The owners of the Los Angeles Dodgers baseball team, Frank McCourt and his wife Jamie, are mired in a messy divorce. According to papers filed in Los Angeles superior court, the McCourts — between 2004 and 2009 — collected income totaling $108 million. According to those same court papers, on that $108 million, the multimillionaire McCourts did not pay a single dime in either California or U.S. taxes.
Obviously, this un-fun couple must be fans of the values of the late New York hotel owner and convicted tax evader Leona Helmsley, who according to the sworn testimony of her former housekeeper, announced: "We don't pay taxes. Only the little people pay taxes."
That's certainly the way things look to be heading after the IRS revealed that the effective federal tax rate for the 400 highest-earners in the United States in 2007 was 45 percent lower than it had been in 1995. The average annual income of the 400 highest earners was $345 million. In 1995, when Bill Clinton was president, the top 400 earned an average of $50.9 million and paid U.S. taxes at an effective rate of 30 percent. Twelve years later, after the enactment of George W. Bush's generous tax cuts on upper-income individuals, the effective federal tax rate paid by the richest 400 averaged just 16.6 percent — or about 45 percent less than in 1995.
Not only did the pre-tax income of the highest earners increase dramatically during the Bush years, but because of the tax cuts, their after-tax income went up even faster.
According to the research of Avi Feller and Chuck Marr of the Center on Budget and Policy Priorities, those changes produced "a tax cut of $46 million per filer in 2007, or a total of $18 billion in tax cuts for these households per year."
Yes, all of the 400 highest earners individually were getting much bigger paydays in 2007, but collectively this privileged group's share of the nation's total adjusted gross income — 1.59 percent — had tripled in size of what it had been in the 1990s.
Republicans, we know, proudly believe in the genius and sanctity of tax cuts for the wealthy — make that, "the productive." The GOP's answer to any problem — from declining Sunday school attendance to increased rush-hour congestion — has always been predictable: Cut taxes, especially the capital gains tax.
Their reasoning, as John Kenneth Galbraith once observed, seemed to be based on the "horse and sparrow" theory of taxation: If you feed the horse enough oats, some will pass through to the road for the sparrows."
But why are not the majority Democrats, the self-proclaimed tribunes of working people, storming the barricades and demanding tax justice beginning with the immediate repeal of the tax preferences for the most affluent? Could the Democrats' passive lack of urgency about changing the nation's manifestly unjust tax laws have anything to do with the fact that candidates of the party of Jefferson and Jackson have lately been the principal beneficiaries of Wall Street contributions? It's time for them to prove otherwise.
As Sen. Byron Dorgan, D-N.D., once asked during a Senate debate on shrinking even further the tax rate on capital gains (now barely half what it was when President Ronald Reagan was in the White House), "Why don't we go all the way and simply take the rich off the tax rolls altogether?"
To find out more about Mark Shields and read his past columns, visit the Creators Syndicate web page at www.creators.com.
DISTRIBUTED BY CREATORS.COM
COPYRIGHT 2010 MARK SHIELDS
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13 Comments | Post Comment
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Thank you, Mark. Love you here as well as on PBS.
Comment: #1
Posted by: ALLAN
Sat Feb 27, 2010 11:27 AM
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Please don't compliment the rich by calling them "earners" Thieves would be more on the mark.
AUX BARRICADES!
Comment: #2
Posted by: Lee N. Lindeman
Sun Feb 28, 2010 5:43 AM
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The term is "trained helplessness." I no longer even hope that anything will change in our government. We will not get tax relief, but the rich will. We get no health insurance coverage while they get the world's best. We fight the wars that they conjure for their own economic benefit. The list goes on. I actually thought having a Democratic President, House, and Senate would really change things. I now know they won't. Trained helplessness.
Comment: #3
Posted by: Mike Ohr
Sun Feb 28, 2010 9:38 AM
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The Democrats constantly bash the upper 5%. If you will google income tax statistics and go to the taxfoundation.org you will find that the break line for the upper 5% is an AGI of $160,041. This group pays 60.63% of all income tax receipts. I would hardly call them the super rich - instead, they are the owners of companies which provide the majority of jobs in the country. This is the group which I hear the Republicans defending - not the "super rich". If the democrats want to increase taxes on the super rich, then do it. But don't do it by increasing capital gains taxes or other such job-killing and investment-robbing measures. And don't think you are increasing taxes on the "super rich" , who pay capital gains rather than income tax, by increasing income taxes on the upper 5% of taxpayers. They already carry the majority of our tax burden - they have 37% of the income, but pay 60% of all the tax.
