don’t believe the recession that began in March 2001 resulted from the bursting of the tech bubble?
Not as a sole cause, no.
In my biz (new home construction) I didn’t work from Jan 2001 to Apr 2001 and even then it was anemic for a few months.
You seem to be presupposing that a recession was inevitable.
The slowdown (nice moving of the goalposts BTW. First you said “recession”, now you’ve walked it back to “slowdown”) could’ve bottomed out at zero and remained flat. It took subsequent data from two more quarters after Bush took office, to confirm the recession.
Dusty
September 20th, 2011
11:57 am
Joe the Plumber,
I like your story. A strong independent man is worth hearing about.
—————–
SCOOTER,
I like your line “I say we should not demonize anyone in America, even the wealthy.” Right! They made their money and it is theirs just like everybody else. “Stealing” should not be legal.
—————
KYLE
I am glad you are back. I don’t know enough about tax history to comment on it. BUT I do know I don’t want my taxes raised and I doubt that anyone else does. Good planning and deletion of excess expense in government is much better. I wish our president could realize that. Obviously, he does not.
willie lynch
September 20th, 2011
12:00 pm
Well Kyle, what is your solution? I really don’t see how the right feels they have a strong argument. After all weren’t the Bush policies a disaster?
KyleKyleGoAway
September 20th, 2011
12:00 pm
USMC @ 11:48 – I absolutely cannot wait to see your and your comrades’ collective apoplexy when the President is reelected. Sooooooooooooooooooooooo excited, in fact!!!!!!!!
Jefferson
September 20th, 2011
12:01 pm
The tax increases proposed by the president hurts no one and is benificial to debt reduction. It is just one of the sacrifies needed that were caused by the runaway budgets between 2000 and 2008. Cuts in spending will follow.
Tiberius - Your lightning rod of hate!
September 20th, 2011
12:02 pm
Sad to see that in over 50 comments posted about this topic (excepting our host’s, of course), perhaps two of them contained something other than personal attacks or insults.
I know that some of you are capable of better performance. Step it up.
Jefferson
September 20th, 2011
12:02 pm
Gomer is calling people commies over here too…
USMC
September 20th, 2011
12:02 pm
“USMC @ 11:48 – I absolutely cannot wait to see your and your comrades’ collective apoplexy when the President is reelected. Sooooooooooooooooooooooo excited, in fact!!!!!!!!”
–Comrade Kylekylegoaway
Nice originality! I’ll be okay; seeing that the Republicans will take back the Senate and control both houses of Congress. Can you say LAME Duck?
Kamchak
September 20th, 2011
12:04 pm
Sad to see that in over 50 comments posted about this topic (excepting our host’s, of course), perhaps two of them contained something other than personal attacks or insults.
And you still maintain that this is the “adult table.”
Too funny.
MarkV
September 20th, 2011
12:05 pm
Latest Gallup poll regarding Obama’s jobs bill:
All 45:32%
Democrats 70:9%
Republicans 19:60 %.
Independents: 44:32 %
USMC
September 20th, 2011
12:05 pm
“Gomer is calling people commies over here too…”–Jefferson
Well if the shoe fits, Weezy…
When you Bolsheviks espouse the philosophy of Marx, you might be a Marxist/Socialist
“From each according to his ability, to each according to his need (or needs) is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Program.[1] The phrase summarizes the principles that, in a communist society, every person should contribute to society to the best of his or her ability and consume from society in proportion to his or her needs.”
Don’t run from it. Wear it with pride.
USMC
September 20th, 2011
12:08 pm
SolyndraGATE, coming to a theatre near you!
Issa to launch probe of Obama actions on Solyndra, LightSquared
http://thehill.com/blogs/blog-briefing-room/news/182553-issa-to-investigate-government-loan-programs
Tom B
September 20th, 2011
12:12 pm
DebbieDoRight
September 20th, 2011
9:43 am
“The tax shelters and tax credits have. And yes, before you say that “these laws are put in place for everyone to use”, (basic Con argument); not everyone can use that Luxury Boat deduction, or the private jet deduction; OR the deduction for owning multiple housing (apartments/condos) facilities.:
And why not? Because you (they or whoever) choose to not better yourself to take advantage of these tax issues means those that do are evil? I am in no position myself to take the private jet deduction but I will not belittle those that have achieved success.
HDB
September 20th, 2011
12:13 pm
USMC
September 20th, 2011
12:08 pm
With Republicans like these, it’s no wonder why the GOP is part of the “theatre of the absurd”!!
Does It Really Cost This Tea Party Congressman $200,000 to Feed His Family?
http://www.dailyfinance.com/2011/09/19/does-it-really-cost-this-tea-party-congressman-200-000-to-feed/?a_dgi=aolshare_facebook
KyleKyleGoAway
September 20th, 2011
12:17 pm
Usmc @ 12:02 – that sounds like a wet dream you had in boot camp. Grunts like you are a disgrace to the corps.
