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*Opinions expressed here may or may not reflect the views of the Fernley Republican Women. Blog posts should not be considered an endorsement from the FRW.

Just the Facts, Ma’am: Income and Taxes in America

2/9/2021

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​“The rich get richer and the poor get poorer.”  A glib trope a liberal-statist law school classmate used as an obvious and key claim in advanced constitutional law in 1995.  My oral response objection was so loud and immediate the professor admonished me.
But official numbers at that time supported my objection.  And sound theory shows that, in a true market economy, it’s the right result when it happens.
We’ve all heard numerous similar tropes from Democrats, liberals, progressives, the politically correct and populists nearly every day.  These claims are so glib, well known and often generally accepted that the Dems, et al. usually don’t bother to back them with research, data and analysis.  And Republicans, conservatives and even many limited-government empiricists often don’t even bother to contest them.
More: The rich are paying lower taxes than they used to, especially since the Trump tax cuts.
And: The rich aren’t paying their fair share, so we need to increase their taxes so they do.
Etc.
Fortunately, the Internal Revenue Service publishes the actual numbers and facts with which we can determine the validity of these claims each year.  So, let’s explore the latest annual report, released last month and covering tax year 2018.
The poor get poorer?  The Tax Foundation’s (TF) digest of the IRS’s data states: “Tax year 2018 was the first under the Tax Cuts and Jobs Act (TCJA).  The number of returns filed and the amount of income reported grew in 2018 yet average tax rates fell across every income group and total income taxes paid decreased $65 billion.”
So, a tax cut preceded not just increased incomes for the poor and all income classes, but also income for all taxpayers as a group.  Score one for the key supply-side claim our tax rates are so high they damage the overall economy.
What about the really rich?  Per TF: “The share of reported income earned by the top 1 percent of taxpayers fell slightly, to 20.9 percent in 2018 from 21 percent in 2017.”  But remarkably, “Their share of federal income taxes rose by 1.6 percentage points to 40.1 percent.”
Moreover, “Since 2001, the share of federal income taxes paid by the top 1 percent increased from 33.2 percent to a new high of 40.1 percent in 2018.” … In 2001, the top 50 percent of all taxpayers paid 97.1 percent of all individual income taxes, while the bottom 50 percent paid the remaining 2.9 percent.”
That is, the long-term trend shows the income tax has become greatly more progressive.  And that trend continued with the Trump tax cuts.
But wait, there’s more!  “The top 1 percent paid a greater share of the individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent).”  And, “The top 1 percent of taxpayers paid a 25.4 percent average individual income tax rate, which is more than seven times higher than the taxpayers in the bottom 50 percent (3.4 percent).”
So much for the claim the super-rich don’t pay their share.
Moreover, high-income taxpayers paid the majority of federal income taxes, “In 2018, the bottom 50 percent of taxpayers (those with [Adjusted Gross Income] below $43,614) earned 11.6 percent of total AGI.  This group of taxpayers paid $45.1 billion in taxes, or roughly 3 percent of all federal individual income taxes in 2018.”
“In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) …  earned 20.9 percent of all AGI and paid 40.1 percent of all federal income taxes.”
No one knows the exact ratios that are distributionally fair, but the trends and current rates support the following:
1) high overall tax rates and public spending are greatly responsible for our slow economic growth in the 21st century (as discussed at length in my previous columns and my Controller’s Annual Reports);
2)  the poor as a group are getting richer, not poorer;
3) the share of income taxes paid by the rich has increased greatly in the 21st century and continues to do so; and
4) the ratio of the rich incomes taken by federal income taxes is much higher than the puny fraction taken from the poor and middle-income folks.
Ron Knecht has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contact him at RonKnecht@aol.com. 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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LGBTQ and All That: Conflicting Rights

2/2/2021

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​In my last column, I discussed the problem of transgendered boys and men competing in athletic competitions established for girls and women.  I explored the subject from the perspective of outstanding female athletes who have no chance of winning against previously male competitors who were nowhere near the top of the men’s standings in their events.
As one lady said, “It’s just not fair.”
That seems to be the overwhelming consensus on the subject among folks I know.  But while I think that’s the essence of the matter, the subject deserves a broader and deeper treatment.
One appropriate context is to consider transgender issues in the context of lesbian, gay, bisexual, transgender and queer issues – the LGBTQ complex so widely discussed but not addressed in necessary disaggregation and detail.
The first point is: transgender issues are characteristically different from the other four.  LGBQ matters involve folks’ preferences and actions regarding persons of the same or opposite gender.  Transgender issues deal with how some persons identify themselves and their desires to assume a gender other than the biological identity with which they were born.
Thus, LGBQ persons typically are generally happy with their own sexual or gender identity and they prefer the intimate company and practices of their own kind or of a mix of their own sex and the opposite sex.  This is generally contrary to conventional sexual mores and religious or ethical teaching.
Social pressure against LGBQ practices still today in many societies and historically in many others, including our own, often extended to legal prohibition or other sanction.  American social practice and law, as well as that in most other western societies, has been greatly liberalized in recent decades.  Now, LGBQ lifestyles are celebrated, not discouraged, as part of valuing human diversity.
So, we have LGBQ holidays, parades, nightclubs, bars, literature, etc.  Many more traditional people continue to resist this change, especially the supportive and celebratory aspects of it, but mainly tolerate it without objection.  The issue is the distinction between, first, accepting and, second, supporting and even celebrating minority choices.
Law in this area has generally focused on requiring tolerance, but not mandatory active acceptance or celebration of minority practices.  And make no mistake, the LGBQ community is decidedly a minority, varying from three to ten percent of the population, depending on age and other factors.  The sticking point arises when LGBQ people seek public support, celebration or accommodation, a burden on straights beyond mere passive acceptance and tolerance.
The apparent logic is: There’s little burden on folks who oppose or only passively tolerate LGBQ practices when those practices are confined to the minority’s private life and do not intrude on the lives of the majority.  And there’s significant benefit to the minority of allowing them to do their thing.  Hence, the social cost-benefit analysis favors toleration and passive acceptance.
But requiring participation, active accommodation or celebration reverses the C-B analysis so that the majority suffer more burden than the benefit then accruing to the minority.  This is because there are so many more people in the majority and the feelings of many of them are as strongly held as those of many LGBQ supporters.
Also, each side has strong claims it has basic rights at stake:  LGBQ persons to their practices, and straights to a world that doesn’t continuously assault majority mores and cause conflict. Transgender issues confront an even bigger deficit in terms of minority numbers and sensibilities versus majority numbers.  About 0.03 percent, or three in ten-thousand people have significant transgender tendencies.  So, the ratio is about 9997:3.
But transgender issues aren’t only characteristically different from LGBQ issues.  Some transgender desires, such as sharing locker and bathroom space or competing in athletic competitions, directly burden straights, as shown in considering transgender men in female athletics.
Even after full biological change to female, including surgery and hormones, persons born as men still have significant advantages in size, bone and muscle mass, strength, etc.  As one girl said, “That unfairness doesn’t go away because of what someone believes about their gender identity.”
LGBQ issues lend themselves to mutual accommodation.  In the transgender conflict of basic rights, there’s very little room to live and let live.
Ron Knecht, MS, JD & PE(CA), has served Nevadans as state controller, a higher education regent, economist, college teacher and legislator.  Contract him at RonKnecht@aol.com . 
Ron Knecht

775-882-2935
775-220-6128
 
www.RonKnecht.net
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