Comment: #4
Posted by: Mike Stanley
Sun Feb 28, 2010 6:54 PM
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I want to inform you that my family's gross income (from hard work) was around $72,000 last year so I am not one of the rich you speak of. Bashing only the rich is just plain wrong. I have a niece who is married with two children to a bum that has no intention of ever holding a steady job. He has had several jobs the last couple of years and quits after working a few months. She works part time so their income is low. They received almost $7,000 back in taxes this past year even though they only paid in a few hundred dollars. They went around telling all of us how excited they were because now they could both get a new tatoo. My tax dollars paying for a tatoo! That just irritates the heck out of me. We have so many bums playing the system that our country is going bankrupt. I don't want to hear about taxing the rich unless we can kick the lazy bums off of the taxpayers payroll.
Comment: #5
Posted by: Jim Montz
Tue Mar 2, 2010 9:09 AM
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Mark and his cronies,
HAVE YOU EVER BEEN RIGHT ABOUT ANYTHING IN ECONOMICS?
You ideas for taxation and spending are from 1930s and you haven't learned anything in 80 years.
Pack it in .
Comment: #6
Posted by: Pascal
Tue Mar 2, 2010 12:40 PM
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This article is a perfect example of why tax cuts work. According to my math, in 1995 the top 400 combined made 20.3 billion. At a 30% RATE, they paid about 6.1 billion in taxes. Twelve years later the top 400 made about 138 billion. At 16.7%, they paid about 22.9 billion in taxes. This just goes to show that tax cuts work. Thanks to the biggest liberal of them all for proving conservatives point.
Comment: #7
Posted by: Marc
Tue Mar 2, 2010 4:47 PM
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Why is paying more taxes always the goal on the left. Is spending 3.9 trillion at the federal level on a 15 trillion dollar economy not enough? What number would the liberals like to see? We need more jobs not more taxes. Giving the government more money just creates more poverty.
What is the ultimate goal? How much needs to be collected in taxes? When will the tax amount be ok with liberals? When does it end?
Comment: #8
Posted by: Matt
Thu Mar 4, 2010 8:55 AM
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Mark,
Great column. The rich get richer and the rest of us traed water. I have been working steady since 1995. My income has not even doubled since then. The middle class is disappearing because the wealthiest Americans are making tons and it has not been trickling down. The big investors and corporate executives are having their way with us. If I made 5 times as much now as I made in 1995, I would gladly pay more taxes. My income has about doubled and my tax burden has almost doubled. The super rich have had incomes go up six times and their tax burden has been nearly cut in half. I don'r see how anyone can call this fair.
Comment: #9
Posted by: Trent
Thu Mar 4, 2010 11:44 AM
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Thanks for proving that tax cuts for the Rich work!
Using your own statistics: In 1995 the 400 highest earners in the United States earned an average of 50.9 million dollars which was taxed at an effective rate of 30%. That means they each paid an average of 15.03 million in federal tax revenues.
After George W Bush's tax cuts, the portion that went to the 400 highest earners had an effective tax rate that averaged 16.6% and their annual income went to an average of 345 million dollars. The federal taxes paid were an average of 57.27 million. So the federal government saw an increase in tax revenues from these 400 people of over 42 million dollars or nearly 300%.
And now these people also had 300 million more dollars to use on consuming goods and services and providing investment. Those are the things that create Jobs. More Jobs equals more opportunities to create wealth and moves more people from the middle class to the wealthy class and results in even more tax revenues paid to the Federal government. More tax revenues allow government to provide support for programs which help the poor.
So across the board tax cuts, but especially tax cuts for the wealthy, factually, provably help the poor, the middle class, and the wealthy.
But the left complains because the wealthy create more wealth and they don't like that so they do exactly the opposite.
We are seeing the results in Obamanomics.
Comment: #10
Posted by: Larry
Sat Mar 6, 2010 12:05 PM
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According to your own statistics, you have proven that tax cuts for the rich really do work!
In 1995 the 400 highest earners in the United States earned an average of 50.9 million dollars which was taxed at an effective rate of 30%. That means they each paid an average of 15.03 million in federal tax revenues.
