Countering the Heritage Foundation's Tax Arguments

The right-wing Heritage Foundation continues to be a major propaganda outlet for conservatives. A recent release by Heritage bemoans the fate of those in the highest tax brackets. I found this item to be interesting in particular:

The often repeated myth that lawmakers are dumping more of the tax burden on low-income families is simply false. From 1979 through 2003, the highest-earning 20 percent of Americans—who earn 52 percent of all income—saw their share of the federal tax burden rise from 56 percent to 66 percent of all taxes. By contrast, the lowest-earning quintile of Americans—who earn 4 percent of all income—saw their share of the federal tax burden drop from 2 percent to 1 percent. (See Chart 1 and Chart 2.) Clearly, the rich are shouldering an increasing share of the tax burden.

Hmmm. Interesting. So I went looking for some other data that might shed some light on this situation.

Percent of total net worth in the United States in 2001 by households:

Top 1%. 33.4%.

Top 5%. 59.2%.

Top 10%. 71.5%.

Top 20%. 84.4%.

Bottom 80%. 15.5%.

Bottom 40%. 0.3%.

(Link).

So I looked a little more and found these interesting tidbits:

"There were an estimated 7.7 million millionaires in the world at the end of 2003, half a million more than at the end of 2002, as stock markets and economic growth picked up and the rich took more risks with their cash.These wealthy individuals saw their riches increase by 7.7 percent to $28.8 trillion in 2003, recovering to levels seen before the global recession took hold in 2001, according to a survey on Tuesday from U.S. investment bank Merrill Lynch and technology consultancy Capgemini. And the rich are set to get richer, with their wealth forecast to grow by seven percent a year and to exceed $40.7 trillion by 2008, the survey predicted... The survey also highlighted a small, but fast-growing global group of 70,000 super rich individuals with more than $30 million in financial assets. It found that this group was growing at a faster pace than those in the $1 million-plus bracket." (World's richest worth $29 trillion in 2003; Survey: Wealthy now back at level before dot-com bust. MSNBC.com, June 15, 2004,)

Very Richest's Share of Income Grew Even Bigger, New York Times, June 26, 2003

In the late 1970s, the top one percent of the US population held 13 percent of the wealth; in 1995 it held 38 percent. (Levy, Frank. The New Dollars and Dreams ).

In 1998 the top 1 percent of the population owned 38 percent of the wealth, the top 5 percent owned over 60 percent (source: www.inequality.org/fatcsfr.html).

The top ten percent of the U.S. population owns 81.8 percent of the real estate, 81.2 percent of the stock, and 88 percent of the bonds. (Federal Reserve Bank data in Left Business Observer, No. 72, Apr. 3, 1996, p. 5).

One percent of the U.S. population owns sixty percent of the stock and forty percent of the total wealth. (Hawken, Paul, The Ecology of Commerce: A Declaration of Sustainability. New York: HarperBusiness, 1993).

The top one percent of U.S. households owned 42 percent of all stock in 1997... The top ten percent of households owned 82 percent of all stock-market wealth...Only 27 percent of households held more than $10,000 in stock in 1997...57 percent of Americans didn't own any stock at all...The top fifth of households saw their income rise 43 percent between 1977 and 1999, while the bottom fifth saw their income fall 9 percent....Since 1973, every group in society except the top 20 percent has seen its share of the national income decline, with the bottom 20 percent losing the most. They have just 3.6 percent of national income, down from 4.4 percent a quarter century ago. Indeed, the top fifth now makes more than the rest of the nation combined...Rebecca Blank, who recently left the President's Council of Economic Advisors, pointed out, ‘We've gone back to levels of income and wealth inequality that this country hasn't seen since the teens and 1920s.’" (Source: Merrill Goozner, Crash of '99?, Salon.com, Oct. 1, 1999).

The top one percent of Americans receive more income than the bottom 40 percent. (Korten, David. When Corporations Rule the World, p. 108).

When he was worth $40 billion, Microsoft chairman Bill Gates was worth more than the bottom 110 million Americans (the bottom 40 percent of the population). By 1998, Gates was worth $59 billion; a year later, he was worth $85 billion. Gates is twice as wealthy as the second richest American, Microsoft co-founder Paul Allen (worth $40 billion). (Source: open letter from Ralph Nader (December 1998), citing Edward Wolff of New York University, whose calculations included home equity, pensions and mutual funds, but excluded personal cars, based on Gates' then-current net worth of $40 billion).

Also interesting. So I looked a little further and found this interesting site. Among other things, it points out that when you add Social Security taxes into the federal tax picture, you find that those with incomes of $30,000 a year pay about 15% of their adjusted gross income in taxes while those in the $200,000 plus range pay about 28%.

In my view, when you consider the impact of sales taxes, property taxes, and state income taxes, the poorest Americans pay just about the same percentage of their income in taxes as the richest.

The issue is NOT simply federal income taxes. It is the total tax picture that matters. Even more importantly, it is about who controls this country. And brothers and sisters, it's the people in the top 10% of income. WEALTH IS POWER. Only the dishonest or naive think otherwise. And power in America resides in those for whose plight Heritage feels so deeply.