USMC
September 20th, 2011
12:24 pm
I think the Politburo is going to enter ANOTHER Left wing Liberal into the Presidential Race for 2012…
Liberals vow to challenge Obama in Democratic primaries
http://www.washingtontimes.com/news/2011/sep/19/liberals-vow-challenge-obama-democratic-primaries/
John
September 20th, 2011
12:24 pm
Kyle,
“The top marginal tax rate in the Internal Revenue Code is what’s made the rich “vastly richer”? Not such economic trends as the shift toward an information-based services economy, or the ever more rapid rise of global manufacturing competition, or the change in the way corporate boards have awarded executive compensation? Or any of the things Tomasky means, several paragraphs later, when he acknowledges, “A hundred factors affect economic performance”?”
I don’t see where he said tax policy is the only factor.
“I didn’t realize columnists at the Daily Beast were on welfare — and with “the rest of us,” Tomasky is necessarily excluding those public functions (e.g., the military) that benefit everyone regardless of income. But that’s a side point. Have lower tax rates really “reduced the amount of money” sent to the government?”
Where don’t see in his statement where he excludes anything. Of course, you jump to the conclusion that all public benefits are welfare. Does that include education? Does that mean everyone who has a child in public school are on welfare?
dixiedemons
September 20th, 2011
12:25 pm
Kyle, give us some insight on how the automatic spending cuts will go down when the “super committee” fails to do its job.
USMC
September 20th, 2011
12:26 pm
More of the same old “Do as I say, not as I do” Obama politics…
In early Obama White House, female staffers felt frozen out
http://www.washingtonpost.com/politics/friction-over-womens-role-in-obama-white-house-was-intense/2011/09/19/gIQA9OUygK_story.html
USMC
September 20th, 2011
12:30 pm
What a hypocritical, Intellectually Dishonest, morally Bankrupt “Crook”:
FLASHBACK: Obama Says You Don’t Raise Taxes In A Recession
http://www.youtube.com/watch?v=aufAtuTwKlE
HDB
September 20th, 2011
12:35 pm
USMC
September 20th, 2011
12:30 pm
What a hypocritical, Intellectually Dishonest, morally Bankrupt “Crook”:
You can say the same thing about the GOP (or can you refute this??)
Does It Really Cost This Tea Party Congressman $200,000 to Feed His Family?
http://www.dailyfinance.com/2011/09/19/does-it-really-cost-this-tea-party-congressman-200-000-to-feed/?a_dgi=aolshare_facebook
Tiberius - Your lightning rod of hate!
September 20th, 2011
1:03 pm
“Does It Really Cost This Tea Party Congressman $200,000 to Feed His Family? ”
Possibly the dumbest article I’ve ever read.
Obviously, the Congressman is talking about whatever living expenses he shells out each year (food, clothing, housing, utilities, etc) and not just “food”. If he has grown children (and he does) he’s likely got college bills out the wazoo to pay as well.
But this moronic gotcha journalism focusing on a single word and blowing it all out of proportion has got to stop. On both sides.
GT
September 20th, 2011
1:11 pm
Your whole model is based on a false economy. Profits were booked all through these presidential terms that were later erased by reality but those losses were taken on another president’s watch. The president given the credit and the president taking the losses had little to do with their own policies. If we could have taxed bank robbers and the gross dollar amount of bank robbery was up in the Bush administration or the Clinton that would cause tax revenues to increase as the revenue or principal increased. This would not be a real indicator of the real economy or the results of taxation, plus or minus, because we eventually have to answer for the money stolen from the banks We built and sold houses, among other things, all along this period, that were funded with bad paper sold to the banks and investment houses, not unlike robbing a bank. Our babysitters were buying houses bigger than the ones our parents lived in. The house builder, the land salesman, the Home Depot, the lawyer, insurance man, and hundred on down the list were booking profit and paying taxes off of bank robber booty, better known as stolen money.
Now we have no stolen money to burn. Only the honest middle class is paying for the party bills long ago spent, by paying mortgages in upside down house values that they never missed a payment on and taxes to pay back the stolen money they did not steal themselves. To ignore these facts ,and more, and to make an argument that not taxing the rich ,when many still have the booty of these bank robbing days, and were bailed out of losing any money by a honest hard working middle class so they would never have to pay for the harm they have created, is beyond the pale to the level of child pornography.
Tiberius - Your lightning rod of hate!
September 20th, 2011
1:16 pm
Only one word fits GT’s 1:11 post:
Oy.
MarkV
September 20th, 2011
1:20 pm
USMC @12:05 pm: “When you Bolsheviks espouse the philosophy of Marx, you might be a Marxist/Socialist
“From each according to his ability, to each according to his need (or needs) is a slogan popularised by Karl Marx in his 1875 Critique of the Gotha Program.”
Can you name anybody in these posts, or in a position in the government, advocating this philosophy?
KyleKyleGoAway
September 20th, 2011
1:23 pm
@USMC, generally – it is painfully obvious you wouldn’t know a socialist from a communist from a Marxist from a Bolshevik from a comrade even if one or all of them simultaneously slapped you upside the head. What’s truly frightening is that ignoramus’ such as yourselves are what pass for a good % of the voting public. Im beginning to fear that even the Lord himself couldn’t save the USA from its rabid right wing.
