The only thing jaw-dropping about the report and its fawning coverage by the NYT and other lamestream media is how completely ignorant, dishonest, envious, avaricious and wantonly destructive of human wellbeing and flourishing their proposals would be.
The extreme left-wing ProPublica advocacy group evaluated the federal income tax as if it were a wealth tax, a very different animal with very different consequences, including destruction of any economy and society unless the wealth tax rate were very low.
The report evaluates selected results of our income tax in wealth-tax terms. But it doesn’t even attempt to justify this bait-and-switch fraud, proceeding as if a wealth tax – their “true tax rate” – is self-evidently fair and in the public interest, while it certainly is neither.
In a future column, I’ll address some misinformation and chicanery involved, such as:
· The report is based on leaked confidential Internal Revenue Service data on 15 years of tax data on thousands of people. ProPublica is not legally entitled to such data, and it did not disclose its sources.
· It studiously ignores key points such as: the top half of taxpayers by income paid 97 percent of income-tax revenues in the most recent year for which data are available. The bottom half paid three percent.
· The top one percent of earners paid 38.5 percent of income taxes while the bottom 90 percent paid only 29.9 percent.
· And the top one percent also paid a 26.8 percent average individual income-tax rate, more than six times higher than the four percent for taxpayers in the bottom 50 percent.
Here, I’ll address the misrepresentations about wealth taxes advocated by ProPublica and the media. I carry no brief for the 25 rich people in their report, just one for the public interest in economic growth (aggregate human wellbeing) and fairness.
I first understood this matter 50 years ago as an Assistant City Engineer in Urbana, Illinois. The lesson came courtesy of the crotchety old Public Works Director who was a Republican, while I was an ignorant statist liberal progressive Democrat.
I advocated the kind of income and wealth redistribution nonsense ProPublica and the media now promote. He pointed out simply that if people had roughly equal income and wealth levels, it would make significant investment in major enterprises (a/k/a “capital formation”) impossible.
Thus, if everyone had roughly $70,000 in annual income (the U.S. gross domestic product divided by our population), no entrepreneur could raise in reasonable time and cost the billions of dollars required for an electric vehicle industry. Nor wind and solar energy sources. Nor for high-speed rail or concert hall projects.
Government financing of such projects is even more ridiculous, as shown by the cost and schedule overruns and poor performance of water projects, bridges to nowhere and crosstown highways.
The day of the NYT report, an editorial cartoon ran showing spaceships launched from earth bearing the Bezos and Musk names. Space aliens watching from a flying saucer comment: “The male earthlings are overcompensating again.” The irony is that capital formation has allowed these entrepreneurs to restart space travel after the government recently proved its ineptitude at that venture.
ProPublica and the media either don’t understand or cynically deny that in a mostly market economy, people get income and accumulate wealth generally in proportion to the value they deliver to other folks, and thus in proportion to their contribution to society and the public interest. That essential fairness is not found in redistribution and government provision.
Also, wealth taxes would require people with unrealized capital gains (much of the wealth of the 25) to either sell stock, driving down the value of enterprises, or borrow large sums. Also, if wealth were taxed, would immense capital losses such as those not infrequently incurred require the government to pay tax rebates to those suffering the losses?
The income tax is destructive enough. Similar revenues from wealth taxes would be disastrous.
Ron Knecht is a Senior Policy Fellow at the Nevada Policy Research Institute. Previously, he served Nevadans as State Controller, a higher education Regent, Senior Economist, college teacher and legislator. Contact him at RonKnecht@aol.com.