After George W Bush's tax cuts, the portion that went to the 400 highest earners had an effective tax rate that averaged 16.6% and their annual income went to an average of 345 million dollars. The federal taxes paid were an average of 57.27 million. So the federal government saw an increase in tax revenues from these 400 people of over 42 million dollars or nearly 300%.
And now these people also had 300 million more dollars to use on consuming goods and services and providing investment. Those are the things that create Jobs. More Jobs equals more opportunities to create wealth and moves more people from the middle class to the wealthy class and results in even more tax revenues paid to the Federal government. More tax revenues allow government to provide support for programs which help the poor.
So across the board tax cuts, but especially tax cuts for the wealthy, factually, proveably help the poor, the middle class, and the wealthy.
But the left complains because the wealthy create more wealth and they don't like that so they do exactly the opposite.
Comment: #11
Posted by: Larry
Sat Mar 6, 2010 12:19 PM
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You are so far off the mark, Mark Shields. Spewing more liberal out right lies and deception in your publications. In America, the top 5% pay more than 50% of all income tax collected. The wealthiest 1% of the population earn 19% of all income, yet pay 37% of their income to federal tax. The top 10% income earners pay more than 68% of the total income tax tab in America. The bottom 50% income level earn 13% of all income, yet pay just 3% of their earnings to imcome tax. The facts, Mr. Shield, plain and simple. So spin your liberal lies to get the public stirred up. Pretend the liberals are there for the "little guy". Keep them all voting for the democrats at any cost, that is the liberal agenda. You should be ashamed. I think jealousy is the root of all evil and yours is showing. Couldn't make it in business to accumulate wealth for yourself? So stick it to those that did.
Comment: #12
Posted by: Debra Rammer
Fri Mar 12, 2010 10:33 AM
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Saying that tax cuts increase revenues relies more on magic than math. To Larry and Marc who claim that the math proves the effectiveness of tax cuts for the ultra wealthy are missing the bigger picture. According to Larry and Marc the increase in tax revenue of the top 400 earners went up close to 300%. But that's only because their income went up close to 700%. Now let's do some applied algebra.
Let's say X=all the money in America, R=Rich peoples money and P=poor & middle class cash.
X = R + P
Now we've established that the income for the super rich increased by 700%. Let's be generous and say that the poor and middle class doubled their income over this time to adjust for inflation. (pretty generous, huh?)
The equation becomes X = 7R + 2P
Let's give the super rich another bone since they're having such a hard time and say they only make about twice as much as everyone else. That let's us put some pretty small numbers into the equation just to keep it simple.
X= R + P let's say 3 = 2 + 1
now move ahead a few years and...
X = 7R + 2P or 16 = 14 + 2
adjusting for inflation in this case means bringing X back down to 3 so...
16/3 = 5.3333 ( divide everything by 5.3 to make X = 3 again )
so.... 3 = 2.62 + .28
P = .28 = the poor and middle class got screwed = lower tax revenues collected from the middle class
Now this equation is flawed on several levels but it does show the broader point that the Ultra Rich are getting richer very quickly while the poor and middle class are forced to accept a lower standard of living. Now saying that the ultra wealthy can then spend their millions on investments that create jobs relies on the assumption that the rich will spend ALL of their tax relief on capital. This just doesn't happen. Ever. All the extra money that the rich (or anyone) puts into savings is money taken out of the economy. (Yes savings are good for you but bad for the economy) And it's an economic trend that the more disposable income people have the more they tend to save.
Most Americans accept a certain degree of inequality because they believe that one day, if they work hard enough, they'll be in that top 2%. But I promise you that the top 2% do not want you at the country club. Especially if you come from the "working class". We're talking about global elites and CEOs of companies like Goldman Sachs and BP. People that allowed their greed to bring us into the worst recession of my lifetime and that of my parents. These people are not effected by the recession. They're making more money from it foreclosing peoples homes who they said should refinance because they were sitting on a gold mine and then hit them with outrageous variable interest rate loans. The Super Rich aren't America's most "productive members of society". They are thieves and parasites. A burden on society that we can't afford. (In general... maybe one or two are cool... maybe.)
I say tax the hell out of them until the deficit is paid off.
They're the only ones who can afford it.
Comment: #13
Posted by: mike
Tue Jul 27, 2010 10:12 PM
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