MarkV
September 20th, 2011
1:26 pm
Tiberius dictionary: Where “feeding the family” does not mean “feeding the family.”
Tiberius - Your lightning rod of hate!
September 20th, 2011
1:29 pm
“Can you name anybody in these posts, or in a position in the government, advocating this philosophy?”
MarkV, anyone who advocates taking more from the rich in order to fund our social programs, i.e. 99% of the elected Democrat representatives, you, and virtually every other liberal poster on this blog is advocating that philosophy.
Tiberius - Your lightning rod of hate!
September 20th, 2011
1:31 pm
MarkV dictionary: Where believing that anyone could possibly spend $200,000 in food in one year for a family of four.
Reality. You should try it sometime, MarkV.
MarkV
September 20th, 2011
1:32 pm
Tiberius @1:29 pm: “MarkV, anyone who advocates taking more from the rich in order to fund our social programs, i.e. 99% of the elected Democrat representatives, you, and virtually every other liberal poster on this blog is advocating that philosophy.”
Which shows how ignorant you are regarding the philosophy of communism and socialism.
John
September 20th, 2011
1:33 pm
Tiberius – Your lightning rod of hate!
“Possibly the dumbest article I’ve ever read.”
That was his words…but the interesting thing is this was his answer to a direct question which he sidestepped. Republicans want to claim raising taxes would destroy jobs…he’s a business owner and was asked if he would layoff employees if his taxes were raised. Guess he couldn’t answer that question with a YES.
GT
September 20th, 2011
1:34 pm
Ability? Aren’t we in love with ourselves? Go down to the Atlanta Fed. Pen. and you will find people with the same “ability”. Another thing we will find in common is neither one of these groups with great “ability” pay taxes. Ability is the small business owner that has ability to produced something and not the guy that steals the idea and has never produced anything. This country will not be great again until the fly over country becomes the country and all this other stuff is call out for what it is, slick unproductive white collar crime.
MarkV
September 20th, 2011
1:37 pm
Tiberius @1:31 pm: “MarkV dictionary: Where believing that anyone could possibly spend $200,000 in food in one year for a family of four.”
Show me where I claimed that belief. Take it up with Rep. John Fleming (R-LA).
HDB
September 20th, 2011
1:45 pm
Tiberius – Your lightning rod of hate!
September 20th, 2011
1:29 pm
The direct QUOTE:
“Fleming’s taxes would rise under the Obama plan. This is because, in addition to his $174,000 congressional salary — which is far below the minimum threshold for Obama’s tax increases — Fleming also pulls in an impressive $6.3 million from his investments, including several Subway franchise restaurants and UPS stores.
However, Fleming was quick to explain that he only brought home a small portion of his $6.3 million gross income. As he told Jansing, “That’s before you pay 500 employees, you pay rent, you pay equipment and food. The actual net income of that was only a mere fraction of that amount.” In fact, according to Fleming, he made a comparatively paltry $600,000.
While decidedly less than $6.3 million, Fleming’s $600,000 is still nothing to sneeze at: Given the $49,455 that the median American household brought home in 2010, the congressman’s yearly income equaled the take-home pay of more than a dozen average families. But, as Fleming noted, even that princely sum was not all it appeared. In order to create more jobs — and, not coincidentally, expand his business — Rep. Fleming needed to invest more money: “By the time I feed my family, I have maybe $400,000 to invest in new locations, upgrade my locations, buy more equipment …”
So, let’s see: $600,000 minus $400,000 for reinvestment leaves $200,000 that Fleming has budgeted to “feed his family.” In other words, the congressman’s yearly food budget is more than the total take home salary for four average families. ”
Include his Congressional salary, the funding Congressmen get for staffing/offices/travel…….he shouldn’t be complaining!!
See full article from DailyFinance: http://srph.it/qNKdnm
John
September 20th, 2011
1:45 pm
Tiberius – Your lightning rod of hate!
If you do the math…that comes to about $45.66 per person per meal for a family of 4. $45.66 a meal doesn’t seem to be that far fetched, does it? Of course, most of us don’t spend an average of $45.66 per meal but I have spent more that $45.66 on a single meal before.
MarkV
September 20th, 2011
1:47 pm
GT: I have a feeling I might agree with at least some of the things you have in mind, but with all due respect, would it be possible for you to write in a way that makes sense?
Lil' Barry Bailout (Revised Downward)
September 20th, 2011
1:47 pm
The recession began in March 2001, two months after Bush took office.
Can’t “inherit” something that didn’t exist.
——–
Kind of like 9% unemployment and $1.5 trillion deficits, eh?
Voice of Reason
September 20th, 2011
1:49 pm
In terms of government making sound business decisions, one word jumps to mind: Solyndra.
GT
September 20th, 2011
1:50 pm
Would matter anyway would it?
GT
September 20th, 2011
1:51 pm
Wouldn’t matter anyway, hell I can’t even type that straight, sorry.